Get an air source heat pump

Even with higher electricity prices, replacing your gas heating system with a heat pump could make financial and business sense.

This is because heat pumps are becoming more efficient, lasting longer, and government grants can reduce upfront costs.

Find out the costs and benefits to help decide if an air source heat pump is right for your home or small business.


  1. Decide if heat pumps are right for your business
  2. Find out which heat pump is best
  3. Calculate upfront costs and savings
  4. Get permission to install a heat pump
  5. Find a heat pump unit and local installer
  6. Get up to £6,000 off through the Boiler Upgrade Scheme
  7. Save the VAT on heat pump installation
  8. Apply for the Industrial Energy Transformation Fund (IETF)
  9. Find finance and support

Decide if heat pumps are right for your business

Similar to other clean energy technology, heat pumps are continuously getting more efficient and useful. Heat pumps can cut down on carbon emissions by up to 70% versus a gas boiler.

They don’t run on fossil fuels and only require electricity to run. They’re more efficient than gas boilers but cost about the same to run due to the current price difference between gas and electricity.

Heat pumps could save money in the long run because they are likely to last much longer and require less maintenance than a gas boiler or furnace.

Some types also provide cooling as well as heat. They can be powered by solar panels and wind turbines if you also have those on site.

For homes and small buildings

Heat pumps can benefit SMEs that own homes or small buildings if they have:

  • cash flow or finances to invest in upfront costs
  • a fossil fuel boiler or furnace that needs replacing
  • a small spot outside to place or mount one
  • good insulation in the walls and roof
  • a need to improve their energy performance certificate

You can use Energy Saving Trust to find out how much heat pumps save based on current electricity prices and your existing heating system.

Homes and small businesses that have fossil fuel or non-heat pump electrical systems may be eligible for up to £6,000 off a new heat pump through the Boiler Upgrade Scheme.

Commercial and industrial buildings

Larger air source heat pumps can be used for building heat in commercial and industrial settings if they have:

  • good insulation in the walls and roof
  • existing radiators and hot water pipework
  • space to locate heat pump units outside

Industrial-strength heat pumps can be used for process heat depending how much is required. Some newer models are able to provide heat up to 200C.

SMEs that own larger buildings are not eligible for the Boiler Upgrade Scheme but should consider the Industrial Energy Transformation Fund for grants.

Find out which heat pump is best

‘Air source’ heat pumps capture the heat from the air outside your property and use it to power indoor heating and cooling systems. They require electricity to power fans, compressors and other parts.

They are the most popular category of heat pump because they:

  • cost the least
  • fit in tight spaces outside
  • run quietly under normal conditions

There are also ‘ground source’ heat pumps. These cost more than air source heat pumps and require large outdoor spaces to be dug up. They are often used in rural locations, though vertical boreholes are possible and only require a small surface footprint.

‘Ground source’ heat pumps are particularly suited to rural businesses and organisations with land available, though vertical boreholes are possible and only require a small surface footprint.

There are two main types of air source heat pump: air-to-water and air-to-air.

Air-to-air heat pumps

This type of pump heats or cools the air inside your property and requires an indoor distribution outlet.

These are usually mounted on indoor walls and can be switched between heating and air conditioning.

They do not heat water.

Air-to-water heat pumps

These heat pumps absorb heat from the outside air and transfer it to the central heating and water supply.

These heat pumps work best with underfloor heating or large radiators.

They can be ‘reversed’ to provide cooling but require an air handler and ductwork to provide air conditioning.

It’s not recommended to run cold water through radiators or floor heating.

Calculate upfront costs and savings

The price of an air source heat pump depends on the size of the system you install.

According to GOV. UK a typical air source heat pump costs between £7,000 to £14,000, including installation.

This depends on the size of the heat pump and what changes are required to your heating system to use it.

Running costs will depend on the size of your home and how well insulated it is. With regular maintenance a heat pump can last for 20 years.

Warranties range from 2 to 10 years.

Visit Energy Saving Trust’s guide to heat pumps for more detailed guidance.

Get permission to install a heat pump

Check with your installer as planning permission may be required in some cases. Heat pumps do not normally require planning permission, so long as they comply with Microgeneration Certification Scheme standards (MCS) or equivalent.

If you are a tenant, check with your landlord about installing a heat pump.

Once you install a heat pump, make sure that the installer has registered this with your Distribution Network Operator (DNO).

Check GOV.UK for advice on registering your unit.

Find a heat pump unit and local installer

To find a heat pump model and installer that’s right for your business, consult:

6. Get up to £6,000 off from the Boiler Upgrade Scheme

Homes and smaller non-domestic properties in England and Wales are eligible for up to £5,000 off the cost of an air source heat pump and £6,000 towards a ground source heat pump.

The Boiler Upgrade Scheme runs until 2028 and has £450M in total funding that will be spent on a first come first served basis..

To qualify you must have a building that:

  • can have both air and water heated with a 45kWth installation
  • is currently using fossil fuels or non-heat pump electric heat
  • has a valid Energy Performance Certificate
  • has sufficient loft and cavity wall insulation

Find a certified installer to help figure out if your property is suitable.

If you’re eligible the grant is automatically applied to the cost of your installation by the company doing the work.

Visit the OFGEM website for detailed guidance for property owners.

In Scotland, check with Home Energy Scotland. The Home Energy Scotland Loan currently offers loans for heat pumps and biomass boilers:

  • up to £10,000 (£2,500 loan plus up to £7,500 cashback) for air source and ground source heat pumps.
  • up to £10,000 (£2,500 loan plus up to £7,500 cashback) for biomass boilers.

Find out more about eligibility and how to apply.

In Northern Ireland, check with the Boiler Replacement Scheme.

Save the VAT on domestic heat pump installations

From 2022 to 2027 VAT will no longer be charged on some domestic energy saving measures in England, Scotland and Wales.

This means that it will be up to 20% cheaper to make your home business more energy efficient.

Eligible measures include insulation, heat pumps, solar panels, wind turbines and more.

Apply for the Industrial Energy Transformation Fund (IETF)

For larger sites with high energy use, the IETF provides up to £30M in matching funding per business for a variety of efficiency measures. The scheme is designed to run until 2027 and is available across the UK with Scotland having a similar scheme.

Subject to business case approval, Phase 3 of the IETF will open for new applications in early 2024, supporting industry to cut their energy bills and carbon emissions through investing in energy efficiency and low carbon technologies.

For queries about the IETF, contact If your site is based in Scotland, you can apply for the Scottish Industrial Energy Transformation Fund (SIETF), or contact them at

Find finance and support

Use our finance and support page to find green business grant programmes in your region.

Many are designed to help with improving energy efficiency, including the cost of heat pumps.

They can also offer:

  • grants with no payback requirement
  • matching funds up to a total amount or percentage of costs
  • loans with low or no interest
  • free expertise for energy assessments

Funding is dependent on the size of your business and where it’s located.

You can also use GOV.UK’s fund listing service to find programmes that apply to your business.