HEAT PUMPS AND THE BUDGET 2025
Following last week’s budget, we’re sharing our thoughts and understanding of the implications of this budget for the heat pump market in the UK.
Boiler Upgrade Scheme
Despite a couple of unhelpful articles in the press in the weeks leading up to the Budget, the Boiler Upgrade Scheme (“BUS”) is being retained in full. And in fact, the Department for Energy Security and Net Zero (“DESNZ”) went one step further and announced that the scheme was being expanded to run for longer and potentially to include additional technologies.
Whilst this was the news we expected – we are classed as a Key Stakeholder by DESNZ and so we have been kept in the loop – it is still a relief given the economic environment in which we operate. The Boiler Upgrade Scheme has worked incredibly well as a policy, and Alto Energy has played a really important role in providing homeowners and local heating businesses with access to the £7,500 grants.
The ongoing commitment to the Boiler Upgrade Scheme is a genuine statement of intent by the Government that heat pumps are going to play a crucial role in the UK’s energy transition. Switching to efficient heat pumps, powered by sustainable and renewable electricity sources, is the UK’s best option to decarbonise and to reduce our reliance on overseas fossil fuel imports.
If you’re a plumbing and heating business, get in touch with Alto today to find out more about how the Boiler Upgrade Scheme can help you to transition your business over the coming years, and how Alto can support you accessing the grants.
The End Of The Energy Company Obligation
The Energy Company Obligation is scrapped. Those were the words the Government used to describe their decision to bring the Energy Company Obligation (“ECO”) scheme to an end in March 2026. To explain the full context here, the current iteration of ECO – ECO4 – was due to come to an end in March 2026 anyway. The regulatory body Ofgem had been consulting on what to do next. Unfortunately for the scheme, it has often been mired in controversy around quality of work, and that came to a head in 2025 as the extent of the workmanship issues around solid wall insulation came to light. This meant that the scheme became an easy target, hence the Government’s decision to not renew the scheme from April 2026 onwards.
However it isn’t quite right to say that the scheme is scrapped entirely, because in ECO’s place the Government has announced an additional £1.5B of Treasury funding which will fund a direct replacement for ECO – i.e. a fuel poverty focussed scheme targeting bill-saving improvements to the homes of the UK’s most vulnerable households. This additional £1.5B funding is in addition to the existing DESNZ budget of £13.2B for their overall Warm Homes Plan, of which the Boiler Upgrade Scheme is a part. Alto Energy will stay close to policy developments over the coming months to find out more on how this new scheme will take shape.
Electricity Prices
By ending ECO in it’s current form, as well as restructuring the way some other policies are paid for, what this means is that the Government is able to deliver on it’s commitment to bring down energy bills. And excitingly for the heat pump industry, these savings will all be coming off of the price of electricity. The saving will equate to an amount per kWh… so heat pump users (classed as high electricity consumers) will save even more.
Here's what Chris Stark – leader of the UK’s Clean Power mission, had to say:
“Today's decision to move policy costs off bills is designed to push us towards cheaper energy costs overall, and particularly cheaper electricity - we want to drive electrification of the economy more quickly. As we said consistently at the Climate Change Committee, the best possible incentive to decarbonise is cheaper electricity.”
Conclusion
Commitment to the Boiler Upgrade Scheme signals UK’s policy support for high-quality heat pump installations in homes throughout the UK. The expansion of the Boiler Upgrade Scheme, both in terms of funding and scope, is a clear signal of the trajectory for heating in UK homes. At Alto Energy we are delighted to be able to continue supporting local plumbing and heating businesses to transition to heat pumps, access the grant, and deliver high quality heat pump installations into customer’s homes.
Get in touch today to start delivering high-quality heat pump installations and help your customers benefit from the Boiler Upgrade Scheme.