Grants to Replace Oil Boilers in UK Households

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grants for oil boilers

The government’s ECO (Energy Company Obligation) scheme now provides grant funding for replacing LPG and oil boilers in England, Wales, and Scotland.

Boiler grants are accessible to many homeowners and tenants across the UK as part of the Government’s Energy Company Obligation (ECO) plan. In addition, qualifying households can receive a free new, energy-efficient boiler.

Eligible households may be able to have an outdated, inefficient boiler (over 8 years old) replaced for free with a new A-rated condensing boiler (subject to a free survey and meeting qualifying criteria). A new A-rated boiler could save you up to 25% on your yearly fuel bills, according to The Energy Saving Trust.

What exactly is the Boiler Upgrade Scheme?

The UK Government’s BUS scheme (Boiler Upgrade Scheme) encourages people in England and Wales to install low-carbon heating systems that would include heat pumps and also biomass boilers.

This new boiler upgrade scheme, launched as part of the government’s “Heat and Buildings Strategy” in October 2021, allows householders to earn up to £5,000 toward replacing an existing oil or gas boiler with a low-carbon heating system, such as a heat pump.

The £450 million initiative will help install nearly 100,000 heat pumps in the next three years.

If you want to be an early adopter of low-carbon heating, this grant can bring the installation cost down to the cost of a gas boiler. A heat pump, on the other hand, is better suited to energy-efficient homes with proper insulation.

The effort is part of the government’s Affordable Warmth programme. It aims to help low-income households reduce their heating costs and become more energy efficient, all while lessening the nation’s carbon footprint. Even if you do not qualify for the entire grant, partial funding is sometimes available to greatly reduce the overall price of a proposed new boiler.

This scheme is available to both property owners and private tenants, so apply soon if you feel you could benefit from it.

There are a variety of government assistance, incentives, and plans available to help you purchase a new boiler. Even if you are not eligible for government assistance, alternative schemes and financing options can support you in your search for a warmer home.

The average cost of buying and putting in a new boiler with thermostatic valves is around £2,300, according to Energy Saving Trust Furthermore, because heating accounts for around 55% of average household energy consumption, a new, greater energy-efficient boiler could potentially save you over £100 per year on energy costs.

Through the Boiler Upgrade scheme, the government incentivises house owners to adopt low-carbon heating technology such as heat pumps (BUS). These incentives can help property owners finance the initial cost of low-carbon heating systems.

The scheme is open to domestic and small non-domestic premises in England and Wales and will be in effect from 2022 to 2025.

What you could receive:

You can get:

£5,000 discount – air source heat pump and installation

£5,000 discount – biomass boiler and installation

£6,000 discount – ground source heat pump and installation

What technologies does the programme cover, and how much money is available?

The Boiler Upgrade Scheme applies to three types of low-carbon heating systems:

Air source heat pump: £5,000 grant – list price + installation.

Biomass boiler: £5,000 grant – list price + installation*

Ground source heat pump: £6,000 + installation.

*Please remember that the award will only be available for biomass boilers in rural areas, in homes that are not linked to the gas grid, and with an emissions certificate demonstrating that polluting emissions are maintained to a minimum. The scheme does not apply to biomass boilers installed in self-built homes.

man working on oil boiler

How will I know which low-carbon heating system is appropriate for my home?

Your installer can tell you whether a heat pump or a biomass boiler is suitable for your home. They may advise you to start by enhancing your property’s energy efficiency.

Before installing a low-carbon heating system, read our loft and cavity wall insulation tips to increase your home’s energy efficiency.

Who is eligible to apply for the scheme?

It is exclusively available to households and small company owners in England and Wales.

To apply, you must do the following:

You own your property (this can be a home or a small business property).

Have a property with a maximum installed capacity of 45kWth (this covers most homes).

You must have a current EPC (Energy Performance Certificate). In addition, there must be no outstanding suggestions for loft or cavity wall insulation in your EPC (unless you have an insulation exemption).

When does the scheme run?

The programme will continue from 2022 to 2025.

Low-carbon heating systems commissioned (installed and thoroughly tested by your installer) on or after April 1, 2022, will be eligible for funding under the scheme.

The new heating system must also meet your property’s total space heating and hot water requirements and specific technical standards, such as minimum efficiency requirements. Again, your installer can help you with this.

How do I gain access to the scheme?

The Boiler Upgrade Scheme is a scheme run by installers. This means that the installer will submit the grant application on your behalf.

The grant amount will be deducted from the final price you pay.

How will the application work?

You will need to locate an MSC-certified installation in your area that can complete the work. The MCS quality assurance process ensures that installers are qualified and that their goods fulfil the required specifications.

The installer will inform you whether your installation is eligible for the scheme’s incentive.

You and your installer will agree on an estimate for the installation, which should include the grant from the Boiler Upgrade Scheme, as a discount from the overall amount.

After that, the installer will apply for the grant.

When the installer contacts you, you must confirm that they are operating on your behalf with Ofgem.

Scheme for Scrapping Boilers

The UK launched this government programme in 2009 to encourage homeowners to switch to more energy-efficient boilers, but it has since been phased out. However, some vendors may still offer discounts on new boiler installations in exchange for discarding an older, more efficient boiler. Still, we recommend getting multiple quotations because these are not government programmes. This is because, in some situations, even with reductions, a new boiler may be more expensive than it should be.

Renting a boiler or purchasing a boiler monthly

If you are not qualified for boiler grants or a free replacement, you may want to look into paying monthly instalments for your boiler. This service is provided by various companies and is a means to spread out the cost of a new boiler installation. 

There is no requirement to pay an upfront fee. Instead, you pay a monthly fee that covers the cost of the boiler, installation, and, depending on your contract, any repair, maintenance, and servicing fees for the term of your contract. The boiler will be yours once you have finished your payment. A boiler rental is a long-term commitment. 

Contracts can run up to 12 years. However, most boiler rental firms provide a variety of contract lengths. The shorter your contract, the greater your monthly payments will be, but you will own your boiler sooner. Most providers also allow you to make a deposit up ahead, which reduces your monthly payments even more. Check the fine print to see if your monthly payments are planned to rise each year or if they are fixed. Check the penalties for late fees as well. Penalties can also accrue daily, so falling behind on payments can quickly become costly.

Finally, renting may not be the greatest option if you intend to move before the end of your lease. When you move, you generally have to pay off any leftover balance. 

Renting a boiler could be a smart alternative if you can’t afford the upfront cost of a new boiler or want an all-in-one payment that covers everything related to your boiler for peace of mind. 

However, keep in mind that you’ll be locked into a long contract and are unlikely to save money in the long run compared to paying for a new boiler upfront.

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Ollie Creevy
Ollie has been writing content online about home improvements for over 3 years. With a real interest and in-depth knowledge of heat pumps and ECO home improvement measures you can use to save on your energy bills. Ollie also keeps up to date with all the Government grants available for you to take advantage of like ECO4 and the Boiler Upgrade Scheme.