Grants and funding for commercial heat pump installers

Start with the thing every commercial buyer asks and almost every website gets wrong: the £7,500 Boiler Upgrade Scheme is domestic only. It does not cover commercial or non-domestic buildings, full stop. If a quote leans on that grant for your office, factory, or care home, it is leaning on money you cannot claim. The good news is that commercial and public-sector buildings have their own routes, and several of them are far larger than the domestic grant. The job is matching your building, your sector, and your ownership to the right one.

Public Sector Decarbonisation Scheme (PSDS)

If you are a public body, an NHS trust, a school, a college, a university, a local authority, or an emergency service, PSDS is usually the first port of call. Administered by Salix Finance for DESNZ, it funds the cost over and above a like-for-like fossil-fuel replacement, taking a whole-building approach that pairs low-carbon heating with demand-reduction measures. Awards run from tens of thousands to several million. It is competitive and runs in application windows with firm completion deadlines, so the work needs to be shovel-ready when the window opens. See the Public Sector Decarbonisation Scheme for current rounds. Private commercial buildings are not eligible.

Industrial Energy Transformation Fund (IETF)

For industrial sites and data centres in eligible SIC codes, manufacturing, recovery and recycling, data centres, and newer sectors including controlled-environment horticulture and industrial laundries, the Industrial Energy Transformation Fund supports fuel-switching to industrial heat pumps and waste-heat recovery. The SME minimum grant is £75,000, intervention is typically 30 to 50%, and the technology must be at TRL 7 or above. Projects must complete by 31 March 2028. This is the route for high-temperature process heat, not ordinary office heating.

Green Heat Network Fund (GHNF)

If your project serves more than one building, a campus, a council estate, a hospital site, or a large mixed-use development, the Green Heat Network Fund covers up to 50% of eligible commercialisation and construction costs, with awards regularly running to several million per scheme. It is open to public, private, and third-sector bodies in England building new low-carbon heat networks or expanding existing ones with heat pumps, geothermal, water-source, or waste heat. Heat networks are moving under Ofgem regulation, so design to the CIBSE and ADE Heat Networks Code of Practice from the outset.

Full expensing and the Annual Investment Allowance

Any business buying a heat pump can claim capital allowances, and this is the route most private commercial buyers actually use. Full expensing gives companies a 100% first-year deduction on new qualifying plant and machinery with no upper cap, worth up to 25p of tax saved per pound at the 25% corporation-tax rate, and it becomes permanent from April 2026. Sole traders and partnerships use the Annual Investment Allowance instead, up to £1m at 100%. Some ancillary wiring may fall outside full expensing but still qualify for AIA. Always confirm treatment with your accountant.

How the routes stack, and the common pitfalls

Grants and tax relief are not mutually exclusive, but they interact. A public body using PSDS is not also claiming corporation-tax relief, while a private manufacturer might pair an IETF grant with capital allowances on the unfunded balance. The biggest pitfall we see is leaving the funding application until the design is half-finished: the strongest applications are built around a fully modelled project with consumption data, a heat-loss survey, and a clear carbon case. The second is missing the DNO conversation, a supply upgrade can outlast a grant window. We map which routes your building qualifies for and build the application around the project, not the other way round.

The summaries below carry the current eligibility and value detail for each route. To talk through which one fits your building, get in touch for a free initial consultation.