Heat Pump Grants 2024 Guide: Incentives For Renewable Heating

Using advanced, low-carbon technology, heat pumps extract and move heat from one place to another. They also only need just a small amount of electricity to do this. As a result, ground and air source heat pumps have emerged as a viable green alternative for heating homes.

The UK Government recognises that heat pumps can help it achieve the 2050 net-zero carbon targets. As a result, it has introduced several schemes to encourage their adoption, while increasing the available funding for these heating solutions.

For example in late 2023, the Boiler Upgrade Scheme increased the air source heat pump grant by 50% to £7,500 and the scheme overall received a £1.5 billion boost.

We’ll explore the latest in government heat pump funding and how you can benefit from both air and ground source heat pump incentives.

Understanding Heat Pump Installations

The two main types of heat pumps attracting funding are air source heat pumps and ground source heat pumps.

• Air source heat pump: This heat pump system draws thermal energy from the air. It uses a special refrigerant and compression to convert it into steam to heat your home. Although installation can take a couple of days, an air source pump is quicker and easier to fit than a ground unit because no major groundwork is involved.
• Ground source heat pump: Ground source heat pumps extract heat from the ground through a network of pipes buried in the earth. The released heat is then circulated through your house. The pipes are laid either horizontally or vertically depending on the ground space around your property. The vertical option is more costly as a fairly deep excavation is needed to insert the network. 

Renewable energy will feature more prominently in the years ahead as the UK Government tries to cut its reliance on fossil fuels and reduce carbon emissions. Renewable energy comes from the Earth’s natural resources – sun, wind, waves, tides, and geothermal heat. It is clean and, more importantly, won’t run out.

When your heat pump uses renewable electricity from solar or wind power, it creates a renewable heating solution. It’s more sustainable and efficient than oil or gas and it uses electricity more efficiently than other heating systems. We know that higher energy efficiency means lower utility bills!

So what’s the catch? Heat pumps sometimes struggle in drafty, poorly insulated homes. Some people keep a backup heating system just in case a really cold snap hits and the heat pump can’t deliver the goods. Plus, they are quite expensive to install.

Cost of heat pump installations

Many clean energy and renewable solutions are still more expensive than traditional methods. Say what you like about the conventional gas boiler but it delivers heating at generally affordable prices. You can have one installed in a three-bedroom home for £4,000. An electric boiler is generally even cheaper to buy and install.

Compare that to the cost of having a heat pump installed:

• The average installation cost for air source pumps is £8,000 to £18,000, depending on the size, model, house size, and complexity of installation.
• Ground source heat pump installation can cost from £15,000 to over £45,000. This unit is typically more expensive since the job involves more piping, U-loops, trenches, and labour.

It’s only fair that the government provides a helping hand as it urges homeowners to take on a major expense. Sure, your bills will reduce over time thanks to your new super-efficient air source heat pump but the upfront outlay is hefty.

Hence the necessity for the heat pump grant. There are ambitious plans to encourage people buying new homes to move to a clean heating system such as a heat pump. So, you can expect heat pumps to enjoy healthy government support over the next while.

What Grants Are Available For Heat Pumps

The various government heat pump grants on offer aim to create more affordable heating for consumers. There is also a strong focus on encouraging the move to greener energy.

Let’s briefly discuss Energy Performance Certificates (EPCs). An EPC is often required to source heat pump grants. An EPC describes the energy efficiency of your property. Ratings range from A (very efficient) to G (inefficient). The certificate can also indicate your property’s heating costs and emissions.

Below is Eco Happy‘s guide to the various initiatives covering ground source and air source heat pump grants.

Boiler Upgrade Scheme (BUS)

The Boiler Upgrade Scheme (BUS) is part of the government’s Heat and Buildings Strategy. The BUS provides a grant of £7,500 for homeowners and landlords to replace their old and inefficient oil or gas boiler with a new and efficient heat pump.

The Boiler Upgrade Scheme aims to reduce the carbon emissions from domestic heating systems. It acknowledges that heat pumps are an expensive alternative and looks to subsidise a major part of the expense to make the move to greener energy easier.

To qualify for the Boiler Upgrade Scheme:

• You must own your property in England or Wales.
• The property must have a valid Energy Performance Certificate (EPC).
• There should be no issues with loft or cavity wall insulation.

In addition, the new heat pump must:

• Have been installed, or set for installation, after 1 April 2022.
• Be able to meet the full hot water and heating needs of the property.
• Be under 45 kWth and replace a fossil fuel heating system (including electric, gas, and oil).

How to apply:

1. Contact suitable MCS certified installers to get quotes.
2. The installer will confirm if you’re eligible.
3. Once a quote is agreed upon, the installer will make an application on your behalf (via the Ofgem website).
4. The grant amount will be deducted from the sum you pay the installer.

ECO4 (Energy Company Obligation)

The Energy Company Obligation (ECO) scheme obliges larger energy suppliers to provide funding for energy efficiency and low-carbon heating measures for low-income and vulnerable households. ECO4 is the fourth phase of the scheme which is currently set to run until 2026.

ECO4 provides grants for heat pump installations; however, it is not exclusively a heat pump grant. It also supports energy efficiency measures such as insulation, draught-proofing, and heating controls. Depending on the upgrade needed, the ECO4 grant can cover up to 100% of the cost.

To be eligible for the ECO4, you must:

• Own or rent a property in England, Scotland, or Wales. The property must have an EPC rating of D, E, F, or G.
• Receive one of the following benefits: Universal Credit, Pension Credit, Child Tax Credit, Working Tax Credit, Income Support, Income-Based Jobseeker’s Allowance, Income-Related Employment and Support Allowance, Disability Living Allowance, Personal Independence Payment, Attendance Allowance, Carer’s Allowance, Severe Disablement Allowance, Industrial Injuries Disablement Benefit, or War Pensions Mobility Supplement.
• Have a combined annual household income of less than £31,000.
• Local authorities can refer residents to obligated energy suppliers to receive support under ECO4 Flex.

To apply for the ECO4 heat pump grant:

1. Contact your energy supplier or an ECO-registered installer.
2. Provide proof of your eligibility such as your benefit letter or your EPC.
3. Get a free assessment of your property and a quote for the work.
4. Agree to the work and sign the declaration form.
5. The grant will be used to pay the installer once the work is completed.

Warmer Homes Scotland

Warmer Homes Scotland is a scheme that provides funding for energy efficiency and heating measures for homeowners and private tenants in Scotland. The scheme is funded by the Scottish Government and delivered by Home Energy Scotland.

Warmer Homes Scotland provides grants for air source heat pumps, as well as insulation, glazing, boilers, and renewable energy systems. In most cases, the Scottish Government try to meet all costs, which means grants up to 100% may be awarded to qualifying homeowners.

To be eligible for Warmer Homes Scotland, you must:

• Own or rent a property in Scotland.
• Have lived in the property for at least six months.
• Live in the home as your main residence.

In addition:

• The home must have a poor energy rating, a council tax band of A-F, and a total floor area of 230 square metres or less.
• Eligible households may include either a person who is over 75 or a person confirmed as gravely ill (a DS1500 or BASRiS certificate from a medical professional may be required).

To apply for Warmer Homes Scotland assistance:

1. Contact Home Energy Scotland (0808 808 2282).
2. Home Energy will assess what support is available and if your household qualifies.
3. If you are eligible, an appointment is made with a company that delivers the programme.

Home Energy Scotland Scheme

Funded by the Scottish Government, the Home Energy Scotland Grant and Loan scheme focuses specifically on helping homeowners access heat pumps. The scheme promotes low-carbon heat pumps rather than high-emission gas boilers or electric boilers in homes across Scotland.

The scheme provides grant funding of up to £7,500 toward a ground source or air source heat pump. The amount is £9,000 for households that qualify for a rural uplift. Besides the grant, the scheme avails an optional interest-free loan of up to £7,500. The amount you can borrow covers up to 100% of the heat pump cost to a maximum of £7,500 (whichever is smaller).

To be eligible for the scheme, you need to be a:

• Homeowner in Scotland.
• Have a suitable property for heat pump installation.
• Be living in the property as your main residence.

The rural uplift assistance is available to households in remote and island areas and residents in off-gas Accessible Rural areas (as defined by the Urban Rural Classification).

You also need to get a quote from an approved installer (three quotes are recommended) and apply for funding before the work.

To apply for the scheme:

1. Contact Home Energy Scotland on 0808 808 2282 or fill in an online form.
2. They will give you expert, impartial advice on the best options for your home and help you with the application process.
3. You will receive a funding offer if approved.

Nest Scheme, Wales

The Nest Scheme is a Welsh Government Warm Homes programme that provides free advice and support to help people improve the energy efficiency of their homes.

The scheme offers eligible households a range of free home efficiency improvements. These may include a new boiler, central heating, insulation, solar panels, or a heat pump (air source or ground source).

The current Nest scheme ends on 31 March 2024. On 1 April 2023, it will be replaced by a new scheme with an increased focus on low-carbon technologies to support Wales’s Net Zero 2050 mission.

The Nest Scheme is available to Welsh residents and the main qualifying focus includes:

• Homes where people receive Income Support, Universal Credit, or Pension Credit Guarantee Credit.
• Homes that are not energy efficient – rated D or lower.
• Households experiencing fuel poverty. If over 10% of the home’s income is spent on energy costs to maintain basic warmth, the household is considered fuel-impoverished.

To apply for the current scheme:

1. Call Freephone at 0808 808 2244 or request a call back using the online form on the Nest website.
2. You may need to provide some further information such as a benefit award letter and, if applicable, your landlord’s details.

To express your interest in the new scheme you can also contact the Nest advice service and discuss other energy efficiency and low carbon grant schemes or renewable heating support.

FAQs

Does the Boiler Upgrade Scheme offer funding for a hybrid heat pump system?

Hybrid heat pump systems, such as a combined gas boiler and air source heat pump, don’t qualify for a heat pump grant under BUS.

Is there a grant for water source heat pumps?

The Boiler Upgrade Scheme includes water source heat pumps. These pumps fall under the ground source heat pump grant. Other schemes may offer assistance for water source heat pumps depending on the circumstances.

Is heat pump maintenance expensive?

The annual cost of heat pump maintenance ranges between about £100 and £200. A problem requiring more major repairs could cost you around £500 to £600.

Conclusion

The heap pump is considered part of our green, net-zero future. The UK is promoting the transition to this more eco-friendly heating system and the government is prepared to share the financial burdens with homeowners. This is good news for both vulnerable and more financially stable households.

Be sure to look into various government grants for heat pump installations when weighing your heating investment decisions. You could benefit from significantly reduced energy bills in the future with very little upfront costs.

If you need more help with navigating the requirements of these different heat pump grants, reach out to Eco Happy today.