The UK government recently implemented significant updates and modifications to two boiler grant schemes: Energy Company Obligation 4 (ECO4) and Boiler Upgrade Scheme (BUS). These modifications aim to improve accessibility, increase adoption of low carbon heating solutions, and address affordability challenges.
Key Updates in Government ECO4 Boiler Schemes
The Government ECO4 Boiler Schemes, running until March 2026 and with a PS4 billion budget, focuses on increasing energy efficiency for low-income households. Recent updates include: Source
- Mid-Scheme Adjustments: Ofgem has proposed administrative adjustments to streamline delivery of ECO4 and the Great British Insulation Scheme (GBIS), inviting stakeholder feedback on these updates. Source
- Performance-Based Incentives: The government is considering creating a voluntary Pay-For-Performance mechanism to reward suppliers who produce high-quality retrofits, thus encouraging better outcomes for households. Source
Recent Updates on Boiler Upgrade Scheme (BUS): Recent Changes
The BUS offers grants to facilitate the installation of heat pumps and biomass boilers, including recent initiatives including: Source
- Increased Funding: For 2025-2026, Ofgem has increased their budget from PS275 million to PS295.5 million with an extra PS25 million allotted this financial year in order to be able to allocate more vouchers due to increasing demand.
- Expanded Eligibility: The government is exploring expanding eligibility by including heat batteries and other low-carbon heating solutions as part of this scheme, thus meeting suitability concerns in some homes.
- Regulatory Adjustments: Planning rules have been changed to simplify installation of heat pumps by relaxing their requirements of placement at least one meter from property boundaries, thus making installation faster.
Addressing Affordability and Adoption Challenges in Manufacturing Technology Solutions
Even with these improvements, challenges remain:
- Affordability Gap: Even with a PS7,500 grant in hand, an estimated shortfall for heat pump installation averages PS5,400, making the process less accessible for low-income households.
- Adoption Rates: In 2024, gas boiler installations outnumbered heat pump installations by 15-1, signaling an urgent need for more effective incentives and support mechanisms.
Future Prospect.
The government continues to explore options to enhance these schemes, including:
- Additional Subsidies: Proposals for top-up grants to low-income households to address affordability gaps
- Subscription Models: Exploration of heat pump leasing arrangements to minimize upfront costs and facilitate adoption.
