Commercial Heat Pump Grants & Funding 2026

There is one clearing-the-air moment in every commercial heat pump funding conversation, so let us have it straight away. The £7,500 Boiler Upgrade Scheme is domestic-only. It does not apply to your commercial or non-domestic building. Almost every competitor page leaves this vague, and it is the single most common misconception we correct for facilities and estates teams. The good news is that commercial and public-sector buildings have their own routes, several of them far larger than £7,500, and the job of a specialist installer is to map which ones you genuinely qualify for and build the application around the design rather than bolting a grant on as an afterthought.

Why the Boiler Upgrade Scheme does not cover your building

The Boiler Upgrade Scheme funds air-source and ground-source heat pumps in domestic properties in England and Wales up to 45 kWth. The headline grant is £7,500 for an air-source or ground-source heat pump. BUS terms and eligible technologies change over time, so check the current rates on gov.uk, but the central point holds: the scheme is explicit that it is for homes, not commercial premises. We flag it here only to set expectations, because businesses ask about the £7,500 grant constantly. For a commercial building you need a different playbook, which is exactly where specialist commercial design and grant navigation earns its keep.

Public Sector Decarbonisation Scheme (PSDS)

If you are a public-sector body, this is usually the headline route. The Public Sector Decarbonisation Scheme, administered by Salix Finance for DESNZ, funds low-carbon heating such as heat pumps and heat-network connections, taking a whole-building approach that also covers demand-reduction measures.

• Who qualifies: public-sector bodies in England, including NHS trusts, schools, colleges, universities, local authorities and the emergency services.
• What it covers: capital grants from tens of thousands to multi-million pounds, covering the additional cost beyond what a comparable fossil-fuel replacement would have cost.
• The catch: it runs in competitive application windows and is time-limited, so confirm the current deadlines on gov.uk. It is for the public sector only, not private commercial buildings.

You can read the official scheme detail on the Public Sector Decarbonisation Scheme pages. Because windows are competitive and time-bound, the work that wins funding is a properly costed, technically sound application, which is why we build the bid around the modelled design.

Industrial Energy Transformation Fund (IETF)

For industrial sites and data centres, the IETF supports fuel-switching to industrial heat pumps and waste-heat recovery.

• Who qualifies: industrial sites and data centres in England, Wales and Northern Ireland in eligible SIC codes. That means manufacturing and recovery or recycling, plus newer sectors including controlled-environment horticulture, industrial laundries and textile renting.
• What it covers: capital grants towards fuel-switching and waste-heat recovery. Terms (grant rates, minimum grant sizes, technology-readiness requirements and eligibility windows) vary by funding round, so check the current scheme guidance on gov.uk.
• The catch: it runs in periodic competition windows operated by DESNZ and is time-limited, so confirm current deadlines on gov.uk. It is for large-scale industrial and process heat, not ordinary office heating.

The official collection sits on the government’s Industrial Energy Transformation Fund page. If your site raises process heat or hot water with gas, an IETF-backed high-temperature heat pump can recover waste heat and cut both cost and Climate Change Levy exposure.

Green Heat Network Fund (GHNF)

Where the project serves more than one building, the GHNF is the route to look at.

• Who qualifies: public, private and third-sector bodies in England developing new low-carbon heat networks, or retrofitting and expanding existing ones, using heat pumps, geothermal, water-source or waste heat.
• What it covers: capital grants towards eligible commercialisation and construction costs of low-carbon heat networks, with awards regularly running to several million pounds per scheme. Grant rates and eligibility vary by funding round, so check the current scheme guidance on gov.uk.
• The catch: it suits campuses, councils, hospitals and large mixed-use developments rather than a single building. The fund is time-limited, so confirm current deadlines on gov.uk, and heat networks are moving under Ofgem regulation as the new market regulator.

The government’s Green Heat Network Fund publication sets out eligibility. Heat network schemes are designed and operated to the CIBSE and ADE Heat Networks Code of Practice CP1, and the Heat Network (Metering and Billing) Regulations apply.

Capital allowances: the route open to any business

Grants are competitive and sector-specific, but capital tax relief is available to any taxpaying business and is often the largest single saving on the table. Because heat pumps count as plant and machinery, the relief is generous.

• Full expensing: companies paying UK corporation tax can deduct 100 per cent of new, unused qualifying plant in year one, with no upper cap. It was made permanent from April 2026 and is worth up to 25p of tax for every pound spent at the 25 per cent rate.
• Annual Investment Allowance: unincorporated businesses, and spend outside full expensing, get 100 per cent relief on up to £1m of qualifying expenditure.

Wiring and some ancillary works may fall outside full expensing but generally still qualify for the AIA. As always, confirm the precise treatment with your accountant. The bigger point is that capital allowances can stack on top of a grant: a public body or industrial site might combine PSDS or IETF support with the tax relief on any non-grant-funded element.

How the routes map to your organisation

A quick way to orient yourself before a feasibility study:

• A public body such as a council, NHS trust, school or university should look to PSDS, with capital allowances on any element the grant does not cover.
• An eligible industrial site, manufacturer, laundry, food producer or data centre should look to the IETF, again with capital allowances alongside.
• A multi-building campus or development should look to the GHNF.
• A private commercial building outside those categories relies on capital allowances, and the business case rests on running-cost savings and carbon reduction rather than a headline grant.

Turning eligibility into a funded project

Funding windows are competitive and the paperwork rewards a properly modelled design. We map which routes you qualify for, model running cost and carbon from your own twelve-month consumption data, and build the application around the engineering rather than treating it as a bolt-on. To see how funding interacts with the underlying numbers, read our cost and payback guide, run the headline figures on the savings calculator, or look at how the funding plays out for a specific application such as industrial and process heat pumps. When you want the right route mapped for your building, request a feasibility study and we will line up the funding alongside the design.