Government to offer £5,000 grants for new heat pumps

Around 90,000 homes are set to benefit from the funding which the Government say will bring the price of a heat pump down to affordable levels.

However, critics have already argued the funding on offer is inadequate for the number of homes in need of an upgrade and underestimates the costs homeowners face.

The Government unveiled the funding pledge as part of their Heat and Buildings Strategy.

Grants

£450 million has been earmarked for the Boiler Upgrade Scheme over the next three years.

This funding will provide around 90,000 grants of £5,000 to households looking to upgrade their traditional gas boiler to a more efficient, low-carbon system such as a heat pump.

The Government say the £5,000 grant will bring the cost of a new heating system down to around the amount typically paid for a new gas boiler.

It's part of a wider Heat and Buildings Strategy that will see £3.9 billion in funding towards decarbonising homes and other buildings.

This includes £60 million to help innovative research on smaller clean heat systems and how to make them both easier to install and cheaper to run.

Reception

There have been some positive responses to the Government's announcement, with the CEO of Octopus Energy pointing out that they will be able to install heat pumps for around the same price as gas boilers when the scheme starts in April.

Meanwhile, Scottish Power say the support grants will kick-start the demand for electric heating and the industry will then be able to innovate and bring down costs.

However, critics say the number of grants available over the three year period is insufficient as 25 million UK homes have gas boilers and the new scheme aims to fund low-carbon technology in just 90,000 of them.

Concerns have also been raised about the estimated cost of heat pump installations and whether the grants will bring the costs down enough to make it worthwhile for customers.

Typical costs for heat pump installations can range from £6,000 up to £18,000 and households may need to spend more on upgrading their home insulation.

Many households will also not have the space to install the type of heat pump currently available on the market, so until smaller options are available and provision is made for cramped properties, plenty of people will not have the choice to upgrade.

Last year, Good Energy became the first supplier in the UK to create a tariff specifically for heat pump technology users.

Phasing out

The Government has said they want to phase out traditional gas boilers by 2035, yet they have stopped short of setting a deadline to ban them and favour a voluntary approach in the short-term.

Part of this is inevitably due to the costs of low-carbon options like heat pumps for customers, but it's also due to the industry needing to scale up their rollout of these pumps.

Decarbonising homes is a key milestone on the way to achieving net zero, with a report commissioned by Shell Energy and published in June 2021 suggesting 30 million homes would need low carbon heating installations over the next 30 years.

The research undertaken by Energy Systems Catapult (ESC) found 1.2 million homes would need new low-carbon installations every year, up from the 26,000 currently seen.

In this context, it's easy to understand why some critics think the number of Government grants on offer is inadequate.

Earlier this year, the five biggest energy companies commissioned a report looking at the way Government policy penalises heat source pump customers by forcing them to pay more on their energy bills each year.

They argued renewable levies should be added to gas bills rather than electric bills, although the rising price of gas and the resulting energy price crisis mean this change would be controversial.