High-Temperature & Process / Industrial Heat Pumps: Commercial heat pump grants

Why industrial process heat is where the biggest commercial heat pump grants live

If your site uses gas or oil to raise process heat or hot water, the funding landscape changes completely, and in your favour. Where ordinary office heating has no single headline commercial grant, eligible industrial sites have the Industrial Energy Transformation Fund, a dedicated fuel-switching pot specifically designed to support a move to industrial heat pumps and waste-heat recovery. High-temperature and process heat pumps are therefore the sub-sector where the largest commercial funding awards tend to sit, which is exactly why an energy-intensive manufacturer, food producer, laundry or recycler should treat the grant question as central, not incidental. The £7,500 Boiler Upgrade Scheme remains domestic-only and irrelevant, but for industrial process heat the IETF, alongside full-expensing or Annual Investment Allowance tax relief, can meet a significant share of the capital on schemes that would otherwise be hard to justify.

Industrial heat pumps do more than swap a fuel. Modern high-temperature units deliver process heat and hot water at 70 to 90C and above, the temperatures real manufacturing, laundries and food processing need, and they can recover waste heat from refrigeration, compressors or process streams to lift overall efficiency. On an energy-intensive site that means large carbon savings and reduced Climate Change Levy exposure, and on a site supplying sustainability-conscious clients it can become a genuine tender differentiator. Because the IETF rewards exactly this kind of fuel-switching and recovery, the strongest industrial schemes are the ones designed from the outset to qualify, with the funding application and the engineering built together rather than bolted on afterwards.

The pressures driving these projects are real and rising. Energy is often one of the largest single operating costs on an industrial site, gas prices are volatile, and the Climate Change Levy sits on top of every unit burned, so a fuel switch protects the operating budget as well as the carbon position. Sustainability-conscious customers increasingly write decarbonisation expectations into their contracts, which turns process-heat carbon from a compliance cost into a commercial advantage. The barrier has always been capital and the risk of an over-promised quote, which is why we anchor every figure to recognised performance standards and your own consumption data, and why we treat IETF eligibility as a design input from the first conversation rather than an afterthought.

What a typical install looks like and how we size it

Industrial process schemes span a wide range, generally 100 kW to 2 MW or more of thermal output, using high-temperature units delivering 70 to 90C and above flow, often with waste-heat recovery loops, sited in a plant compound whose size varies with the process. A scheme of that scale delivers in the region of 200,000 to 5,000,000 kWh of heat a year and removes roughly 35 to 900 tonnes of CO2 annually. Sizing is driven by the process heat demand and its profile, established from a heat-loss and process survey plus at least 12 months of consumption.

The design then hunts for waste-heat sources, refrigeration reject heat, compressor heat or process exhaust, that can be recovered to raise the effective efficiency, because on an industrial site recovered heat is often the single biggest lever on the whole-life numbers. Even at high flow temperatures a well-designed industrial heat pump returns a useful SCOP, and that figure, rated to recognised standards, is the heart of an IETF bid, so the survey and the funding evidence are one and the same exercise. Where the process can tolerate a slightly lower flow temperature for part of its duty, we design for it, because every degree of reduced flow temperature lifts the SCOP and strengthens both the running-cost case and the grant application.

Costs, payback and tax relief

Industrial process schemes typically run £200,000 to £3,000,000 or more depending on scale and the degree of waste-heat integration, with a simple payback near 9 years before grant funding, which an IETF award can shorten considerably. The plant qualifies as plant and machinery, so a company can claim full expensing, a 100% first-year deduction on new, unused qualifying kit with no upper cap, worth up to 25p of tax saved per pound at the 25% corporation-tax rate and permanent from April 2026; unincorporated businesses use the Annual Investment Allowance up to £1m. On an energy-intensive site the combination of an IETF grant, the tax relief and the avoided gas cost and Climate Change Levy is what turns a large capital number into a defensible investment. Our cost guide sets out installed cost and tax treatment for process schemes.

Funding routes in detail

The headline route is the Industrial Energy Transformation Fund, operated by DESNZ for industrial sites and data centres in England, Wales and Northern Ireland whose SIC code qualifies, manufacturing, recovery and recycling, data centres, and newer sectors including controlled-environment horticulture, industrial laundries and textile renting. IETF Phase 3 carries up to £185m across the fund for 2024 to 2028, with an SME minimum grant of £75,000, intervention typically 30 to 50%, technology required to be TRL 7 or above, and projects to complete by 31 March 2028; it runs in periodic competition windows.

Any business can also use full expensing or the Annual Investment Allowance on the qualifying plant, which stacks usefully alongside an IETF grant on the proportion the grant does not cover. The Public Sector Decarbonisation Scheme is for public bodies and the Green Heat Network Fund for multi-building schemes, so neither usually fits a private industrial site, but we always confirm eligibility against your circumstances rather than assume. The most important early step is checking the site SIC code against the IETF eligible list, because that one fact determines whether the headline route is open at all, and we build the application around the engineering from there; the detail sits on our grants and funding page.

Compliance and sector considerations

High-temperature duties drive refrigerant choice. The F-Gas phase-down of high-GWP gases pushes industrial designs toward natural refrigerants, R290 propane, ammonia and CO2, which deliver the high temperatures process heat needs but carry DSEAR and ATEX considerations for flammable-refrigerant plant, all of which we design for. All refrigerant work is done by F-Gas certified engineers under the UK F-Gas Regulation, and systems are designed to BS EN 378 for safety and environmental compliance.

Performance is rated to BS EN 14511 (rated COP) and BS EN 14825 (SCOP) so the SCOP in your IETF bid is comparable and credible against any other compliant supplier. IETF eligibility hinges on the site SIC code, so confirming that early is essential and shapes the whole funding strategy. As with every route, the large electrical load means DNO supply capacity must be checked early, and on an industrial site the supply upgrade can be the longest-lead element of the programme, so we start that conversation at feasibility and look at phasing or demand management where the supply is constrained. Where the site already operates to ISO management standards, those feed naturally into the procurement and grant documentation.

The choice of natural refrigerant is itself a compliance and design decision with funding implications. R290 propane, ammonia and CO2 each suit different duties and each carries its own siting, ventilation and safety requirements under DSEAR and ATEX, so the plant compound has to be laid out for the refrigerant chosen rather than the other way round. Getting this right matters for the IETF because the fund requires the technology to be proven, at TRL 7 or above, and a well-evidenced design using established natural-refrigerant plant gives the funder confidence that the scheme will deliver the carbon savings claimed. We design the refrigerant circuit, the safety provisions and the recovery loops together so that the engineering, the safety case and the grant application all point at the same set of figures, which is what a credible IETF bid and a confident board both need.

How we approach this kind of project

We start with a process and heat-loss survey and at least 12 months of consumption, because an IETF bid and a sound design both need the real demand profile and the genuine waste-heat opportunities mapped. We design for the lowest viable flow temperature that the process allows to protect the SCOP, integrate waste-heat recovery wherever the streams exist, and select the refrigerant and the DSEAR and ATEX provisions to suit the duty. We confirm the site SIC code against IETF eligibility, get the G99 grid application and DNO supply enquiry in early given the load, and check the plant compound before quoting a fixed price. You receive a fixed-price proposal with running cost, carbon and Climate Change Levy impact modelled from your own data, an insurance-backed warranty, and an IETF application built around the scheme rather than retro-fitted to it. We share the full model and welcome a second opinion, because on a project of this scale the funder and the board both need numbers they can trust.

An illustrative example

As an illustrative composite based on typical UK projects, and not a real named client: a commercial industrial laundry, an eligible IETF sector, using gas to raise process hot water above 75C found energy was a major operating cost and needed to cut both cost and carbon to retain contracts with sustainability-conscious clients. The design was a 600 kW high-temperature, natural-refrigerant heat pump recovering waste heat from the wash process and lifting it to a 78C process flow, delivering around 1,800,000 kWh of heat a year at an SCOP of about 3.2 at that high flow temperature. It saved roughly 330 tonnes of CO2 a year, with an IETF grant meeting a significant share of the capital, the waste-heat recovery lifting overall efficiency, Climate Change Levy exposure reduced, and decarbonised process heat becoming a tender differentiator. The indicative saving was about £140,000 against the prior gas cost for a payback near 6.5 years. The figures are illustrative and depend on your process, site eligibility and the funding you secure.

Where the process plant could also serve neighbouring buildings, see heat networks and ambient loops, and for space-heating duties look at commercial air-source heat pumps. To weigh the economics, read the cost guide and the grants and funding routes, browse the FAQs, then request a free feasibility built from your consumption data.