Proposed amendments to the Boiler Upgrade Scheme Regulations

Proposed amendments to the Boiler Upgrade Scheme Regulations – GOV.UK (www.gov.uk)

Closing Date: 12 October 2023
Response submitted by: National Insulation Association
For more information, please contact: info@nia-uk.org

About the National Insulation Association The National Insulation Association (NIA) represents the insulation industry in the UK with a member base comprised of installers, system certificate holders, and manufacturers who provide a wide range of insulation solutions for homes and buildings. The NIA and its members are fully committed to maintaining and raising standards within the insulation industry.

Yes, the current requirement for a valid EPC with no outstanding recommendations for loft or cavity wall insulation should be maintained. These minimum insulation requirements are vital to make sure that properties are ready for the transition to low-carbon heat. Removing these requirements would create a number of risks, particularly for consumers who may see increased costs and worse outcomes as a result.

Firstly, if heat pumps are installed in properties with inadequate insulation, there is a risk that those heat pumps will have overly expensive running costs, as heat pumps are most effective in properties with a high thermal efficiency. Making sure that a home has adequate insulation prior to installing a heat pump is essential to safeguard consumers from potential energy bill increases. The current level of the energy price cap means that the unit price for electricity is almost 4 times higher than that for gas.1 Therefore, to ensure that consumers do not see higher prices, insulation minimum requirements are absolutely vital to provide the right internal conditions for heat pumps to run as efficiently and as affordably as possible. In this way, insulation has a crucial role to play to ensure that the transition to low carbon heat is a just one which does not result in increased costs for consumers. This is particularly relevant within the context of the current cost of living crisis.

Secondly, if a heat pump is installed followed by insulation, consumers may be left with a heating system that is not proportionate with the property’s reduced space heating demand and therefore has capital and running costs that are unnecessarily high. The installation of fabric efficiency measures prior to, or alongside, heat pump installation means a smaller, cheaper heat pump can be installed which will then operate at higher efficiencies over its system lifetime. For these reasons, a fabric-first approach has been incorporated into government policy and accepted as industry best practice for a number of years.

According to the Energy Saving Trust, if a home has an uninsulated loft and cavity walls, it could be losing over half of its heat through those two building elements.2 3 Hence, it is crucial that the current requirement for a valid EPC with no outstanding recommendations for loft or cavity wall insulation is maintained. Now is not the time to abandon the importance of a fabric first approach, which is the best way to reduce consumers’ bills and make sure that the transition to low carbon heat is affordable for all. Removing insulation minimum requirements in the middle of a cost of living crisis could have damaging impacts on consumers.

Consumer confidence is a crucial element of the transition to low carbon heat. The Government has set ambitious targets for the decarbonisation of heat, including to install 600,000 heat pumps per year by 2028, rising to 1.9 million per year by 2035.4 For these targets to be met, consumers must be on board. If residents find that their heat pump is overly expensive or incorrectly sized as a result of inadequate insulation, then this may have damaging effects on consumer confidence, which could hinder the uptake of heat pumps. Thus, the importance of a fabric first approach cannot be ignored, as insulation will be key to ensuring that the transition to low-carbon heat is as smooth and cost-effective as possible for consumers.

The NIA does not consider insulation requirements on EPCs to be a barrier to uptake.

As outlined in our response to Question 3, a fabric first approach to home decarbonisation is vital to ensure that the transition to low carbon heat is as smooth and cost-effective as possible for consumers. Therefore, we believe that the requirement for a valid EPC with no outstanding recommendations for loft and cavity wall insulation should be maintained.

The main issue preventing uptake of heat pumps via the Boiler Upgrade Scheme (BUS) is the level of grant funding being offered. This has been the main barrier to the success of the scheme thus far, not minimum insulation requirements on EPCs, We are pleased to see that the Government is taking steps to address this, as evidenced by the Prime Minister’s announcement last month that the grant funding level will be rising to £7,500 from 23 October 2023.

The findings of the Lords Environment and Climate Change Committee’s inquiry into BUS, published in February 2023, found that the low level of grant funding was one of the main factors holding back the uptake of heat pumps via the scheme. 6 On average, the £5,000 grant offered by the scheme for an Air Source Heat Pump only represents approximately half of the installation cost. 7 Therefore, even with the BUS grant, households still face substantial remaining costs, which has deterred many from applying for the scheme. As a result, the Committee recommended raising the grant level to address low uptake8 , which the Prime Minister has now implemented in a move that has been welcomed across the home decarbonisation industry.

Since the Government is already removing the main barrier holding back the success of the scheme, there is no need to also remove minimum insulation requirements, particularly due to the risks associated with such a move. As mentioned in our answer to Question 2, the removal of insulation requirements would create substantial risks, including raising energy costs for residents and damaging consumer confidence in the transition to low carbon heating.

The main issue preventing uptake of heat pumps via the Boiler Upgrade Scheme (BUS) is the level of grant funding being offered. This has been the main barrier to the success of the scheme thus far, not minimum insulation requirements on EPCs, We are pleased to see that the Government is taking steps to address this, as evidenced by the Prime Minister’s announcement last month that the grant funding level will be rising to £7,500 from 23 October 2023.

The findings of the Lords Environment and Climate Change Committee’s inquiry into BUS, published in February 2023, found that the low level of grant funding was one of the main factors holding back the uptake of heat pumps via the scheme. 6 On average, the £5,000 grant offered by the scheme for an Air Source Heat Pump only represents approximately half of the installation cost. 7 Therefore, even with the BUS grant, households still face substantial remaining costs, which has deterred many from applying for the scheme. As a result, the Committee recommended raising the grant level to address low uptake8 , which the Prime Minister has now implemented in a move that has been welcomed across the home decarbonisation industry.

Since the Government is already removing the main barrier holding back the success of the scheme, there is no need to also remove minimum insulation requirements, particularly due to the risks associated with such a move. As mentioned in our answer to Question 2, the removal of insulation requirements would create substantial risks, including raising energy costs for residents and damaging consumer confidence in the transition to low carbon heating.