Commercial heat pumps: £7,500 grant for smaller business buildings, costs and quotes

Commercial heat pumps: key facts for 2026

Boiler Upgrade Scheme for business: the £7,500 grant

The Boiler Upgrade Scheme (BUS) is run by Ofgem and pays a fixed grant towards replacing fossil fuel heating with a low-carbon system. GOV.UK says it can replace the heating system in your home or a building used for your business, and the regulations extending it to 2030 refer to homes and small non-domestic properties.

Who qualifies

• You own the building. GOV.UK says this includes a business property or one you let to tenants.
• You're replacing fossil fuel heating: gas, oil, LPG or electric. You can't get a grant to replace an existing low-carbon system.
• England or Wales. The scheme doesn't cover Scotland or Northern Ireland.
• One grant per property, and not if the building has already had government funding for a heat pump or biomass boiler.
• Not most new builds or social housing.

Shops, offices, surgeries, workshops, farm buildings, village halls and smaller hotels or care homes are the kind of buildings that can fit within the size limits. For the off-gas top-up in detail, see heat pump grants for oil and LPG.

Size limits: 45kWth, 70kWth and 300kWth

This is where commercial heat pumps differ from home installs. The BUS caps the capacity of the system, measured in kilowatts thermal (kWth):

A cascade links several heat pumps so they run as one system. It gives resilience (one unit can fail without losing all heat) and lets units step up and down with demand, which suits buildings with big swings in load. It also means a larger building can sometimes stay within the 70kWth limit with a well-insulated fabric and good controls.

How much does a commercial heat pump cost?

The only official national cost figures come from DESNZ's Boiler Upgrade Scheme statistics, built from MCS installation certificates. For April to June 2026:

What drives a commercial heat pump quote:

• Heat demand: the peak heat loss of the building sets the capacity, and capacity drives cost.
• Emitters: heat pumps run most efficiently at lower flow temperatures. Undersized radiators or old fan coils may need replacing.
• Hot water: the size of the cylinder or thermal store and how much hot water you use.
• Ground works: boreholes or trenches for ground source systems.
• Electrical supply: larger units may need a three-phase supply or a capacity upgrade.
• Controls and monitoring: building management system integration and metering.

Ordinary business premises pay 20% VAT on heat pumps, which VAT-registered businesses can normally reclaim. Buildings used solely for a relevant charitable purpose can get 0% until 31 March 2027. For home heat pump costs, see our heat pump cost guide.

Sizing: why a heat-loss survey comes first

An oversized heat pump costs more and can short-cycle. An undersized one won't hold temperature on the coldest days. Commercial buildings vary far more than homes, so the survey matters more:

• Room-by-room heat-loss calculation using the fabric, glazing, ventilation and occupancy, not the size of the old boiler.
• Metered gas or oil use from 12 months of bills, as a reality check on the calculation.
• Occupancy patterns: an office empty at weekends, a care home occupied 24/7 and a church used twice a week need very different control strategies.
• Fabric first: insulation, draught-proofing and controls can bring a building under the 45kWth or 70kWth limit and cut running costs.
• Plant space and noise: where the outdoor units go, and planning or neighbour considerations.

Hot water loads: hospitality, care homes and leisure

In hotels, pubs, restaurants, care homes, gyms and sports clubs, hot water can be as big a load as space heating. It peaks at predictable times: morning showers, kitchen service, laundry. That changes the design:

• Storage over instant output: larger cylinders or thermal stores, charged ahead of the peak, let a smaller heat pump meet a big demand.
• Legionella control: stored hot water has to be managed under HSE guidance. Ask how the design achieves safe storage temperatures, whether by a high-temperature heat pump, a booster or an immersion cycle, and what that does to running costs.
• Kitchen and laundry: heat recovery from cold rooms, extract air or laundry waste water can feed the heat pump.
• Care settings: continuous occupancy means steady loads, which suit heat pumps well, but there's no tolerance for downtime. A cascade with redundancy is worth the extra cost.

Heat pump grants for business by nation, and for the public sector

Heat pump grants for the public sector: with PSDS closed, public bodies should check with Ofgem whether a smaller building fits the BUS, and fund larger estates from capital budgets, the tax allowances below or third-party finance. Schools and councils will find the wider picture on business energy grants.

Larger systems above 45kWth: tax allowances, rates and EPCs

For factories, warehouses, leisure centres and multi-building estates, the BUS won't apply. The money comes from elsewhere:

• Capital allowances. HMRC lists "a space or water heating system" as an integral feature of a building (CA22320), and integral features are special-rate expenditure. The Annual Investment Allowance (£1 million a year) can be used against them, and companies can claim the 50% first-year allowance on new special-rate assets above that. Full expensing covers main-rate plant only. How your heat pump system is split between heating plant and other items is a question for your accountant.
• Business rates. England's 2022 rating change covers renewable power generation and storage plant. Heating plant that serves your building is treated separately and wasn't changed, so a heat pump that heats your premises may still be rateable. Ask a rating adviser.
• EPC and MEES. Since 1 April 2023 you can't keep letting a commercial property in England or Wales rated below EPC E unless you register an exemption. In June 2026 the government dropped the planned EPC C by 2027 step. It now proposes EPC B from 2031 for buildings over 1,000 square metres, where cost-effective. A heat pump can lift a rating, especially in a building heated by oil or direct electric. Get an EPC assessor to model it before you buy: see MEES and commercial EPCs.
• Solar to run it. A heat pump adds electrical load, so a solar roof pays back faster. See commercial solar panels and battery storage.

How to get a commercial heat pump quoted

1. Tell us about the building: floor area, how it's heated now, fuel bills and opening hours.
2. Heat-loss survey: room by room, plus hot water demand and plant location.
3. Design and quote: capacity, single unit or cascade, emitters, controls and the grant position.
4. Grant application: for systems within the limits, the MCS-certified installer applies to Ofgem on your behalf. Ofgem contacts you to confirm. The grant comes off your invoice.
5. Install and commission within 120 days of the grant application, or the installation won't be eligible.
6. Handover: controls set-up, metering and a maintenance plan.

What to ask heat pump installers

• Are you MCS certified for this technology and size, and have you done commercial buildings like mine?
• What peak heat loss did you calculate, and how?
• Single unit or cascade, and does it stay inside the 45kWth or 70kWth grant limit?
• What flow temperature does the design run at, and which emitters need changing?
• How is hot water handled, including legionella control?
• Does the site need a supply upgrade, and who handles it?

We pass your enquiry to one suitable installer that does commercial heat pump work.