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Heat Pump Incentives

Author: Samuel Beckingham
Updated: Oct 22, 2022
3 minutes read

Is your heating system feeling a bit dated? Are you looking for a greener option? Heat pumps are incredibly energy efficient, but they do come with a big up-front cost. Fortunately, there are grants available to make this cost more affordable so you can benefit from renewable energy.

Currently, the UK Government offers a Boiler Upgrade Scheme, pledging £450 million to help offset the cost of a heat pump. You’re able to receive one of the below:

  • £5,000 off an air source heat pump

  • £6,000 off ground source heat pump

The astute among you will quickly realise that while the grants are a fair amount, this will mean that the initial cost of a heat pump is quite high. An average heat pump is between £10,000 and £14,000, putting the discounted cost between £4,000 and £8,000.

While the grants are a reasonable sum, they do make being sustainable a more affordable option for your home heating system. The scheme is set to run until 2025 and the funds will cover the cost of an estimated 90,000 heat pumps. While this sounds like a lot, it’s nowhere near the government target of 600,000 installed a year by 2028.

In order to qualify for the grant, your home must meet the minimum standards for insulation. This means that your EPC should have no recommendations for loft or wall insulation. The only reason for this criteria is because heat pumps are ineffective with a poorly insulated home. Otherwise, you’d require a much larger heat pump to make up for the extra heat loss, which would be more expensive to purchase and install. If you don’t qualify because of insulation, you could end up spending your heat-pump-ready funds on properly insulating your home.

While you don’t apply for the grant directly, you’ll still receive it if you go through the proper channels. After speaking to an MCS-certified installer, they will advise you on whether a heat pump is suitable for your home. If so, they’ll let you know and will receive the grant themselves. Once the work starts, the grant acts as a discount off your final bill.

While heat pumps are discounted, they are still expensive. Some critics of the scheme wish to see it double in order to have a meaningful impact. A higher value grant will not only be more attractive to householders, but it will increase uptake and get the UK moving towards a greener future.

The initial cost of a heat pump is currently over ten times the cost of an average gas boiler. In the wake of soaring costs, the cost of living crisis, the energy crisis and now the crisis in the state of the economy, many people won’t be able to afford a heat pump, even with the government grant.

Fortunately, heat pumps will start to come down in price in the next ten years or so due to the gas boiler ban. Heat pumps will be produced en masse, doing something to replace the void left by the absence of gas boilers. More people will want to turn to sustainable heating solutions and their low operating costs, spiking demand.

In other good news, Octopus Energy is looking to drive down the cost of a heat pump to around £2,500 after the government grant. Seeing as they recently increased their export rate for their customers to three times more than any other energy company, they are certainly driving homeowners to change to sustainable means more quickly. If other energy companies started to think similarly, we’ll be well on our way towards our net zero target.