Heat Pump Funding: What do we know about the new Boiler Upgrade Scheme?

Heat pumps are a highly efficient, low carbon way of providing heating and hot water in homes and, while not yet commonplace in the UK, their use is increasing quickly.

The Government has thrown its weight behind the technology in a bid to help in the fight against climate change and reach its goal of net zero greenhouse gas emissions by 2050.

But, right now, heat pumps cost a bit more than a common gas boiler to install, which can be a barrier for those choosing their next heating system.

This is where the new Boiler Upgrade Scheme (BUS) comes in.

Announced as part of the Government’s recent Heat and Buildings Strategy, from April 2022 the scheme will provide homeowners with funding to offset the cost of installing certain low carbon heating systems, including heat pumps.

While some of the finer details are still to be released, here’s what we know so far:

Who can apply for a BUS?

The BUS is open to domestic property owners. The property must be a privately-owned residential dwelling and not used for social housing. It must also have a valid Energy Performance Certificate, with no recommendations for cavity wall insulation or loft insulation.  

How much is the funding?

Up to £5,000 is available for air source heat pumps and biomass boilers, while up to £6,000 is available for ground source heat pumps.

What technologies are covered by the BUS scheme?

The scheme covers a number of different low carbon technologies, including air source heat pumps and ground source heat pumps. Some biomass boilers are also eligible if the property is in a rural location where there is no gas connection and a heat pump cannot be used.

What is not included in the scheme?

There are a number of exclusions that would make a property or application ineligible. These include:

• Hybrid systems that use a fossil fuel source

• Biomass boilers in homes that could be heated by a heat pump or are on the gas grid

• Solar thermal heating systems. Though these can be installed with a heat pump, the heat pump must cover all the heat and hot water load as there is no specific funding for solar thermal systems

• New builds. However, a custom one-off new build, such as a self-build may still be eligible

• Social housing. Other funding, such as the Social Housing Decarbonisation Fund, exists to support the installation of low carbon heating in these properties

What is the process?

The BUS scheme provides funding in the form of a voucher.

At the moment, the proposal is that the voucher application process will be managed by the installer on behalf of the homeowner. 

Step 1: The homeowner gets a quote from an installer that’s accredited by the Microgeneration Certification Scheme (MCS). Only one quote is needed but homeowners would be advised to source at least three quotes for comparison.

Step 2: The application is submitted by the installer prior to installation and approved.

Step 3: The new heating system is installed by the accredited installer.

Step 4: The voucher is redeemed by the installer after commissioning and registering the appliance and the value is deducted from the customer’s invoice. Vouchers must be redeemed within three months for air source heat pumps and biomass boilers and within six months for ground source heat pumps.

Are there any requirements for installers?

There are some requirements installers must meet. These include:

• Holding MCS accreditation for the renewable technology proposed

• Registered with a scheme administrator such as NAPIT or NICEIC

• Employing or subcontracting workers with relevant industry qualifications

• Holding membership of an associated consumer code such as RECC or HIES

What are the system requirements?

To be eligible, the homeowner must install low carbon heating technology that replaces an existing fossil fuel-based system. There is an exception if the property is a one-off custom new build, such as a self-build, and it is the first heating system to be installed.

There are also some specific requirements relating to the performance of the heating system being installed. For example, the new system must be able to provide 100% of the heating and hot water demand of the home. Heat pumps are required to have a minimum Seasonal Coefficient of Performance (SCOP) of 2.8 and the chosen system must not exceed 45kW load capacity.

The new system cannot include any fossil fuel source and must represent the MCS design in full when installed.

How is the scheme different from the current RHI?

The BUS will replace the Renewable Heat Incentive (RHI) when it starts in April 2022.

The RHI is a payback scheme that offers homeowners quarterly payments based on their energy use over seven years, while BUS is an upfront voucher scheme. The aim is to help homeowners overcome one of the biggest barriers they face in switching to low carbon heating technologies – the initial capital outlay.

There are also some differences in what technologies the schemes can fund. For example, the BUS excludes hybrid systems with a fossil fuel energy source and requires the technology installed to cover 100% of the heating and hot water load in the property, though the RHI funds heat-only systems.

Under the BUS, a heat pump must have a minimum SCOP of 2.8, up from 2.5 with the RHI.

Looking ahead

More details on the BUS are set to be released in the coming months, so keep an eye on our website for more information.

To find out all about heat pumps and if they are suitable for your property read our brochure.