An inquiry held by the Lords Environment and Climate Change Committee has concluded that the Government’s Boiler Upgrade Scheme (BUS) is failing to deliver on its objectives, as the take-up of grants remains “disappointingly low.”
First announced during the government’s Heat and Building Strategy in October 2021, the BUS launched in May 2022, offering a £5,000 grant for the installation of a biomass boiler and £6,000 for a ground-source heat pump.
In response to its findings, the Lords committee today (22 February) penned a letter to parliamentary under secretary of state for energy security and net zero, Lord Callanan, warning that if the current low grant take-up rate persists, only half of the government’s allocated budget will be used.
This also means that the government’s 2028 ambition of 600,000 installations per year is looking increasingly unlikely and consequently, a strong market of installers and manufacturers will not be in place fast enough to facilitate a smooth implementation of low-carbon heating policy measures in the UK.
The key findings of the inquiry include:
- As a result of the “inadequate” promotion of the BUS scheme, public awareness of low-carbon heating systems is lacking
- There is a shortage of heat-pump installers
- Upfront costs are too high for many households, even with the government grant
- Progress is urgently needed through electricity market reform if heat pump running costs are to be affordable
“The transition to low-carbon heat is fundamental in the path to net zero, given that 17% of the UK’s greenhouse gas emissions come from our homes,” said Baroness Parminter, chair of the environment and climate change committee.
“The government must quickly address the barriers we have identified to a successful take-up of the Boiler Upgrade Scheme in order to help grow the take-up of low-carbon heating systems. It is vital they do so if we are going to meet our net zero ambitions.”
To address these concerns and accelerate the electrification of heat to match 2028 targets, the committee presented the government with the following recommendations:
- Carry over the remainder of the BUS budget from the first year onto the second year and review the possibility of extending the scheme
- Provide consumers and the industry with greater clarity on low-carbon heating options for households
- Modify the Energy Performance Certificates’ methodology to cease being a barrier to BUS eligibility and instead benefit households switching to low-carbon heating
- Relax the requirement to situate heat pumps a certain distance from neighbouring properties
In response to the letter, industry figures – including Octopus Energy, the Energy Network Association (ENA) and the Heat Pump Federation (HPF) – have backed the committee’s recommendations, calling for stronger support for the electrification of the UK’s heat.
“The Boiler Upgrade Scheme has successfully ignited a price war between suppliers, driving down the upfront cost of heat pumps and helping more households move to greener, cheaper and safer heating,” said director for external affairs at Octopus Energy Group, Clem Cowton.
“Demand has skyrocketed, with Octopus alone seeing more than 50,000 people registering interest in a heat pump, and removing bureaucracy like unnecessary EPC and planning rules will make heat pumps even more popular. It’s clearer than ever that the future of heating is electric.”
“The BUS is the current cornerstone of government policy to decarbonise domestic heating. Heat pump take-up across the country is increasing, as is industry investment, but the BUS’s first year of operation has been challenging for all the reasons outlined by the Lords committee.”
Bean Beanland, director of growth and external affairs at HPF, added: “The committee’s findings chime precisely with what heat pump installers and consumers are telling us. In particular, homeowners and landlords need better information on heat pump technologies that are available now, and this needs to be underpinned by an EPC framework that appropriately recognises the benefits of heat pump systems.
“Given the disjointed launch of the scheme and the urgency needed to mitigate against climate change it is completely inappropriate for HM Treasury to claw back any underspend. Rather, the unspent funds should be used to extend the scheme in year two and to increase support for ground-source deployment to match the demand proven under the previous Domestic Renewable Heat Incentive.
“Implementation of these scheme improvements, together with early action on the fair pricing of increasingly low-carbon electricity and the removal of outdated planning barriers, will encourage the heat pump industry to accelerate investment in skill sets and in the supply chain, in readiness for future growth driven by the Future Homes Standard in 2025 and the consulted-on bans on replacement fossil fuel boilers off the gas grid in 2026.”
In concurrence with Octopus and HPF, Lawrence Slade, chief executive of the ENA, said: “The scheme is failing to deliver for customers because, as the committee correctly points out, public awareness is low and promotion of the scheme has been inadequate. To decarbonise heating, customers need choice.
“It is an accepted fact that multiple solutions will be required. The use of heat pumps and the adoption of hydrogen are going to be needed if the UK is to meet its net zero target. Debates about one technology over another are simply not helpful for customers and add confusion.
“Experience from the last two decades shows us that much more effort is needed overall to engage customers in energy efficiency and how to reduce demands on the energy system.”