Eighth Delegated Legislation Committee
Wednesday 14th October 2026
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16:29
16:30
16:30
Speaker 3
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Speaker 3
Thank you, Mr. Socrates, and it's a pleasure to serve under your chairmanship. I beg to move that the committee has considered the draft Boiler Upgrade Scheme amendment to the Energy Act 2008, etc. regulations 2026, which were laid before the House on 13th July. The Boiler Upgrade Scheme is the government's flagship scheme for supporting the decarbonisation of heating in homes and small non-domestic buildings across England and Wales. Through the scheme, households can receive grants towards the installation of eligible low carbon heating technologies, primarily heat pumps, helping them overcome the upfront costs of moving away from fossil fuel heating system.
These regulations are important, enabling step towards the future inclusion of heat batteries within the scheme, helping to ensure that consumers can benefit from a wider range of low carbon heating technologies. In 2025, the government consulted on expanding the range of technologies supported through the boiler upgrade Scheme, including the potential introduction of heat batteries. For those members who maybe aren't aware. Heat batteries are a type of thermal energy storage that can use low carbon electricity to generate and store heat for use when it is needed.
Following consideration of consultation responses, the government confirmed its intention to support heat batteries through the scheme. Once appropriate, standards and consumer protections are in place. These regulations amend section 100 of the Energy Act 2008, which provides powers for the Secretary of State to establish schemes that facilitate and encourage the generation of renewable heat in England and Wales. At present, those powers apply only in relation to specified technologies and energy sources.
These regulations add thermal energy storage systems to that list. This provides the necessary legislative foundation for thermal energy storage systems, including eligible heat batteries, to be supported through government schemes made under those powers, such as the Boiler Upgrade Scheme. It is important to be clear that these regulations will not themselves introduce grants for heat batteries into the boiler upgrade scheme, but subject to Parliament approving these regulations, the government intends to bring forward a further s I to amend the Boiler Upgrade Scheme Regulations 2022 and enable support for eligible heat batteries through the scheme.
The government is supporting the future inclusion of heat batteries to increase consumer choice, recognising their potential to provide an alternative low carbon heating solution in properties where heat pump installation may not be suitable. The regulations also make a technical amendment to regulation 22 of the Boiler Upgrade Scheme Regulations 2022. This clarifies the powers available to the scheme administrator. Ofgem, where an installer has received an ineligible payment. The amendment will allow amounts owed to be recovered through a combination of repayment and offsetting against future grant payments, helping to strengthen scheme administration and safeguard public money.
In conclusion, these regulations ensure that the legislative framework underpinning the Boiler upgrade Scheme can accommodate thermal energy storage systems. They represent an important enabling step towards the future inclusion of heat batteries within the scheme, supporting greater consumer choice and helping more households across England and Wales transition to low carbon heating. I commend these regulations to the committee.
These regulations are important, enabling step towards the future inclusion of heat batteries within the scheme, helping to ensure that consumers can benefit from a wider range of low carbon heating technologies. In 2025, the government consulted on expanding the range of technologies supported through the boiler upgrade Scheme, including the potential introduction of heat batteries. For those members who maybe aren't aware. Heat batteries are a type of thermal energy storage that can use low carbon electricity to generate and store heat for use when it is needed.
Following consideration of consultation responses, the government confirmed its intention to support heat batteries through the scheme. Once appropriate, standards and consumer protections are in place. These regulations amend section 100 of the Energy Act 2008, which provides powers for the Secretary of State to establish schemes that facilitate and encourage the generation of renewable heat in England and Wales. At present, those powers apply only in relation to specified technologies and energy sources.
These regulations add thermal energy storage systems to that list. This provides the necessary legislative foundation for thermal energy storage systems, including eligible heat batteries, to be supported through government schemes made under those powers, such as the Boiler Upgrade Scheme. It is important to be clear that these regulations will not themselves introduce grants for heat batteries into the boiler upgrade scheme, but subject to Parliament approving these regulations, the government intends to bring forward a further s I to amend the Boiler Upgrade Scheme Regulations 2022 and enable support for eligible heat batteries through the scheme.
The government is supporting the future inclusion of heat batteries to increase consumer choice, recognising their potential to provide an alternative low carbon heating solution in properties where heat pump installation may not be suitable. The regulations also make a technical amendment to regulation 22 of the Boiler Upgrade Scheme Regulations 2022. This clarifies the powers available to the scheme administrator. Ofgem, where an installer has received an ineligible payment. The amendment will allow amounts owed to be recovered through a combination of repayment and offsetting against future grant payments, helping to strengthen scheme administration and safeguard public money.
In conclusion, these regulations ensure that the legislative framework underpinning the Boiler upgrade Scheme can accommodate thermal energy storage systems. They represent an important enabling step towards the future inclusion of heat batteries within the scheme, supporting greater consumer choice and helping more households across England and Wales transition to low carbon heating. I commend these regulations to the committee.
16:33
16:33
16:33
Speaker 4
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Speaker 4
It's a pleasure to serve under your chairmanship and a pleasure to be here. For my first outing as an S, I am returning back to a department that I spent 18 months in. It's amazing how much things have changed and also how much things haven't changed with some of the arguments that come forward. And as we've heard from the minister, rightly sets out these regulations, extend the bus scheme to thermal energy storage systems, and, of course, make those Ofgem ability to recover payments a little bit more easy.
But it's remiss of me not to point out the context of having this debate. When we heard in the media that this potentially is going to be one of the schemes that could well have some of the funding cuts to it. We only have to look at the explanatory memorandum 5.5 when it stills used uses the 2.7 billion. Now we actually asked those questions yesterday in Des Moines about whether or not every single penny of the warms home plan, that £15 billion worth of funding was going to be kept, and the minister was unable to answer.
So it'll be interesting today to see whether or not that is going to be the case, because when we bore this sea down, the real question is whether this further extension of subsidy represents value for money. The government's wider ambition was to install 600,000 heat pumps a year by 2028, but deployment remains far below that level. Now, of course, this scheme was introduced by the conservative government, but we should judge policy by its results, not defend it simply because we introduced it.
And the fundamental problem is that electricity remains too expensive. And rather than addressing the underlying problem, the government continues to reach for subsidies. This risk asking taxpayers to compensate for an energy market that makes electric heating less attractive than it should be. There is also the question of fairness. Households unable to afford a new heating system should not face additional costs to subsidise those who can now heat batteries may well have a role, particularly in homes unsuitable for heat pumps.
We're not opposed to the technology. We're simply questioning the economics of subsidising it. As the government's announced a grant of 2500 pounds per installation, but appears to have decided the level of subsidy before demonstrating publicly why that figure represents good values. In essence, ministers have put the cart before the horse, and the question still arises is whether the necessary standards have now been complete. If so, that's welcome. But standards tell us whether a system is safe and properly installed.
They do not tell us whether it's worth subsidising. Let's give an example. A car can pass. It's MOT. That doesn't mean the government should give someone 2500 pounds to buy it. I therefore have three areas to explore for the minister. The first is about those standards. It was raised in the other place. So could the Minister confirm that all necessary product safety, design and installation standards are now in force? And will those standards be assessed with real world performance, not just safety? And what redress will consumers have if properly installed systems fail to deliver the efficiency or savings that they were promised? The second area I'd like to question is around the methodology.
What evidence led ministers to select heat batteries for taxpayers support? Heat batteries can store energy at cheaper times for use later. That may lower bills, but shifting electricity consumption is not the same as reducing it. The benefit depends on efficiency, household demand, electricity tariffs and the system's operating life. So will the minister publish the department's underlying analysis, including its assumptions about consumption, efficiency, running costs and lifetime carbon savings? And how does that analysis compare to heat batteries with other heating technologies? So my question is not whether heat batteries work, it's why this technology was selected for subsidy over other electric heating solutions.
So what criteria were applied? What alternatives were indeed incest? And if another technology can deliver the same or greater carbon reduction at lower cost to the taxpayers, why should it not qualify? And that leads me on to my final area, which is about the costings. Could I simply ask the minister how it was arrived at 2500 pounds, because it would be helpful to understand what the average purchasing and installation costs would have been assumed, what annual running costs have been modelled, and what proportion of the total cost will taxpayers fund? And most importantly, what is the expected taxpayer cost per tonne of carbon saved, and how does that compare with the equivalent support for heat pumps? If the government can't ask those questions, how can this committee judge whether 2500 pounds represents value for money? Money ministers may point to high satisfaction, as they did in the other place.
Amongst existing boiler upgrade recipients. But satisfaction with one subsidised technology does not justify the pricing of subsidising another. They may also argue that the extension increases customer choice. Actually, the minister mentioned it in his speech. But genuine choice requires clear information about installation costs, running costs, long term performance and not simply the government promising a grant. So this isn't an argument against innovation. It's an argument for evidence led policy and proper stewardship of taxpayers money.
We asked to establish the standards, publish the methodology, demonstrate the carbon savings and value for money, then determine the subsidy. Parliament should not be asked to approve an extension of the subsidy without clear evidence. The government has got the economics right. So the Minister would do well to explain simply why heat batteries might work, but why the taxpayer should pay 2500 pounds towards them, and what measurable benefit we should have. Of course, this is all in the context of what comes in the budget, so I'd be very interested to see if the minister can answer those questions today.
Thank you , chair.
But it's remiss of me not to point out the context of having this debate. When we heard in the media that this potentially is going to be one of the schemes that could well have some of the funding cuts to it. We only have to look at the explanatory memorandum 5.5 when it stills used uses the 2.7 billion. Now we actually asked those questions yesterday in Des Moines about whether or not every single penny of the warms home plan, that £15 billion worth of funding was going to be kept, and the minister was unable to answer.
So it'll be interesting today to see whether or not that is going to be the case, because when we bore this sea down, the real question is whether this further extension of subsidy represents value for money. The government's wider ambition was to install 600,000 heat pumps a year by 2028, but deployment remains far below that level. Now, of course, this scheme was introduced by the conservative government, but we should judge policy by its results, not defend it simply because we introduced it.
And the fundamental problem is that electricity remains too expensive. And rather than addressing the underlying problem, the government continues to reach for subsidies. This risk asking taxpayers to compensate for an energy market that makes electric heating less attractive than it should be. There is also the question of fairness. Households unable to afford a new heating system should not face additional costs to subsidise those who can now heat batteries may well have a role, particularly in homes unsuitable for heat pumps.
We're not opposed to the technology. We're simply questioning the economics of subsidising it. As the government's announced a grant of 2500 pounds per installation, but appears to have decided the level of subsidy before demonstrating publicly why that figure represents good values. In essence, ministers have put the cart before the horse, and the question still arises is whether the necessary standards have now been complete. If so, that's welcome. But standards tell us whether a system is safe and properly installed.
They do not tell us whether it's worth subsidising. Let's give an example. A car can pass. It's MOT. That doesn't mean the government should give someone 2500 pounds to buy it. I therefore have three areas to explore for the minister. The first is about those standards. It was raised in the other place. So could the Minister confirm that all necessary product safety, design and installation standards are now in force? And will those standards be assessed with real world performance, not just safety? And what redress will consumers have if properly installed systems fail to deliver the efficiency or savings that they were promised? The second area I'd like to question is around the methodology.
What evidence led ministers to select heat batteries for taxpayers support? Heat batteries can store energy at cheaper times for use later. That may lower bills, but shifting electricity consumption is not the same as reducing it. The benefit depends on efficiency, household demand, electricity tariffs and the system's operating life. So will the minister publish the department's underlying analysis, including its assumptions about consumption, efficiency, running costs and lifetime carbon savings? And how does that analysis compare to heat batteries with other heating technologies? So my question is not whether heat batteries work, it's why this technology was selected for subsidy over other electric heating solutions.
So what criteria were applied? What alternatives were indeed incest? And if another technology can deliver the same or greater carbon reduction at lower cost to the taxpayers, why should it not qualify? And that leads me on to my final area, which is about the costings. Could I simply ask the minister how it was arrived at 2500 pounds, because it would be helpful to understand what the average purchasing and installation costs would have been assumed, what annual running costs have been modelled, and what proportion of the total cost will taxpayers fund? And most importantly, what is the expected taxpayer cost per tonne of carbon saved, and how does that compare with the equivalent support for heat pumps? If the government can't ask those questions, how can this committee judge whether 2500 pounds represents value for money? Money ministers may point to high satisfaction, as they did in the other place.
Amongst existing boiler upgrade recipients. But satisfaction with one subsidised technology does not justify the pricing of subsidising another. They may also argue that the extension increases customer choice. Actually, the minister mentioned it in his speech. But genuine choice requires clear information about installation costs, running costs, long term performance and not simply the government promising a grant. So this isn't an argument against innovation. It's an argument for evidence led policy and proper stewardship of taxpayers money.
We asked to establish the standards, publish the methodology, demonstrate the carbon savings and value for money, then determine the subsidy. Parliament should not be asked to approve an extension of the subsidy without clear evidence. The government has got the economics right. So the Minister would do well to explain simply why heat batteries might work, but why the taxpayer should pay 2500 pounds towards them, and what measurable benefit we should have. Of course, this is all in the context of what comes in the budget, so I'd be very interested to see if the minister can answer those questions today.
Thank you , chair.
16:39
Speaker 5
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Speaker 5
Thank you very much, Mr. Hobhouse, and it's a pleasure to serve with you in the chair. To be clear, the Liberal Democrats support this statutory instrument. We have long called for home energy policy to move beyond a fixation on heat pumps as the only solution. Heat pumps work well for many homes, but heat batteries offer another low carbon option. And with energy bills rising because of the conflict in the Middle East, the government must do more to improve energy, home energy efficiency and protect households from volatile energy prices.
The Liberal Democrats are calling for an ambitious ten year emergency home upgrade programme, starting with free installation for people on low incomes, alongside a commitment to zero carbon new homes and decoupling from the marginal pricing system. As the chair of the climate tech, Appg would be remiss of me. Not to mention, we also need to make better use of data when delivering home upgrades like heat pumps and batteries. Decisions based on factory estimates do not reflect how building upgrades actually perform.
Verify performance data can help households get better advice, improve the success of retrofit programmes, reduce costs and encourage private investment. The government should go further to help households access these solutions and ensure that low carbon heating is affordable and practical for more people.
The Liberal Democrats are calling for an ambitious ten year emergency home upgrade programme, starting with free installation for people on low incomes, alongside a commitment to zero carbon new homes and decoupling from the marginal pricing system. As the chair of the climate tech, Appg would be remiss of me. Not to mention, we also need to make better use of data when delivering home upgrades like heat pumps and batteries. Decisions based on factory estimates do not reflect how building upgrades actually perform.
Verify performance data can help households get better advice, improve the success of retrofit programmes, reduce costs and encourage private investment. The government should go further to help households access these solutions and ensure that low carbon heating is affordable and practical for more people.
16:40
16:40
Speaker 3
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Speaker 3
Thank you, Mr. and I, as I said yesterday, welcome the member to his place and to his new role, and I'm sure this will be the first of many committees that we'll be facing each other in just to turn to his all of his points. So to begin, he obviously heard what I had to say yesterday about departmental budgets and obviously what's in the explanatory memorandum in front of him still is dependent on future departmental budgets are obviously ultimately decisions for the Treasury and for budgets and for spending review.
So there will be decisions for the Chancellor at the end of of this month on his broader point around the cost of electricity versus gas. I think across both the previous government and this government, we have prioritised the the delinking of electricity and gas. And this is this is important to encourage the uptake of these technologies. What I would gently say to him is obviously the his party in government had 14 years through which to try and reduce that spark gap, and I don't think made much progress.
While we've been in government, we have made sure that the reduction in levies have fallen heavily on the electricity bill, rather than just on gas. We've adopted CFDs and encouraged companies on to CFDs so that there are fixed costs rather than rather than the high cost of gas for certain generation. So we've already taken action significantly over the last couple of years on Delinking, and we will take further action down the down the line. On the question of standards, the government has been clear that the support for heat batteries will only be introduced once the appropriate production, product and insulation standards are in place.
They will need to be MCs certified, just as heat pumps are at the moment, and comply with the MCs design and installation standards. I think there is good reason to introduce this legislation now, in order to make sure that we are in the right position to be able to move quickly. Once those standards are in place. You may already know that with air to air heat pumps, which have obviously been in legislation for some time, the standard is, is, is still being worked on by MCs and the accreditation bodies now, but by doing this legislation, by passing this legislation today, we are enabling us to move as quickly as possible to have the technology in place and so that we're ready to support heat batteries as soon as possible.
Once those standards are in place. On the questions he asked around the methodology and why we are supporting heat batteries, perhaps, in his words, ahead of other forms of electric heating. I think what we saw from the consultation that we ran in 2025 was that the responses showed a really broad support for expanding the scheme to additional to additional electric technologies and heat batteries, where the technology that was most frequently highlighted by respondents, and they pointed towards the a number of potential benefits associated with heat batteries, including the fact that they are able to take advantage of charging at off peak times.
In terms of the questions asking about value for money, in terms of minimising running costs, and that they can also be installed , unlike some other solutions. As a like for like solution for many gas or electric boilers. And it was only after that consultation, and I'm sure he's read the government response to the consultation, which includes many of the answers to the questions that he's asked today. It was only after that deliberation that we have decided to include heat batteries in the boiler upgrade scheme.
On his final question, around the around the value of the 2500 pounds grant, we arrived at that number largely because it was judged to be the best amount in order to. Given the lower cost of heat batteries versus heat pumps, we think that the 2500 pounds grant will bring the cost of installation of a heat battery to around about £6,000. That is, you know, brings it to the around the same level that we see for heat pumps.
Once the 7500 pounds grant is taken into account. So part of the reasoning behind this is so as not to create an unequal playing field for heat batteries versus heat pumps, and so as not to distort the the market there. On the member for West Dorset points, I would thank him for his support for the for the s I. And I know that there's a lot that we a lot of common ground between our parties on these issues.
I think he's talked about his party's ten year plan and the ambition for retrofit. I would say that's what we've got in. The Warm Homes plan is an ambitious plan for retrofitting homes across the country. There's billions of pounds behind that plan, and I really welcome what he said about data. I would agree with that. And I think the the moves that the department is making, for example, around, around using some of the smart metering data that we've got, how we enhance that, how we ensure that that's being used properly to inform proper assessments of homes that might take us beyond in the future, beyond what's available at the moment through EPCs is really valuable.
And there's work going on in that at the moment and would be happy to discuss that with him if that is useful. In closing, Mrs. Hobhouse, these regulations are enabling measure. They don't by themselves introduce support for heat batteries through the boiler upgrade scheme, but they do provide the necessary legislative foundation to do so through future secondary legislation. They also support the effective administration of the Boiler Upgrade scheme by clarifying Ofgem's powers to recover those ineligible payments and strengthening the protection of public money.
They are an important step forward for delivering the government's commitment to support heat batteries through this scheme, and I commend these regulations to the Committee. The
So there will be decisions for the Chancellor at the end of of this month on his broader point around the cost of electricity versus gas. I think across both the previous government and this government, we have prioritised the the delinking of electricity and gas. And this is this is important to encourage the uptake of these technologies. What I would gently say to him is obviously the his party in government had 14 years through which to try and reduce that spark gap, and I don't think made much progress.
While we've been in government, we have made sure that the reduction in levies have fallen heavily on the electricity bill, rather than just on gas. We've adopted CFDs and encouraged companies on to CFDs so that there are fixed costs rather than rather than the high cost of gas for certain generation. So we've already taken action significantly over the last couple of years on Delinking, and we will take further action down the down the line. On the question of standards, the government has been clear that the support for heat batteries will only be introduced once the appropriate production, product and insulation standards are in place.
They will need to be MCs certified, just as heat pumps are at the moment, and comply with the MCs design and installation standards. I think there is good reason to introduce this legislation now, in order to make sure that we are in the right position to be able to move quickly. Once those standards are in place. You may already know that with air to air heat pumps, which have obviously been in legislation for some time, the standard is, is, is still being worked on by MCs and the accreditation bodies now, but by doing this legislation, by passing this legislation today, we are enabling us to move as quickly as possible to have the technology in place and so that we're ready to support heat batteries as soon as possible.
Once those standards are in place. On the questions he asked around the methodology and why we are supporting heat batteries, perhaps, in his words, ahead of other forms of electric heating. I think what we saw from the consultation that we ran in 2025 was that the responses showed a really broad support for expanding the scheme to additional to additional electric technologies and heat batteries, where the technology that was most frequently highlighted by respondents, and they pointed towards the a number of potential benefits associated with heat batteries, including the fact that they are able to take advantage of charging at off peak times.
In terms of the questions asking about value for money, in terms of minimising running costs, and that they can also be installed , unlike some other solutions. As a like for like solution for many gas or electric boilers. And it was only after that consultation, and I'm sure he's read the government response to the consultation, which includes many of the answers to the questions that he's asked today. It was only after that deliberation that we have decided to include heat batteries in the boiler upgrade scheme.
On his final question, around the around the value of the 2500 pounds grant, we arrived at that number largely because it was judged to be the best amount in order to. Given the lower cost of heat batteries versus heat pumps, we think that the 2500 pounds grant will bring the cost of installation of a heat battery to around about £6,000. That is, you know, brings it to the around the same level that we see for heat pumps.
Once the 7500 pounds grant is taken into account. So part of the reasoning behind this is so as not to create an unequal playing field for heat batteries versus heat pumps, and so as not to distort the the market there. On the member for West Dorset points, I would thank him for his support for the for the s I. And I know that there's a lot that we a lot of common ground between our parties on these issues.
I think he's talked about his party's ten year plan and the ambition for retrofit. I would say that's what we've got in. The Warm Homes plan is an ambitious plan for retrofitting homes across the country. There's billions of pounds behind that plan, and I really welcome what he said about data. I would agree with that. And I think the the moves that the department is making, for example, around, around using some of the smart metering data that we've got, how we enhance that, how we ensure that that's being used properly to inform proper assessments of homes that might take us beyond in the future, beyond what's available at the moment through EPCs is really valuable.
And there's work going on in that at the moment and would be happy to discuss that with him if that is useful. In closing, Mrs. Hobhouse, these regulations are enabling measure. They don't by themselves introduce support for heat batteries through the boiler upgrade scheme, but they do provide the necessary legislative foundation to do so through future secondary legislation. They also support the effective administration of the Boiler Upgrade scheme by clarifying Ofgem's powers to recover those ineligible payments and strengthening the protection of public money.
They are an important step forward for delivering the government's commitment to support heat batteries through this scheme, and I commend these regulations to the Committee. The