The Scottish Government opened a revised Home Energy Scotland Grant and Loan scheme on 2 December 2022, allowing homeowners to apply for grant funding without first taking out a loan1. Under the previous offer, the cashback element had to be taken in tandem with an interest-free loan; the new scheme provides a grant that can be taken on its own or alongside an optional interest-free Home Energy Scotland Loan1.
The headline figures are a standalone grant of up to £7,500 for heat pumps, and grant funding for energy efficiency improvements of up to 75 per cent of the combined cost of the improvements, capped at £7,5001. The remainder of funding requested for a heat pump can be taken as an optional interest-free loan1. A rural uplift of £1,500 applies to both grants, raising the heat pump flat rate and the maximum energy efficiency grant to £9,000 for eligible homeowners in rural areas1. The government said the uplift honoured a commitment made under the Bute House Agreement1.
"As of today it will be simpler and more affordable for people to install climate-friendly heat and energy efficiency measures in their homes."
The scheme also introduces packages of measures intended to support the uptake of complementary improvements offering substantial gains in energy efficiency and heat decarbonisation1. The service and its funding are managed by the Energy Saving Trust on behalf of Heat and Energy Efficiency Scotland, Scotland's national public energy agency1. Replacing the cashback element with a standalone grant was pledged in the 2022-23 Programme for Government1.
| Measure | Standard grant | Rural uplift | Rural maximum |
|---|---|---|---|
| Heat pump | Up to £7,500 | £1,500 | £9,000 flat rate |
| Energy efficiency | Up to 75% of combined cost, capped at £7,500 | £1,500 | £9,000 cap |
£42 million was committed to the initiative for 2022-2023, almost double the previous year's amount1. Baxi reported that this was indicatively sufficient for around 5,600 heat pump installations2; the Scottish Government's release does not give that figure. The government said it had committed £1.8 billion over the parliamentary term to delivering its Heat in Buildings Strategy1.
Why it matters for households
The change removes the requirement to borrow in order to receive public money, which alters the arithmetic for a household weighing up a heat pump against a fossil-fuel heating system. A homeowner can now take grant funding alone, or combine it with an interest-free loan where the installed cost exceeds the grant1. For energy efficiency work, the 75 per cent contribution rule means the household still funds at least a quarter of the cost, up to the £7,500 cap1.
For rural and island households, the uplift recognises that home improvements often cost more in those areas, as Home Energy Scotland's head put it in the announcement1. Higher upfront costs and off-gas-grid properties are common in such areas, so the additional £1,500 narrows, but does not close, the gap between rural and urban installation economics. Households that had already taken the old loan-plus-cashback route are not addressed in either source; whether they can move to the new standalone grant has not been reported.
What happens next
No further dated steps are set out in the announcement. The scheme remains open for applications through Home Energy Scotland, which advises applicants on eligibility and process1.