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Grants and funding for heat pump installation

Want to save money on energy bills, reduce your carbon footprint and keep your home warm and cosy?

Installing a heat pump may be the answer. What's more, there's financial support available for heat pump installation in Scotland.

The Home Energy Scotland Grant and Loan can help with the cost of installing both heat pumps and energy efficiency improvements. Grant funding for heat pumps is up to £7,500 or £9,000 for households which qualify for a rural uplift. The remainder of funding requested can be taken up as an optional interest-free loan.

Let's start with a general overview of the scheme.

air source heat pump

Introduction to the Home Energy Scotland Grant and Loan

The Scottish Government funds the Home Energy Scotland Grant and Loan funding scheme. Homeowners can access the following funding:

  • up to £15,000 to install a heat pump (up to £7,500 as a grant plus up to £7,500 as an optional loan, or £9,000 grant plus £7,500 optional loan if the household qualifies for the rural uplift)
  • grants up to 75% of the combined cost of improvements to improve home energy efficiency (up to £7,500 as a grant, or £9,000 if the household qualifies for the rural uplift)
  • up to £6,000 for energy storage systems (as an interest-free loan).

Example

For example, with heat pumps, you could receive up to £15,000 in funding. This breaks down to a £7,500 grant and you would pay back the remaining £7,500 as an interest-free loan.

What does the Home Energy Scotland Grant and Loan cover?

The amount you can borrow and grant values vary depending on the type of work.

Home energy efficiency funding covers measures like insulation (solid wall, loft, floor, cavity, glazing, doors), and heating systems (electric heating, or high heat retention storage heaters when installed as part of a package of measures). Read Home Energy Scotland Grant and Loan - in detail for more on conditions and funding options.

Home renewables systems funding covers solar photovoltaic (PV) and water heating systems, wind and hydro turbines, energy storage systems and more. Read Home Energy Scotland Grant and Loan - in detail for more on conditions and funding options.

Heat pumps are classed as a home renewables system,  and are eligible for up to £15,000 funding, of which £7,500 can be a grant. You can only receive up the total cost of the heat pump installation or the maximum value available for that measure, whichever is less. So, if a heat pump costs, £7,000, then £7,000 is the maximum funding you can access.

There may also be other support for people living in rented accommodation. Take a look at our energy efficiency support for landlords to find out more.

The Home Energy Scotland Grant and Loan application process

If you're thinking about applying for a loan to install a heat pump, these are the steps to follow.

  1. Call Home Energy Scotland on 0808 808 2282 for free and impartial advice.
  2. Check heat pump suitability and home energy efficiency. This may involve further support from a specialist if applicable. Home Energy Scotland can refer you for funding and discuss relevant energy reports.
  3. Check your current Energy Performance Certificate (EPC). For example, if loft or cavity wall insulation is recommended and can be installed, this work must be done by the time you claim funding. Home Energy Scotland can discuss your EPC with you. You can also apply for funding for these measures if they're recommended on your EPC.
  4. Invite quotes (at least three recommended) from MCS-registered installers (Microgeneration Certification Scheme). You can search for installers and read installer reviews on the Renewables Installer Finder.
  5. Fill in the Home Energy Scotland Grant and Loan online application form with all relevant supporting documentation.
  6. Home Energy Scotland will send you a funding offer if your application is approved. Work can only commence after a written funding offer is issued and must be completed within nine months. There is ongoing support from Home Energy Scotland throughout this period.
  7. Once you have installed your heat pump, leave a review of your installer on the Renewables Installer Finder (if registered).
  8. Submit your claim documents, including your updated EPC. Your EPC must show your heat pump has been installed, and none of the required energy efficiency improvements are outstanding.

Read our installation checklist and guide for a detailed, step-by-step explanation of the preparation and application process. It explains how to get an EPC, find installers, and more.

You can read more about the different heat pumps and how heat pumps work and debunk common misconceptions about them in our myth-buster article.

How heat pump funding works in Scotland

Heat pumps can be a significant upfront investment.

A typical air source heat pump costs between £7,000-£13,000 to install, depending on house size, insulation, and desired temperatures. A typical ground source heat pump system costs around £24,000, rising to around £49,000 if you need to dig a borehole.

The Home Energy Scotland Grant and Loan aims to help with the upfront costs, giving you a grant up to £7,5000 (or up to £9,000 if the household qualifies for the rural uplift) and borrow up to £7,500 as an optional loan. The amount you can borrow covers up to 100% of the heat pump cost, up to a maximum of £7,500 (whichever is smaller).

Example

For example, if you purchase a heat pump that costs £10,000, you will receive a grant of £7,500 and can borrow £2,500 as an interest-free loan. If your household qualifies for the rural uplift, you'll receive £9,000 as a grant and can borrow £1,000 as an interest-free loan.

You choose how long to take to repay the loan up to the following maximum number of years:

  • Under £5,000: 5 years
  • £5,000 - £9,999: 10 years
  • More than £10,000: 12 years

There is no early repayment clause if you wish to pay off the interest-free loan early. You will still need to pay your loan if you move home.

The amount of grant and loan funding you can apply for depends on what improvements you want to make. If you’re applying for any loan funds, we will also carry out affordability and credit checks. If your application is successful, Home Energy Scotland will send you a funding offer.

Funding operates on a first-come, first-served basis and is subject to availability or until the end of the financial year – whichever is sooner.

You cannot start work until you’ve received the funding offer in writing. If you receive a funding offer this financial year, you have up to nine months to carry out the work and claim your funding.

You may be able to combine the Home Energy Scotland Grant and Loan with other schemes and incentives. However, eligibility for this funding does not indicate eligibility for any other programmes of support.

Self-builders can apply for funding for home renewables systems, but not energy efficiency. You will need to provide planning permission documents with your application and title deeds with your claim.

If your loan application's successful, you'll need to pay an administrative fee of 1.5% of the total loan value - up to a maximum of £150 per application. But you can apply for multiple measures in one application, and this fee will be covered in your monthly repayments.

You will need to use a certified installer for some improvements.

Energy Saving Trust administers these loans and is authorised and regulated by the Financial Conduct Authority. All loans are subject to availability, and terms and conditions apply.

Read more about application conditions. 

Use our Funding Finder to find out what support may be available to you.

You can also borrow up to £500 per improvement (including up to £375 grant) for what are known as secondary improvements and up to £600 (including up to £450 grant) for heating controls.

You must combine a secondary improvement with one of the energy-efficient improvements or renewables systems listed above, such as heat pump installation.

Examples include cylinder thermostats, heating controls, or hot water jackets. Talk to our advisors for more information.

More funding options

Loans and heat pumps aren't suitable for everyone. We run thorough affordability and credit checks after your loan application. Remember, Home Energy Scotland offers free, impartial advice on both the improvements you can make and the financial support available to you.

Depending on your circumstances, you may qualify for other financial support through schemes such as Warmer Homes Scotland, Energy Company Obligation (ECO), or Home Energy Efficiency Programmes for Scotland (HEEPS).

You can use our Funding Finder to find out what support may be available to you.

Take action today

Home Renewables Selector

Check if your home is suitable for a heat pump and find out how much carbon and money you could save.

Green Homes Network

Read stories from those who've installed, or book a visit or chat with a homeowner to find out more.

Funding Finder

Find out what funding and support is available to help you install a heat pump.

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