Heat Pump Market to Benefit from Green Homes Grant

A First Look at the UK Government’s New Green Homes Grant

During the government’s long-awaited summer economic statement, the Chancellor, Rishi Sunak announced that homeowners and landlords in England will be able to apply for up to £5,000 per household and up to £10,000 for low income households under the 2bn green homes grant to make their properties more energy efficient. These green vouchers could potentially save homeowners hundreds of pounds on their energy bills each year.

The new policy is part of the government’s economic recovery plan to create up to 140,000 green jobs in the wake of the coronavirus pandemic. The 2bn Green Homes Grant is part of a £3bn ‘green investment’ package. The announcement is not only a welcome boost for employment but goes some way towards helping the UK to reach its zero-carbon goal by reducing carbon emissions.


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Chancellor Rishi Sunak said:

“Our Green Home Grant will not only cut families’ bills by making their homes more energy-efficient, It will also kick-start our economy by creating thousands of green jobs and supporting those skilled tradespeople who are ready to work.”

In addition to the Green Homes Grant, a £1 billion programme will make public buildings, including schools and hospitals, greener, helping to achieve net-zero by 2050. Funding of £50m will go to pilot schemes to retrofit social housing at scale, with measures including insulation, double glazing, and heat pumps.

At the moment what we do know about the grant is that eligible homeowners will be able to use the scheme to help pay for energy efficient improvements which could include the installation of loft, floor and wall insulation, double or triple glazed windows, eco-friendly boilers, heat pumps, low energy lighting and energy efficient doors. The grant should cover as much as two thirds and in some cases all of the cost. Once the scheme is in operation you will have to apply for a voucher which you will then be able to spend to improve your home.

For the majority of homeowners, the vouchers will be worth about two-thirds of the cost of energy efficient improvements up to a maximum of £5,000 per household. To give an example the Treasury says that a homeowner installing cavity wall and floor insulation costing £4,000 would only pay about £1,320, with the Government contributing the remaining £2,680 through the voucher scheme.

Those homeowners on low income will be able to receive more. In fact, the government may cover the full cost of the energy efficient improvements up to £10,000. The Treasury hopes the Green Homes Grant will help pay for improvements in over 600,000 homes across England. The funding has been set aside to be spent in one financial year and it is claimed that about half of it will go to low income households.

The full details about what is included in the new scheme and how it will work are not yet available. The scheme is due to be launched in September and homeowners will be able to apply online at this point. The website will illustrate what energy efficient measures the vouchers can be used for. Once a supplier has provided a quote and the work has been approved, a voucher will be issued. No indication has been given yet for how long it will take for an application to be approved and a voucher issued. However, it would be advisable to do your homework now and look at what options are both the most energy efficient and affordable for you.

Though details of the scheme are still scant the impression given by the chancellor was that there would be no income qualifying on getting the main vouchers.

Martin Lewis, founder of moneysavingexpert.com said:

“I’ve been told there won’t be any income qualifying on getting the main vouchers, so every homeowner and landlord is likely to be eligible. However, whether every home will qualify is still up in the air. With the Green Deal you had to have a pre-qualifying inspection and the inspectors decided what your home was suitable for. My totally unsubstantiated guess is that it is likely there will be some form of pre-qualification assessment here. It may also be that they dictate what your house needs. For example, for those wanting double-glazing, you may be told that it needs to be part of a package with floor installation.”

The Green Deal was a similar type of scheme a few years ago from the coalition government.

UK landlords were pleased to receive the news about the government’s new Green Homes Grant and that they will be able to apply for vouchers to help fund the cost of energy improvements to their rental properties.

Ben Beadle, Chief Executive of the National Residential Landlords Association, said:

“Improving the energy efficiency of rental housing is good news for tenants, landlords and local economies. We encourage all landlords to make use of this as it will mean housing standards are improved, tenants will save money and it will reduce carbon emissions across the whole sector.”

Viessmann UK, a German manufacturer of heating, industrial, and refrigeration systems has welcomed the move by the Chancellor of the Exchequer, Rishi Sunak. The Green Homes Grant has the potential to stimulate the heat pump market which is essential for the decarbonisation of housing.

Darren McMahon, Viessmann UK Marketing Director said:

“We know the government wants UK homeowners to switch from fossil-fuelled boilers to renewable technologies such as heat pumps, to achieve carbon reduction targets. Yet many properties require significant investment in home improvements, such as insulation, before low temperature heating systems can provide expected levels of comfort while running in an energy-efficient way.”

The Green Homes Grant takes into account both the need for home improvements such as insulation to prevent energy loss and low temperature heating systems to reduce carbon emissions. It advocates a ‘fabric first’ approach recognising that the best way to save energy in the home is to reduce heat loss. It will also contribute to or cover the cost of the heat pump to make sure that the overall heating system is efficient. Viessman believe that the grant will encourage consumers to consider purchasing heat pumps if they are more affordable.

This is in line with the government’s announcement in 2019 that the installation of fossil fuel heating systems such as gas boilers would no longer be allowed in any homes built after 2025.

Ben Dyer, CEO, and co-founder of Powered Now, a back-office solution for tradespeople was among the first to respond positively to the government announcement.

He said:

 “At a time like this, tradespeople need as much support as possible, and by kick-starting home improvements, this is almost certainly set to help. Homeowners need the incentive to help bring traders back into their home and schemes like this that will save them money in the medium term for a reduced price will help to achieve this.”

Angela McGinlay, MD of Daikin though pleased with the government’s pledges believing the scheme will give homeowners an incentive to research renewable alternatives to fossil fuel heating, such as heat pumps, is of the view that government policy will have to go much further.

She said:

“With the planned phase out of fossil fuel boilers from new homes after 2025 this package was needed to provide a boost to the much-needed reduction of carbon emissions from the UK’s existing housing stock.

But if the government is to truly live up to its rhetoric of ‘bouncing back better’ then it will need to go much further.”

Many countries are announcing bigger & bigger eco-spending, with France promising £13bn just recently, Germany £36bn and Italy providing generous ‘eco bonus’ tax breaks. Heat pumps are just one of the many technologies and measures fighting for a slice of the much smaller pie in England. The renewable industry will be looking to the Autumn statement for further support.

On the whole the new scheme has received extensive support though opposition parties have cited a lack of support for renters in the private and social housing sector many of whom live in properties with some of the worst energy efficiency standards. It has also been pointed out that although the £3bn figure is more than many people expected, it is only a fraction of the £9.2bn pledged by the Conservatives in its manifesto to improve the energy efficiency of low-income housing and public buildings.



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