UK heat pump installers fear subsidy cuts could stall demand

UK heat pump installers fear expected cuts to government installation subsidies could slow demand just as customers and heating engineers are becoming more interested in the technology. The Guardian reported that funding for the Boiler Upgrade Scheme, which offers grants of up to £9,000, was expected to be reduced in the budget.

The concern comes against a changing backdrop for businesses fitting low-carbon heating. Bill Tuck, who began installing air source heat pumps six years ago, told the newspaper that engineers who once questioned whether the technology would catch on were now approaching him for advice on behalf of their customers.

That shift suggests heat pumps are becoming a more familiar option when households consider replacing their heating. But interest alone does not resolve the question of affordability: reducing financial support would leave property owners needing to cover more of the installation bill themselves, unless other costs fell.

Ofgem describes the Boiler Upgrade Scheme as an upfront grant programme for homes and non-domestic buildings in England and Wales. Its published guidance lists £7,500 for eligible air-to-water, ground source and water source heat pumps, with £9,000 available for qualifying air-to-water or ground source installations in off-gas-grid properties until March 31, 2027.

The maximum award is therefore not a universal payment for every heat pump installation. Ofgem also lists separate grants for biomass boilers and residential air-to-air heat pumps, making the technology and property’s eligibility important to the support available.

The programme is installer-led, with MCS-certified businesses applying for and redeeming vouchers on property owners’ behalf. Ofgem administers applications and payments, while the Department for Energy Security and Net Zero sets the scheme’s policy, budget allocations and grant values. That division places decisions about future financial support with the government rather than the regulator.

Britain has previously supported renewable heating through a different model. According to Ofgem, the Domestic Renewable Heat Incentive closed to new applicants on March 31, 2022; qualifying participants received quarterly payments over seven years for the renewable heat their systems were estimated to produce. The current scheme instead targets the initial installation expense.

The implications extend beyond installation businesses. Heat Pump Association figures show that 32,920 of the 98,345 heat pumps sold in the UK in 2024 were manufactured domestically, representing about a third of factory-gate sales. The association reported that domestic production had increased by 40% from 2023 and emphasised the importance of market confidence to further investment.

The immediate question is whether the budget changes the funding available and, if so, how that affects grants for individual installations. Expected cuts should not be treated as settled policy before an announcement. For installers seeing more enquiries, the next test is whether government support continues to help turn that interest into purchases.