Is the Boiler Upgrade Scheme available to businesses?

The Boiler Upgrade Scheme is open to owners of domestic and small non-domestic properties in England and Wales, including small businesses in eligible building types. Larger commercial and industrial heat decarbonisation projects are typically routed through the Industrial Energy Transformation Fund, the Public Sector Decarbonisation Scheme or the Green Heat Network Fund.

What is the difference between IETF and the Net Zero Innovation Portfolio?

The Industrial Energy Transformation Fund (IETF) is a deployment-focused capital programme that helps existing industrial sites reduce energy use and emissions. The Net Zero Innovation Portfolio (NZIP) is an R&D and demonstration programme that funds earlier-stage clean-energy technologies. Most companies engage NZIP as an innovator and IETF as a site operator.

Are Contracts for Difference relevant to anyone other than utility-scale developers?

Contracts for Difference are designed for utility-scale low-carbon electricity generation projects — offshore wind, onshore wind, solar, geothermal, tidal stream, and Advanced Conversion Technologies. They are not appropriate for small commercial generators or behind-the-meter projects, but they shape the economics of every electricity-intensive industrial project in the UK and so should be understood by anyone planning a major industrial-decarbonisation business case.

What funding exists for hydrogen projects?

Hydrogen-specific UK funding centres on the Hydrogen Allocation Round (HAR) for electrolytic hydrogen production, alongside NZIP-funded innovation streams covering low-carbon hydrogen production, storage, distribution and end use. The Industrial Strategy Council and the Hydrogen Business Model together set the long-term revenue support framework for hydrogen producers.

Are there grants specifically for public-sector net zero projects?

Yes — the Public Sector Decarbonisation Scheme (PSDS) is the principal capital programme for decarbonising heat and energy in the UK public estate, including schools, hospitals and local-authority buildings. Local authorities and NHS trusts should engage Salix Finance as the delivery body.

How should an industrial site sequence net zero funding applications?

Most sites begin with a feasibility-stage application to IETF, follow with a deployment-stage IETF application or a NZIP demonstration competition for less mature technologies, and engage Contracts for Difference or the Hydrogen Allocation Round only where the project includes utility-scale generation or hydrogen production. Heat-network developers should add the Green Heat Network Fund to that sequence.

Best Net Zero Funding Programmes in the UK (2026)

Executive summary

The United Kingdom's net zero funding system in 2026 is one of the most comprehensive in the world. It spans household heat-pump grants of a few thousand pounds, industrial decarbonisation capital awards in the tens of millions, and utility-scale revenue-support contracts measured over fifteen-year horizons. For organisations of every size — from a domestic homeowner installing a heat pump under the Boiler Upgrade Scheme, to an NHS trust replacing gas boilers under the Public Sector Decarbonisation Scheme, to an offshore-wind developer bidding into a Contracts for Difference allocation round — there is a credible public-sector route to capital. The difficulty is not finding a programme; it is matching the right project type to the right programme at the right point in its life cycle.

This report sets out the editorial team's view of the strongest net zero funding programmes available in the UK in 2026, organised by project type. It describes the relationships between the deployment programmes (IETF, PSDS, BUS, Green Heat Network Fund), the innovation programmes (NZIP and Innovate UK's net zero competitions) and the revenue-support mechanisms (CfD, HAR and the wider Hydrogen Business Model). It then describes the readiness signals funders look for, the mistakes that most often disqualify good projects, and the order in which we typically recommend developers and operators apply.

The UK net zero funding landscape

The UK net zero funding system is led, on the policy side, by the Department for Energy Security and Net Zero (DESNZ), which sets the overall framework and operates most of the major capital and innovation programmes directly or through arm's-length delivery bodies. On the innovation side, Innovate UK co-funds many DESNZ-led competitions and runs its own net zero themed Smart Grant streams. The Catapult Network — particularly the Energy Systems, Offshore Renewable Energy, Connected Places and High Value Manufacturing Catapults — provides delivery infrastructure for projects that need testbeds, demonstration sites or systems integration capacity.

The FundingAtlas catalogue currently lists 507 published programmes, of which more than 80 are tagged against the “Net Zero” objective. Live distributions are published in the UK net zero funding statistics page and the UK Funding Index 2026. The most striking feature of the data is the breadth of project types covered: the same catalogue contains a £5,000 capital grant to install a domestic heat pump and a £100m-class revenue-support contract for an offshore wind project. The programmes do not compete; they layer.

Best routes by project type

Domestic and small non-domestic heat

For domestic and small non-domestic heat decarbonisation projects, the principal capital programme in England and Wales is the Boiler Upgrade Scheme. BUS provides a single capital grant towards the installation of an air-source heat pump, ground-source heat pump or biomass boiler in eligible properties, paid to the installer and netted off the customer's invoice. Larger non-domestic heat projects, and any project connecting to a district heat network, should instead engage the Green Heat Network Fund, which provides capital grants to support the commercialisation, construction and expansion of low-carbon heat networks across England.

Industrial decarbonisation

For industrial sites — manufacturing, food and drink, chemicals, paper, cement, glass, ceramics and similar — the headline programme is the Industrial Energy Transformation Fund. IETF operates in distinct strands: a feasibility-stage strand that funds engineering studies, and a deployment-stage strand that funds capital projects. The fund is competitive, but the assessment criteria are well-defined and the assessor population is consistent across rounds, which makes the programme one of the more predictable in the UK system.

IETF is best understood as a deployment programme. Earlier-stage industrial decarbonisation technologies — for example novel process electrification, novel waste-heat recovery, or first-of-a-kind hydrogen-based process heat — typically need to mature through the Net Zero Innovation Portfolio before they are deployment-ready. NZIP is structured as a portfolio of themed innovation programmes, each running a sequence of competitions over multi-year horizons. The comparison NZIP vs IETF sets out the boundary.

The public estate

For the public estate — central and local government, the NHS, schools, universities and the wider public-sector building portfolio — the dominant programme is the Public Sector Decarbonisation Scheme. PSDS is delivered by Salix Finance and provides capital grants for energy-efficiency and low-carbon heat installations, typically structured around bundled portfolios of buildings within an organisation's estate. Local authorities and NHS trusts should engage Salix early in the project life cycle and combine the application with a robust whole-portfolio decarbonisation plan.

Utility-scale low-carbon generation

For utility-scale low-carbon electricity generation — offshore wind, onshore wind, solar PV, geothermal, tidal stream, and Advanced Conversion Technologies — the principal revenue-support mechanism is Contracts for Difference. CfD is not a grant; it is a long-tenor contract between the generator and the Low Carbon Contracts Company that stabilises the wholesale price the generator receives over the contract life. CfD allocation rounds are competitive, technology-segmented, and operate to a published schedule.

Hydrogen

For low-carbon hydrogen production, the principal allocation mechanism is the Hydrogen Allocation Round. HAR operates alongside the broader Hydrogen Business Model — a long-term revenue-support framework administered by DESNZ that allocates production support contracts to qualifying low-carbon hydrogen producers. Earlier-stage hydrogen R&D is funded through NZIP and through targeted Innovate UK competitions; the Net Zero Innovation Portfolio contains dedicated hydrogen production, storage, distribution and end-use streams.

The strongest UK net zero programmes

Boiler Upgrade Scheme — capital grants for domestic and small non-domestic heat-pump and biomass installations in England and Wales.
Industrial Energy Transformation Fund — feasibility and deployment capital for industrial sites reducing energy use and emissions.
Net Zero Innovation Portfolio — DESNZ's flagship innovation programme across low-carbon heat, power, hydrogen, CCUS and energy storage.
Contracts for Difference — long-tenor revenue-support contracts for utility-scale low-carbon generation.
Hydrogen Allocation Round — competitive allocation of production-support contracts to low-carbon hydrogen producers.
Public Sector Decarbonisation Scheme — capital programme for decarbonising heat and energy in the UK public estate.
Green Heat Network Fund — capital grants for commercialisation, construction and expansion of low-carbon heat networks.
Innovate UK Smart Grants — open-topic R&D funding accessible to net zero innovators.
Innovation Loans — patient debt to fund later-stage clean-technology commercialisation.
R&D Tax Relief and RDEC — tax-side support for the technical work that underpins net zero project pipelines.

Grants vs loans vs incentives

Net zero funding in the UK splits more cleanly than other domains into three families. Grants — IETF, NZIP, PSDS, BUS, Green Heat Network Fund and the Innovate UK net zero competitions — fund up-front capital and engineering costs at intervention rates between 30% and 100% depending on the programme. Loans — Innovate UK Innovation Loans, the UK Infrastructure Bank's growing loan book and the wider British Business Bank Growth Guarantee Scheme — fund the later, more capital-intensive phases of project deployment. Incentives — Contracts for Difference, the Hydrogen Business Model and the wider revenue-support framework — fund the operating-life economics of large generation and production projects.

For most industrial decarbonisation projects the right financial design uses two or three of these in combination. A typical industrial heat-pump retrofit may combine an IETF deployment grant for the capital cost, an Innovation Loan to bridge installation cash flow, and an RDEC claim against the underlying engineering work. The decision guide Grant vs loan vs investment walks through the financial trade-offs.

Readiness and evidence expectations

UK net zero funders have converged on a small number of readiness signals that they want applicants to demonstrate. The first is a credible technical baseline: a quantified energy and emissions baseline for the site or system, derived from metered data wherever possible. The second is an engineering-grade design package commensurate with the funding stage — pre-feasibility for early-stage funding, FEED-equivalent for deployment funding. The third is a counterfactual: a clearly articulated description of what the applicant would do in the absence of the funding, and why the funding is the difference between the project happening and not happening. The fourth is governance: named decision-makers, defined approval gates, and credible procurement plans.

On the revenue-support side — CfD and HAR — readiness is dominated by consenting, grid-connection or hydrogen off-take readiness, and credible commercial counterparties. Allocation rounds are won by projects that can credibly demonstrate they will reach financial close and commissioning within the contractual delivery year.

Common mistakes

The mistakes we see most often are baseline mistakes. Applicants submit an IETF deployment application without an engineering-grade baseline and the application is scored down on the savings claim. Applicants submit a NZIP innovation application that reads as a deployment business case rather than a research project and the application is scored down on innovation. PSDS applicants submit portfolios of buildings that have not been screened for grid or planning constraints, and find that delivery slips into a following financial year. CfD bidders submit projects whose underlying consents are not robust enough to support the contractual delivery date and lose their contract in early enforcement.

A separate category of mistake is funder mis-targeting. Applicants apply to BUS for projects too large for the scheme, to PSDS for projects outside the eligible public-estate scope, to Green Heat Network Fund for projects that are not in fact heat networks, and to NZIP for projects that are deployment rather than innovation. The decision guide Which net zero support? sets out the prioritisation logic.

What to apply for first

For a homeowner or small property owner, the first step is almost always the Boiler Upgrade Scheme via a MCS-accredited installer. For an industrial site, the first step is a feasibility-stage IETF application, followed by a deployment-stage IETF or NZIP application depending on technology maturity. For a public-sector estate, the first step is engagement with Salix Finance on the next PSDS round and assembly of a whole-portfolio plan. For a heat-network developer, the first step is the Green Heat Network Fund. For a generation developer, the first step is the next relevant CfD allocation round. For a hydrogen producer, the first step is the next Hydrogen Allocation Round. For an innovator developing a technology that is not yet deployment-ready, the first step is an Innovate UK Smart Grant or a relevant NZIP competition, with R&D tax relief layered in across the year.

Frequently asked questions

Is the Boiler Upgrade Scheme available to businesses?: The Boiler Upgrade Scheme is open to owners of domestic and small non-domestic properties in England and Wales, including small businesses in eligible building types. Larger commercial and industrial heat decarbonisation projects are typically routed through the Industrial Energy Transformation Fund, the Public Sector Decarbonisation Scheme or the Green Heat Network Fund.
What is the difference between IETF and the Net Zero Innovation Portfolio?: The Industrial Energy Transformation Fund (IETF) is a deployment-focused capital programme that helps existing industrial sites reduce energy use and emissions. The Net Zero Innovation Portfolio (NZIP) is an R&D and demonstration programme that funds earlier-stage clean-energy technologies. Most companies engage NZIP as an innovator and IETF as a site operator.
Are Contracts for Difference relevant to anyone other than utility-scale developers?: Contracts for Difference are designed for utility-scale low-carbon electricity generation projects — offshore wind, onshore wind, solar, geothermal, tidal stream, and Advanced Conversion Technologies. They are not appropriate for small commercial generators or behind-the-meter projects, but they shape the economics of every electricity-intensive industrial project in the UK and so should be understood by anyone planning a major industrial-decarbonisation business case.
What funding exists for hydrogen projects?: Hydrogen-specific UK funding centres on the Hydrogen Allocation Round (HAR) for electrolytic hydrogen production, alongside NZIP-funded innovation streams covering low-carbon hydrogen production, storage, distribution and end use. The Industrial Strategy Council and the Hydrogen Business Model together set the long-term revenue support framework for hydrogen producers.
Are there grants specifically for public-sector net zero projects?: Yes — the Public Sector Decarbonisation Scheme (PSDS) is the principal capital programme for decarbonising heat and energy in the UK public estate, including schools, hospitals and local-authority buildings. Local authorities and NHS trusts should engage Salix Finance as the delivery body.
How should an industrial site sequence net zero funding applications?: Most sites begin with a feasibility-stage application to IETF, follow with a deployment-stage IETF application or a NZIP demonstration competition for less mature technologies, and engage Contracts for Difference or the Hydrogen Allocation Round only where the project includes utility-scale generation or hydrogen production. Heat-network developers should add the Green Heat Network Fund to that sequence.

Continue reading

For live data, see the UK net zero funding statistics page and the UK Funding Index 2026. The companion reports cover Best Funding for UK Startups and Best R&D Funding Routes.