Recent Changes to the Boiler Upgrade Scheme (BUS)

After a consultation in Summer 2023, the Government announced changes being made to the Boiler Upgrade Scheme (BUS), which provides financial support to help homeowners install air or ground source heat pump systems.

Why are changes being made now?

The changes came after a review of the BUS by the House of Lords Environment and Climate Change committee[1], which raised concerns that the scheme was ‘failing to deliver’ following the low uptake of grants and warned that the Government’s target to install 600,000 heat pumps per year by 2028 was in jeopardy.

The committee states that upfront costs were still too high for many despite the grant, and the running cost savings in many cases didn’t warrant the switch without urgent electricity market reform. 

The review also led to other changes within the Government’s heat pump strategy, including an acceleration in marketing surrounding both heat pumps and the BUS itself, after the review also highlighted limited public awareness of low carbon heating systems.

The Lords’ review added that there’s a shortage of heat pump installers and insufficient independent advice for homeowners. Over 23million homes across the UK have their central heating and hot water supplied by a gas boiler system, and so a comprehensive marketing strategy was needed to increase both awareness and trust in the new technology[2].

What changes are being made?

The key change made to the BUS was an increase in individual grant funding for air source and ground source heat pumps from £5,000 and £6,000 respectively, to £7,500 for both models.

Individuals can also apply for a £5,000 grant to install a biomass boiler. An additional £1.5 billion was allocated to the scheme to account for the higher grant level and the expected increase in interest for the scheme after a more prominent marketing campaign. 

The Government has also added additional scheme flexibility, removing the original requirement for applicants to have no outstanding recommendations for loft and cavity wall insulation on their last Energy Performance Certificate (EPC). However, applicants will still need a valid EPC generated within 10 years of the application.

Alongside this, the BUS has been futureproofed to allow for different grant levels for properties off the gas grid and self-build properties, allowing greater flexibility due to the change in upfront heat pump installation costs for these types of properties.

Biomass boilers are an alternative solution for homes where heat pumps may be unsuitable. Previously, biomass systems with an integrated cooking function weren’t eligible for support, however a change in the scheme now deems these systems eligible for funding.

The threshold for shared ground loops for ground source heat pumps has also been increased from 45kW to 300kW, although the threshold for a single installation remains at 45kW. 

Find out more about the Boiler Upgrade Scheme with the Energy Saving Trust

How successful have changes been?

Scheme changes to the BUS - including increased grant levels - were implemented in the hope that demand would surge, and the UK would get back on track to reaching its 2028 installation targets. So far, the results are mixed, but there are strong signs that heat pump demand has increased thanks to greater flexibility and accessibility offered by the revamped scheme. 

In February, monthly applications for the BUS grew by 75% compared to the same period in 2023, the third most successful month for applications since the scheme was first introduced in 2022[3]. In April, the scheme saw a 93% increase in applications compared to April 2023.

However, despite all the positives, the UK is still a long way off installing 600,000 systems per year by 2028. Since the BUS was launched in 2022, almost 27,000 vouchers have been redeemed to cover the upfront costs of a heat pump or biomass boiler. When looking at the recent spike in applications, reflecting this across the rest of the year would still place the number of applications at around 25,000 per year[4].

If the Government is to reach its target, yearly installations would need to increase by over twenty-four times by 2028.

What’s next for the industry?

Of course, it isn’t just the BUS that’ll drive heat pump installations across the UK, and uptake should increase naturally as the technology becomes commonplace. According to recent figures by MCS, almost 5,000 heat pumps were installed in April 2024 alone[5]. Once Summer ends, consumers are likely to use the cooler months to explore alternative heating solutions. 

As the Government begins to talk more about phase out dates for fossil fuel heating systems, heat pumps are becoming front and centre of the domestic energy transition.

What will increase interest in the scheme?

Future-proof heating controls

Drayton are supporting the growing demand for heat pumps to decarbonise the way we heat our homes and buildings. Our heating controls with dedicated heat pump settings help to create greater incentives for the BUS supported heating systems, making it easier to reduce energy consumption for consumers and in turn reduce energy bills. Our products also provide users with a familiar interface to operate their heat pump, whilst enabling improved control over indoor climates.

Heat pump tariffs

Additionally, more is being done to reduce the running costs of heat pumps, with many utility companies and manufacturers offering ‘heat pump tariffs’ designed to work specifically with these systems. There’s also been talk from politicians about rebalancing energy levies, so electricity becomes cheaper to use and heat pumps offer more enticing cost savings.

Upskilling for installers

Other support is being provided through the ‘Heat Training Grant’ to support training new heat pump installers, alongside other support schemes for installing low carbon heating in low-income households through the Social Housing Decarbonisation Scheme (SHDF) and ECO4. 

Installer? Find out how to become heat pump qualified

[1] The Boiler Upgrade Scheme is failing to deliver, says Lords committee - Committees - UK Parliament

[2] UK Boiler Statistics 2023 (uswitch.com)

[3] Boiler Upgrade Scheme sees February surge in demand - Heating and Ventilation News (hvnplus.co.uk)

[4] HVP Magazine - Official figures show BUS applications surge but still well below target

[5] The MCS Data Dashboard - MCS (mcscertified.com)