Government unveils £1.5 billion Christmas bonus for heat pumps

The government has made £6 billion available for heating and energy upgrades through to 2028, including an extra £1.5 billion for the Boiler Upgrade Scheme

The government has announced that ‘around a million homes will be made warmer’ with £6bn-worth of funding for heating and energy upgrades, both in new schemes and through additional funding for existing ones.

The extra funding will include targeted support for 200,000 low income, cold and social homes, which the government said ‘backs families to reach net zero’

The funding is part of what the government calls its ‘new approach to net zero that will save on costs for the public.’

The measures announced will include insulation for around 500,000 homes and hundreds of thousands more grants for heat pumps. A major proportion of the funding will go to extending the life of the Boiler Upgrade Scheme, thanks to the success of increasing the heat pump grant to £7,500 – which has led so far to a 57 per cent increase in applications, the government said.

But there is also news of a new scheme which will see £400 million for households to upgrade energy efficiency, including specifying bigger radiators and additional insulation.

Energy Secretary Claire Coutinho said:

Cutting energy bills is my top priority. Today’s funding will help those who are most in need and keep around a million more families warm during winter. Everyone deserves to live in a warm, energy efficient home. We have already made excellent progress with nearly 50% of properties in England now having an Energy Performance Certificate of C – up from just 14% in 2010.

Chancellor of the Exchequer Jeremy Hunt said:

Investing in energy efficiency combined with energy security, is the only way to stop ourselves being at the mercy of international gas prices, one of the main drivers of inflation.

The government noted that the cash boost comes on top of the £6.6bn capital funding already committed from 2022 to 2025.

The government added that the Future Homes and Buildings Standards, recently launched for consultation will ensure new homes and buildings will be zero-carbon ready from 2025 too, saving any further costs for families to future-proof their new home as we embrace clean heating.

It said that energy-saving changes will deliver significantly lower bill costs than the vast majority of existing homes, while also reducing carbon emissions by at least 75% for all new homes compared to 2013 standards.

The £6bn of funding comprises:

• £1.5bn added to The Boiler Upgrade Scheme
• A new £400m energy efficiency grant, launching in 2025, for households in England to make changes such as bigger radiators or better insulation.
• A new local authority retrofit scheme, allocated £500m to support up to 60,000 low-income and cold homes, including those off the gas grid, with measures such as insulation.
• The Social Housing Decarbonisation Fund, allocated £1.25bn to support up to 140,000 social homes to be insulated or retrofitted, improving energy performance and lowering bills.
• The Green Heat Network Fund, allocated £485m to help up to 60,000 homes and buildings access affordable, low carbon heating through new heat networks, reducing our use of fossil fuels and providing more reliable heating.
• The Heat Network Efficiency Scheme, allocated £45m to improve around 100 existing heat networks, in a move that will reduce bills and improve reliability.
• The Industrial Energy Transformation Fund, allocated £225m, will continue to help businesses transition to a low-carbon future.

Businesses, heavy industries and public sector organisations such as schools and hospitals will also benefit from the Public Sector Decarbonisation scheme and wider industrial energy efficiency and decarbonisation support, through to 2028, the government said. In another key move it added that it will also explore ways to expand heat networks to deliver more low-carbon heating to homes and businesses in England. The Heat Network Zoning Consultation will set out how heat networks will be delivered in areas where they are likely to be the cheapest low carbon option.

Greg Jackson, chief executive of Octopus Energy said:

Heat pumps are rapidly becoming cheaper and quicker to install, in more and more homes, and it’s clear this technology is the heating of the future. Our customers love heat pumps, and we’re planning on hiring two thousand new engineers next year alone to try to meet rocketing demand. This increased certainty from government enables us to invest with confidence and will unlock cheaper, cleaner heating for the UK.

Mike Thornton, Chief Executive at Energy Saving Trust said:

We welcome these new schemes and additional funding, which will help provide much needed incentives to encourage more people to upgrade their homes. We look forward to learning more about the detail including plans for roll out and engagement, as well as how we can help the UK Government to ensure they are as successful as possible in supporting people to get the right measures into their homes.