Boiler Upgrade Scheme (Amendment to the Energy Act 2008 etc.) Regulations 2026
Monday, 14 September 2026
Contributions
Considered in Grand Committee
Moved by
Baroness Curran
That the Grand Committee do consider the Boiler Upgrade Scheme (Amendment to the Energy Act 2008 etc.) Regulations 2026.
Parliamentary Under-Secretary of State, Department for Energy Security and Net Zero (Baroness Curran) (Lab)
My Lords, these regulations were laid in draft before Parliament on 13 July 2026. The boiler upgrade scheme is the Government’s flagship scheme for supporting the decarbonisation of heat in homes and small non-domestic buildings across England and Wales. The scheme provides grants towards the installation of eligible low-carbon heating technologies, primarily heat pumps, helping households overcome the upfront costs associated with transitioning away from fossil fuel heating systems. In 2025, the Government consulted on expanding the range of technologies supported through the scheme, including the potential introduction of heat batteries. Heat batteries are a type of thermal energy storage system that can use low-carbon electricity to generate and store heat, and release that energy when required. Following consideration of the consultation responses, the Government confirmed their intention to support heat batteries through the scheme once the appropriate standards are in place. The amendments made by these regulations are an important step towards implementing that decision. The Government are supporting the future inclusion of heat batteries in the boiler upgrade scheme to increase consumer choice, as they have the potential to provide an alternative low-carbon heating solution for consumers in homes where heat pump installation may not be appropriate. These regulations amend the power of the Secretary of State to make regulations to establish schemes to facilitate and encourage the renewable generation of heat in England and Wales. These schemes can be established only in relation to the listed sources of energy and technologies. These regulations add thermal energy storage systems to the list of those sources of energy and technologies. This amendment provides the necessary statutory basis for thermal energy storage systems to be supported through government schemes that derive their powers from Section 100 of the Energy Act, such as the boiler upgrade scheme. Subject to Parliament approving these regulations, the Government intend to bring forward a statutory instrument to amend the Boiler Upgrade Scheme (England and Wales) Regulations 2022 and to enable support for eligible heat batteries through the scheme. The regulations also amend Regulation 22 of the Boiler Upgrade Scheme (England and Wales) Regulations 2022. This is a technical amendment that clarifies the powers available to the scheme administrator where an installer has received an ineligible payment. The change will enable the scheme administrator, Ofgem, to recover any amount owed through a combination of repayment and offsetting against future grant payments to that installer, improving the administration of the scheme and the protection of public money. The changes made by these regulations will ensure that the legislative powers underpinning the boiler upgrade scheme can accommodate heat batteries. In doing so, they deliver an important step towards the Government’s commitments to support heat batteries through the scheme, to increase consumer choice and to help more homeowners across England and Wales decarbonise their properties. I beg to move.
Lord Moynihan (Con)
My Lords, I thank the Minister for introducing this statutory instrument. The passage of time points to the boiler upgrade scheme’s own record. Regrettably, there have been years of missed installation targets: the original goal was 600,000 a year by 2028, but barely a tenth of that figure has been met. It is now self-evident that expanding the scheme’s budget and eligibility in 2026 will escalate spend on a mechanism that has structurally underperformed without any intention to reform it coming from either the Government or the Liberal Democrat Benches. At this point, I should declare my interest as the chairman of Buckthorn, Acteon and Amey. The clearest recent articulation of this comes from the shadow Business Secretary and former shadow Secretary of State for Energy, Claire Coutinho, fronting a report from the think tank Onward. It argued that UK electricity prices are too high and that cheap power itself, achieved partly by using more gas and cutting green levies, will do more to drive heat pump and EV uptake than continued subsidy and mandates. It is compelling economic sense, and it is the belief on this side of the Committee that this approach would make electrification more attractive, while delivering prosperity and a better environment. In other words, no one is arguing that heat pumps are bad, but we believe that a BUS-style subsidy is now proven to be the wrong lever and that removing green levies from bills would achieve similar ends without state spending. Moreover, my colleagues in another place have consistently pressed Ministers about the stronger evidence that costs associated with the wider agenda for the decarbonisation of heat, including mechanisms such as the clean heat market mechanism boiler tax on manufacturers, are being passed to consumers via higher gas boiler prices. In other words, the current approach taxes conventional boiler households to subsidise heat pump adopters, and this is regressive. There are a number of specific points, and I am grateful to the Minister for having raised them. The first was a constitutional process concern. This SI amends primary legislation via secondary legislation. That is not unusual but, because it touches Section 100 of the Energy Act 2008, it requires the affirmative procedure. Regulation 2 modifies the list of sources of energy and technologies as set out in Section 100(4) of the 2008 Act to include “thermal energy storage systems” and, as stated: “By virtue of section 105(3A) and (3B), these Regulations attract the affirmative procedure”. Instruments that amend an Act of Parliament rather than just delegated regulations routinely draw scrutiny from committees such as the Secondary Legislation Scrutiny Committee or the JCSI over the appropriateness of using a Henry VIII-style power for what is a fairly narrow technical expansion. A related 2026 BUS amendment instrument, SI 2026/390, had to be reissued because the original published version did not reflect the version signed by the Minister and had to be removed and replaced. That is not this specific SI, but it illustrates the concerns about drafting quality that Members of Parliament in the other place and committees have been raising about the pace of legislation on the boiler upgrade scheme. My second point—I am grateful again to the Minister for raising this—relates to the question of heat batteries or thermal storage. This came out clearly in the Government’s consultation on the eligibility of expanding the BUS, which took place in November last year and which underpins this SI. I would be grateful if the Minister, in responding, could update the Committee on whether any product standards yet exist. Currently, as I understand it—and things may have moved on since November—there are no product standards for the thermal energy storage performance of heat batteries. These technologies will become eligible for scheme funding only once the relevant standards have come into force, which means that the law will permit funding for a technology category that cannot actually be certified or verified yet. On efficiency and running costs, some respondents raised concerns about direct electric heating’s lower efficiency relative to a heat pump, its running costs and a lack of evidence on the performance and suitability of the various technologies. Some respondents preferred excluding the heat battery category altogether, arguing that funding should stay focused on technologies with proven carbon savings rather than diluting the budget across less tested electric heating options. The Minister rightly pointed out the importance of the Regulation 22 payment offset amendment, which is a much more mundane and fairly straightforward change clarifying that the administrator may take one or a combination of the actions available to recover payments, provided that the total does not exceed the sum of payments due. As I understand it, it has not attracted any public objections, but it is worth flagging and I am grateful the Minister did; it is a tidying-up clause that gives Ofgem a somewhat broader discretion to recover overpayments and clawbacks. A point that scrutiny committees sometimes probe is whether it expands administrative power beyond what was originally debated, but, as the Minister said in her opening remarks, that would not be the case on this occasion. I believe that the Government should stop increasing the cost of gas boilers for families through their boiler tax and stop wasting money forcing people into buying heat pumps that they do not want to make marginal reductions to our already limited contribution to global emissions. The Government must, above all, make electricity cheaper and back consumer choice, if they truly want families to adopt electric heating technologies instead of simply forcing people into changing the way that they live their lives to meet their self-imposed, unachievable net-zero targets. That is why we have called for the scraping of the boiler upgrade scheme along with the clean heat market mechanism that places an obligation on gas and oil boiler manufacturers to install a minimum number of heat pumps at an estimated cost of £340 million in the first year. This goes far further than the boiler upgrade scheme introduced in 2022 under the Energy Act 2008, which encouraged the use of renewable heat by providing financial support for families to install heat pumps to replace fossil fuel boilers. As the Minister said, this instrument amends that Act to extend financial support eligibility to heat batteries, electric heating tech and thermal energy storage systems. Many of us on this side of the Committee who have studied this consider it to be a case of excessive government intervention and cost to ease the effects of other government interventions. Energy prices are currently high, not despite our transition to renewable sources and green policies but because of them. The Government have acknowledged the fact that policies are to blame by removing VAT from energy bills. Similarly, their focus on renewables, inextricably linked to firm power—oil and gas—has caused the cost of using gas-fired power plants to rise, as they are forced to operate on an ad hoc basis dependent on the weather and are thus far less efficient and very expensive. Taxes and renewables are the two core policies that have led to the increase in energy bills, which are now the highest of any IEA member country, both including and excluding taxes, for industrial and domestic bills. The Government should not be subsidising the cost of renewables by promoting higher bills for some instead of bringing them down for all through more systemic changes, which will be a subject we will return to, no doubt, on the long overdue introduction of the supremely misnamed energy independence Bill, which will increase energy dependence on imports and not decrease them. That said, on a personal note, I welcome the Minister to the Dispatch Box for this SI and look forward to further debates and discussions with her.
Baroness Curran (Lab)
My Lords, I thank the noble Lord for that contribution, and on that very note I welcome his remarks. We debated some of these issues on my very first outing at the Dispatch Box on the Floor of the House, and I think we will debate some of the fundamental points that he made about the direction of energy policy. He is right to contextualise this within that wider debate about energy policy. It is perhaps one of the great debates of our time and will dominate our thinking and discussions in the time ahead. I am tempted to go into a very long discussion about that; I am sure we will have lively debates going forward. He will know, as I said on the Floor of the House, that the Onward report faced some criticism and there were some arguments from the sector about the report’s premises, but I will leave that because I am sure that we will return to it. At the end of my contribution today, I will comment on the general policy of our approach. I will now address the boiler upgrade scheme. I put on record that I recognise and respect the noble Lord’s detailed points about it and will pay great attention to the arguments that he is putting forward. It is an argument that this Government want to win, and we believe we can win it, but we will do that only by paying attention to the substance of what he said—and I recognise that substance. I will go through the points that he raised. I will not repeat that the boiler upgrade scheme remains the Government’s flagship scheme for supporting the decarbonisation of heat in homes and small non-domestic buildings across England and Wales, because we see decarbonisation as fundamental to the challenges facing the country and as offering solutions to some of the great issues around climate change and its consequences. I will return to that. I shall focus on the points raised by the noble Lord and the detail of what he said. He acknowledged that the boiler upgrade scheme is directly funded by the Exchequer. It does not put any direct costs on consumers’ bills. Furthermore, our scheme evaluation data shows that people who have received grants from the boiler upgrade scheme most commonly find that their energy bills decrease as a result. Some 50% of boiler upgrade scheme grant recipients reported that their total energy bills decreased when replacing a gas boiler with a heat pump, compared with just 15% who reported an increase. As he acknowledged, eligible low-carbon heating installations currently benefit from 0% VAT, which further reduces costs for consumers.
It is also worth highlighting that consumer satisfaction rates are extremely high with the boiler upgrade scheme. Around 90% to 95% of property owners who received a boiler upgrade scheme grant are satisfied with their heating system. To date, the scheme has delivered over 90,000 low-carbon heating installations and issued over £600 million in grant funding. Our polling from the department also indicates that the broad population support this move and see these technologies as something that they welcome and want to invite more into their own usage.
Regarding the clean heat market mechanism, it is a key part of the Warm Homes Plan , providing industry with the confidence to invest in the transition to low-carbon heating and is welcomed. Alongside the boiler upgrade scheme, it sets achievable targets to make heat pumps more attractive and affordable for consumers. Heat batteries are intended to complement heat pumps, which are expected to remain the primary technology supported through the boiler upgrade scheme. Contrary to the noble Lord’s argument, they add to consumer choice, which is to be welcomed, and they help people in different settings within their housing arrangements.
It may be helpful to say a few more words about why the Government are supporting heat batteries through the scheme. While heat pumps will remain the best solution for the majority of homes, the Government recognise, as I think is recognised broadly, that no single low-carbon heating technology will be suitable in all circumstances. Heat batteries therefore have the potential to provide an alternative low-carbon heating option for some consumers, particularly where installing a heat pump may not be practical.
The Government consulted on support for electric heating technologies in April 2025, as was recognised, and the government response was published in November 2025. There was broad support for expanding support through the scheme to alternative electric technologies, with heat batteries being the most frequently cited example. Unlike heat pumps, heat batteries do not require an external unit and can therefore be suitable for some properties where external space is constrained or where the installation of an outdoor unit may be more challenging. They therefore have the potential to offer a low-carbon heating option in circumstances where a heat pump installation may not be suitable.
These regulations establish the necessary legislative powers by amending Section 100 of the Energy Act 2008. Without this amendment, the Secretary of State would not have the statutory basis on which to include heat batteries within the boiler upgrade scheme framework in future. Subject to Parliament approving these changes, the Government intend to bring forward further amendments to the boiler upgrade scheme regulations to support eligible heat batteries through the scheme.
However, the Government have been clear that support for heat batteries will be introduced only once appropriate product and installation standards are in place—and we are confident that they will be in place in the near future. In the government response, we confirmed that heat battery installations would need to be certified by the microgeneration certification scheme and comply with a new MCS design and installation standard, alongside new product standards. Again, progress has been made on this. As these standards are still under development, it is not yet possible to begin supporting heat batteries through the scheme. However, we will ensure that robust standards are in place before support is introduced and protect consumers in supporting high-quality installations.
I draw the Committee’s attention to the grant level and will say a few words about it. In the government response to the 2025 consultation, we stated our intention to support heat batteries with a grant value of £2,500 once the necessary standards are in place. The proposed grant level is intended to provide meaningful support towards upfront installation costs while ensuring value for money for taxpayers and consistency with the wider objectives of the scheme.
I would argue that it is value for money for the Government to encourage this investment to help decarbonisation; it is recognised, valued by consumers and welcomed by the broader public as an option for consumer choice to help them to deal with the big challenges we face as a country and move forward in decarbonisation. As with other technologies supported through the scheme, grant levels will remain under review, but we judge that the grant is set at the appropriate level in the current context.
The consultation also sought views on a range of electric heating technologies that are not heat pumps. While there was broad support for expanding the scheme, heat batteries emerged as the strongest candidates for support. Respondents highlighted their ability to make use of off-peak electricity and time-of-use tariffs, as well as a potential suitability for homes where heat pumps may not be appropriate. Following consideration of those responses, the Government confirmed their intention to support heat batteries, and these regulations are specifically intended to facilitate that future support.
Let me briefly address the amendment to Regulation 22, which I recognise is technical and administrative; it just helps to address a fundamental issue that was necessary. More broadly—and I look forward to our debates in future—these changes support this Government’s objective of expanding consumer choice in the transition to low-carbon heat, a necessary requirement in the modern age. Decarbonising heat is essential to delivering net zero, and the Government are taking action across the economy to reduce emissions, strengthen energy security and support the transition to clean energy. By enabling future support for heat batteries through the boiler upgrade scheme, these regulations will help to ensure that consumers can access a wider range of low-carbon heating options.
I conclude by reiterating that these regulations are an enabling measure. They represent an important step towards delivering the Government’s commitment to support heat batteries through the boiler upgrade scheme and support the effective administration of the scheme. I welcome our engagement and look forward to a robust debate about these schemes; it is quite proper to have one.
Lord Moynihan (Con)
Can I return to a question that I raised, which the Minister has answered? She seems to be in agreement but it is a real concern. Without product standards for the thermal energy storage performance of heat batteries, these technologies will become eligible for the scheme but the law will permit funding for a technology category that has yet to be certified or verified. I know the Minister said in response that she hoped that it would be done in the near future. I know she would agree that there are significant safety risks associated with this, and consumers and the industry are very worried about it. Recent incidents have highlighted critical gaps in safety standards, indicating that certification alone does not guarantee safety under real-world conditions. That makes the importance of certification and having product standards all the more important for the safety. Can she write to me at the time when the Government are likely to approve these product standards, and therefore introduce into effect what we are considering in the SI today?
Baroness Curran (Lab)
I thank the noble Lord for that, and of course I commit to write to him and always to keep him as informed as I possibly can. He raises an interesting point, which was exactly the point that I asked during my three or four briefings with the team to prepare myself for today’s statutory instrument. I asked specifically about where we were with safety regulations and product standards. I have to say that I was concerned about the timing of it, because I want to make sure we move forward in this, but we also talked in some depth about the safety measures around that. I cannot recall in detail offhand every single step they took me through at the moment, but they explained to me the rigorous process that it goes through, which sometimes means it takes that bit longer. One example they cited was that you have to ensure that, as with a driver’s test, the installer must be observed by a senior person to get their certification. I can assure the noble Lord that we have this in hand, but I will of course write to him and keep him appraised of our process in that regard.
Motion agreed.
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Source: UK Parliament Hansard API. Debate ID: 5406111.