Heat pump grants for business: what is open and closed

Start with the question businesses ask most: can a business use the Boiler Upgrade Scheme (BUS)? BUS covers England and Wales and is not limited to homes: small non-domestic buildings can qualify, so confirm eligibility with the installer or on the Ofgem BUS page. It is a flat grant per installation, £7,500 for an air-to-water, ground-source or water-source heat pump, up to a system size of 45 kWth, so it suits small systems and not building-scale plant. The installer must be MCS certified and applies for the voucher.

Larger projects need other routes. Several schemes were designed for public bodies, industrial sites and heat networks, although two of them (PSDS and IETF) are now closed. The catch is that there is no single headline scheme, so the right answer depends entirely on what kind of organisation you are and what kind of building you run. Here is how the main routes work and who they suit.

Public Sector Decarbonisation Scheme (PSDS)

If you are a public-sector body, an NHS trust, a school, a college, a university, a local authority, or an emergency service, the Public Sector Decarbonisation Scheme was the main capital grant route for low-carbon heating in public buildings, including heat pumps and heat-network connections, typically funding the cost over and above a like-for-like fossil-fuel replacement. It is for public bodies only, not private commercial buildings. Phase 4 closed to new applications in November 2024, there is no open application window and no confirmed successor, and projects already funded continue to 2027/28. Check gov.uk before planning around any future scheme.

Industrial Energy Transformation Fund (IETF), now closed

For industrial sites and data centres in eligible SIC codes, the Industrial Energy Transformation Fund (closed July 2025: no new applications) supported fuel-switching to industrial heat pumps and waste-heat recovery. Eligible sectors included manufacturing, recovery and recycling, data centres, and newer additions such as controlled-environment horticulture and industrial laundries. The fund is now closed: gov.uk guidance lists it as closed from July 2025, with no further extension and no successor planned, although projects already funded continue. Do not build a business case around it, and check gov.uk for any future industrial decarbonisation support. It was aimed at energy-intensive process heat, not ordinary office heating.

Green Heat Network Fund (GHNF)

If your project serves more than one building, a campus, a hospital estate, a council development, or a large mixed-use scheme, the Green Heat Network Fund is the one to investigate. It supports new low-carbon heat networks and the retrofit or expansion of existing ones using heat pumps, geothermal, water-source, or waste heat. It covers England and Wales, and public, private and third-sector organisations can apply, but not individuals, households or sole traders. Funding can be drawn down until 2029-30. Round 12 closed on 25 September 2026, so no round should be treated as open; check gov.uk for the next round. Heat networks are moving under Ofgem regulation as the new market regulator, and schemes are expected to follow the CIBSE and ADE Heat Networks Code of Practice (CP1), which shapes design and operation.

Capital allowances: the AIA and others

Every business paying UK tax can use the tax system, regardless of sector. The Annual Investment Allowance and other capital allowances (AIA, £1m a year) are tax reliefs on qualifying plant and machinery. Relief applies to the cost the business itself funds, so any grant reduces the qualifying spend. The official detail is in the government's capital allowances guidance, and you should always confirm the treatment with your accountant.

How the routes stack

The routes differ by organisation type and status: BUS can cover small non-domestic systems up to 45 kWth, GHNF suits heat networks, PSDS (public bodies) and IETF (industrial sites) are closed to new applications, and capital allowances are a tax matter for almost any project the business funds. A private commercial building that does not qualify for a grant can still claim relief on its own spend, which is why the tax route is the backbone of many private-sector business cases. Where a grant does apply, relief is on the portion of the cost you fund yourself. Confirm the position with an accountant and ask the installer for the net cost after any grant.

What you will need, and the common pitfalls

Whichever route fits, a credible application rests on the same foundation: at least twelve months of consumption data, a proper heat-loss survey, a modelled SCOP and running cost to BS EN 14825, and a clear carbon saving. The most common pitfall is leaving the application too late for the competition window, these schemes do not run continuously, and a strong application needs design work behind it. The second is underestimating the DNO supply timeline, which can outlast the grant deadline if it is not started early. The third is assuming BUS will fund a building-scale system: it is a flat grant capped at 45 kWth per installation, so it only meaningfully offsets small systems. Ask the installer to build the design and the funding case together, so the numbers in an application are the numbers the installer can deliver. To check which routes may apply, send an enquiry and ask the installer which routes you may qualify for, and roughly what each is worth, before you commit to anything. The expected costs sit on our cost page.