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)

Opened in April 2022 in England and Wales, the £450m Government Boiler Upgrade Scheme (formerly known as the Clean Heat Grant), offers 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

Scottish Funding

Grant funding is available for the installation of heat pumps of up to £7,500, or £9,000 for households that qualify for a rural uplift. Additional funding can be requested as an optional interest-free loan.

Home Energy Scotland Grant and Loan – you can now apply for grant funding without taking out a loan. A rural uplift is also available to provide extra support to rural and island homes which can face increased costs to install home improvements.

Warmer Homes Scotland – you could get funding from the Scottish Government to make energy efficiency improvements, like new heating or insulation. The improvements offered will depend on a survey of the home. Assessors will come to your home to survey it and will recommend improvements suitable for the home, which could include a range of insulation and heating.

The Energy Company Obligation (ECO)

The ECO is a Government 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 government’s response to ECO4 consultation sets out the policy of the scheme from April 2022 until March 2026. Please click on the link below to find out more about ECO4.

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 November 2024.

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.

Wave 1, which ran in the financial year 2021/22, awarded £179m of funding to 69 projects which will improve the energy performance of around 20,000 social homes.

Wave 2 opened on 29th September 2022, with application submission details to be published in October. The competition closed on 18th November and bid assessments for Wave 2 ended in December 2022.

Successful projects were notified in the spring and are now in process.

The applications will be worth £800m across three years.

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 88% 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
  • MOD estate

Be ‘shovel ready’ for potential funding

Phase 3b of the Public Sector Decarbonisation Scheme is set to provide £635 million of grant
funding over the financial years 2023/2024 to 2024/2025 – this is to be split with up to £402 million
for 2023/24 and up to £233 million for 2024/25.

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.

The application window for PSDS Phase 3b closed on 31 October 2022.

Stay in touch with Kensa to find out about further rounds of funding. Kensa has already assisted a number of local authorities and institutions to secure PSDS funding.

Contact us to discuss any potential schemes and we can support any application bids.


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.