The government's final impact assessment for the Boiler Upgrade Scheme confirms that the scheme is now planned to run over three years, to 2024/25, rather than the two years to 2023/24 proposed at consultation stage for the Clean Heat Grant1. The document, published on 16 February 2022 by the Department for Business, Energy and Industrial Strategy, sets out the preferred grant levels and the budget for the scheme, which is planned to launch in Spring 20221.
The preferred option is a £5,000 grant for an air source heat pump, £6,000 for a ground source heat pump and £5,000 for a biomass boiler1. The consultation stage assessment had proposed a flat £4,000 for each technology1. The scheme has a budget of £450 million over three years, 2022/23 to 2024/25, and support cannot exceed either that three-year cap or a £150 million yearly cap1. The assessment estimates the scheme will support up to 90,000 installations in total between April 2022 and March 20251.
"Under the current proposal, the BUS scheme is now planned to run over a three-year period (to 2024/25)."
Support is for installations of no more than 45kWth capacity in existing domestic and small non-domestic buildings in England and Wales1. The assessment states that the scheme will promote high quality installations assured through the Microgeneration Certification Scheme standards1. Vouchers for air source heat pumps and biomass boilers will be valid for three months, and for ground source heat pumps for six months1.
| Item | Figure |
|---|---|
| Air source heat pump grant | £5,000 |
| Ground source heat pump grant | £6,000 |
| Biomass boiler grant | £5,000 |
| Budget | £450m over three years (2022/23 to 2024/25) |
| Yearly budget cap | £150m |
| Maximum capacity supported | 45kWth |
| Estimated installations | Up to 90,000 between April 2022 and March 2025 |
The assessment puts the whole life capital cost at £450m nominal, undiscounted, between 2022/23 and 2024/25, delivering £660m of social benefits and an overall Social Net Present Value of £310m in discounted 2020 prices1. It estimates the scheme could deliver 1.1MtCO2e of carbon savings over Carbon Budgets 4 and 5 and 2.6MtCO2e over its lifetime, alongside 3.0MtCO2e of non-traded carbon abatement over its lifetime1. The annual renewable heat generated is estimated at 0.3TWh on average between 2022 and 20501. The assessment also states that the scheme is expected to support an average of 2,100 direct full-time equivalent jobs and 1,800 indirect full-time equivalent jobs per year over the three job-years covering 2022/23 to 2024/251.
The document notes that the Domestic Renewable Heat Incentive, the primary existing support scheme for low carbon heat in homes, will close to new applications on 31 March 2022, and that the Non-Domestic RHI closed on 31 March 20211. It states that after 2024/25 the scheme will have closed to new applicants1. The assessment also records a revision to the additionality assumption, from 100% at consultation stage to 70%, and a change to the assumed lifetime of biomass boilers, from 20 years to 15 years1.
Why it matters for households
For a household considering a heat pump, the assessment sets the grant levels that will apply and the period over which they are available. The £5,000 air source heat pump grant and £6,000 ground source heat pump grant are the figures the scheme is built around, and the three-year run to 2024/25 means the support is planned to remain open beyond the two years originally proposed for the Clean Heat Grant1. The assessment gives an average estimated capital cost of an air source heat pump installed under the scheme of £8,900, and an annual maintenance cost of £1002. How far a grant covers the total cost of an installation depends on the property and the installer, and the assessment does not set out a figure for that.
The scheme is limited to England and Wales, to buildings that already exist, and to installations of no more than 45kWth1. Households on the Domestic RHI have until 31 March 2022 to apply under that scheme, after which the Boiler Upgrade Scheme is the planned replacement for able-to-pay households1. The assessment describes the scheme as intended to grow the supply chain ahead of market-based and regulatory levers from the mid-2020s to phase out fossil fuel heating in buildings2. For a home's energy independence, the practical effect is that a grant reduces the upfront cost of moving away from a fossil fuel boiler, while the running costs and the suitability of the property remain matters the assessment does not resolve.
What happens next
The scheme is planned to launch in Spring 20221. The Domestic RHI closes to new applications on 31 March 20221. After 2024/25, the scheme will have closed to new applicants1. The assessment states that the need for a review will be considered1.
Sources2 cited
- Boiler upgrade scheme: final impact assessment, qna.files.parliament.uk
- Boiler upgrade scheme: final impact assessment, assets.publishing.service.gov.uk