Heat Pump Grants in the UK (2022)
What Heat Pump Grants are Available for UK Homes?
Homes in the UK can access financial help towards the costs of purchasing and installing a heat pump through wide-ranging government grants that cover not only heat pumps but also other renewable and energy-efficient technologies such as solar panels and insulation.
The following UK heat pump grants are either currently available or will be available later in 2022:
- Domestic RHI
- Boiler Upgrade Scheme
- Warmer Homes Scotland
- Home Energy Scotland Loan
- Nest Scheme, Wales
Through certain incentives such as Warmer Homes Scotland and the Nest Scheme in Wales, it is even possible to get a free heat pump if you meet the eligibility criteria. The important thing to remember is that since the same government grants also cover other home improvement solutions, heat pump funding is subject to availability. What this means for you is that grants work on a first come first serve basis. The good news is that most UK homeowners are eligible for at least one grant.
Additionally, you can now save more than £6,300 since the advent of the VAT slash on clean energy technologies announced on 23 March 2022. The slash brings the already low 5% VAT down to a whopping 0%. Read the latest news below.
In April 2022, Europe witnessed energy prices driving inflation to numbers that haven’t been seen in more than 40 years! And more than 40% of this inflation increase comes from energy prices.
To help households reduce energy bills and increase energy efficiency, the UK government announced a reduction of the current 5% VAT relief on energy-saving measures (e.g. solar panels, heat pumps) to 0%. So, a typical household with rooftop solar panels will save more than £1,000 in total installation costs, in addition to £300 in yearly energy expenses.
In March 2027, the VAT-free period will end, and the rate will return to 5%. If you want to get a head start before it ends, you can begin by comparing solar panel prices to save you the most money.
The first step before you claim government grants is to get offers from certified heat pump installers operating near you and compare them to see which one would help you maximise your savings when combined with the available grant.
Another key aspect of ground source and air source heat pump grants is that the similar incentive may carry over from say 2021 to 2022, under a different name and amended criteria. This guide will give you a rundown on all the available heat pump grants in the UK.
This post will be regularly updated in line with the latest government announcements to ensure that environmentally-conscious UK homes don’t miss out on new opportunities.
Can You Get a Grant to Install an Air Source Heat Pump?
Regarding heat pump funding, while homes in the UK are more interested in air source heat pump grants, you shouldn’t dismiss the possibility of ground source heat pumps. The difference in interest can be attributed to the higher apparent costs of the latter as compared to an air source heat pump in terms of installation.
However long term, a ground source heat pump may be the more efficient option since it can continue to extract heat from the ground through winter, unlike an air source heat pump that may be impacted when temperatures are low.
Having said that, you can get grants to install an air source heat pump, as they’re heavily encouraged in the UK going forward.
To know more about which type of heat pump is right for your house, read our article about air source vs ground source heat pumps.
Are Heat Pump Grants Any Good?
There are three reasons why government grants are worth it. First, certain grants such as the Nest Scheme in Wales can equip you with a free air source heat pump if you meet the eligibility criteria, and through other schemes such as the Home Energy Scotland Loan, you could benefit from up to 75% cashback on certain renewable heating systems. Such grants can help you cover the upfront costs of heat pumps.
Secondly, since heat pumps simply move heat from one space to another and do not burn joules to produce energy as is the case with gas boilers, you’ll save on your yearly bills.
A heat pump delivers approximately 3 units of heat for one unit of energy whereas a gas boiler produces only around 0.9 units of heat for every one energy unit. An air-source heat pump will save you £4,882 on average over its lifetime as compared to a gas boiler.
When it comes to efficiency, heat pumps last up to 20-25 years as compared to boilers that have an average lifespan of only around 10 years. This is partly because heat pumps have a rigid design – they have few moving parts and so there’s less room for damage.
Why is the UK Government Providing Heat Pump Grants?
Listed below are two of the main reasons as to why the government has made grants for heat pumps available:
Net-zero emissions goal: The UK government is providing renewable energy incentives to people in the race to meet net-zero emission goals by 2035. The UK, along with 192 other countries, is party to the Paris Agreement that aims to limit global warming this century to well below 2 degrees Celsius as compared to pre-industrial levels.
Tackling fuel poverty: The government has introduced heat pump funding in the UK as a response to global volatility around gas prices – the average household’s energy bill is set to increase by 33% or £421 after gas prices soared by 37% to 407p a therm in October 2021. Equipping people with heat pump grants allows the UK to expand its home-grown clean energy sector that isn’t reliant on fossil fuels.
Domestic Renewable Heat Incentive (Closing Soon!)
In a bid to reach its net-zero emissions goal by 2035, the government introduced the Domestic RHI Scheme to reward homes that switch to energy-efficient measures such as heat pumps. Heat pump funding here takes the shape of quarterly payments over 7 years for the amount of clean energy that the system produces.
Depending on the size of your home, you could for instance receive a heating allowance of up to £25,180 for a detached home with 3+ bedrooms over 7 years.
Who is Eligible for the RHI?
To be eligible for the Domestic RHI Scheme:
- You must own or inhabit the property where the renewable technology is installed.
- You must thus either be an owner, tenant, social landlord, private landlord or self-builder.
- Your home must be custom-built if it is a new build.
- Your home must be standalone i.e., the renewable technology mustn’t be supporting a block of houses.
When the RHI Scheme ends, it is expected to be replaced by the Boiler Upgrade Scheme in April 2022.
If you would like to benefit from this scheme, you need to hurry since it will close to new applicants on 31st March 2022! Before you benefit from the RHI Scheme, make sure to get quotes from up to 4 local heat pump installers and compare them to see which one would pair best with the grant in terms of maximising your savings.
Boiler Upgrade Scheme
The government's boiler upgrade scheme is part of a £3.9 billion funding package unveiled as part of the Heat and Buildings Strategy to help reduce carbon emissions in homes. UK homes can receive government funds towards buying low-carbon heating systems like heat pumps, which are more environmentally friendly than natural gas boilers.
The Boiler Upgrade Scheme will be in effect From April 2022 to April 2025. It will take the place of the Domestic RHI Scheme, which will close to new applications on March 31, 2022.
Homeowners can receive up to £5,000 in government funds for air source heat pumps. Applicants will receive a voucher that must be redeemed within three months. This means that the heat pump must be installed within the stated period.
Am I Eligible for the Boiler Upgrade Scheme?
The incentive will be available to all homeowners, small landlords, and private landlords.
All applicants, however, must have a current Energy Performance Certificate (EPC) — typically one granted within the last 10 years — with no outstanding loft or cavity wall insulation recommendations.
Homeowners with outstanding recommendations for loft or cavity wall insulation may still apply if the installation of these forms of insulation was completed during the voucher validity period, as indicated by a newly generated EPC at the voucher redemption stage.
Warmer Homes Scotland
The Scottish initiative Warmer Homes provides potential heat pump funding among other energy-efficiency incentives to UK homes struggling to cover their energy bills and keep warm. Assessors will survey your home to check if switching to renewable heating systems like air source heat pumps will reduce costs.
The Scottish government will cover all expenditure in most cases. Bear in mind that financing can’t be obtained for work that has already been completed. Certain more expensive modifications may require a consumer contribution in some cases. An interest-free loan can be taken out to assist with the costs of the consumer contribution.
Am I Eligible to Receive Funding Through Warmer Homes Scotland?
You are eligible for heat pump funding if you meet all the following criteria:
- You’re a homeowner or tenant of a private-sector landlord.
- The home you want an air source heat pump for is your primary residence.
- You’ve lived in said home for at least 1 year (unless in receipt of a DS1500 certificate).
- You live in a home with an energy rating of 67 or less and a floor area of no more than 230 square metres.
- Your home meets the tolerable living standard set out in the Housing (Scotland) Act 2006 or in a home that does not meet the criterion, but which will not impact the effectiveness of energy-efficiency measures recommended.
- You have not benefitted from this funding as of the last 5 years.
Before you claim government grants, the first step is to get offers from heat pump installers in your area and compare them to see which one would pair best with the available subsidies in terms of maximising your savings.
Home Energy Scotland Scheme
Warmer Homes Scotland is in fact a subset of a bigger scheme called Home Energy Scotland – an initiative by the Scottish government aimed at ending fuel poverty. The scheme offers interest-free loans to pay the upfront costs of renewables including air source as well as ground source heat pumps.
You could get up to £17,500 interest-free when you install renewables through this scheme. Additionally, you can benefit from a cashback of up to 75% depending on what type of renewable system you opt for.
Am I Eligible to Receive Funding Through the Home Energy Scotland Scheme?
To be eligible for this scheme, you must meet the following conditions:
- Your loan can cover up to two renewable energy systems per home, up to a total of £17,500 (including up to £7,500 in cashback financing). If you're installing a heat pump, you can also apply for an extra £500 for a heat meter.
- You can also apply for financing to cover the cost of an energy storage system up to £6,000.
- Cashback financing is also available for qualifying renewable heating technologies. Cashback grants cover up to 75% of the total cost of the improvement or the requested money, whichever is less, and will not exceed the maximum amount indicated.
- Only one whole-house heating system can be funded with your loan.
Nest Scheme, Wales
The Welsh Government's Nest Scheme provides a range of free, unbiased advice as well as a bundle of free home energy efficiency improvements such as air source heat pumps if you are eligible. Through Nest, you can benefit from air source heat pump grants aimed at reducing climate change, ending fuel poverty, and supporting economic development in Wales.
All costs towards your air source heat pump could be covered by Nest if you’re eligible.
Am I Eligible to Receive Funding Through the Nest Scheme, Wales?
- Your home is energy inefficient and expensive to heat, whether you own it or rent it from a private landlord (not a council or housing association).
- You or someone you live with receives a means-tested benefit OR
- You or someone you live with has a chronic respiratory, circulatory, or mental health condition with a low income.
Green Homes Grant (Closed)
The Green Homes Grant closed on 31st March 2021. The voucher covered 100% of the costs of chosen improvements up to £10,000 if the applicant had a family member who received benefits. Under normal circumstances, the £5,000 grant voucher covered up to two-thirds of the cost of chosen improvements.
Projected Heat Pump Installations in 2022
While the demand for heat pumps in the UK is rapidly growing, there are some concerns regarding infrastructure. As per the Heat Pump Association (HPA), manufacturers received double the number of usual heat pump orders in 2021 to meet the growing demand.
This is in line with Prime Minister Boris Johnson’s Ten Point Plan that 600,000 heat pumps should be installed across Britain by 2028. But with only 35,000 pumps sold in 2019 and speculations around the gas boiler ban that’s projected to come into effect from as early as 2023, the target may be considered too ambitious at this stage.
On the bright side, however, energy retailer Octopus has announced plans to slash the cost of an installed heat pump to £5,500 within 18 months. Together with the boiler upgrade scheme from 2022, this could mean that upfront costs could be as low as £1,500 – cheaper than a new boiler.
Experts predict that other manufacturers will see this challenge and respond, probably leading to the rapid innovation and reduction in costs as seen in renewable energy, batteries, and electric vehicles. Academic research has found that heat pump costs fall by a third each time the (currently tiny) industry doubles in size.
On the domestic level, what this means is that the situation is evolving, and savvy homeowners have already started to take advantage of available funding before the government scales heat pump production and everybody wants them.
The predicted boom of heat pumps in the UK means that now is the right time for you to lock in government grants – and the first step to do this is to get offers from local heat pump installers and then compare them to gauge which one would pair best with available funding so that you can maximise your savings and get the best bang for your buck while contributing to a better planet.
Fill in the form in just 1 minute