The Home Energy Scotland (HES) Grant and Loan scheme was launched in December 2022 as an update to the HES Loan and Cashback scheme1. It replaced the cashback element of the previous scheme with a standalone grant, and is open to all domestic owner-occupiers in Scotland1. The Scottish Government said the change was made in line with the commitment within the Bute House Agreement and the Heat in Buildings Strategy, and was "primarily focussed on providing a more straightforward, flexible and accessible way to access targeted priority measure"3.
The scheme provides grant funding for zero direct emissions heating up to £7,500 and for energy efficiency improvements up to 75% of the combined cost of the improvements, up to a maximum grant amount of £7,500, so a grant of up to £15,000 in total1. An additional £7,500 is available as an optional interest free loan for both zero direct emissions heating, such as heat pumps, and energy efficiency measures1. A rural uplift of £1,500 applies to both clean heating and energy efficiency grants, increasing the clean heating grant flat rate and the maximum limit of the energy efficiency grant to £9,0001. The National Islands Plan annual report states that rural and island households can claim up to £18,000 in grant funding compared to £15,000 in non-rural areas4.
The Scottish Government said the new scheme offers applicants the opportunity to take a standalone grant without having to undergo credit checks, unlike the previous loan and cashback arrangements4. The rural uplift is a recognition of the higher costs faced by rural and island households, associated with increased transportation costs and accommodation costs for installers4.
"The new HES Grant and Loan scheme replaced the cashback element of the previous HES Loan and Cashback scheme with a standalone grant."
Applications have risen since launch. HES received over 6,000 applications in the period from launching to the end of August 2023, with over 1,900 funding offers issued for heat pump installations, a 22% increase in funding offers for heat pumps compared with the previous year under the HES Loan and Cashback scheme1. A later release, covering financial years 2022-23 and 2023-24, records 2,543 applications including heat pump funding in 2022-23 and 3,106 in 2023-24, with 1,803 and 2,225 applications respectively paid in full5. The Scottish Government notes there is no direct correlation between applications received and payments made, because applicants have a set period to complete work and submit a claim, currently nine months for the scheme5. A separate release records 7,263 applications for air source heat pumps and 6,322 legally committed funding agreements from financial year 2022-23 to 21 August 2024, figures that include some applications and offers made under the previous scheme2.
On processing, the Scottish Government states that on receipt of a completed application with all necessary documentation, a decision to offer funding or not will be issued within 10 working days, and payment will be made within 10 working days of a completed claim, with a Key Performance Indicator for at least 90% of applications and claims to be processed in these timescales2. Applications are processed by Energy Saving Trust on a national basis, not by regional advice centres2. The Scottish Government has not directly marketed the scheme, but undertakes marketing directing consumers to Home Energy Scotland; it spent £723,237 on relevant marketing in 2022-23 and £550,667.49 in 2023-245.
Why it matters for households
The shift from cashback to a standalone grant changes the shape of support for a Scottish owner-occupier paying for a heat pump or insulation. Under the previous arrangement, the cashback element was tied to a loan; the replacement allows a grant to be taken on its own, without a credit check, and an interest free loan of up to £7,500 can be added optionally1. For a household in a rural or island area, the uplift raises the maximum grant available, reflecting costs the Scottish Government says are higher in those locations4. The grant covers a share of cost rather than the whole bill: energy efficiency funding is capped at 75% of the combined cost of the improvements, up to the maximum grant amount1. The scheme sits alongside other Scottish delivery routes, including Warmer Homes Scotland for households in or at risk of fuel poverty and the Area Based Schemes delivered by local authorities1. Households comparing the Scottish route with the UK-wide Boiler Upgrade Scheme are looking at two separate funding systems with different eligibility rules and amounts.
What happens next
The Scottish Government's Heat in Buildings progress report, published 27 October 2023, records that the successor programme to Warmer Homes Scotland was launched under the same name on 2 October 2023, with a maximum contract value of up to £728 million over up to seven years1. The report also states that the Scottish Public Sector Energy Efficiency Loan Scheme, which has provided zero interest loans since 2006, will be replaced with Scotland's Public Sector Heat Decarbonisation Fund1. No end date for the HES Grant and Loan scheme is given in the published material.
Sources5 cited
- Delivery schemes - Heat in Buildings: progress report 2023 - gov.scot, gov.scot
- Home Energy Scotland Grant and Loan applications: EIR release - gov.scot, gov.scot
- Heat pumps not supported through Home Energy Scotland grant and loan scheme (s6w-16061): EIR release - gov.scot, gov.scot
- Fuel Poverty - National Islands Plan Annual Report 2022 - gov.scot, gov.scot
- Home Energy Scotland/Energy Saving Trust grant and loan data: EIR release - gov.scot, gov.scot