Ground Source Heat Pump Grants: RHI Scheme Alternatives

With the closure of the Renewable Heat Incentive (RHI) scheme to new applicants in March 2022, UK homeowners seeking financial support for ground source heat pump installations have been navigating a new landscape of grants and incentives. Whilst the RHI provided quarterly payments over seven years, today’s alternatives offer different structures and benefits that can still make renewable heating systems more affordable. Understanding these options is crucial for property owners considering the switch to sustainable heating, particularly as the UK moves towards its net-zero carbon targets.

Understanding the Post-RHI Landscape

The domestic RHI scheme supported over 100,000 renewable heating installations across the UK before its closure. Ground source heat pumps, which extract heat from the earth through buried pipes, were amongst the most generously supported technologies, with payments reaching up to 21.17p per kWh of renewable heat generated.

Today’s grant landscape differs significantly from the RHI model. Rather than ongoing payments based on heat generation, current schemes typically offer upfront capital grants to reduce installation costs. This shift reflects the government’s strategy to accelerate heat pump adoption whilst managing public spending more predictably.

Key changes in the current funding environment include:

• Upfront grants rather than quarterly payments
• Stricter energy efficiency requirements for properties
• Regional variations in available support
• Greater emphasis on whole-house retrofitting approaches
• Integration with broader home improvement schemes

The Boiler Upgrade Scheme: Primary National Support

The Boiler Upgrade Scheme (BUS) stands as the government’s flagship replacement for the RHI, offering £7,500 grants for ground source heat pump installations. Launched in April 2022 with initial funding of £450 million over three years, the scheme has been extended to 2028 following strong uptake.

Eligibility requirements for the BUS include:

• Properties must have an Energy Performance Certificate (EPC) with no outstanding loft or cavity wall insulation recommendations
• Installation must be carried out by an MCS-certified installer
• The property must be in England or Wales (Scotland has separate arrangements)
• Maximum property size of 45kW heat demand
• Replacement of fossil fuel heating systems only

The application process operates through installers rather than homeowners directly. Your chosen MCS-certified installer will apply for the grant on your behalf, with the £7,500 deducted from your installation quote. This streamlined approach has improved accessibility compared to the RHI’s more complex application process.

Recent data from Ofgem shows that ground source heat pump applications under BUS have steadily increased, with installations particularly popular in rural areas of Cornwall, Devon, and North Yorkshire where properties often lack gas connections.

Home Upgrade Grant: Support for Off-Grid Properties

The Home Upgrade Grant (HUG) targets low-income households in off-gas-grid properties, offering comprehensive support that can include ground source heat pump installation alongside insulation improvements. With Phase 2 running until March 2025, the scheme provides up to £10,000 per property for heating system upgrades.

This grant operates through local authorities rather than as a national scheme, meaning availability varies by region. Councils including Durham, Norfolk, and Somerset have been particularly active in promoting HUG funding for rural communities.

Qualifying criteria typically include:

• Household income below £31,000 (varies by council)
• Property EPC rating of D or below
• No mains gas connection
• Owner-occupied or privately rented properties

The comprehensive nature of HUG funding makes it particularly valuable for older properties requiring substantial upgrades. For instance, a Victorian farmhouse in the Yorkshire Dales might receive funding for external wall insulation, loft insulation, and a ground source heat pump system in a single package.

Regional and Local Authority Schemes

Beyond national programmes, numerous regional initiatives provide additional support for ground source heat pump installations. These localised schemes often complement national grants, potentially increasing total funding available.

Scottish Government Support

Scotland operates its own Home Energy Scotland Grant and Loan scheme, offering up to £9,000 for ground source heat pumps, with an optional £7,500 interest-free loan. Rural and island communities can access an additional £2,000, recognising higher installation costs in remote areas.

Welsh Government Initiatives

The Welsh Government’s Warm Homes Programme includes the Nest scheme, which provides free home improvements including heat pump installations for qualifying households. Eligibility focuses on low-income households in energy-inefficient properties.

Local Council Schemes

Individual councils across the UK operate various support programmes:

• Bristol City Council’s Green Homes Grant Local Authority Delivery scheme
• Greater Manchester’s Green Homes Grant programme
• Leeds City Council’s energy efficiency grants
• Birmingham’s home improvement schemes

These local schemes often have specific postcode requirements and may prioritise certain property types or household circumstances. Checking with your local authority’s energy efficiency team can reveal opportunities not widely advertised.

Energy Company Obligation (ECO4) Scheme

The ECO4 scheme, running until March 2026, requires energy suppliers to fund efficiency improvements for vulnerable households. Whilst primarily focused on insulation, ECO4 can support heat pump installations as part of broader retrofit packages.

ECO4 operates through a ‘fabric first’ approach, meaning insulation improvements must be addressed before heating system upgrades. This ensures properties are sufficiently efficient to maximise heat pump performance.

Eligibility extends to:

• Households receiving means-tested benefits
• Properties in EPC bands D-G
• Vulnerable households identified through supplier programmes
• Properties in specific postcode areas under Local Authority Flexible Eligibility

Major energy suppliers including British Gas, EDF, and E.ON operate ECO4 programmes with varying offerings. Some provide fully-funded installations, whilst others offer substantial discounts. The competitive nature of the scheme means shopping around between suppliers can yield different support levels.

Planning Your Ground Source Heat Pump Installation

Successfully accessing grant funding requires careful planning and consideration of multiple factors. Understanding the installation process and requirements helps ensure smooth grant applications and project completion.

Site Assessment Considerations

Ground source heat pumps require adequate outdoor space for ground loops, either horizontal trenches or vertical boreholes. Typical requirements include:

• Horizontal systems: 200-400m² of accessible land
• Vertical systems: Access for drilling equipment and 2-3 boreholes
• Minimum distances from buildings and boundaries
• Consideration of underground services and tree roots

Property Preparation

Most grant schemes require properties to meet minimum efficiency standards before heat pump installation. Essential preparations often include:

• Loft insulation to current building regulations (270mm minimum)
• Cavity wall insulation where applicable
• Draught-proofing measures
• Potential radiator upgrades for lower flow temperatures
• Hot water cylinder installation if not present

Finding MCS-Certified Installers

All major grant schemes require installation by Microgeneration Certification Scheme (MCS) certified contractors. The MCS website maintains a searchable database of certified installers by region and technology. Obtaining multiple quotes helps ensure competitive pricing and identifies installers familiar with grant applications.

Financial Considerations Beyond Grants

Whilst grants significantly reduce upfront costs, understanding the complete financial picture helps make informed decisions about ground source heat pump investments.

Installation Costs

Typical ground source heat pump installations range from £15,000 to £35,000, depending on property size and ground works complexity. The £7,500 BUS grant represents a 20-50% reduction in these costs. Additional expenses might include:

• Electrical supply upgrades: £500-£2,000
• Radiator replacements: £2,000-£5,000
• Building fabric improvements: £3,000-£10,000
• Planning permission (if required): £206-£462

Running Cost Savings

Ground source heat pumps typically achieve efficiencies of 300-400%, meaning each unit of electricity generates 3-4 units of heat. With current electricity prices around 24.5p/kWh and efficiency ratings considered, annual running costs for a typical three-bedroom home might be:

• Ground source heat pump: £1,200-£1,600
• Oil boiler comparison: £1,800-£2,400
• LPG boiler comparison: £2,200-£2,800

Additional Financial Support

Beyond grants, other financial mechanisms can support heat pump installations:

• Green mortgages offering preferential rates for energy-efficient homes
• 0% VAT on heat pump installations until 2027
• Potential council tax reductions in some areas
• Enhanced property values from improved EPC ratings

Future Outlook and Emerging Opportunities

The UK’s heat pump market continues evolving rapidly, with new support mechanisms under development. The government’s target of 600,000 heat pump installations annually by 2028 suggests continued and potentially enhanced grant support.

Emerging trends include:

• Integration with smart grid technologies and time-of-use tariffs
• Community heating schemes incorporating shared ground loops
• Heat pump ready programmes preparing properties for future installations
• Green finance innovations reducing upfront costs

The recent announcement of £6 billion for home energy efficiency improvements from 2025 indicates sustained commitment to supporting renewable heating transitions. Property owners planning installations should monitor policy developments whilst taking advantage of current schemes.

Conclusion

Whilst the RHI scheme’s closure marked the end of an era for renewable heating support, the current landscape of grants and incentives continues making ground source heat pumps accessible for UK homeowners. The Boiler Upgrade Scheme’s £7,500 grants provide substantial support for most properties, whilst targeted programmes like HUG and ECO4 ensure vulnerable households aren’t left behind in the heating transition. Regional variations and local authority schemes add further opportunities for those willing to research available options. As the UK progresses towards its 2050 net-zero target, continued evolution of support mechanisms seems assured. Property owners considering ground source heat pumps should act on current opportunities whilst remaining informed about emerging programmes. With careful planning, appropriate property preparation, and strategic use of available grants, the transition to renewable heating remains financially viable despite the RHI’s absence.