There are various financial benefits, grants, incentives and reductions available for the installation of renewable energy technologies, including heat pumps.
Independent financial products are available from various banks and building societies and other organisations, aimed at rewarding customers with low interest rates for energy efficient or ‘green’ homes improvements and building practices.
Government backed schemes aim to assist with upfront costs and incentivise people to switch to renewable energy technologies.
The Boiler Upgrade Scheme (BUS)
The Boiler Upgrade Scheme will provide grants to encourage property owners to replace existing fossil fuel heating with more efficient, low carbon heating systems including air source heat pumps, ground source heat pumps and, in limited circumstances, biomass boilers.
Heating systems can be commissioned any time from 1 April 2022, and applications for grants opens from 23 May 2022. It has £450m funding confirmed over three years.
Grants will reduce the upfront cost of installing a low carbon heating system.
• £7,500 is available towards ground source heat pumps and air source heat pumps.
Your chosen installer will need to be certified by the Microgeneration Certification Scheme (MCS). MCS is a nationally recognised standards organisation that gives you assurance of the quality of your product and competence of your installer. It also means your installer complies with high consumer protection standards.
Eligibility
Your installer will work with you to ensure that your property and technology meet the full range of eligibility requirements.
These are the key requirements:
• Homes and small non-domestic properties in England and Wales will be eligible. The maximum installation capacity of up to 45kWth covers the vast majority of these properties.
• Your property will need a valid energy performance certificate* with no outstanding recommendations for loft or cavity wall insulation. This is because your heating system will work more efficiently with these insulation measures in place. For further information and details of exceptions, please speak to your installer.
• Heat pumps are eligible either on or off the gas grid.
• The commissioning date of your low carbon heating system must be on or after 1 April 2022.
• You must be fully replacing an existing fossil fuel system such as oil, gas or direct electric. Funding will not be available for the replacement of existing low carbon heat systems.
• New build homes and social housing will not be eligible for the Boiler Upgrade Scheme, although custom-build properties will be eligible.
Further information on the BUS can be found here.
Reduced rate of VAT on Ground Source Heat Pump installations
The recently announced 0% VAT on the installation of energy saving materials including heat pumps and biomass boilers, further reduces the cost of installing these systems. This reduction takes effect from 1st April 2022, and will last for 5 years, meaning it will include the entire period of the BUS.
For an Open-Loop Ground Source Heat Pump this includes the the heat pump, the pipework, system controls and any other installation ancillary to the supply.