Has the boiler upgrade scheme hit a ceiling?

The boiler upgrade scheme (BUS) appears to have hit a ceiling far short of the government’s projections, Utility Week analysis of the scheme’s data reveals.

For the past 12 months, the number of voucher applications for heat pump grants has hovered between 1,300 and 1,600 a month.

One industry expert has suggested that this is because of a “constraint in the system” which offers subsidies to consumers for installing heat pumps in their homes, while others have suggested that mixed messaging around home heating is preventing greater uptake.

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 treasury.

Despite widespread condemnation of the scheme’s shortcomings, government said that it expected greater uptake during the second phase of the scheme which started in April and runs until March 2024.

However, Utility Week analysis of BUS data reveals that there has instead been a slight decline in the average monthly applications.

In the four months since the start of the second phase, average monthly voucher applications have fallen by 160 to 1,417. The number of vouchers issued has declined by the same number (to 1040 a month) and the number of vouchers redeemed has dropped at an even greater rate – down from 1,025 per month to 879.

Energy and Utilities Alliance chief executive Mike Foster – who previously labelled the scheme as a “sick dog that needs to be put down” – told Utility Week that the figures suggest that there is a “constraint in the system” preventing greater uptake in vouchers.

“I look at the figures every month and there has been a fairly consistent uptake in vouchers for the past 12 months now,” Foster said. “That suggests to me that there is demand but there is some constraint in the system preventing more voucher applications from being made.

“My hunch is that there is a lack of installers who are available to provide the pre-installation checks [of people’s homes] that are a requirement of the BUS.”

He added: “I have been vocal in my thoughts about the scheme in the past, however if you want it to work then it’s increasingly obvious you need to train more installers and incentivise companies to train more installers.”

However, Bean Beanland, director for growth & external affairs at the Heat Pump Federation, told Utility Week that “there are no industry-related problems” holding back the scheme.

Instead he said that “policy and politicians are entirely to blame” for the scheme’s failings.

“This is not a failure of heat pumps or the heat pump industry,” Beanland said. “With electricity at around 30p a kWh it is difficult to sell people a toaster let alone a heat pump.”

He added: “Without an operation cost reduction it is almost impossible to justify the upfront capital outlay. Politicians should be working as hard as possible to make it as affordable as possible, but they aren’t doing that.”

Beanland said that “government messaging has been appalling”, adding that the back-and-forth on the plausibility of hydrogen for home heating is adding to public reluctance to take up a heat pump.

In response, a spokesperson for the Department for Energy Security and Net Zero (DESNZ) said: “We’re investing billions to improve energy efficiency across the country, with over £81 million in vouchers issued to installers in the first year of our Boiler Upgrade Scheme.

“We are fully focused in meeting our aim of 600,000 heat pump installations a year by 2028 – and consumers can now install one for an increasingly similar price to a gas boiler.”

Last year, the National Infrastructure Commission raised doubts over the plausibility of the government’s heat pump target of installing 600,000 devices a year by 2028.

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.