The Boiler Upgrade Scheme (BUS) could give you thousands of pounds towards adding low-carbon heating alternatives such as heat pumps to your home.
The BUS is a government scheme designed to help meet the UK’s 2050 net zero emissions target by driving down the cost of low carbon heating technologies and working with industry to ensure they are no more expensive to buy and run as traditional fossil fuel boilers.
It launched in April 2022 and is designed for homeowners in England and Wales to help people afford the upfront costs required for low-carbon heating. Applications for homeowners will open on 23 May 2022.
In a nutshell, homeowners who wish to install air source heat pumps, ground source pumps or biomass boilers to replace their traditional heating can apply to get thousands of pounds towards the work.
You can't apply directly – your heating system installer, who must be registered with the scheme, will do this for you. Successful applicants will receive one-off payments of up to £6,000 towards the cost of the installation project.
The funding will be sent as a voucher given to installers on behalf of homeowners utilising the initiative. These vouchers will have a set period of validity to ensure they are used in a timely manner – three months for air-source heat pumps or biomass boilers and six months for ground source heat pumps.
With a view to minimise non-compliance, fraud, and gaming of the scheme, robust upfront checks will take place before vouchers are issued and grants are paid out.
The scheme’s £450 million funding is expected to help install 90,000 heat pumps over three years. But this is far fewer than the target of 600,000 a year announced by the Prime Minister in November 2020.
While the government has stopped short of banning the installation of fossil-fuel boilers for now, it’s hoping that cleaner alternatives such as heat pumps will cost the same to buy and run as gas boilers by 2030, and therefore encourage more people to make the switch.
People who wish to install air-source heat pumps, ground-source heat pumps or biomass boilers are eligible under different circumstances to receive grants through the initiative.
Grants are available to owners of existing homes in England and Wales, including private landlords.
The funding can only be used for replacing fossil fuel heating systems, such as gas, oil, or direct electric heating, and not for replacing existing low carbon systems.
You must have a valid for the property (i.e. one that is less than ten years old), and it must have no outstanding recommendations for loft or cavity wall insulation to apply for the scheme. If your EPC does recommend either of these, you must carry out the recommendation(s) and obtain a new EPC before you can apply for a BUS grant.
This is because your heating system will work more efficiently with these insulation measures in place. For further information and details of exceptions, speak to your installer.
Biomass boilers, meanwhile, will only be supported by the BUS in rural areas (based on the Office for National Statistics’ definition) with no connection to the gas grid or when they replace existing fossil fuel systems that are not fuelled by mains gas or direct electric systems.
While heat pumps may be considered as an effective alternative to ageing boilers, they won’t be suitable for all homes. They must be installed outside and require space indoors for a hot-water cylinder. In addition, heat pumps work best in homes that are already energy efficient, so anyone living in a poorly insulated property may face bigger bills or colder rooms.
The grant can only be used to install a heat pump that can meet the space heating and hot water heating demands of the property. It must have a capacity of no more than 45 kWth (kilowatt thermal) and a seasonal coefficient of performance (SCOP) of at least 2.8.
If you can’t install the recommended insulation because your property is listed, in a conservation area, or is otherwise exempt, you may still be able to apply, but you will have to provide evidence of exemption. New build properties are also not eligible unless you are a self-builder.
If you decide the BUS is right for you, you can send an application through the heating system installer you’ve commissioned to conduct the works in your home.
It is being administered by Ofgem on behalf of the government’s Department for Business, Energy and Industrial Strategy (BEIS). As the homeowner, you will not be able to apply for the grant directly, but must first find an installer who will apply to Ofgem on your behalf.
As with all home improvements, we recommend getting a quote from more than one installer before agreeing to any work.
There are several stages in the application process:
Funding is available for both air source and ground source heat pumps, as well as biomass boilers.
You can apply for:
The grant is not expected to cover the full cost of replacing your existing boiler with a low carbon alternative, however, so the process could still cost more than installing a new gas boiler. The typical cost of an air source heat pump is between £7,000 to £13,000, according to estimates by the Energy Saving Trust, meaning a £5,000 grant could cut the cost to around £2,000 to £8,000.
The RHI offered tariff payments for seven years to financially reward people who use renewable energy to heat their homes, whereas the BUS offers the upfront payment. It gives applicants up-front sums of up to £6,000 in place of the £7,000 paid over seven years in quarterly instalments that the RHI provided.
How much you'll pay for a ground source heat pump is dependent on the size of the system. You'll also need to factor in the cost of fitting internal heating systems, like underfloor heating, if your property requires it.
The cost of installing an air source pump varies according to the size of the pump, the complexity of the system and whether you choose simple or advanced controls (such as a weather-compensated thermostat).
But there is 0% VAT on the installation of energy saving materials including heat pumps and biomass boilers for the next five years, which will help reduce the cost of utilising the scheme.
You’ll need to decide whether your costs to install a renewable energy option in your home will be outweighed by your potential energy bill reduction and an uplift in your green credentials.
You're most likely to benefit from the BUS if your home is off the gas grid and you replace your current heating system with a renewable one. This is because off-gas-grid homes are usually more expensive to heat, so there's more potential to save on fuel bills. You can still install renewable heating and apply for the initiative if your home is connected to the gas grid, though.