Industrial Energy Transformation Fund: Closed, What Next

If you are searching for the industrial energy transformation fund because a site needs to decarbonise process heat, the first thing to know is that it is closed. This guide sets out what the fund was, what happens to projects it already backed, and what an industrial or process-heat buyer can still use today. Every scheme status below was checked on 20 October 2026 against the named government and delivery-body sources.

We publish this as an independent information guide. We are not an installer and we do not run any scheme. Where a route is closed we say so plainly, because planning a project around money that is no longer on offer is one of the most expensive mistakes a finance director or estates manager can make. For the wider picture of what is open and what is not, see our overview of commercial heat pump grants.

Is the Industrial Energy Transformation Fund still open?

No. Government guidance on gov.uk lists the Industrial Energy Transformation Fund as closed from July 2025. Following the Spending Review there was no further extension, and no successor fund is planned. The second window that had been planned for Phase 3 was cancelled.

IETF, now closed, was described by gov.uk as a fund delivered in three phases, with up to £500 million available until 2028. That description tells you the scale of what the fund was designed to do, but it does not mean money is still available to new applicants. If a supplier, consultant or website tells you that IETF is open, treat the claim as out of date and ask for the gov.uk page that says so.

Status on 20 October 2026: closed to new applications; no replacement scheme announced in the sources we checked.

What the fund was for

IETF, which is now closed, was a government fund aimed at industrial businesses that wanted to cut energy costs and carbon emissions, and it was run in phases. Its purpose was to help industry invest in energy efficiency and in lower-carbon ways to run processes, which is the context in which process heat and heat pumps came up for many applicants.

We do not publish award sizes, intervention rates or lists of funded technologies here, because we have not sourced them for this page. If you need those details for a business case, read the relevant gov.uk IETF guidance directly and keep a dated copy of whatever you rely on.

Why projects already funded continue

Closure applies to new applications. Government guidance is clear that projects already funded in Phases 1 and 2, and in the first Phase 3 window, continue. A grant agreement is a contract for a defined project, so closing the application window does not cancel awards that have already been made.

If your organisation holds an IETF award, the practical steps are the same as before: keep to the milestones and reporting requirements in your grant agreement, keep records of spend, and talk to the grant administrator before you change scope, supplier or programme. Do not assume that closure of the fund relaxes any condition.

If you are a supplier or contractor working with a funded customer, ask them for the timetable that their agreement allows. Funded projects can be sensitive to delays, so confirm lead times for equipment early.

What an industrial or process-heat buyer can use now

With IETF closed, there is no single replacement grant for industrial heat. What exists instead is a set of narrower routes, each with limits. Work through them in this order, and be honest about which ones fit your site.

Most large process-heat installations sit outside the schemes below, which is why the business case often has to stand on running costs, tax relief and carbon exposure. Our guide to industrial process heat pumps explains the technology side, and our cost guide covers how to think about capital and running cost.

• Boiler Upgrade Scheme (BUS): covers heat pumps and biomass boilers in homes and non-domestic buildings in England and Wales. The grant is £7,500 for an air-to-water, ground-source or water-source heat pump. For an air-to-water or ground-source heat pump in an eligible off-gas-grid property, the grant is £9,000 for new applications from 21 July 2026, available to 31 March 2027. The single-installation limit is 45 kWth, or up to 300 kWth for a shared ground loop. A June 2025 Parliamentary answer says the scheme continues to give grants of up to £7,500 to small non-domestic property owners.
• Capital allowances: the Annual Investment Allowance and other capital allowances (£1 million a year) are tax reliefs on qualifying plant and machinery. Relief applies to the cost the business funds itself, so any grant reduces the qualifying spend. Confirm treatment with an accountant.
• Green Heat Network Fund (GHNF) and Heat Network Efficiency Scheme (HNES): relevant only where a heat network is involved, for example a site that supplies heat to other buildings or a communal system. They are not a general route for a single-site process heat pump.
• Public Sector Decarbonisation Scheme (PSDS): closed. Phase 4 closed to new applications in November 2024, and government has committed no further PSDS investment beyond currently awarded projects.

Using the Boiler Upgrade Scheme for smaller systems

BUS is the live grant most likely to matter to a small non-domestic site. Ofgem runs it, and the installer must be MCS certified. The installer applies for the voucher on the owner's behalf. The applicant must own the property, and landlords can apply. The system must be commissioned no more than 120 days before an application is properly made.

Ofgem's page does not say which non-domestic properties qualify, and it does not give a scheme end date for the main grant. So do not assume eligibility. Confirm it with an MCS installer or with DESNZ at boilerupgradescheme@energysecurity.gov.uk, and check Ofgem for the end date before you commit to a programme. We state the £9,000 off-gas-grid figure and its 31 March 2027 end because both are sourced; everything else about your site needs checking.

The 45 kWth single-installation limit matters. A process load that needs far more capacity than that will not fit within one BUS installation, so BUS is better thought of as a route for small buildings, outbuildings or a modest heating load than for a production line.

When heat network funds apply

The Green Heat Network Fund is for new low-carbon heat networks, including cooling, and for the retrofit and expansion of existing networks. Public, private and third-sector organisations can apply; individuals, households and sole traders cannot. gov.uk says funding can be drawn down until the 2029 to 2030 financial year. Round 11 closed on 2 May 2026 and Round 12 closed at 11.59pm on 25 September 2026. The page lists no later round, so no round is open on 20 October 2026. Watch gov.uk for the next one. The delivery partner is Triple Point Heat Networks Investment Management.

The Heat Network Efficiency Scheme is different. It gives grant funding to existing operational district heating networks and communal heating systems in England and Wales, part-funding performance improvements and optimisation studies. On gov.uk (updated 12 October 2026), Round 13 has closed and applications for Round 14 are expected to open on 30 November 2026, subject to budget availability, so check gov.uk before you plan around it.

If your site is a single factory with its own heat plant, neither fund is likely to apply. If you could supply heat to neighbours, or you operate a shared heating system, they are worth a closer look.

Why PSDS does not help here

The Public Sector Decarbonisation Scheme is for public bodies, and it is closed to new applications. Salix Finance and gov.uk record that the Phase 4 window closed on 25 November 2024, and a Parliamentary written answer of 20 October 2025 confirms that government has committed no further PSDS investment beyond projects already awarded.

If you are a public body, you will see references to Phase 3c and Phase 4 funding running to 31 March 2026 and 31 March 2028. Those dates relate to projects already awarded, not to a window you can apply to now.

How to build a funding case that stays valid if a new scheme opens

Grants come and go. A case that depends on one named scheme falls apart when the scheme closes, and a case that can absorb a grant if one appears is much more durable. Build the case so it works on its own, then treat any grant as a bonus.

Do the work in this order, and keep it dated so you can show what you knew and when.

• Baseline your heat demand: record fuel use, process temperatures, operating hours and any seasonal pattern. Metered data beats estimates.
• Model the project without any grant: show capital cost, running cost and carbon on a standalone basis, and test it against changes in fuel and electricity prices.
• Record the funding status as a dated line: for each scheme, write down open, closed or not applicable, the source and the date you checked.
• Check tax treatment early: ask an accountant how the Annual Investment Allowance and other capital allowances apply to the spend you fund yourself.
• Keep documents ready: site plans, ownership evidence, energy data, supplier quotes and any planning or grid-connection correspondence. Most schemes ask for the same material.
• Do not start work you would regret: read the rules of any scheme you hope to use before you sign a contract.

Common mistakes to avoid

The most common error is quoting IETF in a board paper as if it were live. The second is assuming that BUS covers any non-domestic heat pump of any size; the 45 kWth single-installation limit, the MCS requirement and the eligibility question all apply. The third is treating a heat network fund as a general industrial grant when it is aimed at networks.

A fourth mistake is letting a funding assumption sit in a financial model with no date or source. Funding facts go stale quickly. Put the checked date next to each one and revisit it before any approval meeting.

What to ask an installer

Use these questions to test any proposal you receive. They are a checklist for you to put to a supplier, not a promise from us.

• Are you MCS certified, and can you show the certificate?
• Which schemes do you believe apply to this site, and what is the source and date for each?
• Is the system within the 45 kWth single-installation limit, and if not, what is the alternative?
• Does the quote show the price with and without any grant?
• What would you need to confirm with Ofgem or DESNZ about our eligibility?
• What are the commissioning dates, and how do they sit against the 120-day rule?

Status summary, checked 20 October 2026

IETF: closed from July 2025, no successor planned; funded projects continue. BUS: open for eligible systems, with the £9,000 off-gas-grid grant for new applications from 21 July 2026 to 31 March 2027; confirm non-domestic eligibility and the end date. GHNF: Round 12 closed on 25 September 2026, no later round listed. HNES: Round 13 closed; Round 14 expected to open 30 November 2026, subject to budget. PSDS: closed to new applications. Capital allowances: available to qualifying spend you fund yourself.

If you want to talk through a specific site, send an enquiry and we reply by email.

Frequently asked questions

Is the Industrial Energy Transformation Fund still open?

No. Government guidance lists the Industrial Energy Transformation Fund as closed from July 2025. There was no further extension after the Spending Review, no successor fund is planned, and the second Phase 3 window that had been planned was cancelled. Status checked 20 October 2026. Do not plan a project around IETF money.

What happens to projects already funded before IETF closed?

They continue. gov.uk guidance says projects already funded in Phases 1 and 2 and in the first Phase 3 window carry on. Closure applies to new applications, not to existing grant agreements. If you hold an award, keep to your agreement and speak to the grant administrator before changing scope, supplier or timetable.

Can a business use the Boiler Upgrade Scheme for a process-heat project?

BUS covers heat pumps in non-domestic buildings in England and Wales, with a single-installation limit of 45 kWth. A June 2025 Parliamentary answer refers to grants of up to £7,500 for small non-domestic property owners. Ofgem does not say which non-domestic properties qualify, so confirm eligibility with an MCS installer or DESNZ.

Is the Green Heat Network Fund open?

No round is open on 20 October 2026. Round 11 closed on 2 May 2026 and Round 12 closed at 11.59pm on 25 September 2026, and gov.uk lists no later round. The fund is for heat networks, not single-site process heat, so watch gov.uk for the next round only if a network is part of your plan.

Can public bodies still apply to PSDS?

No. Phase 4 of the Public Sector Decarbonisation Scheme closed to new applications on 25 November 2024. A Parliamentary written answer of 20 October 2025 confirms that government has committed no further PSDS investment beyond projects already awarded. Do not describe PSDS as open in any business case.

How do capital allowances help if there is no grant?

The Annual Investment Allowance, which is £1 million a year, and other capital allowances are tax reliefs on qualifying plant and machinery. Relief applies to the cost the business funds itself, so a grant reduces the qualifying spend. Treatment depends on your tax position, so confirm it with an accountant before you rely on it.