UK households offered £5,000 grants to replace boilers with heat pumps

The government recently announced that it will provide £450 million in funding to encourage households in England and Wales to install electric heat pumps. Over the next three years, it’s hoped that 90,000 electric heat pumps will be installed as part of the scheme.

From April 2022, the government will offer UK households a £5,000 grant if they choose to replace their gas boiler with a heat pump. The grant is part of a wider £3.9 billion funding package designed to help decarbonise the UK’s housing stock, which currently accounts for more than a fifth of all the country’s carbon dioxide emissions.

By 2035, it’s hoped that all new heating systems installed in UK homes will either use low-carbon technologies or low-carbon fuels, such as hydrogen.

What are heat pumps and how much do they cost?

A heat pump extracts warmth from the outside air, concentrates the heat in a liquid refrigerant and transfers it into the home. The heat pump unit sits outside the home and looks similar to an air conditioning unit.

Depending on the size of your home and your heating requirements, a heat pump will currently cost between £6,000 and £18,000. However, this cost is expected to fall dramatically, and for now the government’s grant will make the cost of installing a heat pump similar to the cost of fitting a new boiler. Octopus Energy, which we recently voted as the UK’s best energy supplier, has said it intends to reduce the cost to about £5,500 within the next 18 months.

Can heat pumps save you money?

At present, energy bills are at record highs. As a result of spiralling wholesale energy costs, many suppliers have gone out of business. Due to this, most energy comparison sites have stopped offering their services because the best energy deals available cannot beat the price cap.  

Although a heat pump is a low-carbon alternative to a boiler, it will not currently save you money on your energy bills. This is because although a heat pump uses less energy to create the same amount of heating as a boiler, the cost of running a heat pump can be up to 50% higher. This is due to the fact that the cost of electricity is much higher than the cost of gas.

To counter this, several green companies are lobbying the government to pass the levies that are currently placed on electricity onto gas instead. This would make it cheaper for people to switch to electric heat pumps and would encourage homes and businesses to stop using fossil fuels.

If the cost of gas continues to skyrocket, then it’s possible that heat pumps will be cheaper to run than boilers in the long term. However, even though the government says it will look at measures to ensure heat pumps are no more expensive to run than a gas boiler, the exact savings or costs you can expect to encounter are currently unclear.