The Department for Energy Security and Net Zero increased the Boiler Upgrade Scheme grant for heat pumps by 50% in October 2023, raising the air source heat pump rate from £5,000 and the ground source heat pump rate from £6,000 to £7,5001. Ofgem, which administers the scheme, recorded the change as applying from 23 October 20232. The Department issued the change notice on 21 September 20231.
The scheme, which launched on 23 May 2022, provides upfront capital grants for heat pumps and, in limited circumstances, biomass boilers in homes and small non-domestic buildings in England and Wales1. Biomass boilers remain at £5,0001. Grants are available to all households irrespective of income3.
"Grants for heat pumps increased by 50% last October as part of the government's plan for a pragmatic approach to reaching net zero"
The Department said the increase made the scheme one of the most generous of its kind in Europe4. It reported that average monthly applications between November and April rose 49% to 2,136, compared with 1,435 before grants were increased, and that applications in April 2024 were up 93% year on year, at 2,3804. By the scheme's second anniversary in May 2024, there had been more than 40,000 applications in total, over 25,000 grants paid out and more than £148 million issued4.
Ofgem's later annual report gives different cumulative figures. From launch to the end of March 2025, 49,136 low-carbon heating systems had been supported, with £328.2 million paid, of which 97% were air source heat pumps1. In the 2024 to 2025 scheme year, Ofgem received 38,412 stage 1 applications and made 25,331 grant payments worth £189.7 million1.
| Measure | Rate |
|---|---|
| Air source heat pump | £7,500 |
| Ground source heat pump | £7,500 |
| Biomass boiler | £5,000 |
Source: Ofgem1
The Committee of Public Accounts reported that the £7,500 grant covered nearly 60% of the average cost of installing a heat pump, based on the average cost in 2023, and that an average heat pump cost around £11,600, four times the cost of a gas boiler3. It also found that the scheme funded 18,900 heat pump installations between May 2022 and December 2023, less than half of the 50,000 installations the Department expected, and that the Department underspent by £100 million in the scheme's first year3.
Why it matters for households
For a household replacing fossil fuel heating, the grant is a fixed contribution towards the upfront cost of a heat pump, not a discount on running costs. The grant amount differs by technology, and the Committee of Public Accounts noted that electricity prices mean heat pumps can be more expensive to run than boilers3. Eligibility rules also changed: from 8 May 2024 the requirement to install loft or cavity wall insulation where recommended on a property's EPC was removed, and the scheme was confirmed as extended to 20281. Ofgem's guidance states that where an EPC lists no loft or cavity wall insulation recommendations, the property meets the scheme's insulation requirements2. The scheme is one of several grants and schemes affecting how a home is heated, and its terms determine how much of the capital cost a household carries itself.
What happens next
The scheme budget for the 2024 to 2025 financial year was increased twice, from £150 million to £205 million, and the government announced in November 2024 that the budget for 2025 to 2026 would rise to £295 million1. Ofgem states that the Department conducted a consultation in April 2025 on proposed changes to the scheme, and that the most recent update at the time of its report was published on 9 April 20251. The Department's target of 600,000 heat pump installations a year by 2028 remains in place4.
Sources4 cited
- BUS Annual Report 2024 to 2025, ofgem.gov.uk
- Summary of updates in the BUS property owner, ofgem.gov.uk
- Decarbonising home heating, committees.parliament.uk
- Demand for heat pumps rises following increase in applications to the Boiler Upgrade Scheme - GOV.UK, gov.uk