Incentives
What is the Boiler Upgrade Scheme (BUS)?
Homeowners have been able to get £5,000 off the cost of a new air source heat pump since the launch of the grant in April 2022 – and £6,000 off the price of a ground source heat pump – thanks to the government’s new Boiler Upgrade Scheme.
However, because the scheme is receiving a relatively small £450m, a maximum of just 90,000 homes will be able to take advantage of the grant over the next three years.
That’s despite the Climate Change Committee (CCC) saying the UK needs to install 3.3 million heat pumps in existing homes by 2030 to reach net-zero.
The BUS is a government scheme designed to help meet the UK’s 2050 net zero emissions target by driving down the cost of low carbon heating technologies and working with industry to ensure they are no more expensive to buy and run as traditional fossil fuel boilers. It launched in April 2022 and is designed for homeowners in England and Wales to help people afford the upfront costs required for low-carbon heating. Applications for homeowners opened in May 2022. In a nutshell, homeowners who wish to install air source heat pumps, ground source pumps or biomass boilers to replace their traditional heating can apply to get thousands of pounds towards the work.
The funding will be sent as a voucher given to installers on behalf of homeowners utilising the initiative. These vouchers will have a set period of validity to ensure they are used in a timely manner – three months for air-source heat pumps or biomass boilers and six months for ground source heat pumps. With a view to minimise non-compliance, fraud, and gaming of the scheme, robust upfront checks will take place before vouchers are issued and grants are paid out. The scheme’s £450 million funding is expected to help install 90,000 heat pumps by 2025. But this is far fewer than the target of 600,000 a year announced by the Prime Minister in November 2020. While the government has stopped short of banning the installation of fossil-fuel boilers for now, it’s hoping that cleaner alternatives such as heat pumps will cost the same to buy and run as gas boilers by 2030, and therefore encourage more people to make the switch.
Announced in the government’s Heat and Buildings Strategy, the BUS follows the Domestic Renewable Heating Incentive (DRHI), which closed at midnight on 31 March 2022.
The BUS allows consumers to apply for a one-off grant payment of:
• £5,000 towards the cost of an air source heat pump (ASHP) or biomass installation
• or £6,000 towards the cost of a ground source heat pump (GSHP) installation.
Please be aware that biomass installations are only supported in limited circumstances, and solar thermal is excluded from the scheme.
The amount for both air source heat pumps and ground source heat pumps is set to increase to £7,500. These changes will take effect from Monday 23 October 2023.
If you currently have a live Boiler Upgrade Scheme voucher, it remains worth the original value – £5,000 for air source heat pumps or biomass boilers, £6,000 for ground/water source heat pumps. However, you may choose to revoke your live voucher now and re-apply for a new voucher at the higher value once the changes take effect.
Contractors will be required to lead the voucher application on behalf of the consumer.
Homes and small non-domestic buildings on and off the gas grid, including owner-occupiers, private landlords and custom-builds, are eligible for the BUS. New buildings and social housing will not be eligible for support. The consumer must have an EPC issued within the last 10 years to qualify.
You can get a £5,000 or £6,000 heat pump grant from April 2022
The average home will be able to save £2,827 over 20 years
But only 90,000 homes will benefit
Is a heat pump right for you?
Read our guide to choosing the best heating for your home
People who wish to install air-source heat pumps, ground-source heat pumps or biomass boilers are eligible under different circumstances to receive grants through the initiative. Air source heat pumps pull heat from the outside air and compress it to warm it up to heat your home. Ground source heat pumps work in a similar way, taking heat from the ground underneath your property. Biomass boilers tend to work by burning wood or wood pellets to deliver heating and hot water to your home. Read more: an introduction to the different types of heat pump.
Who can apply for the Boiler Upgrade Scheme?
Grants are available to owners of existing homes in England and Wales, including private landlords. The funding can only be used for replacing fossil fuel heating systems, such as gas, oil, or direct electric heating, and not for replacing existing low carbon systems. You must have a valid energy performance certificate (EPC) for the property (i.e. one that is less than ten years old), and it must have no outstanding recommendations for loft or cavity wall insulation to apply for the scheme. If your EPC does recommend either of these, you must carry out the recommendation(s) and obtain a new EPC before you can apply for a BUS grant. This is because your heating system will work more efficiently with these insulation measures in place. For further information and details of exceptions, speak to your installer. Biomass boilers, meanwhile, will only be supported by the BUS in rural areas (based on the Office for National Statistics’ definition) with no connection to the gas grid or when they replace existing fossil fuel systems that are not fuelled by mains gas or direct electric systems. While heat pumps may be considered as an effective alternative to ageing boilers, they won’t be suitable for all homes. They must be installed outside and require space indoors for a hot-water cylinder. Heat pumps work best in homes that are already energy efficient, so anyone living in a poorly insulated property may face bigger bills or colder rooms. The grant can only be used to install a heat pump that can meet the space heating and hot water heating demands of the property. It must have a capacity of no more than 45 kWth (kilowatt thermal) and a seasonal coefficient of performance (SCOP) of at least 2.8. If you can’t install the recommended insulation because your property is listed, in a conservation area, or is otherwise exempt, you may still be able to apply, but you will have to provide evidence of exemption. New build properties are also not eligible unless you are a self-builder. Get our free Sustainability newsletter to make changes for you and the planet.
How much funding do you get through the Boiler Upgrade Scheme?
Customer on phone
Funding is available for both air source and ground source heat pumps, as well as biomass boilers.
You can apply for:
£7,500 off the cost of buying and installing an air source heat pump
£6,000 off the cost of buying and installing a ground source heat pump
£5,000 off the cost of buying and installing a biomass boiler
The grant is not expected to cover the full cost of replacing your existing boiler with a low carbon alternative, however, so the process could still cost more than installing a new gas boiler. The typical cost of an air source heat pump is between £7,000 to £13,000, according to estimates by the Energy Saving Trust, meaning a £5,000 grant could cut the cost to around £2,000 to £8,000. Find out how much you could save on your energy bills in our guide to air source heat pump costs and savings.
How will the scheme work?
Installers will then apply for the £5,000 or £6,000 grant on behalf of customers and remove that amount from the total cost of the installation.
This makes the grant simpler for homeowners than the now-defunct Green Homes Grant, which required you to apply for energy-saving improvements yourself.
What’s the difference between the Boiler Upgrade Scheme and Renewable Heat Incentive?
Family making a decision
The BUS has replaced the Domestic Renewable Heat Incentive (RHI), which closed to new applicants on 31 March 2022.
The RHI offered tariff payments for seven years to financially reward people who use renewable energy to heat their homes, whereas the BUS offers the upfront payment. It gives applicants up-front sums of up to £6,000 in place of the £7,000 paid over seven years in quarterly instalments that the RHI provided.
Read our guide to buying a new boiler to find out about the types of boilers to choose the best one for your household
Is the Boiler Upgrade Scheme worth it?
Heat pump
How much you’ll pay for a ground source heat pump is dependent on the size of the system. You’ll also need to factor in the cost of fitting internal heating systems, like underfloor heating, if your property requires it.
The cost of installing an air source pump varies according to the size of the pump, the complexity of the system and whether you choose simple or advanced controls (such as a weather-compensated thermostat).
You’ll also need to allow for the cost of upgrading your radiators or installing underfloor heating for an air-to-water heat pump, which can cost several thousand pounds, and you might need extra insulation.
But there is 0% VAT on the installation of energy saving materials including heat pumps and biomass boilers for the next five years, which will help reduce the cost of utilising the scheme.
You’ll need to decide whether your costs to install a renewable energy option in your home will be outweighed by your potential energy bill reduction and an uplift in your green credentials.
You’re most likely to benefit from the BUS if your home is off the gas grid and you replace your current heating system with a renewable one. This is because off-gas-grid homes are usually more expensive to heat, so there’s more potential to save on fuel bills. You can still install renewable heating and apply for the initiative if your home is connected to the gas grid, though.
You should also make sure that renewable heating is suitable for your home before you start. Read our guides to ensuring your home is well insulated and energy efficient.
Find out about other government energy grants available for your home.
Overview
The grants are available for people using Fossil fuel heating systems include oil, gas or electric.
This scheme is open to people in England and Wales.
Are you eligible for the Boiler Upgrade Scheme?
You must be a homeowner or small business owner
Your property must be in England or Wales
The building must have been issued an energy performance certificate (EPC) in the past 10 years
You must follow one of the three EPC scenarios listed below
Your EPC contains no recommendations for loft or cavity wall insulation
It contains one of these insulation recommendations, but you insulate your home between applying for the Boiler Upgrade Scheme and getting a heat pump installed
Your property has an EPC or insulation exemption – for example, this may be the case if you own a listed building
If you meet all these requirements, an installer can apply to get a discount on an air or ground source heat pump for you.
How do you apply for the Boiler Upgrade Scheme?
Heat pump installation
If you decide the BUS is right for you, you can send an application through the heating system installer you’ve commissioned to conduct the works in your home.
It is being administered by Ofgem on behalf of the government’s Department for Business, Energy and Industrial Strategy (BEIS). As the homeowner, you will not be able to apply for the grant directly, but must first find an installer who will apply to Ofgem on your behalf.
As with all home improvements, we recommend getting a quote from more than one installer before agreeing to any work.
There are several stages in the application process:
- Find an Microgeneration Certification Scheme (MCS) certified installer who is able to carry out the work, as only MCS certified installers can apply.
- The MCS is a nationally recognised standards organisation that assures the competence of installers and quality of products.
- The installer will assess the property and confirm that the installation is eligible for a grant.
- Agree a quote for the installation. The installer will apply for the grant on your behalf.
- You must give permission for the installer to pass on your details.
- Ofgem will contact you to check the validity of the application.
- You must confirm to Ofgem that the installer is acting on your behalf and that you are happy to proceed with the application. Your installer should deduct the value of the grant from the total cost payable by you.
- Once your new heating system is installed, the installer will commission the system and redeem the voucher to receive the grant.
Make small changes to help the planet: The latest eco advice from Which?
Does this make heat pumps affordable?
Yes. For 90,000 lucky homes, the Boiler Upgrade Scheme will reduce the average cost of an air source heat pump from £10,000 to £12,000. Common to misconception, the average cost of an air source heat pump is between £15,000 to £17,000 and not £10,000 to £12,000 as displayed in the news and online. The heat pump itself could be supplied and fitted for much less than £12,000 but, this would not include the required radiator changes and upsizing of pipework to allow the heat pump to work at maximum capacity.
This means that moving from a gas boiler to a heat pump will save you an average of £2,827 over its 20-year lifetime, according to calculations and potential savings in excess of £10,000 for homeowners using any other source to heat their home.
Boiler Upgrade Scheme – It’s time to commit
£4.5 million in grants had been paid to installers of the £150 million set aside for this year. The paper-based application form was placing a big administrative burden on installers, and the scheme was subject to politics, with both Prime Ministerial candidates (at the time) declaring their intention to redivert BUS funding to other energy efficiency measures.
Growing success
Despite that initial uncertainty, the number of heat pumps installed under the BUS has consistently increased month-on-month. As the first six months of the scheme draw to a close, Ofgem has published the latest monthly stats up until the end of October. These figures show that the number of applications has almost tripled since the end of July.
According to the latest Ofgem report, there have been 8,904 applications, 6,755 vouchers issued, and 4,097 vouchers redeemed. That means just shy of £34 million worth of vouchers have been issued in total and more than £20 million in grants has already landed in bank accounts.
Government support
In last week’s Autumn Statement, the Chancellor stated that ’cheap, low carbon, reliable energy must sit at the heart of any modern economy’. In doing so, he underpinned the need to act radically to ensure the UK’s energy independence. The Treasury is now in the process of assembling an Energy Efficiency Taskforce to oversee the allocation of energy funding. It is promising to see that the Government has doubled down on its commitment to clean, green energy and heating.
Please call 01483322121 or email dan@rhiheatpumps.co.uk for more information or to apply for the bus grant.
Prime Minister announces Boiler Upgrade Scheme grant increase to £7,500 20th September 2023
Today, the Prime Minister, Rishi Sunak, made an announcement updating the country on changes to the Government policies supporting our transition to Net Zero.
Among the announcements was a change to the Boiler Upgrade Scheme (BUS). The grant values for air source and ground/water source heat pumps will all increase to £7,500 per installation. The grant value for biomass boilers remains at £5,000.
Our CEO, Ian Rippin, said:
“MCS welcomes the Government announcement today that Boiler Upgrade Scheme grant values will be increased to £7,500. Making it easier and more affordable for the average UK consumer to transition to low-carbon heating is vital if we are to reach our national decarbonisation goals.
“More people will now have the confidence and ability to invest in low-carbon heating and this is an important step forward towards net zero.”
“However, it is disappointing to see a delay in the deadline to phase out new gas boilers by 2035. The most important element of helping consumers make the right, informed, green choice is clarity and moving the goalposts now risks confusing home and business owners about what the right thing to do is.”
These changes will take effect from Monday 23 October 2023. If you have already received a BUS grant, you will not be eligible for an uplift in the total amount.
If you currently have a live voucher, it remains worth the original value – £5,000 for air source heat pumps or biomass boilers, £6,000 for ground/water source heat pumps. However, you may choose to revoke your live voucher now and re-apply for a new voucher at the higher value once the changes take effect.
For further information, please call the Helpdesk on 01483322121 or contact Dan Edwards dan@rhiheatpumps.co.uk