The Department for Business, Energy and Industrial Strategy published the final stage impact assessment for the Boiler Upgrade Scheme on 16 February 2022, setting out the grant levels it intends to pay under the Boiler Upgrade Scheme1. The preferred option is a £5,000 grant for an air source heat pump (ASHP), £6,000 for a ground source heat pump (GSHP) and £5,000 for a biomass boiler1. An alternative option of a flat £4,000 for each technology, which aligned with the April 2020 consultation proposal, was also assessed1.
The scheme is planned to launch in Spring 2022 and to run for three years, to 2024/25, with a budget of £450 million over 2022/23 to 2024/251. Support will go to installations of no more than 45kWth capacity in existing domestic and small non-domestic buildings in England and Wales1. The assessment states the scheme is expected to support up to 90,000 installations in total between April 2022 and March 20251. It follows the closure of the Domestic Renewable Heat Incentive, which "will close to new applications on 31 March 2022"1.
"Our analysis now considers the preferred grant level option of a £5,000 grant for ASHPs, £6,000 grant for GSHPs and £5,000 grant for biomass"
The assessment gives a central Social Net Present Value of £310 million for the preferred option, against a social cost of £350 million and benefits of £660 million, in 2020 prices1. It estimates the scheme will deliver up to 1.1MtCO2e of carbon savings over Carbon Budgets 4 and 5 and 2.6MtCO2e over its lifetime, and 3.0MtCO2e of non-traded carbon abatement over its lifetime1. The executive summary gives 1.4MtCO2e of non-traded carbon abatement over carbon budgets 4 and 52. Average estimated capital cost of an ASHP installed under the scheme is put at £8,900, with annual maintenance of £1002.
| Technology | Preferred grant (option 1a) | Alternative flat rate (option 1b) |
|---|---|---|
| Air source heat pump | £5,000 | £4,000 |
| Ground source heat pump | £6,000 | £4,000 |
| Biomass boiler | £5,000 | £4,000 |
Voucher validity differs by technology: ASHP and biomass boiler vouchers will be valid for 3 months, while GSHP vouchers will be valid for 6 months1. Installations are to be assured through Microgeneration Certification Scheme (MCS) standards1. The assessment also records a revision to the additionality assumption, from 100% at consultation stage to 70%, and a shorter assumed lifetime of 15 years for biomass boilers, against 20 years for the other technologies1.
Why it matters for households
The grant levels in the final assessment are the amounts a household could see deducted from an installation under the Boiler Upgrade Scheme, and they are higher than the flat £4,000 previously proposed for every technology1. The grant amount is an upfront capital contribution, not a payment spread over time, and the assessment describes the scheme as following the closure of the Domestic RHI, which paid renewable heat incentives on a different basis1. For a home weighing a heat pump against other options, the assessment's own figures put average installed ASHP capital cost at £8,900, so the grant covers part of that cost rather than all of it2. The scheme applies in England and Wales and to buildings in the existing stock, with a capacity ceiling of 45kWth1. Households on direct electric heating are identified in the assessment as a group where a heat pump could lower fuel bills, though it notes a possible rebound effect that has not been quantified1. The assessment does not set out running costs for individual homes, and no per-household bill figures are given.
What happens next
The scheme is planned to launch in Spring 20221. The assessment states that after 2024/25 the scheme will have closed to new applicants1. It also states that support cannot exceed the three-year £450 million budget cap or the £150 million yearly budget cap2. The assessment says the policy will be reviewed, with the need for review to 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