The government has been urged to extend grants which cover the costs of buying and installing heat pumps to fund the upfront costs associated with heat networks.
Specialist polymer manufacturer REHAU has called for the remit of the Boiler Upgrade Scheme (BUS) to be extended to give communities greater choice over their future heating method.
Under REHAU’s proposal, BUS grants could be pooled together on a community level to set up a heat network.
From today (23 October), the maximum value of a BUS grant has been increased to £7,500 for both air source heat pumps and ground source heat pumps.
Previously the maximum grant for an air source heat pump was capped at £5,000 while grants of £6,000 were previously available for ground source heat pumps.
The REHAU proposal comes following the National Infrastructure Commission’s (NIC) second National Infrastructure Assessment which backed heat pumps and heat networks to decarbonise the UK’s building stock, while simultaneously urging the government to rule out hydrogen for home heating.
The NIC’s assessment calls for an initial upfront subsidy of £7,000 to households who are installing heat pumps or connecting to heat networks, alongside 0% financing, to encourage the move away from gas boilers.
Steve Richmond, REHAU Building Solutions’ head of marketing & technical, believes that subsidies should allow for community-led heat networks to be created where they don’t currently exist.
He claims that this would particularly incentivise people in rural communities to switch, where the use of oil, LPG and direct electric for space heating is much more prominent and typically more expensive for homeowners.
Richmond said: “It is great to see that the NIC is championing heat pumps and heat networks. It has already been proven that these low carbon solutions work, and they are rapidly being adopted on the continent.
“The UK can follow similar approaches from Europe with community-led, not-for-profit heat networks, but only if there is enough incentive and motivation to do so, which has to come through policy changes from the government.”
He added: “Subsidies such as the Green Heat Network Fund are typically used on larger urban areas so we believe government should also consider subsidies and simplify planning to help rural areas. In these places, up to 4.4 million households are dependent on oil, LPG and direct electric heating to provide heating for their homes, which is costly both in carbon and bills. Installing low carbon heat networks using heat pumps in these areas would help save energy and reduce the reliance on these fossil fuels.
“However, from an energy service company’s standpoint, these rural areas may not be seen as a focus, even with funding they technically could apply for from the Green Heat Network Fund.
“This is where putting the decision into people in the community’s hands can really work, with community champions and local councils leading the way. It has worked in the UK for renewable electricity community schemes such as PV but now we need to turn our attention to heat decarbonisation.”
Speaking on the increased BUS grants, energy secretary Claire Coutinho added: “No one should have to choose between cutting costs and cutting emissions – our pragmatic approach means we can continue to deliver on our ambitious net zero targets without unfairly hitting the pockets of hardworking families.
“From today, for some households starting prices for heat pumps could now be below the average gas boiler, as we have increased the cash grant by 50 per cent to £7,500 – making our scheme one of the most generous in Europe.
“This will help thousands of people across the country reduce their energy use and keep their homes warm.”
Despite rowing back on a number of net zero related targets last month, the government is sticking to its commitment to deploy 600,000 heat pumps per annum by 2028.
The decision to stick with the ambitious annual target is revealed within a briefing paper issued to industry stakeholders and seen by Utility Week.
In August, Utility Week analysis showed that uptake of BUS grants had “hit a ceiling” with voucher applications consistently sitting between 1,300 and 1,600 a month for the past year.
Since the scheme’s inception in May 2022 there have been more than 21,400 voucher applications, with just over 16,100 issued and more than 13,700 vouchers redeemed.
In the first phase of the scheme – which ended in March – there was an average of 1,577 voucher applications made each month, with 1,200 issued and 1,025 redeemed.
At the end of the first round of the BUS, £89.6 million of the £150 million budget went unspent and was clawed back by the Treasury.
Despite widespread condemnation of the scheme’s shortcomings, the government said that it expected greater uptake during the second phase of the scheme which started in April and runs until March 2024.
Speaking at Utility Week Live in May, DESNZ heat pump innovation lead Alex Hobley confirmed that the government was looking at ways of extending support for heat pumps to hybrid options to accelerate the rollout.