The Boiler Upgrade Scheme (BUS) will pay grants towards low carbon heating systems commissioned on or after 1 April 2022, Ofgem said in a decision published on 7 April 20221. The scheme, formerly known as the Clean Heat Grant, is administered by Ofgem on behalf of government and covers property owners in England and Wales1.
The grant amounts, set out by the Department for Business, Energy and Industrial Strategy, are £5,000 off the cost and installation of an air source heat pump, £5,000 off a biomass boiler and £6,000 off a ground source heat pump2. The scheme has a committed budget of £450 million over three years from 2022 to 2025, with an annual allocation of £150 million2. Applications are installer-led: installers carry out the application on the property owner's behalf and the funding is taken off the quote up front2. Installers fitting heat pumps under the scheme must be certified by the Microgeneration Certification Scheme2.
Ofgem set out the timetable in its decision on the scheme's administration, following a consultation published on 16 December 2021 that drew 44 responses from installers, property owners, suppliers, consultancies and trade associations1.
"The BUS will open to installers to create an account on 11 April 2022"
The grants sit alongside a five-year 0% rate of VAT on the installation of heat pumps and biomass boilers2. The government said heat pumps can deliver more than three units of heat for every unit of energy input, while traditional gas and oil boilers deliver less than one2. It also stated an intention that by 2035 all new heating systems installed in UK homes will be low carbon technologies such as electric heat pumps, or will support new technologies such as hydrogen-ready boilers, and that no one will be forced to remove an existing boiler2.
The BUS replaces support that ran through the Domestic Renewable Heat Incentive, which closed to new applicants at midnight on 31 March 20223. Ofgem reported that the DRHI supported 110,281 renewable heating systems across Great Britain and paid £819.3 million over eight years, with 7.04TWh of clean heat estimated to have been generated since 20145. A later Ofgem annual report put the lifetime figure at 118,765 systems and total payments of £1.06 billion6. Existing DRHI participants continue to receive payments for up to seven years if they follow the scheme rules5.
Why it matters for households
For a household weighing up a replacement for a gas, oil or LPG boiler, the BUS changes the arithmetic of a heat pump or biomass installation by £5,000 or £6,000, with the discount applied before the household pays rather than reclaimed afterwards2. Because the grant is tied to the commissioning date rather than the application date, systems installed from 1 April 2022 are covered even though applications only open on 23 May2. The scheme applies in England and Wales only2. Households in Scotland are not covered by the BUS; the Scottish Government's own renewable heat target report, published in October 2021, recorded that useful renewable heat produced in Scotland was equivalent to 6.4% of non-electrical fuels consumed for heat in 2020, against a target of 11% by 20207.
The practical effect on a home's energy independence depends on what is being replaced. A heat pump runs on electricity rather than a delivered fossil fuel, so the household's exposure shifts from oil or gas prices to electricity prices, and the running cost depends on the system's efficiency and the fabric of the home2. The government's stated aim is that heat pumps cost no more to buy and run than fossil fuel boilers by 20302. Ofgem has said it is helping to create the infrastructure for net zero so there is clean, affordable and secure home grown energy, and described heat pumps as a proven scalable option to heat homes and businesses without reliance on fossil fuels2.
What happens next
Installers could open accounts from 11 April 2022, and the scheme opened for grant applications and payments on 23 May 20221. Ofgem said it would publish comprehensive procedural draft guidance for installers before the scheme opened to applications and would invite feedback on it, and planned further stakeholder events in the lead up to launch1.
Sources7 cited
- Decision on administration of Boiler Upgrade Scheme (BUS) | Ofgem, ofgem.gov.uk
- Ditching costly gas and oil is cheaper thanks to heat pump scheme - GOV.UK, gov.uk
- Domestic Renewable Heat Incentive (Domestic RHI) - Domestic RHI Closure | Ofgem, ofgem.gov.uk
- Domestic Renewable Heat Incentive (Domestic RHI) | Ofgem, ofgem.gov.uk
- Domestic Renewable Heat Incentive closes: What's next for clean heat? | Ofgem, ofgem.gov.uk
- Domestic Renewable Heat Incentive Annual Report - April 2023 to March 2024 | Ofgem, ofgem.gov.uk
- Update on Renewable Heat Target and Action – 2021 - Renewable heat target and action: 2021 update - gov.scot, gov.scot