Helping UK homeowners save money on their heating

Green Homes Grants for Renewable Heating


If you would like cheaper heating bills and to reduce your carbon footprint by installing a renewable heating system, now is the perfect time to get it done. Why? Because until March 2021, the government is offering grants of up to £5,000 to cover two-thirds of the cost of installing a renewable heating system.

The Green Homes Grants scheme gives UK homeowners up to £5,000 (£10,000 for the lowest income households) towards the cost of installing an heat pump, biomass boiler, or solar thermal heating system. Grants can also be used to improve insulation and, in some cases, to carry out other energy efficiency improvements such as draught proofing, heating controls, or replacement doors and windows.

Why is the government offering Green Homes Grants?

The UK has a target to achieve net zero carbon emissions by 2050. As 20% of our carbon emissions come from our fossil fueled heating systems, we need to embrace renewable alternatives. The issue is that installing a renewable heating system or making a home more energy efficient is not cheap and most UK homeowners do not have the money for the necessary improvements.

To address this, the government has announced a £2 billion grant scheme, Green Homes Grants, as part of a £3 billion carbon reduction strategy. The grants will be available to homeowners and landlords to enable them to improve insulation or change to a renewable heating system. The government estimates that the grants will help 650,000 households to reduce their heating costs by an average of £200-£600.

Which home improvements can be completed with a Green Homes Grant?

Homeowners and landlords can apply for a primary grant to cover two-thirds of the cost (up to £5,000) of installing insulation or a low carbon heating system. For low income households, grants of up to £10,000 will be available.

  • Insulation: Solid wall, cavity wall, under-floor, loft, flat roof, room in roof, park home.
  • Low carbon heat: Air source heat pump, ground source heat pump, solar thermal, biomass boiler
  • Only low carbon heating systems installed by a TradeMark approved installer who has been certified by the Microgeneration Certification Scheme (MCS) will be eligible for a Green Homes Grant.

    Air source heat pumps

    An air source heat pump works like a refrigerator or air conditioner in reverse. The fan unit sits outside the home where it brings in air from the outside. The air passes over an exchanger coil which contains a refrigerant fluid. The fluid boils and evaporates which transforms into vapour. The vapour is compressed at a high temperature to produce heat for central heating and a hot water cylinder.

    Find out more about air source heat pumps.

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    Ground source heat pumps

    Ground source heat pumps extract natural heat from under the ground via tubes of fluid buried on your property. The fluid absorbs the heat from the ground so it can be used to heat your home and water. The tubes can either be installed vertically or horizontally depending on your outside space.

    Find out more about ground source heat pumps.

    Solar thermal panels

    Solar thermal panels look a lot like solar PV panels which produce electricity, but rather than PV cells, solar thermal panels hold tubes of fluid. The panels are installed on a roof where they are exposed to sunlight and the fluid can absorb the sun’s energy in order to produce hot water for your home.

    Find out more about solar thermal panels.

    Biomass boiler

    A biomass boiler is fueled by organic matter such as wood pellets, wood chips, or wood logs. Biomass boilers are larger than traditional boilers and need to be fed fuel manually, but they are carbon neutral, i.e. they only emit as much carbon as the tree consumed during its lifetime.

    Find out more about biomass boilers.

    Benefits of Renewable Heating Systems

    Cheaper heating bills

    While heat pumps use a small amount of electricity to operate, running costs are minimal. Heat pumps produce three to four times as much energy as they use.

    There are no running costs for solar thermal panels as they are powered by natural energy from the sun.

    Reduced carbon emissions

    These renewable heating systems do not produce carbon emissions when operating which will significantly reduce your carbon footprint.

    Low maintenance

    These renewable heating systems are very low maintenance, especially when compared to boilers which need annual servicing, and can last for your 20-25 years.

    Earn money through Renewable Heat Incentive (RHI)

    By installing an eligible renewable heating system you can earn money through the government’s RHI scheme for 7 years after its installation.

    What to consider when installing renewable heating

  • Renewable heating systems tend to produce heat at a lower temperature which means the heat needs to be delivered via a larger surface area. This may mean you need to install larger radiators or underfloor heating.
  • Air source and ground source heat pumps will be able to extract heat from the air/ground in temperatures as low as -15C, but they are less efficient in cold weather.
  • All of these renewable heating systems require a large hot water cylinder to be installed in your home (which is compatible with the heat pump) to store hot water.
  • You need space outside the property for a heat pump to be installed and adequate roof space for solar thermal panels.
  • For renewable heating systems to be effective, your home will need to be adequately insulated.
  • Solar thermal is not a complete heating solution as the sun isn’t out all the time, so you will also need to have an alternative heating system such as a boiler, a heat pump or an electric heating system to supplement the hot water supply.
  • Get FREE Solar Quotes Now

    Find professional solar thermal installers in your local area

    Renewable Heating Installation Costs

    It can be difficult to put a figure on the cost of installing renewable heating as there are several factors to consider and costs are likely to be different for every home. Some installations will be more complex than others and installers will charge different labour costs. The table below gives some approximate costs of installing each renewable heating system, as well as how much the Green Homes Grant help to make it more affordable.

    Renewable heating systemAverage cost of installation Potential Green Homes GrantPotential Remaining Cost for Homeowner
    Air source heat pump£4,000-£10,000£2,666-£5,000£1,334-£5,000
    Ground source heat pump£8,000-£12,000£5,000£3,000-£7,000
    Solar thermal panels£3,000-£4,000£2,000-£2,666£1,000-£1,334

    Renewable Heat Incentive (RHI)

    If you install a low carbon heating system, you may be eligible to receive payments under the government’s Renewable Heat Incentive (RHI) scheme.

    The Renewable Heat Incentive pays owners of renewable technologies for the energy generated by the system. Payments are made on a quarterly basis over 7 years which could potentially see you earn back a lot of the upfront costs.

    The annual heat demand for average UK homes usually falls between 8,000-17,000 kWh depending on the size of the home. The below table indicates how much you a homeowner could earn through the RHI scheme. All figures are approximations as actual earnings will be impacted by several factors.

    Renewable carbon heating systemRHI Tariff (2020/21)Potential Annual RHI Earnings for Small Home (8,000 kWh)Potential Annual RHI Earnings for Medium Home (12,000 kWh)Potential Annual RHI Earnings for Large Home (17,000 kWh)Total Potential RHI Earnings over 7 years
    Air source heat pump10.85p/kWh£868£1,302£1,844£6,076 – £12,908
    Ground source heat pump21.16p/kWh£1,692£2,539£3,597£11,844 – £25,179
    Solar thermal panels21.36p/kWh£1,708£2,563£3,631£11,956 – £25,417

    The RHI is closing to new applications in March 2021, so you only have until that time to take advantage of both the Green Homes Grants and RHI scheme.

    Applying for Secondary Green Homes Grants

    If you receive a grant to improve your insulation or install a low carbon heating system, you can also apply for a secondary grant for the below improvements, but the secondary grant can not exceed the value of the primary grant.

  • Windows and doors: Double/triple glazing (where replacing single glazing), secondary glazing (in addition to single glazing), upgrading to energy efficient doors (where replacing doors installed prior to 2002).
  • Draught proofing.
  • Heating controls and insulation: appliance thermostats, hot water tank thermostats, hot water tank insulation, smart heating controls, zone controls, delayed start thermostat, thermostatic radiator valves.
  • Which homeowners are eligible for a Green Homes Grant for renewable heating?

    The following properties are eligible for the Green Homes Grants scheme (for funding up to £5,000):

  • All owner-occupied homes (including long-leaseholders, shared ownership)
  • Landlords of private rented sector domestic properties
  • Landlords of social sector domestic properties (including LA owned homes)
  • Park home owners (for residential sites including Gypsy and Traveller sites)
  • New-build properties (domestic and non-domestic) are not eligible.
  • To qualify for the Green Home Grants low-income scheme (which offers grants of up to £10,000 to only owner-occupied properties and park homes) you must be in receipt of at least one of the following benefits:

  • Income based Jobseekers allowance (JSA)
  • Income based Employment & Support Allowance (ESA)
  • Income Support (IS)
  • Pension Guarantee Credit
  • Working Tax Credit (WTC)
  • Child Tax Credits (CTC)
  • Universal Credit (UC)
  • Disability Living Allowance (DLA)
  • Personal Independence Payment (PIP)
  • Attendance Allowance
  • Carer’s Allowance
  • Severe Disablement Allowance
  • Industrial Injuries Disablement Benefit
  • Contribution based Jobseekers allowance (JSA)
  • Contribution based Employment & Support Allowance (ESA)
  • Housing benefit
  • How can homeowners apply for a Green Homes Grant?

    The online application process is now open. You need to ensure that the renewable heating installer you use is certified by the Microgeneration Certification Scheme and TradeMark approved to be able to apply for a Green Homes Grant.

    Finding quotes for a renewable heating system

    While we have outlined some potential costs and earnings of renewable heating systems, to find out exactly how much installing a renewable heating system in your home will cost, you need to get multiple quotes. Only then will you know how much of the cost of the installation you will need to cover (if any) and can work with the installer to apply for the Green Homes Grant.

    To get free no-obligation quotes for an air source or ground source heat pump from MCS certified heat pump installers in your area, visit Boiler Guide.

    Alternatively, visit Solar Guide for free, no-obligation solar thermal quotes.

    Get FREE Heat Pump Quotes

    Find professional installers in your local area

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