Ofgem announced on 30 May 2022 that it is administering the Boiler Upgrade Scheme (BUS) on behalf of government, following the closure of the Domestic Renewable Heat Incentive scheme1. The scheme opened to applications on 23 May 20221.
The BUS offers £5,000 towards the cost of an air source heat pump and £6,000 towards the cost of a ground source heat pump. It also offers £5,000 towards a biomass boiler for properties in rural areas that are not connected to the gas grid1. The funding can only be used to replace traditional fossil fuel heating systems, meaning gas, oil or electric1. The scheme is open to domestic and small non-domestic properties in England and Wales until 20251.
| Measure | Grant |
|---|---|
| Air source heat pump | £5,000 |
| Ground source heat pump | £6,000 |
| Biomass boiler (rural, off gas grid) | £5,000 |
Ofgem states the scheme has a £450 million budget and should generate £660 million of social benefits, and that it will support up to 90,000 installations by March 2025, generating 0.3TWh of heat between 2022 and 20501. The application process is installer led, meaning installers apply on behalf of property owners, though property owners also need to complete an online form1. Ofgem adds that the government has introduced 0% VAT on the installation of energy saving equipment including heat pumps and biomass boilers for the next five years1.
On the closure of the earlier scheme, Ofgem said it had accredited over 110,281 installations and paid £819.3m to consumers under the Domestic Renewable Heat Incentive1.
"Following the closure of the Domestic Renewable Heat Incentive scheme, where we accredited over 110,281 installation and paid £819.3m to consumers, Ofgem is now administering the new Boiler Upgrade Scheme on behalf of government."
Ofgem sets out the context for the scheme in emissions terms, stating that in 2021 domestic properties emitted 68 million tonnes of carbon dioxide, around 20% of all CO2 emissions in the UK, and that heat pump technology currently offers a carbon saving of up to 65% compared with a gas boiler1.
Why it matters for households
For a household weighing up a change of heating system, the BUS is a capital grant paid towards the cost of the installation rather than a payment for heat produced over time, which was the shape of the scheme it replaces. The Boiler Upgrade Scheme grant amounts are fixed by technology, so the sum available depends on whether a home installs an air source heat pump, a ground source heat pump or, in rural off gas grid properties, a biomass boiler. Eligibility turns on the existing system being a traditional fossil fuel one, and on the property being in England and Wales, so homes and systems need checking against the eligibility rules before anything is agreed. Because the process is installer led, the practical route to the money runs through a registered installer rather than a direct claim by the householder, which is set out in the application process. For energy independence, the grant lowers the upfront cost of moving a home off gas, oil or electric resistance heating, though the running cost and carbon outcome depend on the system installed and how the home is used. Households on the gas grid, or those considering insulation measures alongside a heat pump, may find the comparison with ECO4 relevant, and the closed Domestic Renewable Heat Incentive remains the reference point for older installations.
What happens next
The scheme runs until 2025 for domestic and small non-domestic properties in England and Wales1. Ofgem states it will work with installers to ensure the scheme runs smoothly and points to its website and social media channels for updates on the application process1. No further dated milestones beyond the 2025 end point and the March 2025 installation target have been reported1.
Sources1 cited
- Boiler Upgrade Scheme Launch | Ofgem, ofgem.gov.uk