{"id":719597,"date":"2026-01-25T10:58:17","date_gmt":"2026-01-25T10:58:17","guid":{"rendered":"https:\/\/www.europesays.com\/uk\/719597\/"},"modified":"2026-01-25T10:58:17","modified_gmt":"2026-01-25T10:58:17","slug":"qa-what-uks-warm-homes-plan-means-for-climate-change-and-energy-bills","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/uk\/719597\/","title":{"rendered":"Q&A: What UK\u2019s \u2018warm homes plan\u2019 means for climate change and energy bills"},"content":{"rendered":"

The UK government has released its long-awaited \u201cwarm homes plan<\/a>\u201d, detailing support to help people install electric heat pumps, rooftop solar panels and insulation in their homes.<\/p>\n

It says up to 5m households could benefit from \u00a315bn of grants and loans earmarked by the government for these upgrades by 2030.<\/p>\n

Electrified heating and energy-efficient homes are vital for the UK\u2019s net-zero goals, but the plan also stresses that these measures will cut people\u2019s bills by \u201chundreds of pounds\u201d a year.<\/p>\n

The plan shifts<\/a> efforts<\/a> to tackle fuel poverty away from a \u201cfabric-first<\/a>\u201d approach that starts with insulation, towards the use of electric technologies to lower bills and emissions.<\/p>\n

Much of the funding will support people buying heat pumps, but the government has still significantly scaled back its expectations for heat-pump installations in the coming years.<\/p>\n

Beyond new funding, there are also new efficiency standards for landlords that could result in nearly 3m rental properties being upgraded over the next four years.<\/p>\n

In addition, the government has set out its ambition for scaling up \u201cheat networks\u201d, where many homes and offices are served by communal heating systems.<\/p>\n

Carbon Brief has identified the key policies laid out in the warm homes plan, as well as what they mean for the UK\u2019s climate targets and energy bills.<\/p>\n

Why do homes matter for UK climate goals?<\/p>\n

Buildings are the second-largest<\/a> source of emissions in the UK, after transport. This is largely due to the gas boilers that keep around 85%<\/a> of UK homes warm.<\/p>\n

Residential buildings produced 52.8m tonnes of carbon dioxide equivalent (MtCO2e) in 2024, around 14% of the nation\u2019s total, according to the latest government figures<\/a>.<\/p>\n

Fossil-fuel heating is by far the largest contributor to building emissions. There are roughly<\/a> 24m gas boilers and 1.4m oil boilers on the island of Great Britain, according to the National Energy System Operator<\/a> (NESO).<\/p>\n

This has left the UK particularly exposed<\/a>\u00a0\u2013 along with its gas-reliant power system \u2013\u00a0to the impact of the global energy crisis<\/a>, which caused gas prices \u2013 and energy bills<\/a> \u2013 to soar.\u00a0\u00a0<\/p>\n

At the same time, the UK\u2019s old housing stock is often<\/a> described<\/a> as among the least energy efficient in Europe. A third of UK households live in \u201cpoorly insulated homes\u201d and cannot afford to make improvements, according to University College London<\/a> research<\/a>.<\/p>\n

This situation leads to more energy being wasted, meaning higher bills and more emissions.<\/p>\n

Given their contribution to UK emissions, buildings are \u201cexpected to be central\u201d in the nation\u2019s near-term climate goals, delivering 20% of the cuts required to achieve the UK\u2019s 2030 target, according to<\/a> government adviser the Climate Change Committee<\/a> (CCC).\u00a0<\/p>\n

(Residential buildings account for roughly 70% of the emissions in the buildings sector, with the rest coming from commercial and public-sector buildings.)<\/p>\n

Over recent years, Conservative and Labour governments have announced<\/a> various measures to cut emissions from homes, including schemes to support people buying electric heat pumps<\/a> and retrofitting their homes.<\/p>\n

However, implementation has been slow. While heat-pump installations have increased<\/a>, they are not on track<\/a> to meet the target set by the previous government of 600,000 a year by 2028.<\/p>\n

Meanwhile, successive schemes to help households install loft and wall insulation have been launched and then abandoned<\/a>, meaning installation rates have been slow<\/a>.<\/p>\n

At the same time, the main government-backed scheme designed to lift homes out of fuel poverty, the \u201cenergy company obligation<\/a>\u201d (ECO), has been mired in controversy over low standards<\/a>, botched installations<\/a> and \u2013 according to a parliamentary inquiry<\/a>\u00a0\u2013 even fraud.<\/p>\n

(The government announced at the latest budget<\/a> that it was scrapping ECO.)\u00a0<\/p>\n

The CCC noted<\/a> in its most recent progress report to parliament that \u201cfalling behind on buildings decarbonisation will have severe implications for longer-term decarbonisation\u201d.<\/p>\n

What is the warm homes plan?<\/p>\n

The warm homes plan was part of the Labour party\u2019s election-winning manifesto<\/a> in 2024, sold at the time as a way to \u201ccut bills for families\u201d through insulation, solar and heat pumps, while creating<\/a> \u201ctens of thousands of good jobs\u201d and lifting \u201cmillions out of fuel poverty\u201d.<\/p>\n

It replaces ECO, introduces new support for clean technologies and wraps together various other ongoing policies, such as the \u201cboiler upgrade scheme\u201d (BUS) grants for heat pumps.<\/p>\n

The warm homes plan was officially announced<\/a> by the government in November 2024, stating that up to 300,000 households would benefit from home upgrades in the coming year.\u00a0 However, the plan itself was repeatedly delayed<\/a>.<\/p>\n

In the spending review<\/a> in June 2025, the government confirmed the \u00a313.2bn in funding for the scheme pledged in the Labour manifesto, covering spending between 2025-26 and 2029-30.\u00a0<\/p>\n

The government said this investment would help cut bills by up to \u00a3600 per household through efficiency measures and clean technologies such as heat pumps, solar panels and batteries.<\/p>\n

After scrapping ECO at the 2025 budget, the treasury earmarked an extra \u00a31.5bn<\/a> of funding for the warm homes plan over five years. This is less than the \u00a31bn annual budget<\/a> for ECO, which was funded via energy bills, but is expected to have lower<\/a> administrative overheads.<\/p>\n

In the foreword to the new plan, secretary of state Ed Miliband says that it will deliver the \u201cbiggest public investment in home upgrades in British history\u201d. He adds:<\/p>\n

\n

\u201cThe warm homes plan [will]\u2026cut bills, tackle fuel poverty, create good jobs and get us off the rollercoaster of international fossil fuel markets.\u201d<\/p>\n<\/blockquote>\n

Miliband argues in his foreword that the plan will \u201cspread the benefits\u201d of technologies such as solar to households that would otherwise be unable to afford them. He writes: \u201cThis historic investment will help millions seize the benefits of electrification.\u201d Miliband concludes:<\/p>\n

\n

\u201cThis is a landmark plan to make the British people better off, secure our energy independence and tackle the climate crisis.\u201d<\/p>\n<\/blockquote>\n

What is included in the warm homes plan?<\/p>\n

The warm homes plan sets out \u00a315bn of investment over the course of the current parliament to drive uptake of low-carbon technologies and upgrade \u201cup to\u201d 5m homes.<\/p>\n

A key focus of the plan is energy security and cost savings for UK households.\u00a0<\/p>\n

The government says its plan will \u201cprioritise\u201d investment in electrification measures, such as heat pumps, solar panels and battery storage. This is where most of the funding is targeted.<\/p>\n

However, it also includes new energy-efficiency standards to encourage landlords to improve conditions for renters.<\/p>\n

Some policies were notable due to their absence, such as the lack of a target to end gas boiler sales. The plan also states that, while it will consult on the use of hydrogen in heating<\/a> homes, this is \u201cnot yet a proven technology\u201d and therefore any future role would be \u201climited\u201d.<\/p>\n

New funding<\/p>\n

Technologies such as heat pumps and rooftop solar panels are essential<\/a> for the UK to achieve its net-zero goals, but they carry significant up-front costs for households. Plans for expanding their uptake therefore rely on government support.<\/p>\n

Following the end of ECO in March, the warm homes plan will help fill the gap in funding for energy-efficiency measures that it is expected to leave.<\/p>\n

As the chart below shows, a range of new measures under the warm homes plan \u2013 including a mix of grants and loans \u2013 as well as more funding for existing schemes, leads to an increase in support out to 2030.<\/p>\n

\"ChartAnnual support for home upgrades, such as heat pumps and insulation, broken down by UK government scheme, \u00a3bn. The blue columns indicate new schemes under the warm homes plan. The grey columns include ongoing schemes, such as the boiler upgrade scheme. Figures are adjusted to constant 2025\/26 pounds using the latest Treasury GDP deflators. Source: Nesta<\/a> analysis using UK government data.<\/p>\n

One third of the total funding \u2013 \u00a35bn in total \u2013 is aimed at low-income households, including social housing tenants. This money will be delivered in the form of grants that could cover the full cost<\/a> of upgrades.<\/p>\n

The plan highlights solar panels, batteries and \u201ccost-effective insulation\u201d for the least energy-efficient homes as priority measures for this funding, with a view to lowering bills.<\/p>\n

There is also \u00a32.7bn for the existing boiler upgrade scheme<\/a>, which will see its annual allocation increase gradually from \u00a3295m in 2025-26 to \u00a3709m in 2029-30.\u00a0<\/p>\n

This is the government\u2019s measure to encourage better-off \u201cable to pay<\/a>\u201d households to buy heat pumps, with grants of \u00a37,500 towards the cost of replacing a gas or oil-fired boiler. For the first time, there will also be new \u00a32,500 grants from the scheme for air-to-air heat pumps (See: Heat pumps<\/a>.)<\/p>\n

A key new measure in the plan is \u00a32bn for low- and zero-interest consumer loans, to help with the cost of various home upgrades, including solar panels, batteries and heat pumps.\u00a0<\/p>\n

Previous efforts<\/a> to support home upgrades with loans have not been successful. However, innovation agency Nesta<\/a> says the government\u2019s new scheme could play a central role, with the potential<\/a> for households buying heat pumps to save hundreds of pounds a year, compared to purchases made using regular loans.<\/p>\n

The remaining funding over the next four years includes money assigned to heat networks and devolved administrations in Scotland, Wales and Northern Ireland, which are responsible for their own plans to tackle fuel poverty and household emissions.<\/p>\n

Heat pumps<\/p>\n

Heat pumps<\/a> are described in the plan as the \u201cbest and cheapest form of electrified heating for the majority of our homes\u201d.\u00a0<\/p>\n

The government\u2019s goal is for heat pumps to \u201cincreasingly become the desirable and natural choice\u201d for those replacing old boilers. At the same time, it says that new home standards<\/a> will ensure that new-build homes have low-carbon heating systems installed by default.<\/p>\n

Despite this, the warm homes plan scales back the previous government\u2019s target for heat-pump installations in the coming years, reflecting the relatively slow<\/a> increase in heat-pump sales. It also does not include<\/a> a set date to end the sale of gas boilers.<\/p>\n

The plan\u2019s central target is for 450,000 heat pumps to be installed annually by 2030, including<\/a> 200,000 in new-build homes and 250,000 in existing homes.<\/p>\n

This is significantly lower than the previous target \u2013 originally set<\/a> in 2021 under Boris Johnson\u2019s Conservative government \u2013 to install 600,000 heat pumps annually by 2028.<\/p>\n

Meeting that target would have meant installations increasing seven-fold in just four years, between 2024 and 2028. Now, installations only need to increase five-fold in six years.<\/p>\n

As the chart below shows, the new target is also considerably lower than the heat-pump installation rate set out in the CCC\u2019s central net-zero pathway. That involved 450,000 installations in existing homes alone by 2030 \u2013 excluding new-build properties.<\/p>\n

\"ChartAnnual heat-pump installation targets, including the previous UK government goal, the number set out in the CCC\u2019s \u201cbalanced\u201d net-zero pathway and the new target set out in the warm homes plan. Source: UK government, CCC<\/a>.<\/p>\n

Some experts<\/a> and campaigners<\/a> questioned how the UK would remain on track for its legally binding climate goals<\/a> given this scaled-back rate of heat-pump installations.<\/p>\n

Additionally, Adam Bell<\/a>, policy director at the thinktank Stonehaven<\/a>, writes on LinkedIn<\/a> that the \u201cheadline numbers for heat pump installs do not stack up\u201d.\u00a0<\/p>\n

Heat pumps in existing homes are set to be supported primarily via the boiler upgrade scheme and \u2013\u00a0according to Bell\u00a0\u2013 there is not enough funding for the 250,000 installations that are planned, despite an increased budget.<\/p>\n

The government\u2019s plan relies in part on the up-front costs of heat pump installation \u201cfall[ing] significantly\u201d. According to Bell, it may be that the government will reduce the size of boiler upgrade scheme grants in the future, hoping that costs will fall sufficiently.<\/p>\n

Alternatively, the government may rely on driving uptake through its planned low-cost loans and the clean heat market mechanism<\/a>, which requires heating-system suppliers to sell a growing share of heat pumps.<\/p>\n

Rooftop solar<\/p>\n

Rooftop solar panels are highlighted in the plan as \u201ccentral to cutting energy bills\u201d, by allowing households to generate their own electricity to power their homes and sell it back to the grid.<\/p>\n

At the same time, rooftop solar is expected to make a \u201csignificant contribution\u201d to the government\u2019s target<\/a> of hitting 45-47 gigawatts (GW) of solar capacity by 2030.\u00a0<\/p>\n

As it stands, there is roughly<\/a> 5.2GW of solar capacity on residential rooftops.<\/p>\n

Taken together, the government says the grants and loans set out in the warm homes plan could triple the number of homes with rooftop solar from 1.6m to 4.6m by 2030.\u00a0<\/p>\n

It says that this is \u201cin addition\u201d to homes that decide to install rooftop solar independently.\u00a0<\/p>\n

Efficiency standards<\/p>\n

The warm homes plan says that the government will publish its \u201cfuture homes standard\u201d for new-build properties, alongside necessary regulations, in the first quarter of 2026.<\/p>\n

On the same day, the government also published its intention<\/a> to reform \u201cenergy performance certificates<\/a>\u201d (EPCs), the ratings that are supposed to inform prospective buyers and renters about how much their new homes will cost to keep warm.<\/p>\n

The current approach to measuring performance for EPCs is \u201cunreliable<\/a>\u201d and thought to inadvertently discourage<\/a> heat pumps. It has faced long-standing<\/a> calls for reform.<\/p>\n

As well as funding low-carbon technologies, the warm homes plan says it is \u201cstanding up for renters\u201d with new energy-efficiency standards for privately and socially rented homes.<\/p>\n

Currently, private renters \u2013 who rely on landlords to invest in home improvements \u2013 are the most likely to experience fuel poverty and to live in cold, damp homes.\u00a0<\/p>\n

Landlords will now need to upgrade their properties to meet EPC ratings B and C across two new-style EPC metrics<\/a> by October 2030. There are \u201creasonable exemptions\u201d to this rule that will limit the amount landlords have to spend per property to \u00a310,000.<\/p>\n

In total, the government expects \u201cup to\u201d 1.6m homes in the private-rental sector to benefit from these improvements and \u201cup to\u201d 1.3m social-rent homes.\u00a0<\/p>\n

These new efficiency standards therefore cover three-fifths of the \u201cup to\u201d 5m homes helped by the plan.<\/p>\n

The government also published a separate fuel poverty strategy<\/a> for England.<\/p>\n

Heat networks<\/p>\n

The warm homes plan sets out a new target to more than double the amount of heating provided using low-carbon heat networks<\/a> \u2013 up to 7% of England\u2019s heating demand by 2035 and a fifth by 2050.<\/p>\n

This involves an injection of \u00a31.1bn for heat networks, including \u00a3195m per year out to 2030 via the green heat network fund<\/a>, as well as \u201cmobilising\u201d the National Wealth Fund<\/a>.<\/p>\n

The plan explains that this will primarily benefit urban centres, noting that heat networks are \u201cwell suited\u201d to serving large, multi-occupancy buildings and those with limited space.
Alongside the plan, the government published a series of technical standards<\/a> for heat networks, including for consumer protection.<\/p>\n

What does the warm homes plan mean for energy bills?<\/p>\n

The warm homes plan could save households \u201chundreds on energy bills\u201d for those whose homes are upgraded, according to the UK government.<\/p>\n

This is in addition to two changes announced in the budget<\/a> in 2025, which are expected to cut energy bills for all homes by an average of \u00a3150 a year.<\/p>\n

This included the decisions to bring ECO to an end when the current programme of work wraps up at the end of the financial year and for the treasury to cover three-quarters of the cost of the \u201crenewables obligation<\/a>\u201d (RO) for three years from April 2026.\u00a0<\/p>\n

Beyond this, households that take advantage of the measures outlined in the plan can expect their energy bills to fall by varying amounts, the government says.\u00a0<\/p>\n

The warm homes plan includes<\/a> a number of case studies that detail how upgrades could impact energy bills for a range of households. For example, it notes that a social-rented two-bedroom semi-detached home that got insulation and solar panels could save \u00a3350 annually.\u00a0<\/p>\n

An owner-occupier three-bedroom home could save \u00a3450 annually if it gets solar panels and a battery through consumer loans offered under the warm homes plan, it adds.<\/p>\n

Similar analysis published by Nesta<\/a> says that a typical household that invests in home upgrades under the plan could save \u00a31,000 a year<\/a> on its energy bill.\u00a0<\/p>\n

It finds that a household with a heat pump, solar panels and a battery, which uses a solar and \u201ctime of use tariff<\/a>\u201d, could see its annual energy bill fall by as much as \u00a31,000 compared with continuing to use a gas boiler, from around \u00a31,670 per year to \u00a3670, as shown in the chart below.\u00a0\u00a0<\/p>\n

\"ChartAnnual energy bill savings (\u00a3) for a typical household from April 2026, by using different clean-energy technologies in comparison with a gas boiler. Source: Nesta analysis, using data from Ofgem, the Centre for Net Zero and an Octopus Energy tariff. <\/p>\n

Ahead of the plan being published, there were rumours<\/a> of further \u201crebalancing<\/a>\u201d energy bills to bring down the cost of electricity relative to gas. However, this idea failed to come to fruition in the warm homes plan.<\/p>\n

This would have involved reducing or removing some or all of the policy costs<\/a> currently funded via electricity bills, by shifting them onto gas bills or into general taxation.\u00a0<\/p>\n

This would have made it relatively cheaper to use electric technologies such as heat pumps, acting as a further incentive to adopt them.<\/p>\n

Nesta highlights that in the absence of further action with regard to policy costs, the electricity-to-gas price ratio is likely to stay at around 4.1<\/a> from April 2026.<\/p>\n

What has been the reaction to the plan?<\/p>\n

Many of the commitments in the warm homes plan were welcomed by a broad range<\/a> of energy industry experts, union representatives and thinktanks.<\/p>\n

Greg Jackson<\/a>, the founder of Octopus Energy<\/a>, described it as a \u201creally important step forward\u201d, adding:<\/p>\n

\n

\u201cElectrifying homes is the best way to cut bills for good and escape the yoyo of fossil fuel costs.\u201d<\/p>\n<\/blockquote>\n

Dhara Vyas<\/a>, chief executive of the trade body Energy UK<\/a>, said the government\u2019s commitment to spend \u00a315bn on upgrading home heating was \u201csubstantial\u201d and would \u201cprovide certainty to investors and businesses in the energy market\u201d.<\/p>\n

On LinkedIn<\/a>, Camilla Born, head of the campaign group Electrify Britain<\/a>, said the plan was a \u201cgood step towards backing electrification as the future of Britain, but it must go hand in hand with bringing down the costs of electricity\u201d.<\/p>\n

However, right-leaning publications<\/a> and politicians<\/a> were critical of the plan, focusing on how a proportion of solar panels sold in the UK are manufactured in China.<\/p>\n

According to BBC News<\/a>, two-thirds (68%) of the solar panels imported to the UK came from China in 2024.<\/p>\n

In an analysis of the plan, the Guardian<\/a>\u2019s environment editor Fiona Harvey and energy correspondent Jillian Ambrose argued that the strategy is \u201call carrot and no stick\u201d, given that the \u201clongstanding proposal\u201d to ban the installation of gas boilers beyond 2035 has been \u201cquietly dropped\u201d.<\/p>\n

Christopher Hammond<\/a>, chief executive of UK100<\/a>, a cross-party network of more than 120 local authorities, welcomed the plan, but urged the government to extend it to include public buildings.<\/p>\n

The government\u2019s \u00a33.5bn public sector decarbonisation scheme<\/a>, which aimed to electrify schools, hospitals and council buildings, ended in June 2025 and no replacement has been announced, according to the network.<\/p>\n","protected":false},"excerpt":{"rendered":"The UK government has released its long-awaited \u201cwarm homes plan\u201d, detailing support to help people install electric heat…\n","protected":false},"author":2,"featured_media":719598,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3843],"tags":[214887,728,13383,85503,5442,1242,70,5374,16,154529,15,214888],"class_list":{"0":"post-719597","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-environment","8":"tag-clean-technology","9":"tag-environment","10":"tag-heat-pumps","11":"tag-insulation","12":"tag-renewable-energy","13":"tag-renewables","14":"tag-science","15":"tag-solar-energy","16":"tag-uk","17":"tag-uk-policy","18":"tag-united-kingdom","19":"tag-warm-homes-plan"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/115955387920149049","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/719597","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=719597"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/719597\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/719598"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=719597"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=719597"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=719597"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}