Nesta, a research and innovation foundation, published its response to the Boiler Upgrade Scheme regulations consultation on 14 March 20241. The response answers the consultation questions and sets out the organisation's position on the scheme's energy performance certificate rules1.
The consultation asked whether the current requirement for a valid EPC with no outstanding recommendations for loft or cavity wall insulation should be maintained1. Nesta answered no, and identified the specific issue as "b) Requirement to have a valid EPC with no outstanding recommendations relating to loft or cavity wall insulation"1. It supported keeping the EPC itself, stating: "We agree that properties should have a valid EPC when applying for the BUS"1. Its reasoning is that the EPC record retains property characteristics for homes fitting heat pumps, while the insulation condition is a barrier that could be removed to stimulate uptake of the grant1.
"The requirement for a valid EPC with no outstanding recommendations for loft or cavity wall insulation acts as a potential barrier to utilisation of the Boiler Upgrade Scheme (BUS) and hence heat pump adoption, by reducing the pool of households who join the scheme, and for some households, increasing the cost of installing a heat pump."
Nesta argues that insulation is not a fundamental requirement for efficient heat pump operation, because it affects how much heat a home needs rather than the efficiency of the heating system, and that heat pumps can work in poorly insulated homes if properly sized and installed1. It cites its own survey of heat pump owners, in which two-thirds (67%) were satisfied with their running costs against 59% of boiler owners; of the heat pump owners, 51% had an EPC rating of C-D and 15% had an EPC of E-G1. Building fabric upgrades were common but not universal among those installing heat pumps, with 36% installing loft insulation and 23% wall insulation1.
Timing is central to the argument. Nesta cites an Ipsos Mori and Energy Saving Trust study showing that 30% of heating system replacements occur when an old system breaks down, with an additional 28% replaced when systems are on their last legs1. Outstanding insulation requirements could prevent a boiler being replaced with a heat pump at that point1. Nesta adds that insulation can be installed after a heat pump with few drawbacks, the main one being a slightly oversized heat pump, and that there is not a large difference in cost between heat pumps of different sizes1. It also notes the electricity-to-gas price ratio peaked at 6:1 in the October 2020 to March 2021 price cap and has since dropped below 4:11.
Why it matters for households
The EPC condition sits at the point where a household decides whether to apply for a Boiler Upgrade Scheme grant. Under the rule Nesta opposes, a home whose EPC carries an outstanding loft or cavity wall insulation recommendation would not qualify, even where the household wants a heat pump1. For a home whose boiler has failed, that condition can determine whether a heat pump is an option at all, given that 30% of replacements happen at breakdown and a further 28% when a system is failing1. The EPC and insulation requirement is therefore a practical gate on a home's ability to move its heating off gas, and on the running costs a household can expect once it does. Nesta's figures suggest satisfaction with heat pump running costs is not confined to well-rated homes1.
What happens next
The consultation closed and Nesta's response was published on 14 March 20241. No government decision on the EPC and insulation requirement has been reported1.