Heat Pump Grants & Incentives in Essex: 2025 Guide

With the cost of living on a constant upwards trajectory, it's getting harder and harder to justify the use of inefficient appliances.

Ageing boilers, in particular, are notorious contributors to rising monthly energy bills.

Replacing your old boiler with a brand new, energy-efficient heat pump will quickly start shaving money off your monthly energy bills. However, the installation process can be expensive, with equipment and labour costs quickly rising.

Thankfully, there is a selection of government grants and initiatives to make heat pumps more accessible.

In this article, we’ll discuss the heat pump grants and incentives on offer to homeowners and businesses in Essex. We’ll also run you through the requirements, so you can check if you are eligible. 

A heat pump upgrade comes with a range of benefits, most noticeably from a cost-cutting standpoint. Heat pumps are 3.5 times more efficient than traditional boilers. Instead of generating heat, they transfer it from the outside air and into your home. This doesn’t burn through fuel and can subsequently save you £550 a year on your energy bills.

As well as having clear financial benefits, a heat pump installation will substantially reduce your home’s carbon footprint. Heat pumps run on electricity rather than fossil fuels. They're also able to integrate energy provided by renewable sources such as solar, making them a smart choice for a modern home.

However, the major sticking point preventing Essex homeowners from having a heat pump system installed is the price. They're substantially more expensive to install than traditional boilers, which makes government grants and incentives all the more important. 

A heat pump grant is a financial incentive that subsidises the cost of a heat pump installation. The government/local authority hands them out in accordance with energy suppliers to promote environmentally friendly central heating options.

Most grants, including those available in Essex, require you to meet a set of criteria before you can apply. The criteria is often income based and will require you to own the property you’re looking to upgrade.

The UK Government first rolled out the Boiler Upgrade Scheme (BUS) in April 2022. Its mission was clear; to help property owners replace an existing fossil fuel heating system with a renewable alternative. These fossil fuel systems include oil, gas, electric, and LPG (liquid petroleum gas) heating systems. 

The scheme pays out up to £7500 in grants to subsidise the costs of installing air and ground source heat pumps. It covers the entirety of England and Wales, and will run until the 31st of December 2027.

While the scheme is unlikely to cover the whole cost of a heat pump installation, it will save you approximately 75% of the fee. To apply for the scheme, you need to go through an MCS-certified installer, which will apply for the grant on your behalf. The installer will then automatically deduct the value of the grant from your invoice.  

Eligibility requirements:

• - Property ownership: To qualify for the BUS, you must own the property that you live in, whether it’s a domestic, business, or rental property. 

• - Replacing fossil fuels: You cannot apply for the BUS if you are looking to replace a pre-existing heat pump. The scheme is only in place to help property owners replace fossil fuel-dependent heat sources.

• - No new builds/social housing: The BUS isn’t applicable for most new build properties or social housing.

• - Energy Performance Certificate: To apply for the BUS, you’ll need a valid Energy Performance Certificate (EPC). The energy assessor needs to have issued your EPC within the last 10 years. 

The Energy Company Obligation (ECO4) scheme aims to improve the energy efficiency of low-income UK households. ECO4 covers the supply and installation costs for air source heat pumps and in some cases, solar panels.

Launched by the government and funded by major energy suppliers, ECO4 will run until March 2026. To access the scheme, you must meet a selection of stringent requirements. These are:

• Low EPC rating: Your home must have an EPC rating of D, E, F, or G to qualify for the ECO4 scheme. 

• Receiving state benefits: To qualify for the scheme, you need to be receiving one of 10 forms of state benefits. These include Universal Credit, Pension Credit, Child Benefit, Jobseeker’s Allowance, and more. 

• Household income thresholds: If you are claiming Child Benefit, you must fall within the annual income thresholds set out by the ECO4 scheme. These vary depending on whether you are single or part of a couple. 

As of May 2023, the UK Government has applied a 0% VAT rate on ‘energy-saving materials’. This includes both ground and water source heat pumps for residential properties and charitable buildings. 

This incentive will run until the 31st of March 2027. The government will then return the VAT rate to 5% starting from the 1st of April 2027. While this will present an increase in the cost of heat pumps, 5% is still a reduced rate compared to the standard VAT rate of 20%.

If you are receiving a heat pump grant, such as the Boiler Upgrade Scheme, the VAT rate currently stands at 5%.