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HPA chief reacts to Boiler Upgrade Scheme Year 2 budget underspend

The Heat Pump Association (HPA) is disappointed about an underspend on the Boiler Upgrade Scheme (BUS) budget for the second year running but believes it's not all bad news.

Heat Pump Association chief executive, Charlotte Lee

The BUS has been offering households a significant grant to help with the upfront capital cost of installing a heat pump for the last two years. Funding has been set aside to support this scheme until 2028.

Commenting on Ofgem’s statistical release of the Year 2 figures for the BUS, Heat Pump Association chief executive, Charlotte Lee said: 'Whilst it is disappointing to see an underspend of the BUS budget for the second year running, this news should be set against the backdrop of the 125% growth in UK Heat Pump Sales over the past six years.

The 50% BUS grant uplift to £7,500, which came into effect in late October 2023, and the recently announced changes to the BUS to streamline the application process are both very positive and should support a continuation of the positive trajectory that we have recently seen.

Since the grant uplift, we have witnessed a steady and consistent increase in applications to the scheme averaging just over 2,000 each month between November 2023 and March 2024. If this end-of-year trend continues, we anticipate that the Year 3 budget (£150m in 2024-25) will be spent in full.

However, upfront cost is not the only barrier that needs to be overcome if we are to see a true acceleration of heat pump deployment in the UK.

We must see swift and meaningful action taken by the Government to rebalance the price of electricity relative to gas to ensure the lowest carbon heat is the lowest cost heat. In addition, the introduction of the Future Homes Standard in 2025 as planned and a clear timeline for the phase-out of fossil fuel heating in homes is needed to sure up the supply chain and provide investor confidence.’

Read Ofgem’s statistical release here: https://www.ofgem.gov.uk/publications/bus-monthly-scheme-update

View the HPA’s UK Heat Pump Sales data here: https://www.heatpumps.org.uk/statistics/

Read the Government’s proposed changes to the Boiler Upgrade Scheme here: https://www.gov.uk/government/consultations/proposed-amendments-to-the-boiler-upgrade-scheme-regulations

18 April 2024

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