Draft Boiler Upgrade Scheme (Amendment to the Energy Act 2008 etc.) Regulations 2026

Martin McCluskey Excerpts

Wednesday 14th October 2026 General Committees

[The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Martin McCluskey)]

I beg to move,

That the Committee has considered the draft Boiler Upgrade Scheme (Amendment to the Energy Act 2008 etc.) Regulations 2026.

It is a pleasure to serve under your chairmanship, Mrs Hobhouse. The draft regulations were laid before the House on 13 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 to overcome the up-front costs of moving away from fossil fuel heating systems.

The draft regulations are an 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 members of the Committee who may be unaware, heat batteries are a type of thermal energy storage system that can use low-carbon electricity to generate and store heat for use when it is needed. Following the consideration of consultation responses, the Government confirmed our intention to support heat batteries through the scheme, once appropriate standards and consumer protections are in place.

The draft regulations amend section 100 of the Energy Act 2008, which provides powers for the Secretary of State to establish

“a scheme to facilitate and encourage renewable generation of heat”

in England and Wales. At present, those powers apply only in relation to specified technologies and energy sources. The draft regulations add thermal energy storage systems to that list, providing 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 the draft regulations will not themselves introduce grants for heat batteries into the boiler upgrade scheme. Instead, subject to Parliament approving the regulations, the Government intend to introduce a further statutory instrument to amend the Boiler Upgrade Scheme (England and Wales) Regulations 2022 and enable support for eligible heat batteries through the scheme. The Government are supporting the future inclusion of heat batteries to increase consumer choice, recognising the potential to provide an alternative low-carbon heating solution in properties where heat pump installation may not be suitable.

The draft regulations also make a technical amendment to the 2022 regulations to clarify 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, the draft 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 to transition to low-carbon heating. I commend the draft regulations to the Committee.

--- Later in debate ---

[Martin McCluskey]

I welcome the hon. Member for Hinckley and Bosworth to his new role. I am sure this will be the first of many Committees in which we will face each other.

Turning to the hon. Member’s points, he obviously heard what I had to say yesterday about departmental budgets. What is in the explanatory memorandum is still dependent on future departmental budgets. They are obviously ultimately decisions for the Treasury, in Budgets and spending reviews, so they will be decisions for the Chancellor at the end of this month.

On the shadow Minister’s broader point about the cost of electricity versus the cost of gas, the previous Government and this Government have both prioritised the delinking of electricity and gas, which is important to encourage the uptake of these technologies. I gently say to him that his party had 14 years in Government in which to reduce the spark gap and did not make much progress.

Since we have been in Government, we have made sure that the reduction in levies has fallen heavily on the electricity bill rather than just on gas, and also adopted contracts for difference and encouraged companies on to CfDs so that there are fixed costs rather than the high costs linked to gas for certain generation. We have already taken significant action in the last couple of years on delinking, and we will take further action down the line.

On the question of standards, the Government have been clear that support for heat batteries will be introduced only once the appropriate product and installation standards are in place. They will need to be certified under the microgeneration certification scheme, just as heat pumps are now, and comply with the MCS design and installation standards. There is good reason to introduce this statutory instrument now, to make sure we are in a position to move quickly once those standards are in place.

The hon. Member may already know that the standard for air-to-air heat pumps, which have been in legislation for some time, is still being worked on by MCS and the accreditation bodies. Passing this legislation will enable us to get the technology in place, so that we are ready to support heat batteries as soon as possible once the standards are in place.

On the hon. Member’s questions about the methodology and why we are, in his words, supporting heat batteries ahead of other forms of electric heating, the responses to the consultation we ran in 2025 showed broad support for expanding the scheme to additional electric technologies. Heat batteries were the technology most frequently highlighted by respondents. In answer to the questions about value for money and minimising running costs, they pointed to the potential benefits associated with heat batteries, including the ability to take advantage of charging at off-peak times and to be installed as a like-for-like solution for many gas or electric boilers, unlike some other solutions. I am sure the shadow Minister has read the Government response to the consultation, which includes the many of the answers to the questions he has asked today. It was only after that deliberation that we decided to include heat batteries in the boiler upgrade scheme.

On his final question around the value of the £2,500 grant, we arrived at that number largely because it was judged to be the best amount, given the lower cost of heat batteries versus heat pumps. We think the £2,500 grant will bring the cost of installation of a heat battery to around £6,000, about the same level for heat pumps, once the £7,500 grant is taken into account. Part of the reasoning is to avoid distorting the market by creating an uneven playing field for heat batteries versus heat pumps.

I thank the hon. Member for West Dorset for his support for the SI. There is much common ground between our parties on these issues. He has talked about the ambition behind his party’s 10-year plan. I would say that the warm homes plan is indeed an ambitious programme for retrofitting homes across the country, with billions of pounds behind it.

I welcome and agree with what the hon. Member said about data. The Department is making moves around the comprehensive environmental data archive, using and enhancing smart meter vectors, to ensure that data is used to inform proper assessments of homes. That might in future take us beyond what is available through energy performance certificates, which is really valuable. There is work going on in that area, which I would be happy to discuss with the hon. Member, if that is useful.

The regulations are an enabling measure. They do not 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 ineligible payments, strengthening the protection of public money. These regulations are an important step forward in delivering the Government’s commitment to support heat batteries through the scheme.

Question put and agreed to.