The Boiler Upgrade Scheme opened in May 2022 with an overall budget of £450m to be delivered over three years, administered by Ofgem on behalf of the Gas and Electricity Markets Authority1. The scheme provides upfront capital grants to support the installation of heat pumps and, in limited circumstances, biomass boilers in domestic and non-domestic buildings in England and Wales1. Grants of £5,000 are available for air source heat pumps and biomass boilers, and £6,000 for ground source heat pumps, with installations capped at 45 kWth and grant levels not varying by capacity1.
The scheme is installer-led, meaning an MCS certified installer applies on the property owner's behalf1. Only systems commissioned on or after 1 April 2022 are eligible, account creation opened on 11 April 2022, and the last date Ofgem can issue vouchers is 31 December 20241. Vouchers for air source heat pumps and biomass boilers are valid for three months, and for ground source heat pumps six months from the date of issue1. Properties must have a valid Energy Performance Certificate no more than 10 years old unless they meet the definition of an eligible self build, must have had a fossil fuel or non-heat-pump electric heating system replaced, and must meet a minimum level of insulation judged through the EPC1. Social housing as defined in section 68 of the Housing and Regeneration Act 2008 is not eligible1.
The government described the scheme's purpose in its 2023 consultation on amending the regulations:
"To support with the upfront capital cost of a heat pump, the Government launched the £450m Boiler Upgrade Scheme in May 2022. The scheme provides grants of up to £6,000 for the installation of heat pumps and, in limited circumstances, biomass boilers to encourage property owners to replace existing fossil fuel heating with more efficient, low carbon heating systems."
The same document states that the scheme's budget originally ran until 2025, and that the government has announced an extension to 2028 with additional funding for each of the years following 20252. It also records that since launch the scheme had delivered £65 million of grants, with 1,098 installers registered2. The Committee of Public Accounts later reported that nearly 18,900 heat pumps were funded in England and Wales between May 2022 and December 2023, less than 40% of the 50,000 expected installations, causing an underspend of £100 million in the scheme's first year3. The committee put an average heat pump at around £11,600, four times the cost of a gas boiler, which it gave as typically £2,500 to £3,0003.
Independent research published in June 2022 by Nesta and the Behavioural Insights Team, based on a trial with 8,016 participants, found that with no incentives 12% of homeowners said they would choose a heat pump over a gas boiler, rising to 21% with a £5,000 subsidy in place4. The Energy and Climate Intelligence Unit reported in November 2022 that the scheme aims to install 90,000 heat pumps over three years and would run until April 2025, and that monthly MCS-registered heat pump installations were around 2,500 in September and October 2022, with installers taking part in the scheme almost doubling from around 450 to 9005.
Why it matters for households
The grant reduces the upfront cost of replacing a fossil fuel heating system with a heat pump, but it does not cover the full installation cost, and the sources give differing figures for what a heat pump costs: the Committee of Public Accounts put an average at around £11,600 against a gas boiler at £2,500 to £3,0003, while the Energy and Climate Intelligence Unit cited a pilot offering air source heat pumps fully installed for as little as £2,000 to Halifax mortgage customers5. Running costs also matter to household energy independence: the Nesta trial found that a heat pump costing £40 a month less to run than a gas boiler increased the number choosing one by seven percentage points, and combining that with an interest-free loan produced a 24 percentage point increase, with more than one in three choosing a heat pump4. The Committee of Public Accounts noted that heat pumps are more expensive to run than boilers because electricity costs more than gas, and that the government had delayed plans to rebalance electricity and gas costs by nearly two years3. The Energy and Climate Intelligence Unit estimated that had the UK installed heat pumps at Estonia's rate per 100,000 people, domestic gas use would have been 107TWh, or 34%, lower than in 2021, and gas imports could have been cut by a fifth5.
What happens next
The scheme's budget originally ran until 2025, and the government has announced an extension to 2028 with additional funding for each of the years following 20252. The last date Ofgem can issue vouchers under the original arrangements is 31 December 20241. In August 2023 the government consulted on proposed amendments to the Boiler Upgrade Scheme Regulations, including whether to differentiate grant levels in different circumstances, whether to retain or amend the EPC requirements, and whether biomass boilers with a cooking function should be eligible; that consultation closed on 12 October 20232. The consultation states that the government will not consult on consumer codes or the extension to 2028 within that document and will provide further detail on its intentions in due course2.
Sources5 cited
- Boiler Upgrade Scheme installer guidance, ofgem.gov.uk
- Boiler Upgrade Scheme Regulations: consultation, assets.publishing.service.gov.uk
- Decarbonising home heating - Committee of Public Accounts, publications.parliament.uk
- Cheap loans and lower running costs triples demand for heat pumps, according to UK-wide experiment | Nesta, nesta.org.uk
- Energy & Climate Intelligence Unit | Poland, Estonia among states…, eciu.net