The Scottish Government published its response to Recommendation 4 of the Heat Pump Sector Deal Expert Advisory Group on 11 November 2022, setting out the funding it has committed to heat pump installation in Scotland1. The recommendation asked ministers to increase funding through loans and grants and to give multi-year certainty on its availability1.
The government said it has committed to make available at least £1.8 billion for heat and energy efficiency deployment in Scotland during the current Parliamentary Session, to help kick-start growth in the market and support those least able to pay1. Under the existing Home Energy Scotland (HES) Loan and Cashback scheme, interest-free loans with cashback grant are offered for renewable heating systems including heat pumps. Loans of up to £10,000 are available, of which up to £7,500 is available as non-repayable cashback grant1.
The response states that the cashback grant element will be replaced with a standalone grant during this financial year, as set out in the Heat in Buildings Strategy and the 2022 Programme for Government, giving households the option of a loan, a grant or a combination of both1. The budget for the new scheme is around £42 million for 2022/23, double the level for 2021/221. Separately, the Social Housing Net Zero Heat Fund is making £200 million available over four years to support social landlords across Scotland to install zero emissions heating systems such as heat pumps in existing stock1. Fully funded support is also available to eligible homeowners through the fuel poverty schemes Warmer Homes Scotland and local authority Area Based Schemes1.
On how support reaches households, the response notes that HES support is currently delivered directly to consumers, who are responsible for sourcing their own supplier1. It says a complementary approach to subsidising zero emissions heat and energy efficiency may be required, enabling organisations in the supply chain to offer propositions directly to property owners at a subsidised rate, and that this proposal will be explored within the Heat in Buildings Supply Chains Delivery Plan1.
"We have committed to make available at least £1.8 billion for heat and energy efficiency deployment in Scotland during this Parliamentary Session to help kick-start growth in the market and support those least able to pay."
| Commitment | Figure |
|---|---|
| Heat and energy efficiency deployment, this Parliamentary Session | At least £1.8 billion1 |
| HES Loan and Cashback: maximum loan | Up to £10,0001 |
| HES Loan and Cashback: maximum non-repayable cashback | Up to £7,5001 |
| New standalone grant scheme budget, 2022/23 | Around £42 million1 |
| Social Housing Net Zero Heat Fund, over four years | £200 million1 |
Why it matters for households
For a household in Scotland considering a heat pump, the response sets out the shape of public support: an interest-free loan, a cashback grant that is being replaced by a standalone grant, or a combination of the two1. The cashback figure of up to £7,500 is attached to the existing HES scheme, and the response does not state the value of grants under the replacement scheme, only its budget1. Eligibility for the fuel poverty schemes named, Warmer Homes Scotland and local authority Area Based Schemes, is not detailed in this response1. The £200 million Social Housing Net Zero Heat Fund is aimed at social landlords rather than owner occupiers1. How far any of this reduces a home's reliance on imported gas depends on the measures installed and on the building, which the response does not address. For comparison with the scheme that operates in England, Wales and Scotland's owner-occupier market, see Boiler Upgrade Scheme grants for heat pumps and biomass and the wider Heat Pump Grants and Funding Across the UK.
What happens next
The response says the cashback grant element will be replaced with a standalone grant during this financial year, and that the supply chain subsidy proposal will be explored within the Heat in Buildings Supply Chains Delivery Plan1. No dates for the launch of the standalone grant or for publication of that plan are given in the response1.