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Ultimate Guide of Heat Pump Grants in the UK 2023

 

UK households can receive financial assistance through a variety of government grants to cover the costs of purchasing and installing heat pumps, which not only include heat pumps but also other renewable and energy-saving technologies such as solar panels and insulation materials.

 

Whether you’re a homeowner looking to reduce energy costs or simply exploring alternative heating solutions, this article will provide you with all the information you need to know about applying for heat pump grants in the UK in 2023.

 

In addition to utilizing grants, we also recommend comparing quotes from multiple professional installers to help control the costs of the new heat pump installation. By doing so, you can choose the most competitively priced installer in your area.

 

What heat pump grants are available for UK households?

Currently, the following UK heat pump grants are available (as of 2023):

  • Boiler Upgrade Scheme
  • Energy Company Obligation (ECO) Scheme
  • Warm Homes Scotland
  • Home Energy Scotland
  • Nest Scheme, Wales

 

Through certain incentive measures like Warm Homes Scotland and the Nest Scheme in Wales, it’s possible to receive free heat pumps if you meet the eligibility criteria. It’s important to note that since the same government funding also covers other home improvement solutions, the availability of heat pump funding depends on availability.

 

This means that funding operates on a first-come, first-served basis. The good news is that most UK homeowners are eligible for at least one grant. Additionally, since the significant reduction in Clean Energy Technology VAT was announced on March 23, 2022, you can now save up to £750 on installation costs for up to 5 years. This reduction brought the already low 5% VAT down to as low as 0%. Read on for more details.

 

Latest News: Heat Pump VAT abolished until 2027!
In April 2022, the UK witnessed energy price-driven inflation at levels not seen in over 40 years.

 

To assist households in reducing energy costs and improving energy efficiency, the UK government announced the reduction of the current 5% VAT exemption for energy-saving measures (like solar panels and heat pumps) to 0%.

 

This VAT exemption period will end in March 2027, and the rate will revert to 5%.

 

Before applying for government grants, the first step is to get quotes from certified heat pump installers operating near you and compare them to see which one, combined with available grants, can help you save costs most effectively.

 

This guide will provide you with a brief overview of all the available heat pump grants in the UK.

 

Are there grants for installing air source heat pumps in the UK?

Yes, when it comes to heat pump funding in the UK, you can receive grants for installing air source heat pumps. They are currently the most popular type of heat pump among homeowners, but it’s important not to overlook ground source heat pumps and their available grants.

 

While the higher installation costs of ground source heat pumps might deter some homeowners, they could be a more efficient option in the long run. This is because they can extract heat from the ground throughout the winter, which is different from air source heat pumps that might struggle in colder temperatures. To learn more about which type of heat pump is suitable for your property, read our article on air source vs. ground source heat pumps.

 


Are heat pump grants worth it in the UK?

There are three main reasons why government heat pump grants in the UK are worth considering. First, some grants, like the Nest Scheme in Wales, can provide you with a free air source heat pump if you meet the eligibility criteria.

 

Through other programs like the Scottish Home Energy Loan, you can benefit from cashback of up to 75% for certain renewable heating systems.

 

Second, since heat pumps simply move heat from one space to another and don’t generate energy by burning fuel like gas boilers do, you can save on annual costs. A heat pump can provide about 3-4 units of heat per unit of energy, whereas a gas boiler produces only about 0.9 units of heat per unit of energy. Compared to a gas boiler, you could save up to £545 per year, depending on the type of heat pump you install. Over the entire lifespan (20-25 years) of a heat pump, you could save up to £13,625.

 

Finally, in terms of long-term value, heat pumps have a lifespan of 20-25 years, much longer compared to the average lifespan of around 10 years for boilers. Part of the reason is that heat pumps have a robust design – they have minimal moving parts, resulting in fewer points of failure.

 

What are the drawbacks of purchasing a new heat pump?

The largest drawback for most people considering installation is the cost. The installation cost for an air source heat pump typically ranges from £8,000 to £18,000, while the cost for a ground source heat pump might be between £14,500 and £45,000 (including excavation costs).

 

Once installed, your electricity bill will increase as it requires around 12,000 kWh of electricity to provide heat for an average household. However, the efficiency of heat pumps is high, providing 3-5 units of energy per unit of electricity used, depending on the system type and seasonal efficiency. Consequently, the operational costs of a heat pump can actually reduce your annual energy bills compared to a gas boiler.

 

Why does the UK government provide heat pump grants?

The UK government offers grants for heat pumps for two primary reasons:

 

Net-zero emissions targets: The UK government is offering incentives for renewable energy as part of its strategy to achieve net-zero emissions by 2035. The UK, like 195 other countries, is a signatory to the Paris Agreement, which aims to limit global warming to well below 2 degrees Celsius compared to pre-industrial levels and pursue efforts to limit it to 1.5 degrees Celsius.

 

Addressing fuel poverty: The government introduced heat pump funding in the UK to tackle the volatility in global natural gas prices.

 

According to data from the House of Commons Library, electricity prices for UK households have risen by 65% compared to the price cap set for the winter of 2021/2022, and gas prices have increased by 141%. Providing heat pump grants allows the UK to expand its domestic clean energy industry and move away from fossil fuels.

 

2023 UK Annual Energy Bills

Boiler Upgrade Scheme

The government’s Boiler Upgrade Scheme is part of a £3.9 billion funding program and is part of the Heat and Buildings Strategy aimed at reducing households’ carbon footprint.

 

UK households can access government funding to purchase low-carbon heating systems like heat pumps that are more environmentally friendly compared to natural gas boilers.

 

Launched in April 2022, the Boiler Upgrade Scheme runs until April 2025. It replaces the Domestic Renewable Heat Incentive (RHI) scheme, which ceased to accept new applications on March 31, 2022.

 

Homeowners can now receive grants of up to £5,000 for air source heat pumps or £6,000 for ground source heat pumps. Applicants will receive a voucher that must be redeemed within three months. This means the heat pump must be installed within the specified timeframe.

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Are heat pump grants worth it in the UK?

There are three main reasons why government heat pump grants in the UK are worth considering. First, some grants, like the Nest Scheme in Wales, can provide you with a free air source heat pump if you meet the eligibility criteria.

 

Through other programs like the Scottish Home Energy Loan, you can benefit from cashback of up to 75% for certain renewable heating systems.

 

Second, since heat pumps simply move heat from one space to another and don’t generate energy by burning fuel like gas boilers do, you can save on annual costs. A heat pump can provide about 3-4 units of heat per unit of energy, whereas a gas boiler produces only about 0.9 units of heat per unit of energy. Compared to a gas boiler, you could save up to £545 per year, depending on the type of heat pump you install. Over the entire lifespan (20-25 years) of a heat pump, you could save up to £13,625.

 

Finally, in terms of long-term value, heat pumps have a lifespan of 20-25 years, much longer compared to the average lifespan of around 10 years for boilers. Part of the reason is that heat pumps have a robust design – they have minimal moving parts, resulting in fewer points of failure.

 

What are the drawbacks of purchasing a new heat pump?

The largest drawback for most people considering installation is the cost. The installation cost for an air source heat pump typically ranges from £8,000 to £18,000, while the cost for a ground source heat pump might be between £14,500 and £45,000 (including excavation costs).

 

Once installed, your electricity bill will increase as it requires around 12,000 kWh of electricity to provide heat for an average household. However, the efficiency of heat pumps is high, providing 3-5 units of energy per unit of electricity used, depending on the system type and seasonal efficiency. Consequently, the operational costs of a heat pump can actually reduce your annual energy bills compared to a gas boiler.

 

Why does the UK government provide heat pump grants?

The UK government offers grants for heat pumps for two primary reasons:

 

Net-zero emissions targets: The UK government is offering incentives for renewable energy as part of its strategy to achieve net-zero emissions by 2035. The UK, like 195 other countries, is a signatory to the Paris Agreement, which aims to limit global warming to well below 2 degrees Celsius compared to pre-industrial levels and pursue efforts to limit it to 1.5 degrees Celsius.

 

Addressing fuel poverty: The government introduced heat pump funding in the UK to tackle the volatility in global natural gas prices.

 

According to data from the House of Commons Library, electricity prices for UK households have risen by 65% compared to the price cap set for the winter of 2021/2022, and gas prices have increased by 141%. Providing heat pump grants allows the UK to expand its domestic clean energy industry and move away from fossil fuels.

 

Boiler Upgrade Scheme

The government’s Boiler Upgrade Scheme is part of a £3.9 billion funding program and is part of the Heat and Buildings Strategy aimed at reducing households’ carbon footprint.

 

UK households can access government funding to purchase low-carbon heating systems like heat pumps that are more environmentally friendly compared to natural gas boilers.

 

Launched in April 2022, the Boiler Upgrade Scheme runs until April 2025. It replaces the Domestic Renewable Heat Incentive (RHI) scheme, which ceased to accept new applications on March 31, 2022.

 

Homeowners can now receive grants of up to £5,000 for air source heat pumps or £6,000 for ground source heat pumps. Applicants will receive a voucher that must be redeemed within three months. This means the heat pump must be installed within the specified timeframe.

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