Boiler upgrade scheme is “failing to deliver”

The Lords Environment and Climate Change Committee has claimed that the Government’s Boiler Upgrade Scheme is failing to deliver on its objectives, following a disappointingly low take-up of grants.

The inquiry also suggests that hydrogen for home heating is “not a serious option for the short to medium-term”.

In a letter sent to Lord Callanan, Parliamentary under Secretary of State for Energy Security and Net Zero on Wednesday 22 February, the Committee warns that if the current take-up rate continues, only half of the allocated budget will be used to help households switch to low-carbon heating systems and a healthy market of installers and manufacturers will not be in place in time to implement low-carbon heating policy measures smoothly. Therefore, the Government’s 2028 target of 600,000 installations per year is very unlikely to be met.

Key Findings:

  • Public awareness of low-carbon heating systems is very limited, and promotion of the BUS has been inadequate
  • There is a shortage of heat-pump installers and insufficient independent advice for homeowners
  • Hydrogen is not a serious option for home heating for the short to medium-term and misleading messages, including from the Government, are negatively affecting take-up of established low-carbon home heating technologies like heat pumps
  • Upfront costs are too high for many households, even with the help of the grant, making it impossible for low-income households to benefit from the scheme
  • While heat pump running costs are becoming competitive with gas boilers in some modelling, progress is urgently needed through electricity market reform to ensure running costs are affordable.

The Committee is calling on the Government to:

  • Provide greater clarity to industry and consumers on feasible options for low-carbon home heating through a consistent policy framework, public communications, and householder advice
  • Roll over the remainder of the BUS first year budget into the second year and establish a review to consider extending the scheme
  • Correct the Energy Performance Certificates (EPC) methodology so that certificates properly reward households for making the switch to low-carbon heating and flawed EPC recommendations cease being a barrier to BUS eligibility
  • Upgrade the provision of Government advice, alongside recognising the role of independent retrofit coordinators, to help households navigate low-carbon heating installations
  • Relax the requirement arising from Permitted Development Rights to site a heat pump a certain distance from neighbouring properties.

Baroness Parminter, Chair of the Environment and Climate Change Committee, said:

“The transition to low-carbon heat is fundamental in the path to net zero, given that 17% of the UK’s greenhouse gas emissions come from our homes.

“The Government must quickly address the barriers we have identified to a successful take-up of the Boiler Upgrade Scheme in order to help grow the take up of low-carbon heating systems. It is vital they do so if we are going to meet our Net Zero ambitions.”

Industry reaction

The criticism of both the BUS and hydrogen heating will be a concern for the industry, as these are two of the most talked-about routes to net zero.

Dr Matthew Trewhella, CEO of The Kensa Group commented:

“We are calling on the government to reconsider the subsidies that are currently offered by the Boiler Upgrade Scheme which is currently failing to incentivise ground source heat pumps fairly.

“As Baroness Parminter correctly advises – ‘Ground source heat pumps can deliver greater energy efficiency and so should also be adequately incentivised.’ We propose that grant levels should be related to carbon savings as ground source heat pumps are the most energy efficient heating and cooling technology. They should also be reflective of the impact on the grid and the longevity of the infrastructure – both of which are more beneficial with ground source technology.”

Bean Beanland, the Heat Pump Federation Director of Growth & External Affairs said:

“The BUS is the current cornerstone of government policy to decarbonise domestic heating.  Heat pump take-up across the country is increasing, as is industry investment, but the BUS’s first year of operation has been challenging for all the reasons outlined by the Lords Committee.”

“The Committee’s findings chime precisely with what heat pump installers and consumers are telling us. In particular, homeowners and landlords need better information on heat pump technologies that are available now, and this needs to be underpinned by an EPC framework that appropriately recognises the benefits of heat pump systems.”

“Given the disjointed launch of the scheme and the urgency needed to mitigate against climate change it is completely inappropriate for HM Treasury to clawback any underspend. Rather, the unspent funds should be used to extend the scheme in year two and to increase support for ground-source deployment to match the demand proven under the previous Domestic Renewable Heat Incentive.”

While Mike Foster, CEO of the Energy and Utilities Alliance (EUA), has called for the scheme to be scrapped:

“This report confirms just how far removed this committee is from the average member of the public. While we agree the Boiler Upgrade Scheme is failing, we want to see it scrapped, rather than see the recommendation of the committee to double-down on the flawed policy be supported.”

“Giving a £5,000 taxpayer handout to the well-off is immoral and simply cannot be justified when millions are living in fuel poverty and we all face a 20 per cent increase in our bills from April.”

“Exposing just how out of touch the committee are, they suggest removing government protections around insulation requirements as a way of increasing the take up of heat pumps, when this will only push up bills and create a backlash against this technology. Because the money is tied up in the scheme, it can’t be used to fund sensible measures like insulation that permanently reduce bills and carbon emissions. Insulation can also be targeted at the least well-off, making it a fairer policy too.”