Ground Source Grows Up: How to Fund and Deploy GSHPs in July 2025 and Beyond
Ground source heat pumps (GSHPs) have just received a major policy boost. In June 2025, the UK government released its Clean Energy Industries Sector Plan: a 10-year industrial strategy that formally designates heat pumps as one of the nation’s “frontier Clean Energy Industries”. That puts GSHPs alongside offshore wind, hydrogen, and nuclear as a core part of Britain’s energy transition.
The strategy also reinforces long-term support for heat networks and commits over £13 billion to the rollout of low-carbon heat through the Warm Homes Plan. This national backing sends a clear message: GSHPs are no longer emerging. They’re central to the UK’s clean energy mission.
With rising energy costs, stricter building regulations, and an urgent need to cut emissions, GSHPs offer a scalable, low-carbon solution for large buildings and estates. But funding these systems - especially at scale - can be complex.
This guide breaks down your options as of July 2025, whether you’re designing from scratch or looking to retrofit smarter.
New Build vs Retrofit: Strategic Deployment of GSHPs
New Builds
Integrating GSHPs into new developments offers a cost-effective, regulation-ready path for developers. With all new homes from 2025 required to use low-carbon heating, adoption is accelerating.
In partnership with Kensa, we provide GSHP ground loop designs at scale: supporting the delivery of up to 30,000 installations per month. These are complex systems that demand careful, site-specific planning. Our design process focuses on long-term performance, regulatory compliance, and seamless integration with your build programme.
Retrofits
Retrofits can come with complexity: from heating load calculations to ground access on constrained sites. High reinstatement costs or restricted layouts can pose real design challenges. But they’re far from unworkable. Multiple projects prove that, with the right approach, retrofit can succeed at scale.
Long-term projects demand stable leadership. GSHP networks take years to plan and deliver. In that context, private-sector partners often bring the consistency public roles can’t always guarantee:
- Private sector CEOs: avg. tenure ~5.2 years
- Civil Service Permanent Secretaries: ~2.4 years
- Post-2019 government ministers: ~8 months
When you’re designing for decades, continuity counts. And the government’s new roadmap recognises that.
Policy Backing for the Next Decade
The Clean Energy Industries Sector Plan commits to doubling investment across priority clean energy sectors by 2035 - and heat pumps are one of them. The plan highlights that:
- Heat pumps are essential to reducing fossil fuel use and securing long-term energy stability.
- Export potential is growing, with UK heat pump sales quadrupling since 2019 and projected to contribute £500 million GVA annually by 2050.
- Skills investment is underway, with a projected 70,000 installers needed by 2035: showing both market size and momentum.
While technologies like GSHPs were once seen as niche, the UK’s industrial strategy now recognises them as a core part of national infrastructure. If you're looking to future-proof a development, commercial site, or public sector estate, there’s never been a stronger case, or more support, to choose ground source.
Let’s look at some of the funding pathways available.
Key Funding to Support GSHP Deployment
1. Boiler Upgrade Scheme (BUS)
For eligible new builds and retrofits (residential), BUS offers:
- £7,500 grant for heat pump installation
- Open to homeowners and developers
- No insulation prerequisites
- Administered by Ofgem
BUS funding has increased to £200 million this year, with applications up 93% YoY thanks to simplified eligibility and lower upfront costs.
Case in point: At Sydney Street in London, Genius Energy Lab supported a mixed-use GSHP network feasibility study. With plans for 174 boreholes and a peak heat demand of 1,743kW, the system is set to serve 75% of local buildings. Projects like this show exactly how BUS can support large-scale delivery.
2. The UK’s Warm Homes Plan
Backed by £13.2 billion of public investment, the Warm Homes Plan is a cornerstone of the UK’s 10-year industrial strategy for clean energy. It aims to drive a nationwide shift to low-carbon heat, tackle fuel poverty, and support whole-housing stock decarbonisation: with heat pumps, solar, batteries and energy efficiency upgrades all in scope.
For forward-looking developers and local authorities, it marks a clear signal of long-term government alignment behind GSHPs, renewables and retrofit solutions. A dedicated Warm Homes Social Housing Fund will also support the deployment of heat pumps in the public-rented sector, with further policy details expected by October 2025.
In short: this is not a pilot. It’s a structural funding plan for the decade ahead.
More on the Warm Homes Plan from E3G
3. Industrial Energy Transformation Fund (IETF)
Phase 3, launched in January 2024, brings a £185 million budget and expands eligibility to additional industrial sectors such as horticulture and commercial laundries.
For these commercial and energy-intensive sites, the IETF offers:
- Up to 50% matched funding
- Minimum grant: £75,000 for SMEs
- Covers feasibility, infrastructure & waste heat recovery
- Open to England, Wales & NI
4. Energy Company Obligation (ECO4)
Targeted at social housing, landlords and contractors working with low-income households, ECO4 (running until 2026) provides:
- Fully funded GSHP/ASHP installs
- Insulation upgrades & boiler replacements
- Minimum 2-band EPC improvement
5. Third-Party and Regional Grants
The Heat the Streets project in Cornwall showed how ERDF-backed third-party funding can enable shared ground loop networks and cut emissions by 70% across an area.
Read about the Heat The Streets project
6. Warm Homes Grants (Devolved Nation Support)
Schemes like:
provide targeted support for low-income homes and landlords, bridging funding gaps not covered by national schemes.
GSHPs: A Long-Term Gain
With the right design and access to funding, GSHPs offer low-carbon, high-performance heating and cooling that lasts. Whether you’re integrating from the outset or retrofitting into complex sites, GSHP networks unlock long-term savings, compliance, and resilience.
And with the UK government’s Clean Energy Industries Sector Plan now naming heat pumps a strategic priority through to 2035, there’s never been a stronger policy signal to back your project with ground source heating.
To learn more about how ground source heat can support your project, check out our Case Studies or get in touch with our expert team.
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