£5,000 grants unveiled as Government seek heat pump revolution

Brits wanting to fit a low-carbon heat pump in their homes in England and Wales could receive a £5,000 grant from the Government to help replace less efficient gas boilers from April 2022. The initiative is part of a £3.9 billion project to make all heating systems low carbon by 2035.

The Government scheme aims to reduce emissions but also to cut the cost of fitting heat pumps so that more households will be able to afford them. The idea is to ensure that low carbon, more efficient heating systems, such as heat pumps, will be no more expensive – and in many cases cheaper – to buy and run than gas boilers.

But it will operate on a first come, first serve basis with the Government offering payments for 30,000 heat pumps every year for three years. You’ll also have to stump up the difference if costs come to more than the £5,000 grant.

This new grant won’t be available until April next year but below is an overview of how the scheme will work.

Who is eligible for the heat pump scheme?

Most homeowners, public landlords and private landlords in England and Wales will be able to participate in the scheme. The grant won’t, however, be available to those in social housing and new-build properties at launch.

Northern Ireland has a different energy system, while the scheme won’t be available to those in Scotland.

Will everyone get £5,000?

Most households (up to the 30,000/yr cap) that join the scheme will receive a £5,000 grant for air-sourced heat pumps. Houses that need heat pumps where heat is sourced from the ground will, however, receive £6,000 as they are more expensive. But it is expected that the majority of houses will require air-sourced heat pumps.

This cash is designed to help cover the cost of everything from the pump to the installation, including any changes to your house that are needed. For example, you may need to have new radiators installed that work with heat pumps. You will, however, be expected to pay for any shortfall on the final bill – see below.

Does £5,000 cover all installation costs?

The £5,000 is unlikely to cover all installation costs and you’re expected to foot the bill for the balance. Heat pumps [and their installation] cost between £10,000 and £12,000 on average. The idea is that you will end up paying roughly the same amount as you would for a gas boiler.

The price of the heat pump depends on the size of your home, the supplier you go with, and the type of heat pump installed.

Depending on the supplier’s rules, you may be able to pay for any remaining balance in instalments.

How do I apply?

Households don’t apply for the grant – you’ll first need to engage with a heat pump installer, which will then apply to energy regulator Ofgem for the grant on your behalf. Once your application has been reviewed, Ofgem will issue a voucher confirming the grant amount.

The installer will then have a set amount of time to complete installation from the date of the voucher being issued. This tends to be three months for most installations.

Once completed, the installer will generate what’s called a ‘Microgeneration Certification certificate]’ that confirms eligibility criteria have been met. This is then submitted to Ofgem. Ofgem will then pay the grant amount directly to the installer and you will be billed for the remaining amount.

Can I cancel?

You’ll have 14 days to cancel after signing the heat pump contract. You can also cancel at any point before signing the contract if you’re unhappy with how much quoted work will cost.

What is a heat pump?

Heat pumps run on electricity and work in similar way to a fridge in reverse; they extract energy from the air or ground. They then move heat from one area to another to warm it up.

This is different to gas and oil boilers, which literally boil water to work, releasing carbon into the atmosphere every time you use them. The hot water from boilers flows through pipes to the various radiators in your home, warming them up.

Electric heat pumps are more efficient, safer and cleaner than gas boilers

Greg Jackson, CEO and founder of Octopus Energy, said: “This Heat and Buildings Strategy will help kick-start a cheap clean heating revolution, by bringing prices down for households and allowing companies to invest in scaling up their clean heating operations. When the new scheme launches in April, Octopus Energy will install heat pumps for about the same cost as gas boilers.

“Electric heat pumps are more efficient, safer and cleaner than gas boilers and can help make homes more comfortable with less energy. Today we’ve crossed a massive milestone in our fight against climate change and to reduce Britain’s reliance on expensive, dirty gas.”

Kick-starting Britain’s new heat pump industry is expected to protect and create tens of thousands of new jobs in research and development, production, supply chain and installation over the next decade.

The Heat and Buildings Strategy builds on the Prime Minister’s 10 Point Plan, which outlined how decarbonising households and workplaces could support 240,000 jobs across the sector by 2035, with many thousands more into the future in areas such as manufacturing, developing and installing new low-carbon technologies.

With heat in buildings being one of the largest sources of UK carbon emissions, accounting for 21% of the total, there is an urgent need to deliver a mix of new, low-carbon heating solutions to meet our legally-binding target to end the UK’s contribution to climate change by 2050.