Boiler Upgrade Scheme increases grant offering from £5000 to £7500.

Article by: Sam Dewey

Homeowners will soon be able to get grants of £7,500 to help with the installation costs of a heat pump on the Boiler Upgrade Scheme. Be sure to continue reading and find out now if you’re eligible!

The grant amount under the Boiler Upgrade Scheme is increasing to £7,500, the government has recently announced.

The £450m scheme is designed to help homeowners in England and Wales afford the upfront costs of installing air source heat pumps and/or ground source heat pumps in a bid to encourage uptake of the eco-friendly technology. The scheme will run until 2028 or until the funding has run out at a first come first serve basis.

To further boost uptake, the grant will increase to a maximum of £7,500 per household from Monday 23rd October 2023. It was previously a maximum of £5,000 for air source heat pumps and £6,000 for ground source heat pumps. Biomass boiler grants will remain at £5,000.

What is the Boiler Upgrade Scheme?

Initially called the Clean Heat grant, the Boiler Upgrade Scheme aims to help people replace their boilers with an eco-friendlier alternative, like heat pumps. Running from April 2022 until April 2028, this scheme has replaced the Domestic Renewable Heat Incentive (RHI), which closed to new applicants on 31 March 2022.

How does it work?

With this grant, homeowners in England and Wales are now able to get £7,500 off the cost of a new air source and ground source heat pump.

The scheme will operate on a “first-come, first-served basis,” with customers having to rush to register their interest with air or ground source heat pump installers. Overall, this scheme cuts in slashes the average air source heat pump costs from £12,000 to £4,500, which is a huge saving on top of the benefits which will come from the energy saved overtime.

Unfortunately, the government is dedicating a relatively paltry £450 million to this scheme, so jump on it while you can.

As of the current day, October 2023, Ofgem revealed 15% of the available boiler upgrade scheme vouchers have been redeemed so far this year, with 13,766 of the 90,000 Boiler Upgrade Scheme vouchers used. The majority of these vouchers, 96%, were for air source heat pumps (ASHP).

The government says that for those vouchers that have been redeemed, the median cost of an air source heat pump installation on the Boiler Upgrade Scheme was £12,855 with a median capacity of 10KW, whilst the equivalent figures for a ground source heat pump were £28,589 and 12.5kW, respectively.

How much funding can I receive?

The funding is administered through grants, and this means that homeowners are required to pay the difference if costs exceed the grant. However, amid soaring energy price rises, switching to a lower carbon heating system could end up reducing your overall bill.

Heat pumps provide an eco-friendly heating solution that’s better for the planet, and your pocket. Quite simply, heat pumps are the future of home heating.

How do I apply for the boiler upgrade scheme?

Applicants are initially encouraged to register their interest with MCS-certified heat pump installers via the energy regulator Ofgem. A quote will then be agreed for the installation and apply for the grant on your behalf.

The value of the grant will be discounted off the price you pay. Redeeming of the voucher will be led by the installer, which will confirm proof of the installation and process the completed paperwork.

You will then need to confirm that the installer is acting on your behalf when you’re contacted by Ofgem.

What type of heat pump can I get?

The following types of heat pumps are supported on the Boiler Upgrade Scheme:

Ground source heat pumps.
Water source heat pumps (which the government considers in the same tech category as GSHPs).
Air source heat pumps.
Biomass boilers are supported, but only in rural areas with populations of 10,000 people or less. They aren’t being offered to people in urban areas.

Your home must also meet high emissions standards to have a biomass boiler installed, which the government says is “to mitigate any negative impact on air quality.”

Your property must also have enough power to support an installation capacity of 45kWth or kilowatt thermal.

How long do the vouchers last?

Applicants have a set validity period to ensure the vouchers are utilised in a timely manner. The validity period is:

Three months for air source heat pumps and biomass boiler vouchers
Six months for ground source heat pump vouchers.

Who’s eligible for the scheme?

All homeowners, small landlords, and private landlords will be eligible to apply for the grant.

However, all applicants must have a valid Energy Performance Certificate (EPC), typically one which has been issued in the last 10 years with no outstanding recommendations for loft or cavity wall insulation.

What is excluded from the Boiler Upgrade Scheme?

The Boiler Upgrade Scheme is not available for those in social housing and new build properties.

Furthermore, you cannot replace an existing low-carbon heating system on the scheme. Only properties that are fully replacing existing fossil fuel systems (such as oil, gas or direct electric) are eligible for support.

The Boiler Upgrade Scheme also excludes:

Hydrogen boilers and hydrogen heating (which aren’t expected to be available by the time the scheme ends).
Hybrid heat pumps.

Solar thermal is not directly supported, but solar thermal systems can be installed as part of a heat pump or biomass system that is funded on the scheme, providing the heating system can meet the full space and water heating requirements of the home.

And, as these green machines are around four times more efficient than your current boiler, they could reduce your energy bills at the same time.

How much could a heat pump cost with BUS?

While every installation is different, we’ve pulled together a few pricing examples to give you an idea of how much it will cost to buy and install a heat pump, using the Boiler Upgrade Scheme funding. These examples are based on a standard three-bedroom house in the UK.

Example 1: Heat pump only: FREE

If your home is ‘heat pump ready’, your new heat pump could be completely free. The Boiler Upgrade Scheme would cover all the costs of your new monobloc heat pump.

What does heat pump ready mean? It refers to homes that won’t need any additional equipment or adjustments – such as a hot water tank or radiator changes – to have a heat pump installed. It’s most likely to apply to newly built homes with modern fixtures.

What’s included?

Monobloc heat pump system.
Plumbing & electrical fittings.
Installation costs.
5-year warranty on all equipment, parts & fittings.

Example 2: Heat pump + hot water tank: £1,400

Many homes will need a compatible hot water tank installed with their heat pump. This will ensure your heating system provides energy-efficient heating and hot water for your home.

That’s an all-in price for a monobloc heat pump and hot water cylinder, installed and ready to go. And thanks to the Boiler Upgrade Scheme, it’s the cost-effective choice. In fact, it’s less than half the price of buying and installing a new boiler and hot water tank*.

What’s included?

Monobloc heat pump system.
Hot water tank.
Plumbing & electrical fittings.
Installation costs.
5-year warranty on all equipment, parts & fittings.

*Which Report 2023: average price of replacement gas boiler and hot water tank = £3,065.

Example 3: Heat pump + hot water tank + radiators: £2,255

Some homes will require additional adjustments to make sure the heat pump is operating effectively. These modifications can include a new hot water tank, radiators and piping.

With these adjustments included, you could get a brand-new sustainable heating system for less than £2,255 all in. That’s still considerably less than the average cost to buy and install a new gas boiler*. Giving you comfortable and efficient heating and hot water for years to come.

What’s included?

Monobloc heat pump system.
Hot water tank.
New radiators.
Plumbing & electrical fittings.
Installation costs.
5-year warranty on all equipment, parts & fittings.

*Which Report 2023: average price of replacement gas boiler and hot water tank = £3,065.

The time to act is NOW.

There’s never been a better time to make the switch. The applications for the Boiler Upgrade Scheme will no doubt increase with the increased funding. But it’s a limited fund, offered on a first-come-first-served basis.

We’d encourage you to take advantage of this great incentive before the funds run out.

Although the government shifted their position slightly in the September 2023 announcement, the message remains the same. In order to meet the UK’s net zero targets, 80% of homeowners will need to switch over to heat pump technology by 2035. That 80% covers the majority of UK homes, including those off-grid.

With the increased funding of £7,500 now in place, the incentive to make the move to renewables has never been more attractive.