Home » Heat pumps » Grants and funding

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 is interest-free financial support available for heat pump installation in Scotland.

The Home Energy Scotland Loan scheme can help with the cost of installing both heat pumps and energy efficiency improvements. The loan is interest-free, and cashback is available for eligible renewable heating systems.

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

Introduction to the Home Energy Scotland Loan

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

  • Up to £15,000 to improve home energy efficiency.
  • Up to £17,500 for installing renewable energy systems, such as £10,000 for a heat pump (also open to self-builders).
  • Up to £6,000 for energy storage systems.
  • Up to £500 for installing a heat meter alongside a new heat pump

There is a cashback option for some measures, meaning you don't pay back that part of the funding.

Example

For example, with heat pumps, you could receive up to £10,000 in funding. Up to 75% could be cashback (£7,500), and you would pay back the remaining £2,500 as an interest-free loan.

What does the Home Energy Scotland Loan cover?

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

Home energy efficiency funding (up to £15,000 in funding offered) covers measures like insulation (solid wall, glazing, doors, loft, floor, cavity, room-in-roof) and heating systems (gas boilers, warm air units, and high heat retention electric storage heaters) as well as gas connections. Read Home Energy Scotland Loan - in detail for more on conditions and funding options.

Home renewables systems funding (up to £17,500 in funding offered) cover wind and hydro turbines, solar (PV) and water heating systems, biomass boilers, heat meters, and more. Read Home Energy Scotland Loan - in detail to find out more on conditions and funding options.

Heat pumps are classed as a home renewables system and are eligible for up to £10,000 funding, of which up to 75% (£7,500) can be cashback. You can only receive up to 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 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 the loan 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 loan funding. Home Energy Scotland can discuss your EPC with you. You can also apply for loan funding with cashback 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 Loan online application form with all relevant supporting documentation.
  6. Home Energy Scotland will send you a loan offer if your loan is approved. Work can only commence after a written loan offer is issued and must be completed within six 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 £9,000-£11,000 to install, depending on house size, insulation, and desired temperatures. A typical ground source heat pump system may cost around £14,000 to £19,000 to install.

The Home Energy Scotland Loan could help with the upfront costs, enabling you to borrow up to £10,000 with up to 75% cashback (£7,500) for a heat pump. The amount you can borrow covers up to 100% of the heat pump cost, up to a maximum of £10,000 (whichever is smaller).

Example

For example, if you borrowed the maximum of £10,000 with 75% cashback (£7,500), you would have to pay back £2,500 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.

All applications are subject to affordability and credit checks. If your application is successful, Home Energy Scotland will send you a loan 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 loan offer in writing. If you receive a loan offer this financial year, you have up to six months to carry out the work and claim your funding.

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

Self-builders can apply for home renewables systems under the loan (not energy efficiency). You will need to provide planning permission documents with your application and title deeds with your claim.

If your 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.

There is an extra £500 cashback available for heat pump meters installed alongside a new heat pump. To qualify for heat meter funding, you must be prepared to supply with your heat pump performance and data readings up to four times a year if asked in the future. This data will help us understand Scotland's heat pump performance.

As an example, let's assume you have received approval for a £10,000 heat pump loan with 75% (£7,500) cashback, meaning you repay £2,500 as an interest-free loan.

In practice, the £500 heat meter funding is similar to cashback, so your overall loan repayment remains £2,500.

However, if you do not claim heat meter funding, you do not have to share your heat pump and other renewable heating systems' performance data.

You can also borrow up to £500 (including up to £200 cashback) for what is known as a secondary improvement.

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.

Follow us and keep saving