£173million of heat pump grant scheme funding goes unclaimed – could you get subsidy?

Households could make big long-term savings while reducing their carbon footprint by installing heat pumps to “future-proof” their homes.

While it's currently an investment of up to £19,000 to install a heat pump, the Government’s Boiler Upgrade Scheme aims to subsidise the cost and make it more accessible for households.

Although Britons could potentially save money on energy bills with the upgrades, heat pump uptake remains low as £173million in possible grants is going unclaimed, Ofgem has announced.

The Boiler Upgrade Scheme (BUS), which has been running for two years now, has only given £127million worth in grants out from a £300million pot of funding.

The scheme aims to encourage the installation of low carbon heating alternatives such as a heat pump or biomass boiler.

The funding can cover some of the cost of replacing the traditional fossil fuel heating systems, including oil and gas for the low carbon options.

Heat pumps range from £13,000 for an air source pump and up to £19,000 for a ground source pump, according to the Energy Saving Trust.

With a heat pump, Britons could save up to £1,100 per year if replacing an inefficient electric storage heater; up to £510 per year if replacing an inefficient G-rated LPG or oil boiler; and up to £340 per year if replacing an inefficient gas boiler — plus, each well-maintained pump can last up to 30 years before replacement.

To meet climate change goals, the government must increase the demand for more heat pump purchases.

In 2023, the UK government increased the amount of funding available to put towards installing heat pumps through the non-means-tested boiler upgrade scheme, which offers successful applicants grants of £7,500 towards an air source or ground source heat pump, or £5,000 towards a biomass boiler.

This scheme is open to people in England and Wales.

Britons can get one grant per property. The following grants are currently available:

• £7,500 towards an air source heat pump
• £7,500 towards a ground source heat pump (including water source heat pumps and those on shared ground loops)
• £5,000 towards a biomass boiler

Despite the subsidy being worth thousands of pounds, uptake has low. There has been around 65,000 heat pumps sold in 2023 against a target of 600,000 annually by 2028 - less than four years away.

Analysis from the Energy and Climate Intelligence Unit (ECIU) found homes using heat pumps, insulation and electric vehicles make more use of British energy and use less than half the imported fuel of a household reliant on gas and petrol.

ECIU suggested people who want to be "energy patriotic" should be buying British by switching from gas boilers and petrol cars to cleaner alternatives that run on electricity increasingly powered by domestic wind and solar energy.

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The think tank said the Government should help those who cannot afford to invest in new technology by agreeing to more contracts for new UK wind farms, ensuring homes can buy British for more of the power they use for appliances and lighting.

Who is eligible for the Boiler Upgrade Scheme?

Britons are eligible for a grant if all the following are true. They must:

• Own the property they’re applying for (including if it’s a business, a second home, or a property they rent out to tenants)
• have installed their new heating system on or after April 1, 2022
• be replacing fossil fuel heating systems - such as oil, gas, electric or LPG (liquefied petroleum gas)

How to apply

Britons can contact a suitable MCS certified installer to get quotes for the work.

They should then confirm eligibility (their installer will tell them) and agree a quote with their chosen installer.

The installer will apply on their behalf on the Ofgem website. The value of the grant will be taken off the amount people pay for installation.

Ofgem will then contact the individual to confirm that the installer is acting on their behalf.

They might also contact someone by phone or visit their property in order to check the installation.

MCS might contact people to carry out their own checks.

For more information, people can visit the Government website.