Heat Pump Funding & Grants UK (2025 Guide): A Commercial Market Deep Dive for Contractors, Consultants & Clients 

With the UK’s 2050 Net Zero target drawing closer, heat pumps—particularly Air Source Heat Pumps (ASHPs) and Water Source Heat Pumps (WSHPs)—are becoming the cornerstone of commercial decarbonisation strategies. But as capital budgets tighten across sectors, understanding the latest funding and grant opportunities in 2025 is essential for contractors, consultants, and commercial building owners alike. 

This guide consolidates current schemes, offers specification tips for grant compliance, and provides actionable insights for maximising funding success in the commercial market. 

Key 2025 Funding Streams for Commercial Projects

1. Public Sector Decarbonisation Scheme (PSDS) – Phase 4

• • Target: Public sector buildings (NHS, councils, schools, etc.)  
  • Funding: Up to 100% of eligible capital costs for replacing fossil fuel systems with low-carbon technologies.  
  • Heat Pump Focus: Strong priority on ASHPs and WSHPs with flow temperatures under 55°C.  
  • Requirements: – SCOP ≥2.8 – Fossil fuel removal evidence – Carbon savings modelling  
  • Application Notes: Highly competitive; success depends on clear project outcomes and strong SCOP performance. 

2. Industrial Energy Transformation Fund (IETF) – Phase 3

• • Target: Industrial and manufacturing sectors 
  • Funding: Covers 30–70% of capital cost based on company size.  
  • Heat Pump Use Case: Integrating WSHPs or high-capacity ASHPs into process heat systems.  
  • Design Tip: Submit load profiles and integration schematics to maximise scoring. 

3. Green Heat Network Fund (GHNF)

• • Target: Local authorities, universities, and private developers of heat networks. 
  • Use Case: ASHPs and WSHPs that feed into low-carbon district heating.  
  • Eligibility: Must demonstrate carbon savings over time and support multi-property service. 

4. Energy Efficiency Financing (EEF) – Carbon Trust & Siemens

• • Target: Private sector with energy-saving potential.  
  • Format: Lease or hire-purchase agreements where repayments are offset by energy savings.  
  • Heat Pump Fit: Ideal for SME retrofits, hospitality, and retail. 

5. Enhanced Capital Allowances (ECAs)

• • Target: Any commercial business investing in energy-efficient tech.  
  • Format: Tax relief via Annual Investment Allowance (AIA) for qualifying heat pump equipment.  
  • Design Tip: Ensure systems are listed on the Energy Technology List (ETL) or meet equivalent standards. 

Key Specification Advice for Consultants and Specifiers

Design for Grant Success:  

• • SCOP Targets: Design for SCOP ≥2.8 at 45°C flow temp minimum.  
  • GWP Consideration: Select refrigerants with GWP <750 (e.g., R32 or natural refrigerants) to align with funding thresholds.  
  • Carbon Modelling: Include lifecycle carbon assessments using CIBSE TM65 to strengthen grant applications. 

Framework Routes to Funding:  

• • RE:FIT & SHDF for rapid procurement in the public sector.  
  • NHS SBS / Crown Commercial Service (CCS) for compliant and streamlined delivery. 

Case Study Inclusion: – Include at least one successful reference project in your application to improve funder confidence. 

Actionable Tips for M&E Contractors

Start with the Right Data:  

• • Include SCOP values at project-specific conditions (e.g. 50°C flow, winter ambient). 
  • Perform site feasibility assessments that include acoustic, structural, and electrical load capacity. 

Work Closely with Clients:  

• • Identify applicable funding early and align your solution.  
  • Offer modular options that can be scaled if only partial funding is awarded. 

Package for Bids:  

• • Provide clients with a full grant-ready technical pack: performance spec, compliance matrix, SCOP data, ROI/payback, and metering plan. 

Client Guidance – Unlocking the Opportunity

Common Commercial Use Cases:  

• • Education Estates: Universities using WSHPs to decarbonise student housing blocks.  
  • NHS Trusts: Replacing gas-fired hot water systems with ASHPs and solar pre-heat.  
  • Retail & Hospitality: Quiet, roof-mounted ASHPs retrofitted into mixed-use buildings. 

Improving Your Funding Chances:  

• • Involve an accredited installer (MCS, REFCOM, etc.)  
  • Include digital heat metering and monitoring solutions to meet reporting requirements.  
  • Clearly define ROI, carbon savings, and timeline in your application. 

Summary Table: Heat Pump Funding at a Glance 

Heat pumps are no longer an emerging technology—they’re a funded solution to today’s decarbonisation demands. For consultants, M&E contractors, and commercial clients alike, success in 2025 and 2026 depends on early integration of funding requirements into the design and procurement process. 

With millions in grant money available across multiple schemes, the opportunity is real—but only for those who prepare.