Notice

HPRP Round 2: innovation funding competition - clarification questions (updated 22 May 2026)

Updated 22 May 2026

Clarification questions (updated 22 May 2026)

General questions

1. I’m having trouble accessing the application form, who should I contact?’

Please email heatinnovation@energysecurity.gov.uk in the first instance, setting out the issues which you are facing with the application form.

2. Can I speak to someone at DESNZ about my project ahead of submitting my application?

There is not the opportunity for applicants to meet with DESNZ ahead of submitting their application. Any questions you have in terms of eligibility or scope can be submitted to DESNZ via email (heatinnovation@energysecurity.gov.uk) ahead of the deadline of 16:00 on 14 May 2026.

3. Is there a collaboration platform available to help me find project partners?

The Department intends to facilitate collaboration between innovators to help companies find project partners. The collaboration platform to facilitate this will follow in due course:https://hpr-collaboration.meeting-mojo.com/page/homepage.

4. Will there be a webinar to support the competition launch?

The Department will be hosting an online event for guidance on how to apply for the Competition at 4pm on 6 May 2026. To register to attend the Competition Guidance Event, please complete the following MS Form to register for the event, by 13:00 on 5th May 2026. The link to join the event will be issued after this deadline. Please note that the session will not be recorded but slides will be made available after the webinar.

5. How many grants are expected to be awarded under the competition?

As stated in Section 8 of the competition guidance up to £20m has been allocated to this Innovation Funding Competition with grants to be awarded between £200,000 to £2m. The number of projects receiving funding will be subject to the quality, quantity and value of funding applications received.

6. I am a consumer/homeowner, can I get a free heat pump installed through this programme?

Heat Pump Ready, as an innovation programme, does not provide any funding to consumers or homeowners to install heat pumps. For details of funding available to support the installation of heat pump in your home visit: Find energy grants for your home (Help to Heat) - GOV.UK

7. Where can I find out more about projects previously funded by the Heat Pump Ready Programme?

Details of the Heat Pump Ready programme, including previously funded projects can be found here: Heat Pump Ready Programme - GOV.UK.

8. What is DESNZ doing to mitigate risks to programme delivery, where applicants have used AI to generate their application responses? 

As set out in Section 14 of the competition guidance, all applicants are required to report the use of AI in producing their funding application. The additional document upload feature within the application portal allows for applicants to fulfil relevant requirements such as uploading a word document which states clearly where and how AI tools were used (e.g. drafting, summarising, editing, translation, analysis) including the name/type of tool(s) used, what inputs were provided, and what human review was undertaken. In addition, in-person kick off meetings, and 6 monthly stage gates allow for human verification of claims made by projects regarding their technology.   

9. Where can I find out about conflict of interest between the different elements of the Heat Pump Ready Programme?

Please see section 5 of the competition guidance.

10. Do you know whether the stream 1 materials will be published?

The Department is aiming to publish Stream 1 materials shortly.

11. What are the mandatory exclusion grounds to be aware of as an applicant of the grant funding?

Whilst guidance cannot be provided under every circumstance, applicants are encouraged to read the link below to understand the mandatory exclusion grounds. https://www.gov.uk/government/publications/procurement-act-2023-guidance-documents-procure-phase/guidance-exclusions-html#summary-of-schedule-6—mandatory-exclusion-grounds. Individuals subject to financial sanctions designated by HMT under the Sanctions and Anti-Money Laundering Act 2018 are also excluded.

12. As a Heat pump manufacturer there doesn’t seem to be NACE code category that closely matches what we do at this source https://ec.europa.eu/competition/mergers/cases/index/nace_all.html?

Applicants are advised the category provided that most aligns with what the organisation does. In the case of a heat pump manufacturer this could be C27.5.1 - Manufacture of electric domestic appliances.

13. Is there any possibility of an extension to the deadline for submitting funding applications?

No, applicants are advised to ensure they submit their fully completed application form ahead of the advertised deadline.

Project scope and eligibility

14. My innovation overcomes more than 1 barrier, how should I account for this in the application form?

Applicants must focus solely on the primary single barrier which their innovation  overcomes throughout their response to the assessment criteria. The non-assessed question within the application form provides an opportunity to note any additional barriers overcome by the innovation. Further guidance is provided in Section 11 of the competition guidance.

15. I’m submitting a project against a barrier where software projects aren’t eligible, is it still possible to include the cost of software development which supports hardware innovation?

Eligible costs for the competition are set out in Annex 1 of the Competition Guidance. The definition of eligible costs includes the applicant’s own costs, eligible costs incurred by consortium members and eligible costs incurred by companies connected to any of these incurred in delivery of the agreed funded project. Software, where deemed as necessary to support the delivery of hardware innovation, may meet this criterion. Projects must justify all costs associated with the project as part of their responses to the assessment criteria.

16. I have an end-to-end software solution which goes from customer acquisition to quality assurance and servicing, would I be eligible to innovation funding across this solution if I applied under Barrier 4?

Section 3 of the competition guidance, including Table 1, details that projects must focus on the point of the consumer journey from a consumer accepting a quote to having the heat pump installed. Therefore, eligible innovative software projects must focus on activities taking place between these two events i.e. from quote acceptance to heat pump system fully installed in order to be in scope.

17. Why are alternative and direct heating electric heating technologies, e.g. storage heaters, electric boilers, infrared heating, panel heaters, electric radiators, heat batteries (unless the heat battery operates as part of a heat pump system) not eligible under the competition?

As set out in Government’s Warm Homes Plan, heat pumps will be the best and cheapest form of electrified heating for the majority of homes, therefore we are focusing our innovation funding to support increasing their deployment and attractiveness to consumers.

The Department is currently trialling a Retrofit Innovation Panel, alongside Energy Systems Catapult, which will help inform future work on allowing more innovators to enter the market.

18. Can Boiler Upgrade Scheme funding be used as match funding?

Grant funding provided through the Boiler Updated Scheme (BUS) is public funding and therefore cannot form part of an organisations match funding. Details of match funding requirements are set out in Section 8 of the Competition Guidance.

19. What distinction should be drawn to define a domestic heat pump system compared to a district heating network to determine whether a funding proposal is in scope of this competition?

The competition is focused on supporting the development of market ready innovative solutions overcoming the four targeted barriers to heat pump uptake. This is in order to support the Warm Home Plan’s aim that by 2030 the heat pump market will have expanded to over 450,000 installations per year.

Therefore, innovation brought forward as heat pump systems must provide heating and hot water to an individual domestic building and this can include an individual high-rise building. In contrast district heating networks provide heating solutions to multiple buildings which is not within the scope of this funding.  

20. We are supporting an innovative project that addresses domestic heating in high-rise buildings in urban areas. The heat pump system is via a communal heating source serving multiple flats in one building. The heat pump itself will be around 500kW in output. As this addresses residents in high-rise building, would such a heat pump system be considered to be providing heat to a ‘domestic building’ and therefore be in scope on this point ?

As set out in the answer to question 19 above, innovation brought forward as heat pump systems must provide heating and hot water to an individual domestic building and this can include an individual high-rise building, but not multiple buildings.

21. We have pilot sites serving domestic properties through district or communal heating networks. Would we be able to use these in a funding application?

As set out in the answer to question 19 above, innovation brought forward as heat pump systems must provide heating and hot water to an individual domestic building and this can include an individual high-rise building, but not multiple buildings.

22. “Noise” is an issue that can extend the time to install - would a project addressing the noise issues be considered under the “time taken” heading?

As part of the funding application the applicant will need to demonstrate that the proposed innovation, in this case innovation relating to the noise of a heat pump, is solving one of the four barrier the competition is seeking to address.

23. Can eligibility criteria include products which challenge consumer misconceptions, and elevate personal concerns that have been highlighted in government funded research such as Energy Systems Catapult Barriers to Adoption?

As part of the funding application the applicant will need to demonstrate that the proposed innovation, in this case innovation relating to consumer misconceptions and personal concerns, is solving one of the four barrier the competition is seeking to address.

24. Is this potential funding only available to public social housing or open to all i.e. private housing developers too?

Please note this is a heat pump innovation grant competition and not, for example, grant funding relating to social housing, e.g. Social Housing Decarbonisation Fund (SHDF), or the Boiler Upgrade Scheme (BUS). The project’s lead organisation must be a private sector business however a range of organisations can be a partner on a project as described in section 4 of the competition guidance. As part of the funding application the applicant will need to demonstrate that the proposed innovation is solving a barrier the competition is seeking to address. Also of relevance is that the proposed innovation needs to be installed and tested in a real home as per section 4 of the competition guidance.   

25. Can the funding be used to decarbonise food & beverage factories using industrial heat pumps?

This competition supports the Warm Home Plan’s aim that by 2030 the heat pump market will have expanded to over 450,000 installations per year. Applicants applying for the funding need to demonstrate how the proposed innovation is solving one of the four barriers that the competition is seeking to address listed in section 3 of the competition guidance. The innovation needs to be installed and tested in a real home as the competition is focused on heat pumps in domestic settings so industrial and commercial settings are out of scope.

26. Will the competition consider proposals that integrate satellite-based and IoT-fused measurement? We would welcome clarity on (a) whether eligible project scope extends beyond hardware/installation innovation into digital verification infrastructure, and (b) how HPR2 interfaces with DESNZ evidence requirements under the Clean Heat Market Mechanism and future UK CBAM reporting.

Innovative solutions proposed under the competition must:

• Address one of the four barriers and be hardware oriented apart unless the proposal is made under barrier 4 which can be software focused.
• Be proven through recording 12 months of performance data collection to determine a Seasonal Performance Factor (SPF) of at least 3.5 (see annex 4).

The Clean Heat Market Mechanism and future UK Carbon Border Adjustment Mechanism (CBAM) are separate initiatives in their own rights and have their own separate evidence requirements as does the Heat Pump Ready Innovation Funding Competition.

27. Could charge reducing technologies be considered in scope?

As part of the funding application the applicant will need to demonstrate that the proposed innovation. In this case, innovation relating charge reducing is solving one of the four barrier the competition is seeking to address.

28. What is the expectation on TRL of current technology and readiness to go to market and deliver impact?

The competition aims to have market ready innovative heat pump system solutions by the end of the programme (i.e. by or before January 2030). Section 4 of the competition guidance states that the TRL (See Annex 3 for definitions) of the current technology must be at least TRL 5 and no higher than 8 at project start. At project end the innovation is expected to be at TRL 9 and CRL 9 as part of a complete heat pump system with a demonstrated SPF of at least 3.5.

29. Could you please prioritize the barriers 1 to 4? Which one does DESNZ think is the most important to help the market?

The barriers have all been identified as important areas to overcome to ensure wide uptake of heat pumps in UK homes. We recognise that scaling heat pump adoption to the mass market is held back by multiple barriers, and many households face more than one at the same time. To drive uptake at the scale and pace needed to meet the Warm Homes Plan ambition, clear, tangible progress is needed across all of them. This innovation funding targets the four barriers where action will make the biggest difference. The funding allocation (see section 12 of the competition guidance) does not prioritise one barrier over another.

30. It seems all barriers are strongly dependent on the issues of HP implementation or operation. Is this correct?

Yes, that is correct, the barriers that this innovation funding is focusing on are aimed at developing and commercialising domestic heat pump systems that are quicker, cheaper, and less disruptive to install.

31. What are the requirements for auxiliary products developed for a heat pump or radiator that they consider to be valid for the grant?

Section 3 sets out technologies in scope for the funding competition. The heat pump as well as all constituent parts or components of a heat pump system including e.g. radiators that can provide heating and hot water to a domestic building are the auxiliary technologies that can be in scope. All innovations funded that materially influence the energy performance of a heat pump system must demonstrate that the innovation, when integrated as part of a complete heat pump system, is capable of achieving a Seasonal Performance Factor of at least 3.5 in a real‑world home environment by the end of the funded project period (see annex 14).

32. Would a combi type ASHP that will not need any parts at all inside the property, like cylinders, buffers, pumps etc be in scope, e.g. all included inside an outdoor unit that minimizes the installation time?

Table 1 of the competition guidance for barrier 3 (internal & external space requirement) provides an example of an in-scope project stating a wholly internally housed heat pump system providing heat and hot water of a size no bigger than a gas combi-boiler. This could be applicable to a system where they are housed within an outdoor unit. All applicants are required to justify how the proposal reduces the targeted barrier in response to sub-criterion 1B.  

33. Will an innovation project that is designed primarily (but not exclusively) for the new build housing market but will deal with one of the four barriers be eligible?

Page 11 of the competition guidance explains how the focus of the funding competition is on bringing forward solutions that can support overcoming the distress purchase scenario for heat pump consumers. Therefore, any innovation being proposed must be targeted on and tested within the retrofit market , as well as overcoming one of the 4 targeted barriers.

34. Our interpretation of barrier 1 is that it includes the hardware components necessary for installing ground source heat pumps - e.g. the heating loop. Is that a correct interpretation?

Yes, as mentioned in section 3 of the competition guidance ground source heat pumps and the component parts that make a full heat pump system providing heating and hot water are within the technology scope. Annex 14 sets out the requirement for demonstrating that the innovation, when integrated as part of a complete heat pump system, is capable of achieving a Seasonal Performance Factor of at least 3.5 in a real‑world home environment by the end of the funded project period.

35. Can direct electric heating or an electric boiler be used to provide the home’s hot water?

Projects delivering direct electric heating or an electric boiler innovation are out of scope as per section 3 of the competition guidance. The Market Engagement Notice for the Homes for Net Zero Programme however may be of interest particularly the element focusing on alternative hot water solutions https://www.find-tender.service.gov.uk/Notice/033899-2026.  

36. Any specific evidence or performance data you would expect to be demonstrated for the SPF requirements?

Annex 14 of the competition guidance provides requirements around SPF evidencing for funding projects.

37. How is it best to frame in an application a proposal’s alignment with the funding competition criteria?      

Any funding application to the innovation funding competition will need to convey how the proposed innovation will enable the overcoming of one of the four targeted barriers complying with all requirements made within the eligibility section of the competition guidance (section 3 and 4).

38. Are all components used under the funded project required to be at least at TRL at project start?

Yes. A core requirement of receiving the grant funding as per the eligibility criteria is that the technology innovation being funded is being carried out on a technology which has been developed to at a minimum of TRL 5 (see page 17 of the competition guidance) at the point of the funded project starting.

39. For heat pump systems that include reversible operation for cooling provision (with thermal storage of cold), is cooling capability within the programme scope?

Cooling capability is not a requirement in terms of the competition scope or eligibility therefore its inclusion is not required and would be purely optional for the applicant.  

40. Would an open-source, AI-enabled home electrification and home energy efficiency advice platform be considered eligible as a software-led Barrier 4 innovation?

Section 3 of the competition guidance, including Table 1, details that projects must focus on the point of the consumer journey from a consumer accepting a quote to having the heat pump installed. Therefore, eligible innovative software projects must focus on activities taking place between these two. It is innovation that focuses on overcoming the barrier to this specific part of the consumer journey that can be funded if a funding application is successful.

41. Whether match-funding requirement can include benefit in kind  , such as providing delivery capability, partner coordination and community access, instead of providing conventional cash match funding at the level expected of a proprietary commercial applicant.

Match funding is based on cash-settled expenditure (with caps in place regarding plant, property and equipment). Benefits-in-kind will not be considered under this competition Section 8 sets out subsidy ratios where match funding levels for different organisation types can be understood).

42. Under barrier 4 (time taken for heat pump install from accepted quote) we would like to confirm whether DESNZ considers “accepted quote” and “contract signature” to be equivalent starting points for the purposes of measuring baseline installation time and evidencing barrier impact under Criterion 1B.

Yes we would consider “accepted quote” and “contract signature” to be equivalent starting points of ‘’accepted quote’’ 

43. One component of our proposed platform uses a machine learning model, applied to heat loss survey data, to identify and eliminate unnecessary design elements ahead of installation. We are unsure if our project is best to aligned to barrier 2 or barrier 4.

The Department cannot provide specific guidance on aligning projects to barriers as this will be for the applicant to set out and evidence as part of their application. Barrier 4 (time taken for heat pump install from accepted quote) is the only barrier to which an applicant can apply for funding for a standalone software solution.

44. Based on the Round 2 scope, would you consider a physical add-on module that includes cooling and dehumidifying to be in scope as a constituent component of a domestic heat pump system?

Cooling and dehumidifying functionality are not within the scope of the competition set out in the competition guidance and are therefore not eligible for funding.

For example, opportunities for trialling cooling technologies may exist under the Department’s Homes for Net Zero programme where more information can be found at https://www.find-tender.service.gov.uk/Notice/033899-2026. 

45. Can you recommend which of the four Round 2 barriers to select as the primary theme for the application?

The Department cannot provide specific guidance on aligning projects to barriers as this will be for the applicant to set out and evidence as part of their application.

46. Is my proposed project of using augmented reality to increase installer productivity in scope under Barrier 4 (time taken for heat pump install from accepted quote)?

Any funding application to Heat Pump Ready will need to show how the proposed innovation can support the overcoming of one of the four targeted barriers listed in section 3 of the competition guidance. For example, for barrier 4 (time taken for heat pump install from accepted quote) an applicant should demonstrate how the proposed innovation would speed up the amount of time taken against a baseline to install a heat pump system providing heating and hot water to the home. Overcoming a targeted barrier should not be at the detriment of any of the other barriers or system running costs.    

47. Would integration of waste water heat recovery (WWHR) with heat pumps (as a system-level innovation) qualify as a “component of a heat pump system” or “Ambient heat technologies?

Where the innovation is focused on the integration of wastewater heat recovery (WWHR) this could qualify as a component of a heat pump system where it involves the provision of heating and hot water.

48. Could a project aiming to reduce system size, hot water demand, credibly align with one or more of the defined barriers?

The Department cannot provide specific guidance on aligning projects to barriers as this will be for the applicant to set out and evidence as part of their application. Table 1 provides examples on in scope technologies.

49. Does the technology need to have reached TRL 5 by the start of the project, or can TRL 5 activities be included within the project plan?

TRL 5 activities should not be included within the submitted project plan. These activities would need to have been completed prior to the grant funded project beginning due to the eligibility criteria that the funded technology innovation must be at least at TRL 5 at funded project start.  

50. The technology is currently being incubated. As required, the project lead would be a company, specifically the spin-out that will commercialise the technology. Would it be permissible for TRL 5 R&D work to be completed before the spin-out takes the technology forward for further development? 

If an application is successful at the point the project draws down on the grant (i.e. beginning of the grant funded period) the TRL of the funded technology must be at least at TRL 5 as per section 4 of the competition guidance.  

51. Please clarify whether both domestic as well as non-domestic heat pump projects are in-scope?

Only domestic heat pumps are in scope of the competition.

52. Is the Heat Pump Ready innovation funding competition accessible to non-domestic manufacturers?

There is not a requirement on for example a manufacturer as a project lead or project partner being a domestic heat pump manufacturer. However, any innovation being proposed must be proven within a heat pump system providing domestic heating and hot water to a home as part of the funded project.

Heat pump system testing

53. I’m only developing a component of a heat pump system, I’m assuming I test its individual performance, rather than as part of a heat pump system?

Projects developing an individual component are required to test their component within a full heat pump system providing heating and hot water to a home, as set out in Section 3 of the Competition Guidance.

54. I’m developing a software product, is it still a requirement that the project provides system Seasonal Performance Factor evidence?

Innovative software projects (as part of barrier 4 eligibility) that materially influence the energy performance of heat pump systems must demonstrate that when used to support the installation, or equivalent, of a complete heat pump system, the system is capable of achieving a Seasonal Performance Factor of at least 3.5 in a real‑world home environment by the end of the funded project period. This means projects must record a minimum of 12 months’ worth of performance data on an in-situ innovative heat pump system trialled within a home. See Annex 14 of the Competition Guidance for more information.

55. Does the location of the test site need to be in a household or is there specific criteria for the test site that will allow accurate monitoring of performance?

Test sites need to be in an actual home, i.e. a real-world setting, with real occupants and not a lab for the final testing. Applicants if they wish can make use of pre-cursor testing settings such as labs however final testing for the SPF must be in a real-world setting.

56. What level of evidence is expected at the application stage to satisfy the SPF threshold?

The Department cannot provide specific details of the evidence required in terms of achieving an SPF of 3.5. We expect innovators to be at different points of the technological development pathway for their innovation (i.e. technology readiness level) so would expect the answer to this part of the application to be relevant to their situation. The third bullet point of sub-criterion 2A in the competition guidance states what your application should demonstrate within its response. The answer provided should include information showing how the SPF will be demonstrated and what methods will be used.

57. What test conditions should be used to validate a SCOP of 3.5? Without defined conditions, the target is meaningless.

As per annex 14 of the competition guidance a SPF of at least 3.5 is required. This relates to testing across 12 months in a real world home  with occupants for a full year.

58 .Where the innovation affects energy performance, the SPF ≥3.5 requirement applies, does this apply uniformly to air-to-air systems replacing storage heaters, or is there a different baseline (e.g. direct electric SPF 1) for systems that aren’t replacing a fossil boiler?

Air to air systems are expected to provide a SPF including where the system is replacing storage heaters. Two studies providing insight on air-to-air SPF measurement which may be useful are:

• A novel on-board method for quantifying refrigerant charge in residential heat pumps - ScienceDirect
• Development of a method to determine in real time the refrigerant charge and the associated performance of a heat pump - PASTEL - Thèses en ligne de ParisTech

59. The COP of our proposed innovation is about 2.0. If we are not aiming to improve efficiency as part of this project, can we still participate?

As mentioned in annex 14 of the competition guidance a SPF of 3.5 is required for the funded innovation. Anything less than that is not in scope of the competition. Other opportunities for trialling heating and cooling technologies may exist under the Department’s Homes for Net Zero programme where more information can be found at https://www.find-tender.service.gov.uk/Notice/033899-2026. 

60. How many homes does the technology need to be demonstrated in?

Heat Rump Ready Round 2 aims are to bring forward market ready solutions to enable heat pump uptake. Therefore, projects are expected to test their products in a number of homes to enable funded innovations to become commercialised. It will be up to the applicant to evidence how the number of trial homes within the project supports their technology commercialisation . Within the assessment criteria sub-criterion 1C includes commercialisation approach and sub-criterion 2A includes approach to proving technology performance in real homes.

61. How will storage be considered within the SPF H2 calculation? Would it be correct to assume this sits outside the H2 boundary, although could still influence the calculation e.g. through the required flow temperature?

Storage would sit outside the SPF H2 system boundary however it is correct to assume that the overall system design will affect the overall SPF calculation.  

62. The SPF requirement appears likely to encourage applicants to find well-insulated properties with low flow temperature requirements for the trials, which would be an unfortunate outcome. Would we be penalised for seeking to address challenging to treat properties?

The aim  of the programme is to bring market ready solutions overcoming the four targeted barriers to heat pump uptake. The innovation should be tested in homes which are representative of the target market for the innovation. SPF is used partly as a means to demonstrate minimum assurance of quality and minimum assurance of running costs to consumers. We hope innovation brought forward can exceed the minimum SPF requirement. Other factors influencing SPF beyond well insulated homes include but not limited to, system design, heat controls and installation quality.

63. For the application, is it sufficient to demonstrate that SPF ≥ 3.5 is achievable through a combination of live data from a development heat pump (selected for ease of use during R&D, but with a relatively low COP) plus modelling of a production-spec heat pump?

Please refer to answer 56.

64. For the application, is it sufficient to demonstrate that SPF ≥ 3.5 is achievable through a combination of live data from a development heat pump (selected for ease of use during R&D, but with a relatively low COP) plus modelling of a production-spec heat pump?

See answer 56.

65. Does cooling functionality affect SPF measurement methodology or eligibility?

Where innovations funded materially influence the energy performance of heat pump systems, projects must demonstrate that the innovation, when integrated as part of a complete heat pump system, is capable of achieving a Seasonal Performance Factor of at least 3.5 in a real‑world home environment by the end of the funded project period.

Regarding cooling SPF for cooling provision isn’t required to meet MCS thresholds. If cooling is provided within a proposed system, then this can be included for the whole system SPF calculation, however this isn’t mandatory.

66. Does a software project that affects installer productivity, but not the heat pump system’s energy performance, trigger the Annex 14 Seasonal Performance Factor requirement?

Seasonal Performance Factor can be affected by the quality of a heat pump install. Therefore, it would be expected that SPF would still need to be demonstrated.

67. Any considerations regarding demonstrating compliance with requirements such as Seasonal Performance Factor (SPF ≥ 3.5) when the innovation indirectly influences performance through demand reduction rather than direct heat pump efficiency improvement?

A Seasonal Performance Factor of more than 3.5 would still be required to be evidenced.

Project consortiums

68. It’s hard for me to find consumers to trial my heat pump system 2 years in advance of installing, can I add these to my project later?

Achieving commercialisation of applicants’ proposed innovation including relevant testing and proving of the innovation is a fundamental requirement of the competition. As part of the application process (Section 11 of the Competition Guidance) applicants are required to demonstrate a planned route for testing and proving their innovation with consumers. Any deviations from an applicant’s submitted proposal would require to be approved via the change request process explained in Section 6 of the Competition Guidance.

69. How, within a project consortium, does the governance differ between the project lead and project partner and project lead or project partner and subcontractor?

Within a consortium, governance between the project lead and project partners is typically collaborative and set out in a Collaboration Agreement (Section 4 of the Competition Guidance), with shared roles, responsibilities and decision‑making. However, the project lead (as grant recipient) remains accountable to the Department for overall delivery and for ensuring all partners comply with the Grant Funding Agreement.

By contrast, subcontractors (Section 10 of the Competition Guidance) may be engaged by the project lead or a project partner to provide defined goods or services. They do not normally participate in consortium governance or decision‑making. Responsibility for subcontractor performance, compliance and assurance sits with the organisation appointing them, and subcontracting does not transfer accountability to the Department.

70. Can a sub-contractor be involved in more than 3 projects?

There is no limit on how many projects a sub-contractor can be involved in. However, it is the project lead’s responsibility to ensure and evidence, where required, that the sub-contractor is suitably resourced to provide its’ services to applications which they are part of. Applicants must consider guidance set out in Section 10 of the Competition Guidance which defines the role of sub-contractors versus project consortium members. As part of the assessment and due diligence, DESNZ will review the use of sub-contractors to ensure the use of sub-contractors aligns with the Competition Guidance.

71. Can I add a project partner later within the project timeline?

Projects may request, via the change request process, to add/replace a partner to their project. All change requests are subject to approval by the Department, and projects must not depend on approved change request to deliver their project.

72. Can organisations carrying out non-economic activity be included in more than 3 applications?

For an organisation to be defined as carrying out non-economic activity, they must be included as a project partner. Project partners cannot be included in more than 3 applications to the competition.

73. In terms of the role of academic institutions how can an academic institution show interest in being be an academic contributor/ partner to a project

The Department is due to launch an online collaboration platform that will allow all potential applicants to express interest in and form a project consortium. Updates will be sent out via the mailing list once the platform has launched.

74. Is there a requirement for partners?

No. An applicant can make an application as a sole applicant which would be in the absence of any project partner(s).

75. What would be the role of including a spin out company vs a university organisation as a project lead organisation?

A private sector organisation is expected to lead a project (e.g. a spinout company) as the innovation funded must be commercialised as a requirement of the funded project. Any commercial activity would be classed as economic activity. 

76. Could a Community Benefit Society organisation with substantial share capital and delivery credibility, could act as lead applicant.

Project lead applicants must be a private sector organisation as per section 4 of the competition guidance. This requirement is because we want funded innovation to be commercialised and market ready by the end of the funded project period. Therefore, the project lead must be able to lead the commercialisation of the technology and have a credible plan for doing this as part of their application.

In referring to Office of National Statistics definitions of public and private sector organisations (https://www.ons.gov.uk/methodology/classificationsandstandards/economicstatisticsclassifications/introductiontoeconomicstatisticsclassifications) the absence of an organisation’s name on the public sector organisations list means it can be defined as being a private sector organisation so could act as a lead applicant. Due diligence undertaken by the Department will include considering who owns / operates the organisations applying for funding so it would be picked up if there were any concerns of classification of public/private sector organisation at that stage.

Project timelines

77. Under what circumstances could my project start before the 1 February 2027?

Projects are unable to claim funding for the project prior to a signed grant funding agreement being in place. To be issued with a grant funding agreement for signature, projects must have completed financial due diligence undertaken by the Department. This due diligence process is carried out between the conditional award of the grant and issuing of a grant funding agreement. Any work carried out during this period will be at the risk of the project as the Department does not guarantee funding for any work carried out prior to a signed grant funding agreement being in place.

As due diligence requirements are specific to individual projects and organisations, there may be projects which complete this due diligence process ahead of 1st February and therefore are issued a grant funding agreement ahead of this date.

For project planning purposes, projects should aim to start from 1 February 2027.

78. Can my project finish before January 2030?

Project may choose to complete before January 2030. However, projects must ensure they have scheduled time (at least 2 months) following the completion of all its funded activities in order to allow time for approval of final grant claim, final project report and the project reasonable assurance report covering all project expenditure under the grant.

79. The guidance implies projects could commence before January 2027. Could you clarify what this means please?

Project are advised to plan for a start date of 1 February 2027. For a project to be able to start and draw down its awarded grant it will need to have completed financial due diligence. The financial due diligence process can vary length on a project-by-project basis therefore we are unable to say how long it will take at this point in time. The 1 February 2027 date has been provided for the purposes of allowing project applicants to plan as best they can for their start. If a project completes financial due diligence ahead of 1 February 2027 it may be able to draw down on the grant awarded ahead of 1 February 2027, but this should not be relied upon by projects.

80. Is there a minimum funding period for the project? Can it be 18 months or 24 months project from 1 Feb 2027? And can we do the 1 year monitoring post that?

There isn’t a minimum funding period only a minimum funding amount to be sought of at least £200,000. Applicants must  as part of their application submission determine the length of time required to fulfil all the requirements of the grant as set out in the competition guidance.

Project financing

81. I need more than the number of rows available in the project cost breakdown form, given the spreadsheet is locked, how should I add these?

An applicant can add rows themselves. If they are unable to do this please send a copy of your project cost breakdown form, and details of the number additional rows required to heatinnovation@energysecurity.gov.uk – the team will be able to amend the spreadsheet to accommodate your request.

82. If successful, do I need to be able to evidence all the project match funding before a Grant Funding Agreement (GFA) is issued?

At the point of the Department undertaking due diligence, the Department will require a credible plan, with supporting evidence, that you will have sufficient resources to pre-fund expenditure as required by the grant and have sufficient match funding in place to complete the project. The specific evidence will vary on a case-by-case basis, but could include for example, letters of intent from funders or existing resources. We may also require an understanding of anticipated cashflows (see Section 10 of the Competition Guidance). 

83. Is there a maximum percentage of project costs which can be allocated to a research organisation, such as a university?

For research organisations, including universities, activities are described as either being an economic activity or a non-economic activity. The eligible project costs incurred by all non-business partners, carrying out non-economic work, (e.g. Universities, Research and Technology Organisations (RTOs), public sector, third sector and community organisations) in a consortium must be less than 30% of the total eligible project costs. See Annex 1 of the Competition Guidance for more details of eligible costs.

84. Will I have the opportunity later in my project to amend my project plan for example if I need to change the approach to consumer trials or technology testing?

The Department recognises that through the delivery of an innovation project, elements may change therefore projects may request changes to their project delivery through the Department’s change request process as set out in Section 6 of the Competition Guidance.

85. If my plan is to bring a partner into the project later, how will I do this?

Applicants must include within their delivery plan, how and when they will recruit additional project partners. Details of the skills and expertise they will require should also be included within their response to Question 3C of the assessment criteria. Applicants should also include indicative costings for partners who are to brought into the project later.

Projects should ensure that any partners added to their project whilst in delivery ensure the application delivers against the same requirements (expertise, value for money, costs etc) as set out in the original application.

Any change in this will need to be agreed and approved by the Department through its through its change request process outlined in Section 6 of the Competition Guidance and detailed in question 86 below.  

86. Will I have the ability to change my projects costs/scope/time when onboarding a partner?

Projects will have the ability, through the change request process, to set out any changes which are required against their original delivery plan as submitted as part of their application, this applies to the onboarding of a new partner, as well as any other changes.

The Change Request process is set out from page 32 of the Competition Guidance. All change requests are considered by the Department fairly and equitably and are considered against a range of criteria including, but not limited to, whether the change remains in line with the original grant funding application, is affordable to the Department, demonstrates value for money and is deliverable by the project. Once considered by the Department the outcome of the change request will be communicated to the project lead organisation. Project should not depend on change requests being approved to enable the successful delivery of their project.

87. When does the match funding payment need to be made?

The process for grants is that the grant funding will be paid, in arrears, following evidence of defrayment. In other words, at least some of the match funding will need to be in place to meet initial expenditure as grants cannot be paid in advance.

Due Diligence will look for evidence that the project can raise the funding required (see more in question 90). If it is not in place at the point of due diligence, there will be a condition or conditions within the grant offer letter, which will require this to be in place prior to any agreement coming into effect. Evidence of this will need to be submitted to DESNZ. On the Department issuing a grant offer letter with a pre-acceptance condition, an applicant will have 14 days to obtain (if required) and provide evidence of the match funding.

DESNZ will not pay out on any claim if there is insufficient evidence that the project is fully funded in line with the grant agreement.

88. Does the full match funding amount need to be in the bank at the point of application or will there be a grace period to source it after award?

Match funding does not need to be in the bank at application. We recognise that match funding may be drawn down in stages. The key point is the availability, and terms need to be in place either prior to the agreement coming into effect, or at the point of first claim, depending on the circumstances.

89. For small innovative businesses with limited working capital, the combination of quarterly claims and ~6-week payment processing creates a cash-flow burden of 4+ months. What flexibility exists within the Grant Offer Letter process to mitigate this - for example through milestone profile design, an advance payment, or facilitated access to bridge finance via British Business Bank or similar?

We are cognisant of cashflow constraints small businesses may face. Depending on the circumstances, there is scope for increasing the frequency of claims. DESNZ is unable to offer advance payments as a matter of policy and has not set up a facilitation arrangement with the British Business Bank for this scheme.

90. After receipt of a Conditional Offer Letter assuming a successful application at what point must match funding be evidenced - application submission, or Grant Offer Letter stage?  What forms of evidence are acceptable (e.g. letters of interest, conditional investment commitments) , signed terms sheets) and does match funding need to be received ahead of Grant Offer Letter issuance?

The exact evidence required at each stage of the process will be circumstance specific. The application should set out a credible plan for funding, which will be reviewed during Due Diligence.

If the project is dependent on capital providers (whether debt/equity or otherwise), we’d expect by the point of Due Diligence that you’d be able to produce credible evidence of funding being available (e.g. letters of intent) and an outline of key terms likely applicable.

There is a window between application submission and the beginning of due diligence for the plan to be further developed and evidence submitted thereon if required.

A grant offer letter may contain a pre-acceptance condition to provide evidence of finalised match funding arrangements (if required). In other words, the evidence will need to be provided for the agreement to take legal effect. We can build in flexibility to the grant offer conditions to allow a staged drawdown of external funding e.g. a loan that is drawn down in stages or a phased introduction of equity funding.

If any of the material terms of the proposed match funding change between due diligence and finalising the match funding, (e.g. change in amount, term, interest rates, security etc) this will need to be reviewed by DESNZ.

In certain circumstances, a pre-payment condition may be incorporated in addition to or instead of the pre-acceptance condition. In these circumstances, evidence will need to be provided at the point of initial claim, with reimbursement contingent on this being satisfactory.

92. Financial viability? Do you expect applicants to have the full match-funding in the bank before project kick-off, or is a structured fundraising plan that matches the Stage Gates ok?

See answer 88. We would need to consider any conditions relating to stage gates as this increases the risk of match funding not being available.

93. Would a successful application for funding stop or cause an application for funding from GHNF or similar to be declined or can the fund be used alongside?

Other public funding cannot be used to cover the private match funding element of receiving this grant. The scope of the Heat Pump Ready funded project should be materially different to any other project that is being funded from an alternative source. A project cannot be funded twice for the same work. An applicant would not be able to use funding from Heat Pump Ready and funding from GHNF to fund the same project.  

94. Would an Innovate UK Innovation Loan funding similar activities impact an application for a related project?

Applicants should consult with Innovate UK to establish the terms of the loan they are/would be in receipt of, and whether it is eligible as match-funding against the total eligible cost for a proposed Heat Pump Ready funded project. Match funding must be private funding (not a subsidy) for a Heat Pump Ready funded project. The applicant must evidence the source of the funding.

95. Please can you confirm that RTOs should use overhead rates as agreed with Innovate UK as this is an approved process and methodology with auditing etc. This was the agreed position within previous programme HP Ready 1.

Applicants are required to set out their overhead rate as part of their application and where an overhead >20% is proposed, provide a breakdown and justification for this rate on the ‘overhead’ tab of the project cost breakdown form. This rate will then be reviewed as part of the assessment of the application and due diligence process. For project monitoring, once the overhead rate has been confirmed in due diligence, overheads can be claimed at a fixed percentage of pay costs.

96. Please can you confirm the subsidy ratio for a University - according to your slide it would be 65% (Large RO). Is this correct?

The subsidy rate for a university is dependent on the type of activity being carried out by the university as part of the project. An 80% subsidy ratio applies for non-economic activities as per page 75 of the competition guidance. For economic activities the subsidy ratio will be dependent on the size of the organisation (i.e. University) and the type of innovation activity undertaken, e.g. large organisation doing industrial research activity would be 65% or a large organisation doing experimental development would be 40% as per page 41-42 of the competition guidance. The project’s determined subsidy ratio would be inputted on the organisation funding breakdown tab of the project cost breakdown form.

97. Does a Higher Education Institute (HEI) enter its estates and indirect costs under the overhead rate calculation within the project cost breakdown form?

As part of full economic costing estates and indirect costs should be included within the overhead rate calculation which is on the labour & overheads costs tab of the project cost breakdown form. 

98. If we were to receive equity investment from a fund containing public money (e.g. British Business Bank’s NPIF II through Praeseed), can this funding be:

(a) used as general working capital to bridge to HPR claim reimbursement, where the match contribution itself is funded entirely from private sources;

(b) used to fund parallel non-HPR business activities running alongside the HPR project (e.g., commercialisation preparation, separate R&D workstreams)?

Specifically regarding (a), should public-source funds providing temporary working capital be treated as ‘duplicate funding’ under T&Cs Paragraph 4.10?

Other public funding cannot be used to cover the match funding requirement of the grant as this must be sourced from private funding.

On point A, the authority is primarily concerned with the sources of the final funded position for match funding purposes. Using equity, derived from public funds, as working capital wouldn’t be considered duplicative so long as there is evidence of sufficient private match funding.  The ability to use the equity would also depend on the premise on which the equity was given so the applicant should check this with the investment source. If the equity was provided on a concessional basis, we may need to consider whether this contributes towards the intervention rate.

On point B, this would be a matter for the project applicant to decide as the non-HPR activities do not relate to those activities in scope and funded under the Innovation Funding Competition grant.

99. Annex 2 defines ‘Industrial Development’ as TRLs 3–5, with Experimental Development at higher TRLs. However, the guidance requires projects to be at least TRL 5 at the start (pre-grant). Does this mean funding rates for Industrial Research (p.42) are effectively inaccessible, as these apply to TRLs 3–5?

Projects should review section 8 of the competition guidance to determine the type of activities being carried out to determine which innovation category the activities fall under.

Acceleration support

100. I’m interested in bidding to deliver the Acceleration Support contract, when will the tender be going live and where can I find out more?

Please see the link below for details of planned market engagement activities for suppliers potentially interested in the provision of Acceleration Support services:

https://www.find-tender.service.gov.uk/Notice/036907-2026

101. Can I apply to receive acceleration support if not applying for grant funding as I’d like to be involved in some of those activities, such as engaging with policy teams and being included in dissemination reports?

No. Acceleration support services will only be offered to HPR Round 2 innovation funding competition grant recipients (see Section 6 of the Competition Guidance).

102. Do I need to take part in the acceleration support activities?

All projects will be required to participate in Acceleration Support Work Packages 2 & 3 (Collaboration and Dissemination tasks) and will be offered optional support through Acceleration Support Work Packages 1 & 4 (Commercialisation and Social Value tasks). See Section 6 of the Competition Guidance for more information.