BLOG: New data reveals the impact of increasing the bus grant to £7,500
On 20 September 2023, Prime Minister Rishi Sunak announced that from 23 October of that year, the Boiler Upgrade Scheme (BUS) payment would increase from £5,000 to £7,500 for air-source heat […]
Published: 15 Feb, 2022

On 20 September 2023, Prime Minister Rishi Sunak announced that from 23 October of that year, the Boiler Upgrade Scheme (BUS) payment would increase from £5,000 to £7,500 for air-source heat pumps (ASHPs) and from £6,000 to £7,500 for ground-source heat pumps (GSHPs). This boost to the grant was intended to spur installations of heat pumps across the UK and help the government meet their Net Zero target of 600,000 installations per year.

Late last month, the Department for Energy Security and Net Zero (DESNZ) published its latest statistics for the BUS scheme. These figures provide an opportunity to examine the effect of the grant increase and the state of the government’s primary instrument to decarbonise domestic heat.

The official statement from DESNZ reads:

“The total number of applications in December 2023 across all technology types decreased by 46% compared with the previous month. However, the decrease follows a substantially higher monthly volume of applications in November 2023, the first full month after grant increases took effect. The volume in December was 49% higher than the volume received during the same month of the previous year.”

Several publications were keen to publicise that the ‘BUS boost’ had driven applications by 49% from the previous year. Their enthusiasm notwithstanding, if we evaluate the installations month on month over the life of the scheme, a somewhat different picture emerges. Figure 1. illustrates that upon announcement of the scheme, there was a flurry of applications to take advantage of the increased grant funds. Looking at the numbers for the following months, however, it appears applications may have tapered off.

Figure 1. BUS Scheme Voucher Applications Received Over Time (England and Wales).

In a previous article, CaCHE analysed the likely impact of the BUS boost and suggested: “while there will be an increase in applicants, that number will likely be relatively modest.” Although it is too early to say definitively – if the current trend holds – a net increase of 3,212 additional installations would constitute a ‘relatively modest’ achievement set against the goal of 600,000 installations per year.

This leads us to restate the point made in the previous CaCHE piece. The voucher scheme is only open to applicants with substantial household funds at their disposal. According to the BUS scheme data, the dominant applicant is a rural homeowner who lives in the south of England and is paying around £13,500 for an ASHP to replace a gas or oil heating system. However, given half the homes in the UK require around £14,000 in upgrades to ensure the running cost of a heat pump remains economical, the total cost of transitioning to a clear heat solution is likely considerably more than £13,500. In the best-case scenario, the homeowner needs an extra £6,000. In the worst case, £20,000. Reflecting on the impact of the BUS boost so far, we must accept that significant barriers to heat pump deployment remain and that existing government strategies to accelerate their adoption require serious supplementation.

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