The Government has demonstrated its commitment to decarbonising heat and buildings through policy and billions of pounds of funding. It has also recognised that highly efficient, low-carbon heat pumps have a vital role to play in creating a cleaner, greener future for the UK.
If you live or work in Scotland, several initiatives currently exist providing financial support to encourage the adoption of ground source heat pumps.
SCOTTISH FUNDING
If you live or work in England or Wales, below is a list of heat pump funding and grants that could support your project.
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Heat pump funding for homeowners
Boiler Upgrade Scheme (BUS)
Opened in April 2022 in England and Wales, the Government’s Boiler Upgrade Scheme (BUS), offers households capital grants to replace fossil fuel heating systems with more efficient low-carbon heat pumps.
Homes retrofitting ground source heat pumps will receive £7,500 when the system is commissioned. As this is a domestic scheme, there is a 45kW heat pump size limit per property. Social landlords and new buildings (except custom-built) are not eligible.
The Government has announced a further £1.5 billion of funding for the BUS, which covers the spending review period from 2025 to 2028. Calculations by the Heat Pump Association suggest this will fund 206,000 heat pump installations.
Discover the Boiler Upgrade Scheme
Heat pump funding for social landlords
Social Housing Decarbonisation Fund (SHDF)
The government committed to the Social Housing Decarbonisation Fund (SHDF) in 2019, with a proposed £3.8bn available over a 10-year period. The SHDF will upgrade a significant amount of social housing stock to an Energy Performance Certificate rating of C through insulation measures or retrofitting inefficient heating, improving energy performance and lowering bills.
In December 2023, it was announced that the SHDF had been allocated £1.25bn to support up to 140,000 social homes. Social landlords can plan and invest in further retrofit works to help lift residents out of fuel poverty and ensure they live in warm homes that are affordable to heat.
Discover the SHDF
The fund will help:
- deliver warm, energy-efficient homes
- reduce carbon emissions and fuel bills
- tackle fuel poverty
- support green jobs.
Wave 3 of SHDF is due to open for applications in Summer 2024 (dates subject to change). It is crucial to get bid-ready so you can apply when the window opens. Contact Kensa for help.
The Energy Company Obligation (ECO)
The ECO is a Government grant for retrofitting ground source heat pumps into social housing properties. It legally obliges larger energy suppliers to fund efficiency measures for domestic energy users.
DISCOVER ECO
ECO4
The government’s response to ECO4 consultation sets out the policy of the scheme from April 2022 until March 2026. Please click on the link below to find out more about ECO4.
Heat pump funding for local authorities
Public Sector Decarbonisation Scheme (PSDS)
The Public Sector Decarbonisation Scheme (PSDS) is a £1 billion fund dedicated to heat decarbonisation and capital energy efficiency projects in non-domestic public sector buildings across England. Covering up to 88% of ground source heat pump installation costs, the scheme’s objective is to achieve significant carbon savings within the sector.
Eligible public sector bodies include:
- Emergency services
- NHS Trusts & Foundation Trusts
- Further & higher education institutions
- Local authorities
- Maintained schools within the state education system
- Nursery schools maintained by a local authority
- Central government departments & non-departmental government bodies
- MOD estate
DISCOVER THE PSDS
Guidance on Phase 4 will be released in summer 2024.
The annual funding allocation for Phase 4 of the Public Sector Decarbonisation Scheme:
£670 million available in 2025/2026 – up to £335 million of this funding is allocated to the second year of PSDS Phase 3c.
£300 million available in 2026/2027
£200 million available in 2027/2028
Be ‘shovel ready’ for 2025/2026 funding
With each funding round oversubscribed and short timescales to submit bids, projects need to be ‘shovel-ready’ to have a chance of success.
Kensa has already assisted a number of local authorities and institutions to secure PSDS funding.
Contact us to discuss potential schemes, and we can support any application bids.
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Heat pump funding for developers
Green Heat Network Fund (GHNF)
The Green Heat Network Fund intends to help new and existing heat networks transition to low—and zero-carbon technologies. It is anticipated to run from April 2022 to November 2024.
Aimed at developers and investors in low-carbon heat networks, such as Shared Ground Loop Arrays, the objectives are to achieve carbon savings, increase the amount of low-carbon heat utilisation in heat networks and help prepare the market for low-carbon regulation.
See more information or contact us for more details.
Discover the GHNF
Heat pump funding through Kensa
Ground Array Funding
Ground array funding covers the cost of the groundwork for ground source heat pumps. Through this scheme, arranged by Kensa Utilities, an investor funds the network – known as Shared Ground Loop Arrays – to cover the most expensive aspect of the project. In return, the investor can charge connection fees if they wish.
Meanwhile, the developer or property owner benefits from a cheaper project, with all the efficient advantages of ground source over air source.
DISCOVER GROUND ARRAY FUNDING
ZERO
ZERO enables social housing providers and local authorities with a housing stock of 3,000+ homes to access whole stock retrofit with no upfront costs.
Kensa will manage the delivery of this, including the installation of heat pumps, PV and batteries for a diverse range of building types.
DISCOVER ZERO
