Air source heat pump grants UK: What you need to know

So, you’re planning to install an air source heat pump. This could be a great move for the environment and a smart choice for your household budget – provided that your heating system is well-suited to this type of heat source.

An air source heat pump – or ‘ASHP’ – uses thermal energy from the air outside your home to produce hot water for your plumbing and heating systems. Although extra electricity is used to pressurise the water and bring it to the required temperature, an efficient, properly installed ASHP could use far less fuel than the average gas boiler.

If you’ve already checked that your plumbing system is suitable for an ASHP, and you’ve consulted with your installer to pick out one of the best air source heat pumps on the market, you may still have some lingering concerns over the cost. Purchasing and installing an ASHP typically costs between £7,000 and £13,000 – an upfront outlay that prices many people out of getting a heat pump.

As we’ll see, this is where the Boiler Upgrade Scheme can help.

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Boiler Upgrade Scheme grants for air source heat pump installation

To help citizens with the high costs of replacing their traditional gas boilers, the Government has set up the Boiler Upgrade Scheme (BUS).

Under the scheme, qualifying homeowners in England and Wales may have been eligible for a grant of £5,000 to help with the upfront costs of switching to an ASHP. Grants worth £5,000 are also available to rural households that are switching to a biomass boiler, while those installing ground source heat pumps (GSHPs) could access a larger grant of £6,000. From Monday 23 October 2023, installers will be able to apply for the newly increased grant amounts, with £7,500 available for air source heat pumps and ground source heat pumps.

In most cases, the BUS grant will reduce the overall cost significantly, making it much more feasible that a well-installed ASHP will ‘pay for itself’ over its lifetime by saving on energy costs relative to the cost of running a gas boiler.

Qualifying criteria for the BUS air source heat pump grant

There are several criteria you’ll need to meet to secure a BUS grant to help fund your heat pump:

• The ASHP system must be air-to-water (not air-to-air).
• The installer must be MCS-certified.
• The property must be in England or Wales (homeowners in Scotland may qualify for an even larger grant towards their ASHP installation).
• The property must be privately owned.
• You must have an Energy Performance Certificate for the property, with no outstanding recommendations to install loft or cavity wall insulation. 
• The ASHP must be fully replacing an existing fossil fuel heating system or electric heating system. 
• All heat pumps on your system must have a combined capacity of under 45kWth.
• The BUS funding cannot be used in conjunction with funding from other public sources. 
• The ASHP system must have an efficiency of at least 2.8 (SCOP).
• The ASHP must not be a hybrid system (in most cases).

Ofgem’s eligibility criteria for BUS grants are subject to change, so it’s definitely worth checking the energy regulator’s guidance for property owners on the boiler upgrade scheme before you factor the grant into your budget.

The extensive criteria for BUS ASHP grants may seem off-putting, but on the bright side, they are designed to ensure your heat pump installation is beneficial to the environment – especially in terms of reducing carbon emissions. Most of the BUS grant criteria safeguard both your emission reductions and your energy cost savings.

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How to apply for a BUS grant

The BUS scheme is installer-led, which means you’ll need to engage a certified installer to take on the work and contact Ofgem to apply for the grant on your behalf. The grant is given as a voucher to the installer, who should then apply that cost saving to the total you pay them. You can search for a reputable heat pump installer in your area via the Heat Pump Federation.

The BUS vouchers are only valid for three months from allocation, so don’t ask your installer to apply for one until you’re ready to buy a heat pump and start the installation process.

Because access to BUS grants is brokered by certified installers, homeowners might feel out of the loop during the grant application process. However, you can see the same information the installer will have access to by checking the latest version of Ofgem’s BUS installer guidance.

Andy James is the managing director of Force Contracts Ltd, a heating and air conditioning installation firm based in South Yorkshire. According to Andy, homeowners can give their installer a head start on the BUS grant application by making certain their property meets the scheme’s qualification criteria: 

“Before contacting an installer, you should ensure your insulation and cavity wall are in the best possible condition. And make sure you also have a valid EPC from within the past 10 years,” says Andy.

Additionally, the homeowner will also need to communicate with Ofgem while the BUS grant application process is ongoing:

“After the MCS-certified installer has applied to the scheme on behalf of the property owner,  the property owner is contacted by Ofgem to consent to a BUS application being made,” says Andy. 

“Following the heat pump or biomass commissioning, installers can submit a voucher redemption application.”

When will the BUS heat pump grants run out? 

Originally scheduled to run until the end of 2025, the Boiler Upgrade Scheme has now been extended until 2028, meaning homeowners have plenty of time to plan a BUS-assisted air source heat pump installation.

The extension to the grant scheme was announced in March 2023, via the Government’s Powering Up Britain Joint Overview, which reiterates the state’s aim for 600,000 UK households to replace their gas boiler with a low-carbon energy source by 2035. It’s quite possible that the BUS scheme will be further extended in future, to support that government goal.

That said, the BUS scheme is capped at an annual budget of £150 million per year. So, if the yearly allocation is used up by other applicants, you will no longer be able to obtain the ASHP grant until the next year. In Year 1 of the BUS (23 May 2022 – 31 March 2023), about £81 million of vouchers were allocated under the scheme, but when you consider the ongoing development of the heat pump industry and the increasing public awareness of domestic heat pumps, there’s a fair chance that applications in the coming years could equal the value of the budget cap before the end of an annual BUS cycle.

So, if you’re planning an air source heat pump installation, it could pay dividends to undertake that installation in the first half of the year – ready to save carbon and cash during the colder months ahead.