Heat pump installation could be cheaper than gas boilers as government announces 50 per cent boost to grant

Heat pump in pictures

The heat pump installation grant has been increased

Jessica Sheldon

By Jessica Sheldon

Published: 23/10/2023

- 08:07

Updated: 23/10/2023

- 08:24

The government said the heat pump grant scheme is “one of the most generous in Europe”

Families could be able to install a heat pump for less than it costs to install the average gas boiler, after an increase to a grant scheme, the government said today.

Prime Minister Rishi Sunak today announced a boost to the Boiler Upgrade Scheme, now offering a £7,500 grant towards the cost of a new heat pump.

It is a 50 per cent increase in the support available for air source models, and one of the most generous schemes in Europe, the Government claimed.

Buying and installing a gas boiler is estimated to cost between £2,500 and £3,000 typically.

The government said starting prices for heat pumps can now be below this for some households when considering the grant and additional discounts offered by energy suppliers.

The Energy Saving Trust (EST) estimates it can cost between £7,000 and £13,000 to install an air-to-water pump, and between £14,000 and £19,000 to install a ground source heat pump.

The scheme, which aims to offer thousands of families in the UK the chance to upgrade their heating to a cleaner alternative for less, has also been extended by three years to 2028.

Energy Security Secretary Claire Coutinho said: “No one should have to choose between cutting costs and cutting emissions - our pragmatic approach means we can continue to deliver on our ambitious net zero targets without unfairly hitting the pockets of hardworking families.

"From today, for some households starting prices for heat pumps could now be below the average gas boiler, as we have increased the cash grant by 50 per cent to £7,500 – making our scheme one of the most generous in Europe.

“This will help thousands of people across the country reduce their energy use and keep their homes warm.”

Who is eligible for the heat pump installation grant?

Customers don’t have to apply for the grants and can check if their home is eligible online via Gov.uk.

They need to agree on a quote for the work with an MCS-certified installer, who will then do the paperwork.

Ofgem will then contact the customer to confirm they would like to proceed.

Air source heat pump grants have increased from £5,000 to £7,500, ground source heat pumps have risen from £6,000 to £7,500, and households can still access £5,000 grants for biomass boilers.

Lord Callanan, Minister for Energy Efficiency and Green Finance, said: “Making our housing stock more energy efficient not only furthers our net zero ambitions but enables families to cut their energy use and reduce their bills.

“Welcome Home to Energy Efficiency will help people identify measures that will work for them, and in turn create street upon street of warmer homes.”

The government is delaying the ban on installing oil and liquified petroleum gas boilers, and new coal heating, for off-gas-grid homes to 2035, instead of phasing them out from 2026.

The government has also set an exemption to the phase out of fossil fuel boilers, including gas, in 2035, so homes unsuitable for heat pumps will not have to switch.

Greg Jackson, Founder of Octopus Energy, said: "We see enormous demand for heat pumps as they're three or four times more energy efficient than gas boilers, and with these government grants they're affordable to install too. Using Octopus's smart tariffs they're also cheaper to run.

"With Octopus's innovations, we're now able to make heat pumps that are hotter than a gas boiler, making them an almost plug-and-play replacement for many homes, and we're continuing to bring costs down so that one day they won't even need subsidies."

Gráinne Regan, Head of Heat, OVO said: “With home heating accounting for 17 per cent of the UK’s total carbon emissions, it’s clear as a nation we need to switch from gas boilers to heat pumps which are more efficient and powered by cleaner electricity.

“The government’s uplift to the Boiler Upgrade Scheme is a welcome investment to support people to adopt heat pumps. At OVO, we’ve also halved the running costs of a heat pump, helping to level the playing field between gas boilers and heat pumps.

“But we need to go even further. We must encourage a national switch by improving incentives and cutting running costs.”

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