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Boiler Upgrade Scheme Opens - Here's What You Need to Know

Boiler Upgrade Scheme launches
(Image credit: Mitsubishi)

The Boiler Upgrade Scheme has officially launched to help homeowners in England and Wales afford the upfront costs of installing a heat pump.

The £450m policy will offer grants of £5,000 for homeowners to have air source heat pumps installed, and £6,000 for ground source heat pumps. Although only 90,000 homes are expected to benefit.

The scheme is part of more than £3.9bn funding announced in last year's Heat and Buildings Strategy to help cut carbon emissions from homes. 

Around 14% of the UK’s carbon emissions comes from heating our homes, the Committee on Climate Change (CCC) says, and the Boiler Upgrade Scheme will be a key driver to help the UK reach its net zero target of 2050, and to ensure that all new heating system installations will be low carbon by 2035. 

Here’s everything you need to know about the scheme so far, including how much funding you can apply for, and how long the scheme will last. 

How Will the Boiler Upgrade Scheme Work?

The Boiler Upgrade Scheme will operate similarly to the Green Homes Grant, whereby the government will contribute a fixed sum towards the cost of a renewable heating system.

The government will operate a first-come, first-served basis to those who meet the eligibility criteria. 

In an update published in March, the government has confirmed the following timeline:

  • 1 April 2022 - Low carbon heating systems that are commissioned on or after this date will be entitled to support under the scheme. (Commissioning is the completion of installation and set up of the system).
  • 11 April 2022 - Installers will be able to open an account for the scheme with Ofgem, the scheme administrator.
  • 23 May 2022 - The scheme opens for grant applications and payments.

How Much Funding Can I Receive?

Government grants of £5,000 will be available for the purchase of air source heat pumps and biomass boilers, and grants of £6,000 will be available for ground source heat pumps.

The government says that a “proportionately higher grant level in relation to overall cost has been set for ASHPs given that the majority of existing properties are suitable for this technology”.

Because the funding is administered through grants, this means that homeowners will be required to pay the difference if costs exceed the grant.

Ground source heat pumps eligible under Boiler Upgrade Scheme

A basic ground source heat pump can cost between £2,000 to £15,000. (Image credit: Kensa Heat Pumps)

How to Apply

Applications will begin from 23 May, although you can start to get quotes now providing the commissioning date of your new heating system is on or after 1 April 2022.

We recommend you get quotes from more than one installer to make sure you’re getting the best value for money.

Applicants will be encouraged to register their interest with MCS-certified heat pump installers via Ofgem, who will then agree a quote for the installation and apply for the grant on your behalf. The value of the grant will be discounted off the price you pay. 

Redeeming of the voucher will be led by the installer, who will confirm proof of the installation and process the completed paperwork.

You will then need to confirm that the installer is acting on your behalf when you’re contacted by Ofgem.

Which Heating Systems are Eligible?

The following types of heat pumps will be supported:

  • Ground source heat pumps
  • Water source heat pumps (which the government considers in the same tech category as GSHPs)
  • Air source heat pumps

Biomass boilers will be supported, but only in rural areas with populations of 10,000 people or less. They won’t be offered to people in urban areas. 

Your home must also meet high emissions standards to have a biomass boiler installed, which the government says is “to mitigate any negative impact on air quality.”

Systems with a total capacity of up to 45kW will be eligible for the scheme.

Boiler Upgrade Scheme eligibility depends on your Energy Performance Certificate validity

Homeowners will need a valid Energy Performance Certificate (EPC) to apply to the Boiler Upgrade Scheme (Image credit: Tim Pullen)

How Long Will Vouchers Last?

Applicants will have a set validity period to ensure the vouchers are utilised in a timely manner and that unused vouchers can be recycled. 

The validity period will be three months for air source heat pumps and biomass boiler vouchers, and six months for ground source heat pump vouchers.

Who Will be Eligible?

Most homeowners, small landlords and private landlords in England and Wales will be eligibly to apply for grant. 

However, all applicants must have a valid Energy Performance Certificate (EPC), typically one which has been issued in the last 10 years.

There are some caveats to ensuring your EPC is eligible. Firstly, you must have no outstanding recommendations for loft or cavity wall insulation. If you do, you'll need to insulate your home before applying for the scheme. 

Alternatively, you can progress with your application if your property has an EPC insulation exemption. 

Who Won’t be Eligible?

The scheme won't available for those in social housing and new-build properties. And it won't be available if you live in Northern Ireland or Scotland.

You also won't be eligible if you are replacing an existing low-carbon heating system. Only properties which are fully replacing existing fossil fuel systems (such as oil, gas or direct electric) will be eligible for support, the government says. 

What About Self Builders?

Custom and self build homes will be eligible for the Boiler Upgrade Scheme, the government has confirmed.

Custom and self builders will be given a three-month validity period to complete their installations, and will not have to provide an EPC to evidence insulation eligibility. 

Which Systems Won't be Covered?

Support will be available to installations providing space and water heating in buildings, but the grant will exclude:

Solar thermal will not be directly supported. However, solar thermal systems can be installed as part of a heat pump or biomass system that is funded on the scheme, providing the heating system can meet the full space and water heating requirements of the home. 

How Long Will it Run?

The Boiler Upgrade Scheme will run from April 2022 until April 2025. 

How Much do Heat Pumps Cost?

Boris Johnson said in July 2021 that the cost of heat pumps is currently too high, and the Heat and Buildings Strategy set out plans to ensure low-carbon heating systems cost the same to buy and run as fossil fuel boilers by 2030.

Currently, though, a basic air source heat pump such as a small air source mono block unit can cost upwards of £1,600, to around £14,000 for a top end large capacity fan unit. And a basic ground source heat pump can cost between £2,000-£15,000 depending on size and brand.

Biomass boilers can cost anywhere from £11,000 to £25,000. 

The government has pledged to install 600,000 heat pumps in homes per year by 2028, and it expects to see cost reductions during the lifetime of the Boiler Upgrade Scheme. Therefore, homeowners who install a heat pump on the scheme could end up paying a similar amount as if they were installing a traditional natural gas boiler. 

But Mike Childs, head of science at Friends of the Earth, fears the grants won’t lead to enough heat pumps being installed. “A total of £450m delivered via individual £5,000 grants means 90,000 heat pump installations over three years. That just isn’t very much, and won’t meet the prime minister’s ambition of 600,000 a year by 2028,” he said. 

Why the Focus on Heat Pumps?

Heat pumps are an environmentally-friendly alternative to gas boilers for heating our homes.

They extract heat from the environment, even at low outside temperatures, and can produce around three times the energy they use, making them much more efficient than a gas boiler.

And unlike gas boilers, heat pumps do not produce carbon when operating. 

Boilers to be phased out as part of boiler upgrade scheme

Unlike gas boilers, heat pumps do not produce carbon when operating (Image credit: Getty Images)

How Does the Scheme Differ to the RHI?

The Domestic Renewable Heat Incentive (RHI) launched in April 2014 and provided payments for the generation of renewable heat from eligible renewable heat technologies. The scheme ended on 31 March 2022, and the Boiler Upgrade Scheme took its place from April 2022. 

The RHI operated through tariff-based support, where payments differ between properties in accordance with the efficiency of the property. Payments were made on a quarterly basis over a seven-year period after the system has been installed. The Boiler Upgrade Scheme has replaced this funding with a flat-rate payment.

Is it Available Across the UK?

The scheme will only be available in England and Wales. If you live in Scotland you can access funding to make energy-efficient home improvements through Home Energy Scotland.

Reaction to the Scheme

Formerly known as the Clean Heat Grant, the Boiler Upgrade Scheme had originally proposed a fixed-sum payment of £4,000 for homeowners, and Karen Boswell OBE, managing director of Baxi Heating said in October 2021: “We highlighted that the £4,000 per installation grant originally consulted upon may not be sufficient to close the affordability gap. Therefore, we are pleased to see a higher grant level of £5,000 grant taken forward.”

But the plans have been criticised by the Green Party for not being ambitious enough, and that heat pumps would be ineffective without proper insulation. 

Caroline Lucas MP said: "A heat pump in a poorly insulated home just won't work. It’s like buying a teapot with cracks in it: leaky, inefficient and a waste of money."

Ross Counsell, chartered surveyor and director at GoodMove, added that the scale of finances could have been more ambitious. “I believe these sums of money are not sufficient to solve this crisis and could actually run the risk of causing further issues for homeowners,” he said.

What Other Funding is Available?

If you are ineligible for funding on the scheme, you might be able to benefit from the Energy Company Obligation (ECO), a scheme designed to help low-income and vulnerable households make energy-efficient home improvements.

There are also several insulation grants and heat pump grants available to certain homeowners. 

The government has confirmed that you can still apply for the Boiler Upgrade Scheme if you’ve received separate funding for energy efficiency upgrades such as insulation, doors or windows.

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.