Decarbonising Home Heating with Heat Pump Grant

Written by

Inemesit Ukpanah

Last updated

19 March 2024

In the UK, decarbonising home heating has moved to the forefront of environmental strategy, especially after the government postponed the ban on fossil fuel heating systems from 2030 to 2035. This highlights the urgency in transitioning to more sustainable heating solutions. 

The Heat and Buildings Strategy reveals a dedicated effort to alter the heating landscape of residential buildings. The aim is to assist homeowners in adopting low-carbon heating systems, a crucial step towards mitigating greenhouse gas emissions that accounted for 18% of the UK’s total in 2021. 

This shift underscores the critical role of heat pumps in achieving decarbonisation goals, signalling a transformation in how we approach heating in the UK.

Join us as we unravel the complexities of decarbonising home heating, including exploring the latest in heat pump grants and the evolving landscape of low-carbon heating solutions. The collective effort of homeowners, local authorities, and policymakers will be paramount in steering the UK towards its decarbonisation targets.

The Role and Potential of Heat Pumps

Heat pumps are lauded for their efficiency, producing 3 kWh of heat from just 1 kWh of electrical energy, making them 2.2 to 4.5 times more efficient than traditional gas furnaces. 

In exploring the role and potential of heat pumps in decarbonising home heating, we uncover several key aspects that highlight their significance. 

1. Performance Enhancements: Manufacturers are continually working on improving heat pumps across various parameters:
   1. Energy efficiency
   2. Operational noise reduction
   3. Heating and cooling capacity
   4. Air filtration capabilities These advancements contribute to a more sustainable and comfortable living environment.
2. Environmental Impact:
   1. Heat pumps are instrumental in reducing greenhouse gas emissions, with a minimum of 20% decrease compared to traditional gas boilers.
   2. Utilising heat pumps can lead to substantial carbon emission reductions, around 30%, compared to conventional natural gas boilers. When powered by renewable energy, heat generation becomes 100% carbon-neutral.
   3. They have the potential to cut global CO2 emissions by at least 500 million tonnes by 2030, mirroring the annual emissions of all cars in Europe today.
   4. In the UK alone, the DESNZ aims to install 600,000 heat pumps annually by 2028, marking a significant step towards environmental sustainability.
3. Types and Efficiency:
   1. The market offers four main types of heat pumps: air source, ground source, water source, and exhaust air, with air source heat pumps being the most popular due to their versatility and cost-effectiveness.
   2. Air source heat pumps, including monobloc and split systems, are noted for their high Seasonal Coefficient of Performance (SCOP) ratings, indicating superior efficiency.
   3. These systems offer about 30% carbon emission savings over conventional natural gas boilers and, when paired with renewable electricity suppliers, can achieve 100% carbon neutrality in heat generation.

Government Initiatives and Grants

Understanding the urgency of decarbonising home heating involves recognising the significant impact of residential heating. The International Energy Agency estimates that about half of all energy consumption globally is for heating, mainly in homes and industry.

In the UK, domestic heating and hot water energy accounts for around 18% of national greenhouse gas emissions. However, decarbonising home heating across 28 million existing homes, according to the Climate Change Committee (CCC), estimates that an additional investment of £162 billion is needed from 2020 to 2050 to install low-carbon heating in existing UK households. 

Understanding the government’s initiatives and grants is crucial to maximise value for money as it develops its approach to decarbonising home heating. 

Here’s a breakdown of the key components:

Heat Pump Grants and Financial Incentives:

• The Boiler Upgrade Scheme offers substantial grants to homeowners in England and Wales, including £7,500 for air and ground source heat pumps and £5,000 for biomass boilers.
• Notably, the grants have increased for both air source (from £5,000 to £7,500) and ground source heat pumps (from £6,000 to £7,500), making the transition to low carbon heating more accessible.
• These grants are available to property owners with a valid Energy Performance Certificate (EPC) and no outstanding loft or cavity wall insulation recommendations.

Eligibility and Application Process:

• Eligibility extends to domestic and certain commercial property owners, excluding renters and social housing.
• The Social Housing Decarbonisation Fund (SHDF) allocates over £75 million for energy efficiency upgrades in social homes, aiming to upgrade to EPC band C by installing energy performance measures.
• The Boiler Upgrade Scheme, with a £450 million budget over three years, aims to install 600,000 heat pumps by 2028, demonstrating the government’s commitment to scaling up heat pump deployment.

Supporting Training and Development:

• Over £12 billion in public investment is designated through grant programmes to incentivise decarbonisation, a generous R&D credit system and a £5 million Heat Training Grant to support low-carbon heating training.
• The Home Decarbonisation Skills Training Fund has already committed £15 million since 2020, supporting over 16,000 training opportunities in England’s energy efficiency, retrofit, and low-carbon heating sectors. 

Tax Incentives:

• The government has announced a 0% VAT on installing heat pumps and biomass boilers for five years, aiming to reduce installation costs significantly.
• The UK Government has set an ambitious target to deploy 600,000 heat pump installations annually by 2028, underpinned by a £450 million Boiler Upgrade Scheme to incentivise cleaner heating systems.

Challenges in Decarbonizing Home Heating

Decarbonising home heating presents a multifaceted challenge, primarily due to the current reliance on fossil fuels and the limitations of existing low/zero carbon heating technologies. 

Heat Pump Association data shows that only 55,000 heat pumps were sold in the UK in 2022. By 2035, the government plans to increase the installation rate to up to 1.6 million heat pumps annually. 

However, the NAO’s findings reveal that the uptake of heat pumps has been slower than necessary to meet the government’s decarbonisation targets. This slow progress is attributed to high installation costs, limited public awareness, and uncertainty regarding future heating technologies, such as the role of hydrogen.

In addition, DESNZ’s Public Attitudes Tracker indicated that only 30% of respondents to a government survey in summer 2023 had never heard, or hardly knew anything, about the need to change the way homes and buildings are heated. Furthermore, 31% of respondents knew ‘a little’ about this; 28% knew ‘a fair amount’; and 11% knew ‘a lot’.

Due to these challenges, the National Infrastructure Commission advises against supporting hydrogen for home heating. Additionally, the UK’s old and poorly insulated housing stock and the slow pace of fossil fuel-based heating system replacement exacerbate the difficulty in achieving decarbonisation targets.

Therefore, the complexity of transitioning to low-carbon heating would require integrating various technologies and strategies to achieve zero emissions. 

The Government’s Approach to Decarbonising Home Heating

The UK government’s approach is multifaceted, targeting immediate and long-term objectives. Central to this strategy is aligning with broader climate commitments and facilitating a transition for homeowners and businesses to low-carbon heating solutions. 

Key aspects include:

1. Introduction of policies such as the Clean Heat Market MechanismFrom April 2024, mandating boiler manufacturers to sell a quota of heat pumps.
2. The Future Homes and Buildings Standard, banning gas boilers in new homes from 2025
3. Empowering local authorities to designate areas for heat networks, enhancing coordination in heating infrastructure investments. 
4. Conducting trials to assess hydrogen’s viability for heating and making strategic decisions by 2026.
5. Heat pumps should be promoted as the primary technology for reducing carbon emissions from heating, with a target of 600,000 installations annually by 2028. 
6. A heat decarbonisation sector deal is proposed to scale up the heat pump market, with a significant reduction in installation costs of up to 6% from 2021 to 2023.
7. Embracing a mix of technologies, including heat pumps, district heating, and potentially hydrogen, offers a versatile approach to decarbonising home heating.
8. The strategy aims to support up to 240,000 skilled green jobs by 2035, ensuring a phased transition to net-zero emissions while fostering economic growth and job market diversity.

Heat and Buildings Strategy

In unveiling the Heat and Buildings Strategy, the UK government has outlined an ambitious roadmap to reduce carbon emissions from the nation’s 28 million buildings, emphasising the transition to low-carbon heating solutions. 

Conforming to this approach means setting a clear ambition for the industry to reduce the costs of installing a heat pump by at least 25–50% by 2025 (compared to 2021). This means heat pumps should not be more expensive to buy and run. In addition, it will accelerate the growth of the low-carbon heat network market to 20% by 2050, up from at least 3% in 2022. 

This would inwardly phase out fossil fuel heating in homes and businesses over the next decade.

Coordination and Decision-making

The responsibility for decarbonising home heating is shared between DESNZ and the Department for Levelling Up, Housing & Communities (DLUHC), ensuring a unified approach. 

Furthermore, the application process for heat pump grants is installer-led, requiring certification by the Microgeneration Certification Scheme (MCS), which guarantees that installations meet high standards of quality and reliability. 

The enhanced BUS now offers more generous grants, with up to £7,500 available for installing air-source and ground-source heat pumps. This increase in financial support has already led to a 57% jump in applications, demonstrating the scheme’s potential to drive a significant uptick in heat pump installations.

As we move forward, it is clear that decarbonising home heating requires a multifaceted approach. The NAO recommends that the Department for Energy Security and Net Zero (DESNZ) draws on its experience to address the barriers to heat pump adoption, balancing incentives, engagement, and regulations to minimise long-term costs to taxpayers and consumers. 

Together, we can transform our houses of heat into beacons of sustainability, contributing to the UK’s net zero ambitions and paving the way for a cleaner, greener future.