Heat pumps can be cheaper than gas boilers as government grants increase by 50 per cent

UNDER EMBARGO FOR 00.01 Monday 23 October 

Families can install a heat pump for cheaper than the average gas boiler, thanks to an increase in government grants available from today. 

As promised by the Prime Minister as part of the government’s pragmatic approach to net zero, the Boiler Upgrade Scheme will offer £7,500 towards the cost of a new heat pump – a 50 per cent increase in the support available for air source models and making it one of the most generous schemes in Europe.  

Estimates place the typical cost of buying and installing a gas boiler at between £2,500 and £3,000 and starting prices for heat pumps can now be below this for some households, when taking advantage of the grant and additional discounts offered by energy suppliers.  

The increased grants form part of the government’s pragmatic, proportionate and realistic approach to reaching net zero – reducing costs on British families (after huge pressures families have faced over the last couple of years) while still meeting international commitments. 

Today, the government is also: 

• making £10 million available through the Heat Pump Ready programme to support innovation in the heat pump sector to cut installation costs even further;
• launching ‘Welcome Home to Energy Efficiency’ a new campaign to help people improve the energy efficiency of their home and lower their bills over the winter.

As a result of the increased grant funding, thousands of families up and down the country have the chance to upgrade their heating to a cleaner alternative for less. The scheme has also been extended by three years to 2028, giving people more time to take advantage of the opportunity. 

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.”  

Customers do not have to apply for the grants and can check their home is eligible on GOV.UK. Anyone interested just needs to agree a quote for the work with an MCS certified installer, who will then do all the paperwork. Ofgem will simply contact the customer after that to confirm they would like to proceed. 

As well as increasing the air source heat pump grant from £5,000 to £7,500, ground source heat pump grants have risen from £6,000 to £7,500, and households can still access £5,000 grants for biomass boilers. 

Organisations can now apply for a share of the latest round of the Heat Pump Ready programme, which will support innovation projects that would make heat pumps cheaper, quicker or easier to install and would improve the customer experience of using a heat pump. 

The Welcome Home to Energy Efficiency campaign will encourage families to improve their home’s energy efficiency, with adverts across television, on-demand services, podcasts, print and billboards. They will include a range of recommended measures such as: 

• Checking loft and wall insulation
• Upgrading to a heat pump, using the bumper grant
• Installing solar panels to power a heat pump and save even further

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.”   

Boiler Upgrade Scheme grants can be used alongside support from the £1billion Great British Insulation Scheme for more than 300,000 homes, including the most vulnerable families in England, Wales and Scotland. This ensures the most energy-inefficient homes can keep more of their heat indoors and replace their inefficient gas boilers with the latest technology. 

Consumers can also give their home an energy efficiency MOT now at a new dedicated website: Gov.uk/energy-efficient-home. 

To prevent hardworking people being burdened with high costs, 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. Some of these homes are not suitable for heat pumps, so this ensures homeowners are not having to spend around £10,000 to £15,000 on upgrading their homes in just three years’ time. 

The government has also set an exemption to the phase out of fossil fuel boilers, including gas, in 2035, so that households will not have to switch to a heat pump if their home is not suitable.  

 Greg Jackson, Founder of Octopus Energy, said:

"We see enormous demand for heat pumps as they're 3 or 4 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% 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.”