The Department for Business, Energy and Industrial Strategy (BEIS) published the final impact assessment for the Boiler Upgrade Scheme (BUS) on 16 February 2022, setting out revised analytical assumptions for the grant scheme that replaces the Domestic Renewable Heat Incentive1. Among the changes from the consultation stage assessment is the treatment of additionality, the extent to which a grant causes an installation that would not otherwise have happened.
"The additionality assumption has been revised from the previous assumption in the Consultation Stage IA of 100% to 70%"
The assessment confirms the preferred grant levels of £5,000 for an air source heat pump (ASHP), £6,000 for a ground source heat pump (GSHP) and £5,000 for a biomass boiler, replacing the flat £4,000 rate proposed at consultation1. Support covers installations up to 45kWth in existing domestic and small non-domestic buildings in England and Wales, with quality assured through Microgeneration Certification Scheme (MCS) standards1. The scheme has a budget of £450 million over three years, from 2022/23 to 2024/25, and is planned to launch in Spring 2022, supporting up to 90,000 installations in total between April 2022 and March 20251.
| Item | Figure |
|---|---|
| ASHP grant | £5,000 |
| GSHP grant | £6,000 |
| Biomass boiler grant | £5,000 |
| Budget | £450 million over three years |
| Maximum installations | up to 90,000 |
| Scheme period | 2022/23 to 2024/25 |
The assessment also shortens the assumed lifetime of biomass boilers. All low carbon technologies were previously assumed to have a 20-year lifetime; BEIS engineers have since revised this to 15 years for biomass boilers1. Voucher validity differs by technology: ASHP and biomass boiler vouchers are valid for three months, while GSHP vouchers are valid for six months1. The scheme is estimated to deliver up to 1.1MtCO2e of carbon savings over Carbon Budgets 4 and 5, and 2.6MtCO2e over its lifetime, with 3.0MtCO2e of non-traded carbon abatement over its lifetime1. Average annual renewable heat generated is estimated at 0.3TWh between 2022 and 20501. The assessment puts the overall Social Net Present Value at £310 million, discounted in 2020 prices, against a social cost of £350 million in the central scenario1.
Why it matters for households
The additionality figure is an accounting assumption about how many grant-funded installations would have gone ahead anyway. At 70 per cent, BEIS assumes a smaller share of the carbon savings and bill effects attributed to the scheme are genuinely caused by the grant, which lowers the assessed value of the scheme relative to the consultation stage. For a household considering a heat pump or biomass boiler, the headline grant levels are unchanged from the preferred option, but the assessment makes clear that the scheme is time-limited and closes to new applicants after 2024/251. The Domestic RHI closes to new applications on 31 March 2022, and the Non-Domestic RHI closed on 31 March 2021, so the BUS is the remaining capital grant route for able-to-pay households in England and Wales1. The assessment notes that for some property types, typically those heated by direct electricity, a heat pump could lower overall fuel bills, though it says this rebound effect has not been quantified1. How such schemes are proposed and decided is set out in the site's guide to energy consultations and how policy is made, and the wider framework sits under regulation and policy.
What happens next
The scheme is planned to launch in Spring 2022 and run to 2024/25, after which it will have closed to new applicants1. The assessment states that the BUS is intended to grow the supply chain ahead of market-based and regulatory levers from the mid-2020s to phase out fossil fuel heating in buildings1. It says the need for review will be considered1.
Sources1 cited
- Boiler upgrade scheme: final impact assessment, qna.files.parliament.uk