Boiler Upgrade Scheme UK: how many have applied, what has gone wrong with government environmental policy?

In March 2022, to much fanfare from the then-Business and Energy Secretary Kwasi Kwarteng, Boris Johnson’s government announced the Boiler Upgrade Scheme.

Intended to reduce the UK’s carbon footprint and household energy bills, which have been driving the cost of living crisis, the strategy saw the government set up a funding pot people in England and Wales could apply to for grants. This money could then be used towards replacing old, fossil fuel boilers with a heat pump or a biomass boiler.

It also announced additional funding that it hoped would drive technological innovations in heating systems. At the time, Kwarteng said the move would help the UK to “double down” on its efforts to reduce its reliance on fossil fuels and cut energy bills. Greenpeace said that while the scheme was a “decent start” it would not work without new funding for home insulation also being included in the package.

In February 2023, a House of Lords committee report stated that the scheme was “failing to deliver” and risked derailing the country’s environmental objectives for households. Peers urged the government to reassess how its funding pot and the communications around it work.

So, how many people have applied for the government scheme - and why is it ‘failing’? Here’s what you need to know.

How does the Boiler Upgrade Scheme Work?

Launched in March 2022, the scheme allows owners of eligible homes in England and Wales to access grants that can be used towards the installation of a heat pump or a biomass boiler.

The properties in question have to have 45kWth capacity (pretty much all homes) and an Energy Performance Certificate (EPC) that has no outstanding recommendations for loft or cavity wall insulation. The installer also has to confirm the home can support a low-carbon heating system (not all properties can have them installed retrospectively).

There are different levels of grant funding depending on what you want installed to replace your existing fossil fuel boiler. These can be put towards shelf-price and installation costs:

• £5,000 off an air source heat pump (typically costs between £7,000 and £13,000, according to the Energy Saving Trust (EST))
• £5,000 off a biomass boiler (costs around £16,000)
• £6,000 off a ground source heat pump (can cost between £24,000 and £49,000 depending on the scale of work needed to install it, EST says)

Overall, the government has put up a £450 million funding pot to run the scheme for three years. It means a maximum of 90,000 pumps could be covered by the scheme.

How many people have used Boiler Upgrade Scheme?

NationalWorld analysis of the latest Boiler Upgrade Scheme figures suggests that just under half of the 90,000 boiler upgrades the government has provided funding for will take place by the end of the three-year funding period.

By January 2023 (the latest month for which we have official data), the quarter-way point for the scheme, only 11,086 vouchers had been issued for heat pumps or biomass boiler upgrades. If the policy was to meet its target, around 22,500 vouchers should have been given out over that nine-month period.

The statistics showed a disparity between urban and rural areas, with the majority (57%) of vouchers heading to countryside homes. Between them, the South East and South West accounted for 39% of all the applications granted.

The most popular form of boiler upgrade was air source heat pumps, which made up 96% (10,655) of the vouchers issued. Ground source heat pumps only made up 3% (291) of the successful voucher applications, despite being a more efficient heating solution.

Why is Boiler Upgrade Scheme ‘failing’?

According to a report by the House of Lords environment and climate change committee (ECCC), which has conducted an inquiry into the Boiler Upgrade Scheme, only half of the government’s allocated annual budget is set to have been used by the time the scheme’s anniversary comes around in May.

Peers said the “disappointingly low take-up of grants” also meant a “healthy market” for the installation and manufacture of green heating appliances would not be in place “in time to  implement low-carbon heating policy measures smoothly”. A government target to have 600,000 installations of these heat pumps and boilers per year by 2028 was also “unlikely to be met”.

Lords said failings included a national shortage of heat pump installers, upfront costs that were “too high” for many households and “impossible” for low-income households, as well as high running costs compared to standard gas boilers.

To turn the Boiler Upgrade Scheme around, the ECCC urged the government to boost awareness and clarity around the scheme, roll this year’s budget into next year’s, and reform Energy Performance Certificates (EPC) and heat pump rules (at present you can’t have a heat pump within one-metre of another property, which all but rules them out for households in urban areas).

The committee also urged the government to drop its messaging around hydrogen, an energy source it says “is not a serious option for home heating for the short to medium-term”.

Baroness Parminter, chair of the ECCC, said: “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. 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.”

Reacting to the news, Greenpeace said: “If the government isn’t going to push and promote it, what’s the point in the scheme? In order to cut bills, carbon emissions and eradicate fuel poverty, we need a vaccine-style roll out of heat pumps and insulation, not this dismal trickle.”

The Energy and Utilities Alliance (EUA) - a trade body representing the heating industry - said the “immoral” scheme was a “sick dog that needs to be put down”. Its chief executive Mike Foster said: “Part-subsidising a heat pump installation with a £5,000 bung leaves the remaining costs, averaging an extra £8,000, to be met by the consumer.

“Only the well-off need apply, which, in the middle of a cost of living crisis with fuel poverty levels rocketing, is entirely the wrong priority. With energy bills set to climb by another 20% in April, pumping money into the hands of those who wish to go green, rather than helping those who are forced to choose between heating and eating, is immoral.”

The EUA said the government should fund “sensible” measures, like insulation, which could also be more easily targeted at the least well-off.

The government has not yet formally responded to the ECCC report. But the minister responsible for the scheme in the Department for Energy Security and Net Zero, Lord Callanan, has muddied the waters by telling the Sunday Telegraph that “nobody’s going to be forced to ditch their boiler” and that it was “against the British character” to make households replace their gas boilers with green heat sources. The EUA described his intervention as “chaos” given it directly contradicts the official line of his own department.