• New £9,000 heat pump grant for households that use oil to heat their homes gives them the best deal possible when switching to modern low-carbon heating systems
• Nesta calculates savings of over £650 a year for households and encourages consumers on heating oil to “take advantage of the new heat pump funding offer”, which for some “could effectively mean a free heat pump installation”

London, UK - In light of the continuing conflict in Iran and the Middle East, the UK government yesterday announced bigger grants for households on heating oil and Liquified Petroleum Gas (LPG), as part of new measures intended to break the influence of gas on electricity prices.

New analysis by the research and innovation foundation Nesta published today finds that with the higher £9,000 grant for low-carbon heating, people using heating oil that switch to a heat pump could save over £650 per year on their energy bills. This means that heating oil households switching to heat pumps should save overall, including needing to pay less upfront in installation costs.

Nesta’s analysis is based on the current energy price cap level and current heating oil prices, for a medium-sized home, factoring in the additional funding under the Boiler Upgrade Scheme (BUS) grant.

Nesta’s analysis also shows that with the higher £9,000 BUS grant, a typical detached house might expect to pay around £3,600 in upfront heat pump installation costs, whilst bungalows, semi-detached and terraced housing can expect to pay about £2,500 in upfront costs. This is comparable to replacing an oil boiler, which typically costs between £3,500 and £5,500 for a full installation.

Andrew Sissons, director of sustainable future at Nesta, said:

“Yet again millions of people are worried about their bills going up because of an energy shock caused by our reliance on fossil fuels. If this includes you, the best thing you can do to protect yourself is to reduce your dependence on gas and oil.

“There is good news from the government for people who use oil to heat their home. Heating oil is not a common heating source in the UK, but households that use it are at the sharp end of rising prices. The grant for this group to get a heat pump has now been increased to cover £9000 of installation costs. For some people that would mean paying the same price as a replacement oil boiler and for others it could effectively mean a free heat pump installation.

"On top of that, our analysis highlights that switching from heating oil to a heat pump can save a medium-sized home over £650 a year on energy bills at current prices. Anyone using heating oil should look to take advantage of the new heat pump funding offer. For those who aren’t sure and want more information, our Visit a Heat Pump service allows people to see others who have made the switch."

About 865,000 homes in England and Wales use oil as their main heating source, according to the 2021 census, with usage concentrated in rural areas without mains gas connections.

Nesta runs the Visit a Heat Pump service that allows people to host visitors to help them understand how low carbon technology could work in their own home. Heat pump owners who switched from oil boilers have been positive about the experience.

Catherine, from Chelmsford, Essex, replaced the oil boiler in her 1950s two-bed bungalow with a heat pump in 2015, during the process of converting the property into a three-bed house. She said: “My heat pump is a better fit for a modern property than an oil boiler. But cost can be a factor, so I’d encourage anyone who uses heating oil to make the most of the bigger grant.”

Adrian, from Carmarthenshire, had a heat pump installed in his 1800s-built stone detached house in 2021, when his oil boiler came to the end of its life. He said: “Our oil boiler had come to the end of its life and to replace it we would have had to move the tank to the middle of our driveway. There’s no gas here so we had to bite the bullet and look at other options. I got interested in air source heat pumps and had quotes from a couple of local businesses.” On having a heat pump, he said: “The house has never been so warm - it is kept at a constant temperature of 19 degrees in the day - I work from home so I can’t just turn it off in the winter. The technology is amazing - we’ve got down to -6 degrees this winter and it was still warm in the house.”

Notes to editors

1. For more information on the analysis or to speak to one of the experts involved or case studies listed, please contact Kieran Lowe, Media Manager, on 020 7438 2576 or via [email protected].

About Nesta

Nesta is a research and innovation foundation that designs, tests and scales solutions for the biggest challenges of our time.

Driven by a vision to improve the lives of millions of people, our focus up to 2030 is on three missions: breaking the link between family background and life chances, halving obesity and cutting household carbon emissions.

We work with partners to develop high-potential solutions and test them as they evolve, drawing on expertise in qualitative and quantitative research, data science, behavioural science and design.

Once confident in the effectiveness of a solution, we take it to scale. We create national policy proposals, develop consumer-facing products and services, build and spin out commercial ventures and harness the power of the arts.

We work with two specialised units: BIT applies a deep understanding of human behaviour to help clients achieve their goals. Challenge Works designs and runs challenge prizes to spark innovation in science, technology and society. Find out more at nesta.org.uk