Government Boiler Upgrade Scheme to cut costs for consumers
Consumers can now receive grants through the government’s new £450 million Boiler Upgrade Scheme.
Homeowners across England and Wales can now benefit from £5,000 grants to fit clean heating systems when they come to replace their oil and gas boilers. This includes clean heating systems installed from 1st April this year.
Heat pumps are now much cheaper and more competitively priced against gas and oil boilers than ever before and thanks to these grants, it will be significantly cheaper for consumers to install a heat pump and closer to the cost of installing a traditional gas boiler, whilst improving the energy efficiency of their homes, reducing their energy bills and cutting emissions in the long-term.
The scheme will also help kick-start the British heat pump manufacturing industry, helping government and industry to achieve the aim of bringing down the cost of the technology to ensure they are no more expensive to buy and run for consumers than fossil fuel boilers by 2030 when more households will be looking to make the switch.
With the market for electric heat pumps set to rapidly expand in Europe over the coming years, there is also a huge export opportunity for British firms in research and development, production, supply chain and installation over the next decade, creating well-paid jobs across the country.
It will contribute to the 175,000 green skilled jobs we expect to be delivered by 2030 through the BUS and other government commitments made in the Heat and Buildings Strategy.
Energy Minister, Greg Hands, said: “The Energy Security Strategy showed our strong commitment to powering Britain with homegrown renewable and nuclear energy.
“Thanks to the Government’s Boiler Upgrade Scheme, heat pumps using this clean, cheaper electricity will be the cheaper, obvious choice for households choosing to replace their fossil fuel boiler.
“It will also kick-start a British manufacturing industry that will help bring down prices even further whilst creating huge investment and job opportunities.”
The scheme has a committed budget of £450 million over three years from 2022-2025, with an annual budget allocation of £150 million and property owners will be able to get:
- £5,000 off the cost and installation of an air source heat pump
- £5,000 off the cost and installation of a biomass boiler
- £6,000 off the cost and installation of a ground source heat pump.
The Boiler Upgrade Scheme is designed to kickstart the mass rollout of heat pumps across the country in a similar way that government grants have accelerated the uptake of electric vehicles.
Business and Energy Minister, Lord Callanan, said: “We want to make it easier and more cost-effective for homeowners to move away from using expensive fossil fuels for heating. The Boiler Upgrade Scheme means they can make the switch to more efficient, greener alternatives today in an affordable and practical way.
“This scheme makes it a straightforward process for consumers and installers to access significant funding so that, added to the zero rate of VAT on installations, heat pumps are an attractive proposition when looking to replace a gas or oil boiler.”
CEO and founder of Octopus Energy Group, Greg Jackson, said: “Heat pumps are up to four-times more energy efficient than gas boilers but they need to come down in price. The government’s new scheme will not only reduce the cost – often to the same price as a boiler – but it’ll kickstart an industry so that sooner or later we won’t need subsidies. The scheme is super simple and we are already seeing it help families move to cheaper green heating.”
The Boiler Upgrade Scheme is being administered by Ofgem.
Ofgem Director of Delivery and Schemes, Philippa Pickford, said: “Ofgem is helping to create the infrastructure for net zero to thrive so we have clean, affordable and secure home grown energy. Heat pumps are a proven scalable option to heat homes and businesses without reliance on fossil fuels.
“Ofgem is delighted to be administering the Boiler Upgrade Scheme on behalf of government, which will play an important role in supporting energy customers to switch to greener technologies in an affordable way. Today is an important milestone for the Boiler Upgrade Scheme as installers will be able to submit applications for grant funding”
Chair of the Heat Pump Association, Phil Hurley, said: “The Heat Pump Association welcomes the launch of the Boiler Upgrade Scheme and the financial support it will provide to those who opt for a heat pump. An upfront financial incentive like this will not just help to kickstart the industry by making the technology more accessible but will also provide heating installers with the confidence boost they need to upskill.
“With the capacity to train 40,000 installers each year, we have made huge strides as an industry to improve the heat pump training pathway, and we are hopeful that this scheme will inspire the workforce to take up the opportunities available.
“Heat pumps represent a readily available and long-term solution to fossil fuel heating and the scheme is a big step towards kickstarting the mass rollout needed to grow the sector and put the UK economy on track to meet Net Zero.”