Bigger heat pump grant lifted installations, LSE study finds
A new study says the 2023 rise in the Boiler Upgrade Scheme grant boosted installations. Here is what it means for what you pay for a heat pump.
A larger government grant led to more heat pumps being fitted, and it did not push prices up. That is the finding of a new study, according to The London School of Economics and Political Science (LSE). For homeowners in England and Wales, the practical point is that the grant is still worth claiming. Our current figures show a typical air source heat pump now costs £12,900, with a usual range of £10,000 – £16,700, before the grant comes off.
What the study found
According to The London School of Economics and Political Science, researchers from the Grantham Research Institute, the Centre for Economic Performance, Imperial College London and UCL examined 260,000 certified heat pump installation records covering Northern England and Scotland.
They compared the two regions because the Boiler Upgrade Scheme (BUS) applies only to England and Wales. Scotland runs its own clean-heating schemes, and its grant levels did not change in October 2023.
The headline results, as reported by LSE:
- The BUS voucher for air source heat pumps rose from £5,000 to £7,500 on 23 October 2023.
- The voucher for ground source heat pumps rose from £6,000 to £7,500.
- Monthly installations grew by 24% more in England than in Scotland after the change.
- That equated to roughly 7,200 extra units over the following 20 months.
Did installers just pocket the grant?
This was a common worry, and the study says it did not happen. Ralf Martin of Imperial Business School said the bigger grant made local markets large enough to attract more installers, and the added competition "pushed installers' prices down rather than up". According to the researchers, households ended up better off by more than the extra £2,500 the government added.
We would treat that as a finding about the market as a whole in the period studied, not a guarantee for any single quote. Prices still vary with the house, the system size and the installer.
What the grant is today
Our fact sheet puts the Boiler Upgrade Scheme at £7,500 off an air source or ground source heat pump in England and Wales. The installer must be MCS certified. In Scotland, Home Energy Scotland offers a grant of up to £7,500, plus an optional £7,500 interest-free loan.
Installing heat pumps, insulation, solar panels and batteries also carries 0% VAT until 31 March 2027. The Warm Homes Plan, published in January 2026, promises £15bn to 2030. That includes grants for low-income households and low- or zero-interest loans being phased in.
What it means for your costs
Here is how we would work out the figures on a heat pump. We build each estimate from labour hours multiplied by local rates, plus materials, and check it against market prices and real quotes.
| Heat pump tier | Typical cost before grant |
|---|---|
| Basic | £9,700 |
| Mid-range | £12,900 |
| Premium | £15,300 |
Take £7,500 off whichever figure is closest to your quote to see the likely net cost in England or Wales. In most cases the installer applies for the voucher and deducts it from your invoice, so you should not have to find the full sum up front. Our guide to [heat pump costs](Air source heat pump) covers what pushes a price towards the top or bottom of the range.
Related projects worth pricing together
A heat pump works best in a well-insulated home, and the same 0% VAT window applies to several related jobs:
- Insulation: external wall insulation typically costs £26,000, with a usual range of £20,300 – £33,800. See our [wall insulation guide](External wall insulation).
- Solar panels: a typical system costs £12,500. Our [solar PV guide](Solar panels) explains the battery options.
- Staying with gas: a new boiler typically costs £2,800, and has no equivalent £7,500 grant. See the [boiler replacement guide](New boiler) for the comparison.
If you are weighing a heat pump against a new boiler, compare the cost after the grant, not the sticker price.
What to do before you sign
- Get several quotes. The study points to competition as the thing that keeps prices down, so use it.
- Check MCS certification. Without it, the installer cannot apply for the voucher.
- Ask how the grant appears on the invoice. It should be shown as a deduction.
- Mind the VAT deadline. The 0% rate on energy-saving materials runs until 31 March 2027, so book work with that date in mind.
- Run your quote through our "is my quote fair" tool. It compares your figure with our live cost model for your region.
The study looks backwards at a policy change from 2023, so it does not tell us what future grants will look like. For now the scheme stands as set out above. If you are planning a heat pump, the evidence suggests the grant has not inflated prices, but a good quote check is still the best protection.