Incentive schemes for heat pump technology

There are many reasons to choose a heat pump. That’s why Daikin has created the whitepaper Drivers to Heat Pump Adoption by European Households, offering fact-based insights to help consumers make an informed decision. It explores key factors such as energy cost savings, government incentives, environmental impact, policy developments, and how heat pumps integrate with renewable energy solutions to future-proof homes.

In this article, we’ll focus on the various government incentives and subsidy schemes that make heat pump technology more accessible and cost-effective.

In an effort to combat climate change, many governments have decided to phase out gas and oil boilers. Instead, they are encouraging the adoption of low-carbon solutions such as heat pumps with a number of incentive schemes. Could you be eligible?

Government incentives make heat pumps more accessible

Convincing homeowners to make the switch to heat pumps has traditionally posed a significant challenge. There is a perception around heat pumps that they may require a larger initial investment than traditional heating systems which has discouraged some householders from making the change in the past.

Governments are now encouraging the transition toward more sustainable solutions of heating, cooling and domestic hot water production. Government support often comes in the form of public funding to make the investment in a heat pump accessible to a larger portion of the population.

The UK’s Boiler Upgrade Scheme (BUS)

To help reach the net zero carbon emissions target set by the government (a reduction of 95% over the next 30 years), the UK has a grant scheme for the replacement of fossil fuel heaters. Through the Boiler Upgrade Scheme (BUS), people in England and Wales can get a grant to cover part of the cost of replacing fossil fuel heating systems including oil, gas and electric, with a heat pump or biomass boiler.

Recent updates to BUS vouchers

Due to the large volumes of applications, the Government has recently allowed Ofgem to over-allocate BUS vouchers in 2024 for £50 million. This brings the total budget of the scheme to £200 million.

Eligibility criteria for BUS

To be eligible, the property must be a renovation, and you must be replacing a fossil fuel heating system such as oil, gas or electric. Also, the property must have a valid Energy Performance Certificate (EPC) with no outstanding recommendations for loft or cavity wall insulation.

Increased grant amounts

The amount of the grant, per property, has recently been increased from £5,000 to £7,500 for air-source heat pumps and from £6,000 to £7,500 for ground-source heat pumps. Hybrid heat pump systems are not eligible for the grant. An MCS-certified installer will apply for you, and the value of the grant will be deducted from the total installation cost price of the heat pump.

Home Energy Scotland Grant and Loan Scheme

If you’re in Scotland, the Home Energy Scotland Grant and Loan scheme offers funding for energy efficiency improvements and heat pumps, aiming to support homeowners in adopting energy-efficient measures and transitioning to renewable energy systems. Grant funding covers up to 75% of improvement costs, with a maximum of £7,500.

The Energy Company Obligation (ECO) Scheme

Under The Energy Company Obligation (ECO), medium and larger energy suppliers fund the installation of energy efficiency measures such as loft, floor or wall insulation, or heating systems replacement in low-income households. Each supplier is assigned a target based on its share of the domestic energy market in Britain.

Governments are now encouraging the transition toward more sustainable solutions of heating, cooling and domestic hot water production. Government support often comes in the form of public funding to make the investment in a heat pump accessible to a larger portion of the population.

Verifying your eligibility for available grants

If you are keen to learn more about what might be available to you, you can contact your energy supplier directly or use the following resources:

• To verify your eligibility for the Boiler Upgrade Scheme, please contact a suitable MCS-certified installer at the MCS – Find a contractor website.
• To verify your eligibility for the Energy Company Obligation (ECO), please refer to the Ofgem website.
• To verify your eligibility for the Home Energy Scotland Grant, please refer to the Home Energy Scotland website, “Home Energy Scotland Grant and Loan: in detail”.

Act now to maximise incentives

For the time being, governments across Europe are keen to support the adoption of heat pumps, and these grants can have a real impact on the cost of making the change. It’s worth noting though that the incentives won’t be available forever. If you are thinking about transitioning to a heat pump, to make the most of the help available, it’s a good idea to act promptly to make the most of the current support.

For detailed data, sources, and references, please refer to the full whitepaper (available for download in English).