Boiler Upgrade Scheme progress report – is the scheme delivering on its objectives?
We are approaching the end of the first year of the Boiler Upgrade Scheme (BUS), which opened for applications on 23rd May 2022 to cover installations commissioned from 1 April 2022.
Recently, we’ve had some interesting insight into the progress of the scheme.
- First, the Lords Environment and Climate Change Committee concluded its inquiry into the BUS and reported its findings on 22nd
- Second, Ofgem has released the figures from the third quarter of the scheme’s administration, covering the period from November 2022 to January 2023.
How many voucher applications have been received?
From November 2022 to January 2023, the scheme received 4,062 voucher applications, compared to 4,367 in the first quarter and 4,552 in the second quarter.
The total number of vouchers issued under the scheme up to 31st January 2023 is 12,981. This is not enough to meet the government’s target of 600,000 installations per year from 2028.
According to the Lords Environment and Climate Change Committee report, if uptake continues at the current rate, only half of the allocated budget will be used. This would be a real missed opportunity to boost the market, installer base and supply chain and ultimately help households switch to low-carbon heating.
The Committee found that “public awareness of low-carbon heating systems is very limited, and promotion of the BUS has been inadequate”.
How many Boiler Upgrade Scheme vouchers have been issued?
A total of 9,889 vouchers have been issued (out of a possible 12,981):
- May 2022 to July 2022 – 2,534
- August 2022 to October 2022 – 3,445
- November 2022 to January 2023 – 3,910
Are installers getting paid under the Boiler Upgrade Scheme?
The second stage of the BUS process is voucher redemption and paying grants.
Under the BUS, heat pump installers are responsible for applying for and redeeming the £5,000 grant (for air source heat pumps; £6,000 for ground source heat pump installations). Customers only need to pay the balance of the full price following deduction of the grant.
The latest report states that 3,524 voucher redemption applications were received in the third quarter and 3,550 grants were paid, showing that Ofgem is catching up with early applications.
Just over 93% of the total voucher redemption applications had been paid up to 31st January 2023 (8,181 voucher redemption applications received, 7,641 grants paid).
How much of the budget has been spent?
The value of vouchers issued each quarter has been steadily rising, however the drop in applications could threaten this trajectory.
Vouchers issued in the third quarter were worth £19,663,000, bringing the total amount spent under the scheme in the first three quarters to £49,730,000. This is the figure that is used to budget the scheme, rather than the actual amount paid out in grants, which comes to £38,384,000 up to the end of January.
The scheme has a budget of £150 million per year for three years (£450 million in total). For year one, £100,270,000 remains to be allocated.
It is extremely unlikely that over two thirds of the yearly budget will be spent in the final quarter. The Lords Environment and Climate Change Committee is calling on the government to roll over the remaining first year budget to years two and three and establish a review to consider extending the scheme.
Become a heat pump installer
In its report, the Lords Environment and Climate Change Committee acknowledges that “there is a shortage of heat-pump installers & insufficient independent advice for homeowners”.
Installers are a trusted source of independent advice for homeowners, providing greater clarity and increasing consumer confidence in low-carbon heating options.
The heat pump skills shortage represents a significant barrier for the Boiler Upgrade Scheme and any future consumer incentive schemes.
It is widely acknowledged now that hydrogen is not going to play a major role in home heating in the short to medium term. Heat pumps, particularly air source heat pumps, account for 96.4% of the grants paid under the BUS. What’s needed now is greater public awareness and more installers.
Tell your customers about BUS and if you haven’t done so already, upskill into heat pumps! Training is designed for existing plumbing and heating engineers and takes less than a week to complete.