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Government’s £5k boiler grant scheme launches

Paloma Kubiak
Written By:
Paloma Kubiak

Households in England and Wales can now check for installers under the government’s £5,000 grant scheme to replace gas boilers with energy efficient heat pumps or biomass boilers.

The majority of homes currently use gas boilers for heating but they will be banned by 2035 as part of the government’s goal to reach net zero carbon emissions by 2050.

Through the £450m Boiler Upgrade Scheme (BUS) first announced last year, households will be encouraged to switch their traditional gas boilers to energy-efficient sources.

Heat pumps are more energy efficient than gas boilers because they use less electricity than the heat they produce.

But one of the major barriers to having a heat pump in the past has been the initial cost. Installing a new heat pump can cost between £5,000 and £10,000, according to EDF. This is compared to around £2,000 to £3,000 for a new gas boiler.

As such, the new upgrade scheme has been created to bring down upfront costs and make transferring away from a gas boiler more affordable.

The government has committed to install 600,000 heat pumps by 2028 in England and Wales and the new upgrade scheme replaces the Renewable Heat Incentive (RHI) which paid homeowners for renewable energy they produced.

It comes after the chancellor announced in the Spring Statement that VAT on home insulation, solar panels and heat pumps will be reduced from 5% to zero for the next five years.

Who is eligible and what can you get?

The new scheme is open to any domestic properties in England and Wales with enough power to support up to 45kWth, which the government says covers most homes.

You need to own your own home and have a valid Energy Performance Certificate (EPC). New build homes are not included, apart from if you’re building your own home.

You can still apply even if you’re receiving government funding for any other energy efficient upgrade, such as insulation or solar panels.

Homeowners will be able to apply for £5,000 off the cost of an air source heat pump or a biomass boiler and £6,000 off the cost of a ground source heat pump. These costs cover the new heat source and installation fees.

How to apply

From today, you will be able to get quotes for a new heat pump or biomass boiler and start searching for an installer. They will need to be an MSC certified installer. You can search for local installers and compare their prices via the MSC website.

The installer will assess your property and advise you on the best type of heating system available. They can apply for the grant on your behalf. Once you’ve agreed to the costs, and the grant has been applied for, the regulator Ofgem will contact you to confirm what is being done.

The scheme opens today and will run until the end of March 2025. An installer can register with Ofgem from April 11 and applications and payments will begin on May 23.

How much money could upgrading save you?

Rising global demand, and the war in Ukraine, have sent gas bills up by over £500 in the last year and they could rise by this amount again by October, according to industry estimates.

The exact amount you could save by switching will depend on factors including the size of your home, the type of tariff you have and how much you pay for electricity. But they are up to £261 on average a year cheaper to run, according to research from the environmental think tank, the Regulatory Assistance Project (RAP).

It calculated that with the new grant and with a reduction to VAT, a heat pump that previously cost £10,000 would now cost around £4,975 with running costs of between £723 and £964. This is compared to a new boiler costing £2,700 to install and £984 to run per year.

Jess Ralston, Senior Analyst at ECIU, said: “Millions of homes are already suitable for swapping out an old gas boiler for an electric heat pump which are both reliable and clean.

“As with electric vehicles, early adopters will help to drive down the costs and with demand already set to be high plus a heightened focus on the need to get off imported gas, the government may be wise to consider expanding the scheme.

“Most people don’t realize it, but your gas boiler produces more carbon emissions than your car, so they are also a major driver of climate change.”

What are the alternatives?

It may be possible to apply for a grant from your energy provider or a local organization or charity if you’re looking to replace your boiler. However, these aren’t open to everyone and are usually only for those receiving certain benefits.

You can find out more and search for local help on the government’s Simple Energy Advice website.