£1.5bn of new funding allocated to Boiler Upgrade Scheme

The Government expects around a million homes will be made warmer and hundreds of business supported, as £6 billion is allocated to cut energy use and bills.

The funding which was announced last year, has now been allocated to new and existing schemes, which will run between 2025 to 2028.

Subject to business case approval and value for money assessments, the following schemes will benefit from the funding:

• the Boiler Upgrade Scheme, allocated a further £1.5 billion, to support families in England and Wales move away from gas to energy efficient, low-carbon heat pumps
• a new £400 million energy efficiency grant, launching in 2025, for households in England to make changes such as bigger radiators or better insulation
• a new local authority retrofit scheme, allocated £500 million to support up to 60,000 low-income and cold homes, including those off the gas grid, with measures such as insulation
• the Social Housing Decarbonisation Fund, allocated £1.25 billion to support up to 140,000 social homes to be insulated or retrofitted, improving energy performance and lowering bills
• the Green Heat Network Fund, allocated £485 million to help up to 60,000 homes and buildings access affordable, low carbon heating through new heat networks, reducing our use of fossil fuels and providing more reliable heating
• the Heat Network Efficiency Scheme, allocated £45 million to improve around 100 existing heat networks, in a move that will reduce bills and improve reliability
• the Industrial Energy Transformation Fund, allocated £225 million, will continue to help businesses transition to a low-carbon future

Businesses, heavy industries and public sector organisations such as schools and hospitals will also benefit from the Public Sector Decarbonisation scheme and wider industrial energy efficiency and decarbonisation support, through to 2028.

Daniel Särefjord, CEO, Aira UK, commented: ‘The new £1.5bn funding for the Boiler Upgrade Scheme will drive investment and consumer confidence in the nations transition to cleaner, greener heat pumps. At Aira, we are certain that with government support, heat pumps will help to drive down energy bills for millions of families and reduce the UK’s reliance on importing expensive and polluting gas.

‘We are investing £300 million in the UK’s clean technology sector and within the next decade, plan to employ 8,000 new Clean Energy Experts nationwide to help us decarbonise the residential heating market. It’s encouraging to see additional investment in the BUS, though there is still much to be done.

‘Heat pumps have been heating Scandinavian countries for decades and will be the solution to Britain’s energy crisis. The government recently committed to removing planning policy barriers, reforming EPC’s and tackling the unit costs of gas and electricity and if we can see these policy changes through, heat pumps will have a bright future in the UK.’

Greg Jackson, CEO of Octopus Energy said: ‘Heat pumps are rapidly becoming cheaper and quicker to install, in more and more homes, and it’s clear this technology is the heating of the future.

‘Our customers love heat pumps, and we’re planning on hiring two thousand new engineers next year alone to try to meet rocketing demand. This increased certainty from government enables us to invest with confidence and will unlock cheaper, cleaner heating for the UK.’

Tamsin Lishman, CEO of The Kensa Group said: ‘Long-term policy certainty is the most critical factor in delivering business investment, and this is particularly true of an emerging sector like ours. Today’s confirmation of how the government will spend £6 billion/year supporting heat pumps and energy efficiency improvements provides businesses with a clear five-year time frame of support, giving certainty of continued market growth.

‘Critically, today’s announcement provides an enhanced spending envelope across building sectors, including private homes, social housing, the public sector and business. It is particularly promising to see a tripling of the Boiler Upgrade Scheme budget, providing support for almost 70,000 heat pump installations a year, up from 20,000 today. This gives us the confidence to continue investing in and expanding our British manufacturing facilities and supply chains, providing jobs and economic growth for the British economy.

‘It is vital that the government now builds on this announcement and continues to build the best possible green investment environment in the UK that will underpin the transition to net zero. This includes a rapid introduction of the Future Homes Standard, ensuring heat pumps and heat networks are the default choice for new homes, as well as action to address the UK’s artificially high electricity prices, ensuring that clean heat can become the lowest-cost as well as the lowest-carbon choice for homes.’