Heat Pump Funding

The Government has demonstrated its commitment to decarbonising heat and buildings through policy and billions of pounds of funding. It has also recognised that highly efficient, low carbon heat pumps have a vital role to play in creating a cleaner, greener future for the UK.

A number of initiatives currently exist to incentivise the adoption of ground source heat pumps. Have a look at the heat pump funding and grants that could support your project.

Heat pump funding

Boiler Upgrade Scheme (BUS)

Opening in April 2022, the £450m Government Boiler Upgrade Scheme (formerly known as the Clean Heat Grant), will offer households capital grants to replace fossil fuel heating systems with more efficient heat pumps that do not emit carbon when used.

Homes retrofitting ground source heat pumps will receive £6,000 when the system is commissioned, compared to £5,000 for air source heat pumps or biomass.

As this is a domestic scheme, there is a 45kW heat pump size limit per property. Social landlords and newbuild (except custom build) are not eligible,

Discover the Boiler Upgrade Scheme

The Energy Company Obligation (ECO)

The ECO is a grant for retrofitting ground source heat pumps into social housing properties. It places legal obligations on larger energy suppliers to fund efficiency measures for domestic energy users.

The current scheme, ECO3, is due to end 31st March 2022. ECO4 is currently under consultation.


ECO4: Under consultation

The upcoming ECO4 scheme, due to begin in April 2022, is currently under consultation. Stakeholders from sectors including energy efficiency installers and local authorities submitted their views during the summer of 2021 and feedback is currently being analysed.

Green Heat Network Fund (GHNF)

This scheme intends to help new and existing heat networks to move to low and zero-carbon technologies. The fund is anticipated to run from April 2022 to September 2024. The Transition Scheme is live, offering funding to help commercialise projects ready to apply for construction funding in 2022.

Aimed at developers and investors in low-carbon heat networks, such as Shared Ground Loop Arrays, the objectives are to achieve carbon savings, increase the amount of low-carbon heat utilisation in heat networks and help prepare the market for low-carbon regulation.

See more information or contact us for more details.

Discover the GHNF

Social Housing Decarbonisation Fund (SHDF)

The SHDF will upgrade a significant amount of social housing stock to an Energy Performance Certificate rating of C, with the fund expected to offer a potential £3.8bn overall. Applications for the first wave of funding closed on 15th October 2021 and funding has now been allocated.

A second wave of the fund, which housing associations will be able to bid directly, is due to be launched in 2022 and will be worth £800m across three years. Details are expected to be released soon.

Discover the SHDF

The fund will help:

  • deliver warm, energy-efficient homes
  • reduce carbon emissions and fuel bills
  • tackle fuel poverty
  • support green jobs.

Public Sector Decarbonisation Scheme (PSDS)

Eligible projects

The PSDS is a £1billion fund dedicated to heat decarbonisation and capital energy efficiency projects in non-domestic public sector buildings across England. Covering up to 100% of ground source heat pump installation costs, the scheme’s objective is to achieve significant carbon savings within the sector.

Eligible public sector bodies include:

  • Emergency services
  • NHS Trusts & Foundation Trusts
  • Further & higher education institutions
  • Local authorities
  • Maintained schools within the state education system
  • Nursery schools maintained by a local authority
  • Central government departments & non-departmental government bodies

It is clear there is both a need in the market and a desire from the government to support the development of schemes in this sector. However, with each funding round oversubscribed and short timescales to submit bids, projects need to be ‘shovel-ready’ to have a chance of success.


Be ‘shovel ready’ for potential funding

Phase 3 Public Sector Decarbonisation Scheme closed to new applicants on November 3rd 2021. Salix and its partners are currently assessing the submitted projects and are looking to notify applicants early in 2022. Successful applicants will then have to complete their designs and procurement, with the projects starting no earlier than April 2022 and finishing in March 2023 for one-year projects and 2024/2025 for 2-and 3-year projects.

We have seen first-hand how important it is, that clients engage with the supply chain as early as possible. Nearly all projects will require some form of planning permission which can take 12 weeks, with Stage 4 design completion up to 12 weeks, dependent on the level of detail within existing designs used at application, this then leaves 24 weeks for mobilisation, construction and completion.

Kensa has supported their current clients during previous phases of PSDS by undertaking all the necessary stages required and this includes the procurement process, either through tendering or award through specialist frameworks.

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Ground Array Funding

Ground array funding covers the cost of the groundwork for ground source heat pumps. Through this scheme, arranged by Kensa utilities, an investor funds the network – known as Shared Ground Loop Arrays – to cover the most expensive aspect of the project. In return, the investor can charge connection fees if they wish.

Meanwhile, the developer or property owner benefits from a cheaper project, with all the efficient advantages of ground source over air source.