Flagship £450m green energy boiler scheme needs urgent reform to prevent it failing, Lords committee warns
The government’s £450m Boiler Upgrade Scheme (BUS) is failing to deliver on its objectives, following a disappointingly low take-up of grants for heat pumps, warned the House of Lords environment and climate change committee.
The Westminster body described the green energy project as “seriously failing” and urged the government to make serious reforms to the scheme to ensure that its target of 600,000 installations per year in 2028 can be met.
Proposed changes include making sure energy certificates properly reward households for making the switch to low-carbon heating, while also altering Energy Performance Certificates (EPC) methodology to make more homes eligible for the BUS.
It also urged the government to roll out more consumer advice so households feel comfortable with low-carbon heating installations, and relax the requirement to site a heat pump a certain distance from neighbouring properties.
The committee warned in a letter sent to Lord Callanan, the parliamentary under secretary of state for energy security and net zero, that it was unlikely the currently low take-up rate would be reversed without changes.
So far, only half of the allocated budget has been used to help households switch to low-carbon heating systems, while a healthy market of installers and manufacturers will not be in place in time to implement low-carbon heating policy measures smoothly
The scheme has been allocated £150m a year in funds for three years.
The committee revealed that, by the end of January, £49.7m in vouchers had been issued, equating to 7,641 installations, according to Ofgem figures.
Boiler upgrade take-ups remain low
Launched in May 2022, the boiler upgrade scheme offers grants of up to £6,000 for ground borne heat pumps.
However, the committee found that public awareness of low-carbon heating systems is very limited, and promotion of the BUS has been inadequate.
It also determined there is a shortage of heat-pump installers and insufficient independent advice for homeowners.
Meanwhile hydrogen is not considered a serious option for home heating for the short to medium-term.
Ofgem fears misleading messages, including to the goverment, are negatively affecting take-up of established low-carbon home heating technologies like heat pumps
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 per cent 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
Clem Cowton, director for external affairs at heat pump champions Octopus Energy Group, believed the scheme had provided value to the market.
She told Morning Wire: “The Boiler Upgrade Scheme has successfully ignited a price war between suppliers, driving down the upfront cost of heat pumps and helping more households move to greener, cheaper, and safer heating.
“Demand has skyrocketed, with Octopus alone seeing more than 50,000 people registering interest in a heat pump, and removing bureaucracy like unnecessary EPC and planning rules will make heat pumps even more popular. It’s clearer than ever that the future of heating is electric.”
Meanwhile, the Heat Pump Federation recognised the first year of operating the scheme has been “challenging for all the reasons outlined by the Lords Committee.”
Bean Beanland, the HPF’s director of growth and external affairs said: “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.”
By contrast, Greenpeace UK’s climate campaigner, Georgia Whitaker, was damning of the latest figures.
She said: “With housing responsible for almost one fifth of the UK’s carbon emissions, this shameful record on switching to low-carbon heating puts the UK’s legally binding climate targets in jeopardy.
“If the government isn’t going to push and promote it, what’s the point in the scheme? In order to cut bills, carbon emissions and eradicate fuel poverty, we need a vaccine-style roll out of heat pumps and insulation not this dismal trickle.”