Air source heat pump grants you need to know about right now

Air Source Heat Pump Annual Service
(Image credit: Getty Images)

Air source heat pump grants can help homeowners adopt a low-carbon heating system that could lower household energy bills in the long run. And these grants can make a big difference towards paying upfront heat pump costs.

Air source heat pumps (ASHP) are not inexpensive to install — ASHP costs can range between £12,000-£17,000, according to EDF Energy. While Octopus Energy put it's lowest ASHP installation at £8,000. 

Perhaps the most well-known grant currently available is the Boiler Upgrade Scheme, which offers up to £5,000 for an air source heat pump, but there are a handful of other schemes across the UK.  

Most homeowners will be eligible for at least one type of air source heat pump grant. Take a look at which grants you could benefit from and see how much funding you could receive with our guide.

1. Boiler Upgrade Scheme

The Boiler Upgrade Scheme launched in April 2022 and enables homeowners to apply for £5,000 towards an air source heat pump, or £6,000 towards the cost of a ground source heat pump. 

To apply, applicants are encouraged to register their interest via the energy regulator Ofgem, which will then agree quotes from MCS-certified heat pumps installers. 

The £450m funding for the scheme means that around 90,000 homes will be able to benefit. Government figures show that as of September 2022, 5,700 applications have been received and more than 4,400 vouchers have been issued. 

However, while £5,000 is a big saving, homeowners will still need to pay the remainder of the air source heat pump costs to purchase the unit, installation and any other upgrades (such as new radiators) which may be required to the home. 

The Boiler Upgrade Scheme is the replacement for the Renewable Heat Incentive, which ended to new applications in March 2022. 

2. Octopus Energy and Lloyds

Not so much a heat pump grant, but this pilot scheme by Octopus Energy and Lloyds Bank, which launched in autumn 2022, offers Halifax mortgage (a subsidiary of Lloyds Banking Group) customers who install a heat pump through Octopus Energy, £1,000 cashback.

Octopus Energy estimates that the air source heat pump installation price could be as little as £2,000 — this is based on its typical cheapest install price of £3,000 (with the Boiler Upgrade Scheme grant of £5,000 deducted) and the £1,000 cashback the homeowner receives.

3. Barclays' Greener Homes Reward

Barclays has also launched a new pilot scheme, the Greener Homes Reward, this winter to encourage its residential mortgage customers to undertake energy efficiency measures to their homes. Residential mortgage customers can receive £2,000 cashback towards a new air source heat pump.

You can register for the Reward until 1 May 2023, and you must submit your claim, with proof the air source heat pump installation work is complete and proof of payment, by 1 November 2023. The work must be undertaken by a TrustMark-approved installer or business.

Other measures, such as cavity wall and solid wall insulation, will also be rewarded but at a lower rate of £500 and £1,000 respectively.

4. Green Homes Grant Local Authority Delivery Scheme

The Green Homes Grant is still running in the form of a local authority delivery scheme, and some local authorities will provide funding for low-income households to have energy efficiency measures undertaken, such as installing an air source heat. 

To meet the criteria, your home must have an Energy Performance Certificate (EPC) rating of E or below, and an annual income below £30,000. You may also be eligible if you earn £30,000 a year but receive certain benefits. To apply, visit your local council’s website.

This local authority delivery of the scheme is different to the initial Green Homes Grant, which ran from September 2020 to March 2021 and is no longer accepting new applications.

5. District heating schemes

District heating schemes aren’t available for air source heat pumps, but ground source heat pump projects such as Heat the Streets by Kensa Utilities and a forthcoming EDF Energy project offer neighbours the chance to share a ground source heat pump loop, which can reduce installation costs and improve energy efficiency for participating homes. 

What about outside of England?

There are alternative sources of support available across the UK:

Scotland

The Home Energy Scotland scheme enables homeowners to get an interest-free loan from the Scottish government to pay upfront heat pump costs. 

And a similar scheme, Warmer Homes Scotland, is designed for low-income households, elderly and vulnerable people who can apply for heat pump grants and other energy-efficient home improvements.

Wales

Low-income households people with certain health conditions can apply to the Nest scheme to get help with heat pump installation costs.

Northern Ireland

If you live in Northern Ireland then you can contact NI Energy Advice for advice on heat pump grants.

Should you upgrade your boiler to a heat pump?

If you're weighing up a heat pump vs a gas boiler for your home then there's a few things to consider. These include price, the practicality of adding a heat pump to your home, and assessing whether you actually need to replace your boiler. 

Stewart Clements, director of the Heating and Hot Water Industry Council (HHIC), has this advice: “There are around 24 million homes currently fitted with a gas boiler and a large proportion of these are only replaced when it is not possible to repair a faulty appliance. 

"If you are considering an alternative solution to heating your home then it is a good idea to have a plan before you reach the point where there is no choice but to replace the faulty appliance.

 “The Boiler Upgrade Scheme finishes in 2025 so there is time to complete some research to evaluate whether your home is suitable for a heat pump." 

Are there any other savings to be made on air source heat pumps without grants?

The government's Spring Statement earlier this year confirmed that homeowners would pay 0% VAT on air source heat pumps for five years. This rate will then return to 5% in April 2027.

What this means, according to energy expert and Homebuilding & Renovating contributor David Hilton, who examined the cost implications of this policy, is that if you spend around £10,000 on a heat pump then you will save £500 on tax. 

“That is a welcome saving, but it still requires the initial investment which makes it out of reach for many homes,” Hilton said in April. 

However, heat pumps typically last for 20 years – around twice as long as the average gas boiler – and can help to reduce your running costs, making it an investment that can be extremely worthwhile for the right house. 

Jack Woodfield
News Editor

Jack has worked in journalism for 11 years and is the News Editor for Homebuilding & Renovating, a role he has had since 2019. He strives to break the most relevant and beneficial stories for self builders, extenders and renovators, including the latest news on the construction materials shortage and hydrogen heating. In 2021 he appeared on BBC's The World at One to discuss the government's planning reforms. 


He enjoys testing new tools and gadgets, and having bought his first home in 2013, he has renovated every room and recently finished a garden renovation.