UPDATE: As of 30 March 2016, the government has stopped funding and the Green Deal Home Improvement Fund is closed to new applications. You can read about it here.
Can I get a grant for a boiler replacement?
Can I still get a grant for a free boiler?
For many years, the Warm Front scheme helped disadvantaged and vulnerable members of society get a new boiler and up to that point it was free. The scheme worked really well, but because it was funded directly by the government, it was deemed not to be cost effective and was subsequently scrapped in favour of ECO and the Green Deal over a year ago.
- So have we seen the death of completely free boilers under ECO?
- When companies are offering a ‘free’ deal, is the boiler really free?
- Are companies offering grants for boilers and asking for a contribution actually con artists?
We answer these questions below, and show you how you could benefit from the new ECO / Green Deal scheme.
Is ECO the new Warm Front?
The Energy Company Obligation, or ECO as it is more commonly known, is a legal obligation placed on the larger energy suppliers (British Gas, Npower, E.ON, SSE, etc.) to deliver energy efficiency measures to domestic energy users. To you and me this means they are obliged to pay money that will help provide grants towards boilers and loft and cavity wall insulation.
One stream of the ECO funding is known as HHCRO (Home Heating Cost Reduction Obligation) and is specifically set aside to help vulnerable people get their old boilers replaced.
When the scheme launched in early 2013, there was sufficient funding to cover the entire cost of the boiler install for the majority of homes, hence companies were offering ‘free boiler installs under ECO’.
Since the beginning of 2014, the market has changed and installers are getting less and less per installation, which means that in most cases they don’t have enough funding to help pay for the boiler outright and therefore customers are being asked to contribute towards the cost of installation.
How do they calculate the grant funding for new boilers under ECO?
To explain further, the grant money an installer receives is based on the energy savings made as a result of getting a new boiler installed. This not only depends on how old the boiler is that is due to be replaced, but the size of the property and the build type.
For example, installing a new boiler in a large 4 bedroom property will result in far higher energy savings than a small 1 bedroom flat. This means there is a preference to install boilers in larger properties because the installers will get more funding and therefore they don’t have to deal with the difficult situation of asking the customer to contribute.
This is why we have seen some customers who live in smaller properties having their ‘free boiler’ installation date announced then cancelled, without any explanation of why they are no longer getting it – the installers have simply moved onto the more profitable jobs.
People don’t understand why they get the installation refused whereas a friend or neighbour in another part of town has had the installation absolutely free.
This has made a lot of people angry and disappointed and we have certainly spoken to people who have concluded that the ECO free boiler scheme is nothing more than a scam!
Do we think the process has been unfair up to now? Absolutely!
Do we think installers and companies promising free ECO boilers should be more upfront with customers how this process works? Absolutely right!
The changing nature of ECO grant funding
The good news is that the government has extended (Dec 2013 announcement) the bit of ECO that guarantees a grant for boilers for the most vulnerable members of society right through until 2017.
The bad news is that the grant in most cases will not cover the full install cost of the boiler; it will however make a significant dent in the amount you need to pay.
Perhaps more worryingly, vulnerable customers will still be attached to the whims of the energy companies and these rather complex delivery targets that too few understand.
There are certain target figures they need to achieve, and when these targets are reached, the funding will cease or rapidly reduce. Where will this leave the millions of vulnerable customers this scheme is there to help?
If you look at the graph below from OFGEM (the industry regulator), you will see that in November 2013, 73% of the funding for boilers had been used up, and by February 2014, it was extremely difficult for a new customer to get a boiler under the scheme, simply because the money available was, for all intents and purposes, gone.
Bear in mind that the winter just gone was one of mildest winters in a long time – if we have a really cold winter next year, there could be some serious repercussions for those unable to afford a new boiler.
How does ECO boiler grant funding work today?
We are now seeing the environment for these grants changing on a weekly basis.
For instance, some installers are able to get something called a ‘fixed rate’, whereby they receive the same funding for any type of property (no matter the size) as long as the average savings they submit for a group of properties adds up to a certain target figure.
This will mean that each householder will get the same amount of grant money, with some contribution perhaps having to be made depending on the cost of the specific job.
Other installers (as before) allocate the grant based on the saving made by each property. This means that some properties will get completely free boilers, while others will have to contribute a lot of money or be refused the job.
The first method can be very complicated and in the end it may still exclude some people. For example, if the job is complicated (i.e. the boiler needs to be moved) then the costs will add-up and the grant will simply not cover the installation costs.
The second method as mentioned before is unfair and many with smaller properties lose out because they will receive very little funding.
The future of ECO – combining with the Green Deal?
[Update: the Green Deal scheme has now finished.]
The Green Deal, which is the Government’s flagship energy efficiency scheme and available to all, is designed to reduce the up-front cost of measures like new boilers by providing finance at competitive rates that can be paid back through the electricity bill with the savings you make from the measure.
It was actually always intended to work with standalone or side-by-side the ECO grant scheme (to those that are eligible), however recent evidence suggests a lot more work needs to still be done here.
For example, in a scenario where the customer who can get the boiler grant is being asked to pay £1,000 up front towards their new boiler because their ECO grant does not cover the cost, it may be very attractive.
The cost of the job is £2,200 for a boiler install where ECO will pay for a hypothetical £1,200 as a grant. The customer cannot afford £1,000, but because the savings made will be substantial, the Green Deal could pay for the difference – assuming the customer is ok to take out the Green Deal Finance loan, paying it back through their electricity bills.
In this ideal scenario the customer can get a relatively low cost boiler install that they would not have been able to afford using just one of the schemes.
Company websites offering free boilers – is this a scam?
In a landscape where the funding tends to be stretched with more and more middlemen in the market distributing the funding, it suggests the customer will get less and less at the end of it. Our view is that the days of grants covering the cost of completely free boilers are probably gone.
The customer needs to be very careful as there are companies out there that ask for money upfront and promise the earth and don’t respond to calls after this has happened.
To avoid this, ask the operative some more information. For example the customer will need to be assessed first by a qualified Energy Assessor. They will walk around the property taking various measurements and produce an Energy Performance Certificate (EPC).
The assessor will take photographs of the property’s walls, the boiler, windows, loft insulation to work out how much cost the property could save with a new boiler. They will also ask for proof of tenure and take copies of the qualifying benefits. Don’t worry – this is quite normal.
An assessor may ask for a call out charge, which should be the cost of producing an EPC but no more. This is only to cover their time to make sure you qualify. But this should be no more than £50 – £60. Not £100s, as some companies have been found charging!
The installer of the boilers will have to be a PAS2030 qualified Green Deal Installer – licenced to carry out installations on behalf of this Government backed scheme. Make sure you always ask to see the ID of any of these people before inviting them into your property.