Heat pump grants increased by 50% and scheme extended to 2028

Grants available for the installation of domestic air source heat pumps in England and Wales have today been increased from £5,000 to £7,500, making them considerably more price-competitive with gas boilers.

In addition, ground source heat pump grants have risen from £6,000 to £7,500, and households can still access £5,000 grants for biomass boilers.

The scheme has also been extended by three years to 2028, giving people more time to take advantage of the opportunity. 

With the  cost of buying and installing a gas boiler estimated at between £2,500 and £3,000 it is suggested that starting prices for heat pumps could be below this for some homes, when taking advantage of the grant and extra discounts offered by energy suppliers.  

Customers do not have to apply for the grants and can check their home is eligible online. Anyone interested just needs to agree a quote for the work with an MCS certified installer, who will then do all the paperwork. Ofgem will then contact the customer after that to confirm they would like to proceed.

On top of the grant increase, a new campaign –  Welcome Home to Energy Efficiency – is being launched to encourage families to improve their home’s energy efficiency, with adverts across television, on-demand services, podcasts, print and billboards. They will include a range of recommended measures such as: 

• Checking loft and wall insulation
• Upgrading to a heat pump, using the bumper grant
• Installing solar panels to power a heat pump and save even further

Consumers can also give their home an energy efficiency MOT now at a new dedicated website: Gov.uk/energy-efficient-home.

£10 million has also been made available through the Heat Pump Ready programme to support innovation in the heat pump sector.

Greg Jackson, Founder of Octopus Energy, said: ‘We see enormous demand for heat pumps as they’re 3 or 4 times more energy efficient than gas boilers, and with these government grants they’re affordable to install too. Using Octopus’s smart tariffs they’re also cheaper to run.

‘With Octopus’s innovations, we’re now able to make heat pumps that are hotter than a gas boiler, making them an almost plug-and-play replacement for many homes, and we’re continuing to bring costs down so that one day they won’t even need subsidies.’

Gráinne Regan, Head of Heat, OVO said: ‘With home heating accounting for 17% of the UK’s total carbon emissions, it’s clear as a nation we need to switch from gas boilers to heat pumps which are more efficient and powered by cleaner electricity.

‘The government’s uplift to the Boiler Upgrade Scheme is a welcome investment to support people to adopt heat pumps. At OVO, we’ve also halved the running costs of a heat pump, helping to level the playing field between gas boilers and heat pumps.

‘But we need to go even further. We must encourage a national switch by improving incentives and cutting running costs.’