Heat pump grant applications soar

The number of applications made to the Boiler Upgrade Scheme (BUS) has soared in the weeks after grants were increased to £7,500.

Figures released by the government show that more than 2,600 voucher applications were received in the last week of October when that grant level increased. Of that number 1,500 were reapplications from consumers who had relinquished their vouchers at the lower £5,000 limit.

An additional 1,150 new applications were received during the week commencing 23 October, three times as many as the weekly average received so far this year.

The figures show that while reapplication numbers are declining, new voucher applications remain high at between 500 and 600 per week – nearly a 60% increase on the previous weekly average.

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.

The figures do also reveal a significant dip in applications during the four weeks between Sunak announcing the increase and it coming in to force, with just 414 applications made during this period.

Speaking to Utility Week, director for growth & external affairs at the Heat Pump Federation Bean Beanland said he expects the recent surge in demand to remain at a similar level for the foreseeable.

He said that the “bulk” of current applications appears to be coming from consumers who had previously enquired about heat pumps, with many more consumers now just starting on their “heat pump journey”.

“Speaking to our members we know that the bulk of voucher applications that have been received in the last few weeks are from people who had already shown an interest in having a heat pump installed,” Beanland said.

“Suppliers are going back out to people who couldn’t quite afford heat pumps under the £5,000 grant level but they can do now with the additional £2,500. So the early conclusion is that that increase is making a big difference.”

He added: “Now there will also be a lot of people who will be encouraged to enquire based on the higher level. Those people won’t yet be showing up in the voucher statistics as it often takes some time to go from initial enquiry until they are ready to commit.

“Therefore I expect the voucher applications to continue at a steady pace for some time.”

Beanland previously predicted that the annual BUS budget could be “blown” before the March deadline due to the increased grant level.

He added that energy efficiency minister Lord Callanan has previously assured industry stakeholders that he would be lobbying for next year’s funding to be brought forward if it was needed. The Budget for the 2024/25 financial year is currently set at £150 million.

Also responding to the figures, Octopus Energy revealed that the company has seen a five-fold increase in the number of heat pump requests since the grant level was increased.

Rebecca Dibb-Simkin, chief product & marketing officer at Octopus Energy Group, said: “The Boiler Upgrade Scheme has already done wonders to kickstart a nascent heat pump industry and drive hundreds of millions of pounds of private sector investment in the UK. Since the increase in the grant was announced, we’ve seen five times more requests for heat pumps from our customers, and we’ve even been able to offer some installations for free.”

Ovo chief commercial officer Mat Moakes added: “It’s encouraging to see the rise in applications for the Boiler Upgrade Scheme with the recent uplift helping households make the switch.

“At Ovo we’ve seen an uplift in customer interest and our data also shows that when paired with innovative tariffs to reduce the cost the uptake increases.”

The results come alongside new independent research confirming heat pumps are generally rated as quiet, with a majority of those surveyed saying they did not notice the sound.

The review found complaints from neighbours are rare – with people far more likely to hear the noise of traffic and dogs barking, over of the sound of nearby heat pumps.

Lord Callanan, minister for energy efficiency and green finance, said: “This fantastic increase in applications through the Boiler Upgrade Scheme demonstrates not only the desire for heat pumps in this country, but also that our approach to reach net zero works.

“We want more families to enjoy the more stable bills and cleaner heating that heat pumps have to offer – and today’s evidence that heat pumps make minimal noise is yet another reason to make the switch.”

The recent increase in heat pump applications is in stark contrast to the scheme’s previous record. At the end of the first round of the BUS (which ran from April 2022 to March 2023), £89.6 million of the £150 million budget went unspent and was clawed back by Treasury.

In August, before prime minister Rishi Sunak increased the grant level, Utility Week analysis showed that uptake of BUS grants had again “hit a ceiling” with the current funding pot again at risk of going unspent.