Budget for heat pump grants more than tripled

The government has announced a major uplift in the annual budget for the Boiler Upgrade Scheme (BUS).

Between 2025/26 and 2027/28, a total of £1.54bn has been allocated to the scheme, meaning more than £500 million will be available for heat pump grants each year.

The current annual budget – and next year’s budget – is set at £150 million. However, the government has been previously warned that it risks using up the current funding pot up before the March deadline.

That is due to a dramatic increase in grant applications since prime minister Rishi Sunak increased the maximum level of support from £5,000 to £7,500.

In the four weeks following the increase in grant level, 4,687 voucher applications were made. That compares to an annual monthly average of around 1,400 voucher applications for the year so far.

Responding to the increased funding pot, Energy UK deputy director of policy Charles Wood said: “After the sudden significant uplift in applications to the Boiler Upgrade Scheme (BUS) and wider energy efficiency programmes following the prime minister’s decision to increase the grant level for the BUS, this welcome increase in funding will enable more households to take on these measures.”

Greg Jackson, CEO of Octopus Energy added: “Heat pumps are rapidly becoming cheaper and quicker to install, in more and more homes, and it’s clear this technology is the heating of the future.

“Our customers love heat pumps, and we’re planning on hiring two thousand new engineers next year alone to try to meet rocketing demand. This increased certainty from government enables us to invest with confidence and will unlock cheaper, cleaner heating for the UK.”

While also welcoming the increased BUS budget, founding director of Thermal Storage UK Tom Lowe called on the government to extend the scheme to cover the installation of highly-flexible thermal batteries.

The increased BUS budget was announced as part of a £6 billion drive to improve energy efficiency.

Other funding announcements – some of which were announced at the Autumn Statement – include:

• A new £400 million energy efficiency grant, launching in 2025, for households in England to make changes such as bigger radiators or better insulation.
• A new local authority retrofit scheme, allocated £500 million to support up to 60,000 low-income and cold homes, including those off the gas grid, with measures such as insulation.
• The Social Housing Decarbonisation Fund, allocated £1.25 billion to support up to 140,000 social homes to be insulated or retrofitted, improving energy performance and lowering bills.
• The Green Heat Network Fund, allocated £485 million to help up to 60,000 homes and buildings access affordable, low carbon heating through new heat networks, reducing our use of fossil fuels and providing more reliable heating.
• The Heat Network Efficiency Scheme, allocated £45 million to improve around 100 existing heat networks, in a move that will reduce bills and improve reliability.
• The Industrial Energy Transformation Fund, allocated £225 million, will continue to help businesses transition to a low-carbon future.

Energy secretary Claire Coutinho said: ”Cutting energy bills is my top priority. Today’s funding will help those who are most in need and keep around a million more families warm during winter.

“Everyone deserves to live in a warm, energy efficient home. We have already made excellent progress with nearly 50% of properties in England now having an Energy Performance Certificate of C – up from just 14% in 2010.

“This funding will help us go even further and improve 200,000 cold, low income and social homes.”