£450m government grants for 90,000 Heat Pumps

£450m government grants for 90,000 Heat Pumps

8:53 AM, 19th October 2021, About 2 years ago 45

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Landlords don’t hold your breath as the Government announces £3.9 billion for decarbonising heat and buildings. Of this only £450m is allocated for grants of £5,000 to replace old gas boilers with new heat pumps. This would equate to 90,000 installations over 3 years for England and Wales.

Currently, an air source heat pump costs between £6,000 and £18,000 so assuming a grant was available it is anticipated the average cost to an end-user after the grant would be £2,500.

There is also no detail yet on qualification criteria for these grants and if it will include landlords as well as homeowners, but it is likely that an insulation upgrade will also be required.

It is hoped the scheme will kick-start economies of scale improvements for the industry and start bringing down the cost of heat pumps.

The full government press release is below:

Low carbon more efficient heating systems such as heat pumps will be no more expensive – and in many cases may end up cheaper – to buy and run than gas boilers, under government plans being announced today (Monday 18 October).

Through the Heat and Buildings Strategy, the government has set out its plan to incentivise people to install low-carbon heating systems in a simple, fair and cheap way as they come to replace their old boilers over the coming decade. This will significantly reduce the UK’s dependency on fossil fuels and exposure to global price spikes, whilst supporting up to 240,000 jobs across the UK by 2035.

New grants of £5,000 will be available from April next year to encourage homeowners to install more efficient, low carbon heating systems – like heat pumps that do not emit carbon when used – through a new £450 million 3-year Boiler Upgrade Scheme. These grants mean people choosing to install a heat pump will pay a similar amount as if they were installing a traditional gas boiler.

The £450 million Boiler Upgrade Scheme is part of more than £3.9 billion of new funding being announced today by the government for decarbonising heat and buildings. This will fund the next 3 years of investment through the Social Housing Decarbonisation Fund, the Home Upgrade Grant scheme, the Boiler Upgrade Scheme and the Heat Networks Transformation Programme and reducing carbon emissions from public buildings through the Public Sector Decarbonisation Scheme.

The government and industry will also work together to help meet the aim of heat pumps costing the same to buy and run as fossil fuel boilers by 2030, with big cost reductions of between a quarter and a half by 2025 expected as the market expands and technology develops.

This will support the government’s new target for all new heating systems installed in UK homes by 2035 to be either using low-carbon technologies, such as electric heat pumps, or supporting new technologies like hydrogen-ready boilers, where we are confident we can supply clean, green fuel.

No-one will be forced to remove their existing fossil fuel boilers, with this transition of the next 14 years seeing the UK’s households gradually move away from fossil fuel boilers in an affordable, practical and fair way, enabling homeowners to easily make these green choices when the time comes to replace their old boiler.

Prime Minister Boris Johnson said: “As we clean up the way we heat our homes over the next decade, we are backing our brilliant innovators to make clean technology like heat pumps as cheap to buy and run as gas boilers – supporting thousands of green jobs.

“Our new grants will help homeowners make the switch sooner, without costing them extra, so that going green is the better choice when their boiler needs an upgrade.”

The Heat and Buildings Strategy sets out how we are taking ‘no-regrets’ action now, particularly on heat pumps, whilst supporting ongoing trials and other research and innovation on our future heating systems, including on hydrogen. We will make a decision on the potential role for hydrogen in heating buildings by 2026, by learning from our Hydrogen Village pilot. Heat pump technology will play a key role in all scenarios, so for those who want to install them now, we are supporting them to do so.

Business and Energy Secretary Kwasi Kwarteng said: “Recent volatile global gas prices have highlighted the need to double down on our efforts to reduce Britain’s reliance on fossil fuels and move away from gas boilers over the coming decade to protect consumers in long term.

“As the technology improves and costs plummet over the next decade, we expect low carbon heating systems will become the obvious, affordable choice for consumers. Through our new grant scheme, we will ensure people are able to choose a more efficient alternative in the meantime.”

Recent volatile gas prices across the world have demonstrated the need for the UK to build a secure, home-grown energy sector which supports households to reduce their reliance on fossils fuels such as using gas boilers, while protecting consumers and businesses from unforeseen price spikes.

Over the coming years, industry leaders expect electric heat pumps will cost the same as gas boilers to buy and run. UK manufacturers are already making electric heat pumps more attractive to consumers and more affordable and the government wants to incentivise consumers to make the switch as quickly as possible.

To ensure electric heat pumps will be no more expensive to run than gas boilers, ministers want to reduce the price of electricity over the next decade by shifting levies away from electricity to gas. A call for evidence is expected to be published with decisions made in 2022.

Greg Jackson, CEO and founder of Octopus Energy, said: “This Heat and Buildings Strategy will help kick-start a cheap clean heating revolution, by bringing prices down for households and allowing companies to invest in scaling up their clean heating operations. When the new scheme launches in April, Octopus Energy will install heat pumps for about the same cost as gas boilers.

“Octopus has already committed £10 million investment to its research and development and training centre dedicated to the decarbonisation of heat, and has begun training engineers at the rate of 1,000 per year.

“But this is just the beginning. By scaling up the technology and supply chain in Britain, innovative companies like ours will soon be able to fit and run heat pumps without any government support, bringing us one step closer to making the UK the Silicon Valley of Energy and creating thousands of clean energy jobs throughout the country.”

Electric heat pumps are more efficient, safer and cleaner than gas boilers and can help make homes more comfortable with less energy. Today we’ve crossed a massive milestone in our fight against climate change and to reduce Britain’s reliance on expensive, dirty gas.

To help grow the electric heat pump market and expand British manufacturing, a new £60 million Heat Pump Ready innovation programme is being announced, part of the £1 billion Net Zero Innovation Portfolio. The scheme will provide funding to drive technological innovation which will make the systems smaller, easier to install and cheaper to run over the coming years.

Kick-starting Britain’s new heat pump industry is expected to protect and create tens of thousands of new jobs in research and development, production, supply chain and installation over the next decade.

The Heat and Buildings Strategy builds on the Prime Minister’s 10 Point Plan, which outlined how decarbonising households and workplaces could support 240,000 jobs across the sector by 2035, with many thousands more into the future in areas such as manufacturing, developing and installing new low-carbon technologies.

With heat in buildings being one of the largest sources of UK carbon emissions, accounting for 21% of the total, there is an urgent need to deliver a mix of new, low-carbon heating solutions to meet our legally-binding target to end the UK’s contribution to climate change by 2050.


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Comments

Reluctant Landlord

15:11 PM, 19th October 2021, About 2 years ago

Reply to the comment left by Mick Roberts at 19/10/2021 - 15:08
if need be I am sure my tenants will come with me to court to explain that!

Mick Roberts

15:12 PM, 19th October 2021, About 2 years ago

Reply to the comment left by Beaver at 19/10/2021 - 14:38
Ha Ha Beaver yes we gonna' putting water tanks back in. And removing the 45+ free Combi boilers I had fitted paid for by the Govt in 2013 cause that was the way to go.
And what about the electric storage heaters we've been taking out whenever we bought a house? Ooh they want them back in now don't they.

Mick Roberts

15:24 PM, 19th October 2021, About 2 years ago

Reply to the comment left by DSR at 19/10/2021 - 15:11OOh yeah good idea on actually taking the tenant to court with u. I wonder how that will pan out.
I don;t want the house any more Judge, I am only keeping it for the tenant, she is here to explain & that she is also paying £200pm + below market rent. It is her home & the Govt & Councils are making it un-affordable for them to live there.
These costs require a £950 pm rent, yet she is only paying £625pm which is what the Housing Benefit Local Housing Allowance will allow. Now if the Govt up that to what the rent actually should be, some Landlords may then look 5 years ahead.

Beaver

15:44 PM, 19th October 2021, About 2 years ago

Reply to the comment left by Mick Roberts at 19/10/2021 - 15:12
Mick

When Margaret Thatcher was in power we were all told to change our cars to diesel because they gave you more miles per gallon and were more ecofriendly in terms of CO2 emissions. It may also have been because we get more heavy oil than petrol from the North Sea, but who knows, that was not the reason we were given. Now everyone wants us to move away from diesels but that's because of particulates, not because of CO2 emissions.

We were also all told that having a gas combi boiler was the way to go because it was more efficient. So I got rid of my hot water storage tank.

But when either green or blue hydrogen comes in if that's going down the same pipe network that CH4 comes in I would have thought that those gas combi boilers ought to be able to burn it, or ought to be able to be modified to burn it. I used to have a LPG tank before I changed to CH4 and some of the appliances only needed different nozzles to burn it. They didn't have to be replaced in their entirety. I would have thought it would be possible to burn a mix of CH4 and H2 as well.

Peter Sproston

15:49 PM, 19th October 2021, About 2 years ago

A lot of comments about heat pumps but none seem to have actually any experience of them? They have been used throughout northern Europe for years and it is not new technology, only to the UK it seems.
We previously had an oil boiler for a 1960's 4 bed 150 sq m house on the coast. We used £1400pa (2013 prices) on oil alone plus about £500 pa on electricity.
We subsequently had a ground source heat pump installed at the same time as increasing the house size by 50%. We replaced all floors downstairs and installed new solid ones with insulation. We upgraded the insulation within the older part and of course the extension is to latest building regs. We also installed solar PV too. UF heating up and down too, yes it does work on suspended floors if it is installed over aluminium trays.
Result is we only have electricity bills of around £850 pa but we generate around the same from our solar pv on the feed in tariff which lasts for 25 years and so actually have almost zero energy costs at all!
The whole installation cost around £30k but qualified for an RHI (Renewable Heat Incentive) grant which pays £3k pa for 7 years ie £21k altogether. The RHI still exists but take up has been pretty limited because of the initial installation costs.
For the efficiency argument I found this:
'When it comes to efficiency, there's only one winner, and that's the heat pump. Gas and oil boiler efficiency has come a long way in recent years – mainly thanks to condensing boiler technology. But as they're burning fuel to keep your home warm, some heat will always be lost. This means they can run at maximum efficiencies of around 94%. So, for every £1 you spend heating your home, 6p is lost to the heat that's blown straight out the flue pipe.
When it comes to efficiency Heat pumps, on the other hand, are around 300-400% efficient. This means that for every kilowatt (kW) of electricity it uses, you'll be getting 3-4 times more heat'.
We use an economy 7 meter which suits us as most heat pump use will be during the night hours in the cooler months. In fact surprisingly, we don't even use our heating timer at all and rely on the individual room stats to regulate the temp throughout the whole house using the individual UF circuits, and which was a requirement to qualify for the RHI.
As a multiple landlord with all apartments in modern blocks, although only 5 have gas boilers, it will of course be a different story and only air source heat pumps will likely be able to be used, somehow roof or wall mounted.
There is no doubt once UK industry gets it head around manufacturing on bigger scale costs will reduce and solutions that suit most types of accommodation will be found eventually.
So to summarise, it does work and works very well for us. HPs can work with existing heating systems too so long as they are not very old with inefficient radiators by adjusting the circulating temperatures. Air source used to be noisier but newer systems are much quieter. Ground source are very quiet but tend to need a separate modest sized plant room for all of the kit and of course outside space for the buried heating coils or deep wells sunk as we did.
Just like with the phasing of in electric cars, we have a million miles to go before government works out how HP installations will all work out in the end, but it will eventually work as it already does in the Nordic countries and Germany.
By the way I have no connection at all with HP installers or manufacturers and am happily retired.

Mick Roberts

16:08 PM, 19th October 2021, About 2 years ago

Reply to the comment left by Beaver at 19/10/2021 - 15:44
Yes, Let's hope for Hydrogen then.

Mick Roberts

16:15 PM, 19th October 2021, About 2 years ago

Reply to the comment left by Peter Sproston at 19/10/2021 - 15:49
Yes,

I too knew about been used for years in the cold countries, but just couldn't find enough evidence to explain to me in a simple Mick Roberts way.
I think I found them countries have far better insulated houses, but happy to be corrected.

I'd love one on me own house, my gas & elec bill pm is about £400+ and that's BEFORE this latest increase we all gonna' get soon.
Ooh & I've got solar power.

See you've taught us some'at already, Ground source & air source. But my brain is beginning to get fried. I've had years of learning & I don't want to think any more.

Beaver

16:59 PM, 19th October 2021, About 2 years ago

Reply to the comment left by Peter Sproston at 19/10/2021 - 15:49
The last time I looked at grants I wasn't eligible for them because I didn't have cavity wall insulation. Putting in cavity wall insulation would have caused problems to both houses I was looking at. I have an open mind about using renewables, particularly photovoltaics and ground source heat pumps.

So installation costs are £30K+?

That's a lot to stump up if you can't get a grant.

Also, I was watching a programme about a bloke in Sweden who uses photovoltaics to generate electricity and store hydrogen. If we think hydrogen is coming, is it really such a good idea to get rid of your gas boiler and disconnect from the gas network?

Helen

19:42 PM, 19th October 2021, About 2 years ago

I didn't hear anything in the announcements today about the possible upgrades to EPC C rating so I hope this crazy idea has been put on the back burner for now (excuse the pun.)
Nobody is talking about how to put heat pumps into flats above ground floor with no garden. Also the fact that space is needed for a hot water storage cylinder. The guy featured on the news last night who had installed the ground source heat pump had a mansion with a HUGE garden which he dug up to install the necessary pipes. Not your average house holder. We considered it a few years ago when rebuilding our house but the water table was too high. Air source heat pumps were noisy then so we couldn't have that option either - now they say it makes as much noise as a fridge..that's OK as long as it isn't outside anybody's bedroom window.
We went for photo voltaic cells on the roof. Perhaps this should also be promoted. It was quite cheap. Nobody talks about that these days.

david porter

7:02 AM, 20th October 2021, About 2 years ago

for a ground source heat pump do you need 3 phase electricity?
What would be the cost of such modificatin?
You will need bigger radiators which wil be as big as your floor area?
Does anybody remember the ground nut scandal?

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