Industrial heat pumps: high temperature heat for processes, heat recovery and big sites

What is an industrial heat pump? High temperature heat pumps explained

A heat pump doesn't make heat by burning anything. It moves heat from a cooler source to a hotter one, using electricity to drive a compressor. That's why a well-designed heat pump can deliver more heat than the electricity it uses. The colder the source and the hotter the output you need, the harder it works, so the design always starts with two numbers: where the heat comes from, and how hot it has to be.

Heating a smaller building rather than a process? Our commercial heat pumps guide covers the £7,500 grant for business buildings, and home heat pumps covers houses.

Industrial heat pumps: key facts for 2026

Process heat, heat recovery and steam: where industrial heat pumps work

Industrial heat pumps earn their keep where a site needs a lot of heat at a steady rate, and especially where it already rejects warm water or air. Typical fits:

What about steam?

Many sites run a steam boiler because steam was the easiest way to move heat around, not because every user needs steam. A good assessment splits the load: which users genuinely need steam, and which could take hot water instead. Hot water duties are usually where a heat pump fits first. Genuine steam duties are possible with high temperature heat pumps and steam compression, but they're a specialist design, so expect a feasibility study before a fixed quote.

Keep the boiler, at first

Plenty of sites start with a heat pump that recovers waste heat to pre-heat boiler feed or process water, with the existing boiler topping up. It cuts gas use without betting the production line on new kit, and the metering data then sizes the next step.

Above the BUS limits: why the £7,500 grant doesn't cover industrial heat

The Boiler Upgrade Scheme does pay towards heat pumps in business buildings, but its regulations were written for homes and small non-domestic properties. Three rules rule out most industrial jobs:

• Capacity caps. No more than 45kWth for one heat pump, 70kWth combined where heat pumps are installed together, or 300kWth on a shared ground loop.
• Space heating first. The heat pump has to be capable of meeting the building's full space heating demand.
• No process heat. The regulations define the hot water they count as water for the personal use of the people in the building. They expressly exclude hot water used for heating a swimming pool or "carrying out a process".

So a heat pump that heats a factory office block might fit the scheme. One that heats a production process won't. For the buildings that do fit, see commercial heat pumps and the £7,500 grant and the Boiler Upgrade Scheme guide.

Industrial Energy Transformation Fund (IETF) 2026: closed, and what replaced it

For five years the Industrial Energy Transformation Fund was the main grant for industrial heat pumps, heat recovery and energy efficiency in England, Wales and Northern Ireland. It launched in 2020 with £500 million across three phases. That's over:

• Closed in July 2025. After the Spending Review, the government decided there would be no further extension. The planned second window of Phase 3 did not take place.
• No successor. GOV.UK's IETF page says plainly: "No successor fund is planned."
• Existing projects are safe. The 2024 Autumn Budget committed £163 million to finish all current projects from Phases 1 and 2 and the first Phase 3 window.
• Scotland: the Scottish Industrial Energy Transformation Fund (SIETF) lists all three of its calls as closed.
• Older schemes: the Industrial Heat Recovery Support programme closed to applications in July 2020.

Industrial heat pump funding still open in 2026

A site with surplus heat it can't use itself may be able to sell it to a heat network. If a council or developer near you is planning one, talk to them early. Your waste heat could be the low-carbon source their GHNF bid needs. For the wider picture across every sector, see business energy grants.

Capital allowances for heating plant, the Climate Change Levy and business rates

Capital allowances (CA22320)

HMRC lists "a space or water heating system" as an integral feature of a building, and integral features are special-rate expenditure. In practice:

• The Annual Investment Allowance (£1 million a year) can be used on integral features, so the first £1 million of qualifying spend can come off taxable profits in year one.
• Above that, companies can claim the 50% first-year allowance on new, unused special-rate assets, with the rest going into the special-rate pool.
• Full expensing covers main-rate plant only, so it doesn't apply to an integral feature.
• Process plant: HMRC's manual says only the assets on its list are integral features. Whether a heat pump that serves a production process, rather than the building, is an integral feature or ordinary plant changes which allowances apply, so get your accountant to classify each part of the project before you order.

Climate Change Levy

Gas used to carry a lower Climate Change Levy rate than electricity. Since 1 April 2024 they've matched. From 1 April 2026 both pay 0.801p per kWh, rising to 0.827p from 1 April 2027. If a heat pump cuts the kWh you buy, the levy falls with it.

Business rates

England's 2022 rating change takes renewable power generation and storage plant out of rateable value. Heating plant that serves your premises is treated separately and wasn't changed, so a heat pump may still be rateable. Ask a rating adviser. On-site factory solar panels to power it are covered by the exemption. See solar panels and capital allowances for how solar is taxed.

Before you buy: heat audit, power supply and the feasibility study

Industrial heat pumps are bespoke. The projects that work start with data, not a product:

1. Heat audit. Meter or log every heat user: temperature, flow, hours and season. It shows which loads genuinely need steam and which could run on hot water.
2. Waste heat map. Log every source of rejected heat: chillers, compressors, cooling towers, effluent, extract air. Match sources to users by temperature and timing.
3. Hot water vs steam split. Move what you can to hot water. That's where a heat pump fits first.
4. Thermal storage. A buffer tank lets a smaller heat pump run steadily and meet batch peaks.
5. Electrical capacity. A large heat pump is a large new electrical load. Check your supply capacity early and ask the distribution network operator about an upgrade if needed. It can take months.
6. Feasibility study. For bigger projects, a paid study with an investment-grade design avoids buying the wrong machine.

Large companies in the Energy Savings Opportunity Scheme already have audit data that can feed this. Pair the heat pump with on-site generation: a solar PPA or battery storage can cut the cost of each kWh it runs on.

How to get an industrial heat pump quoted

What to send

• Twelve months of gas, oil or LPG and electricity data, half-hourly if you have it.
• A list of heat users, with required temperatures and operating hours.
• Known waste heat sources: chillers, compressors, cooling water, effluent.
• Your supply capacity and any planned production changes.

What to ask every supplier

• What efficiency will the system achieve at our source and output temperatures, month by month?
• Which loads will it cover, and what stays on the boiler?
• How much thermal storage is in the design, and why?
• What refrigerant does it use, and what are the maintenance and leak-check obligations?
• Does the site need a supply upgrade, and who manages the DNO application?
• What performance guarantee and monitoring come with it?

We pass your enquiry to one installer that does industrial heat pump and heat recovery work. You won't be put on a ring-round list.