The UK government has published its plans to generate £15 billion in public investment under the Warm Homes Plan.
Described by the government as “the next step in addressing the long-term problem of energy affordability for the country”, the financing will support consumers to install domestic clean technology, mainly solar, battery energy storage systems (BESS) and heat pumps.
The investment is targeted at low-income households, but the plan will support consumer choice for all households.
“The largest public investment in home upgrades in British history” will split funding across five key areas:
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£5 billion will be used to cover the costs of insulation, solar, BESS and heat pump installations for low-income households;
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£2 billion will provide low-cost, no-interest loans for the installation of these technologies, for those who can afford to pay;
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£1.1 billion for heat networks;
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£2.7 billion Warm Homes Fund for innovative financing, including schemes such as green mortgages that offer lower interest rates on homes that are insulated and fitted with solar panels and heat pumps.
The government said it will provide more details on how consumers can access low-interest loans later this year, following further engagement with the financial sector and consumer groups.
The Warm Homes Plan is the result of two years of deliberation, first proposed as policy by Labor when it was in opposition to the previous Conservative government. Concepts show that the plan has undergone several permutations. In particular, it pays less attention to home insulation than before, and does not ban gas boilers after 2035, as had been suggested. Furthermore, rather than aiming for the installation of 600,000 heat pumps per year, in line with expert advice, the government is targeting around 450,000 per year by 2030.
While these changes have been criticized, they are also a bigger investment than the previously given figure of £13.2 billion.
There is also no comparable replacement for the Energy Company Obligation (ECO), which retrofitted home insulation under a scheme led by the previous government. The lack of a similar or continued scheme could be due to the major scandal of the revelation last year that 98% of homes where external wall insulation had been installed under the scheme or another similar scheme required significant repairs or were at risk of significant damp and mould.
It has also been suggested, perhaps cynically, that solar panels and similar initiatives are a more visible initiative, furthering the government’s political agenda.
The plan may be a solution for ECO, but also aims to improve the home upgrade experience through a new Warm Homes Agency. The agency will bring together existing functions of regulators and other government agencies remotely, provide new consumer support and eliminate duplication and waste in the current delivery landscape.
The plan also implements rules requiring landlords to install clean energy generation in their properties, a move that Chris Galpin, senior policy advisor at think tank E3G, called “life-changing for many tenants.”
From 2030, landlords will have to ensure that rental properties have a minimum energy efficiency rating of EPC C – an increase from E. The government also said it would change the way these ratings are set; the current methodology bases the assessment on total expenditure.
Electricity prices are still a barrier
That changes the tone with the criticism of heat pumps that has returned to circulation following the announcement.
Because the technology electrifies household heating, instead of using gas power, household heating is made electric high electricity costs makes investments less attractive; a heat pump can be just as, if not more expensive to use than a gas boiler.
The technology is more efficient than the gas equivalent, but ultimately consumers will get the most return when combined with technologies that lower the price of their electricity, such as solar and BESS.
The Warm Homes Plan is intended to encourage the use of all three combinations.
Greg Jackson, founder and CEO of Britain’s largest energy company Octopus, called the Warm Homes Plan “a really important step forward”.
“We still need to focus on lowering electricity costs for everyone, building on the changes in the budget, but this plan sends a clear signal that the future of home heating is electric,” Jackson added.
The government’s rhetoric around the plan, and its renewable energy efforts more broadly, focuses on this reducing household energy costs. The Warm Homes Plan aims to save up to 5 million homes on ‘hundreds of energy bills and lift up to a million families out of fuel poverty by 2030’.
Prime Minister Keir Starmer commented: “This is a government that is tackling the cost of living crisis. By cutting bills for good and upgrading millions of homes, we are giving people the security and fair chance they need to get ahead in life.”
Whether energy bills will drop as a result of this long-awaited legislation will be a major political test. There is an argument that the plan’s delay means that voters, all the more impatient to feel its benefits, will have little time to experience its results.
Along those lines, Andy Prendergast, national secretary of workers’ rights union GMB, said: “This is exactly the kind of muddled top-down bureaucracy that is giving the green transition a bad name.
“We will never reach net zero in the country if ministers don’t listen to the voices of the people who work in the energy sector, keep our lights on and our homes warm. Handing out huge heat pump subsidies to a skeptical public isn’t working – but the government seems determined to redouble its efforts.”
Jobs created by the Warm Homes Plan
The Labor government estimated that the investment would create 180,000 additional jobs by 2030. Overall, it is hoped the deal will deliver up to £38 billion in total investment across Parliament, with additional funding for skills, innovation and British manufacturing.
Gemma Grimes, director of policy and delivery at trade body Solar Energy UK, highlights the wide-ranging benefits the plan offers: “Reducing household energy expenditure is of vital national importance. But the Warm Homes Plan will do so much more.
“Every solar installation, every battery storage unit, every heat pump brings us closer to a clean, low-cost energy system; it removes our dependence on expensive and polluting natural gas.
“That means better energy security, tens of thousands of high-quality, highly skilled, well-paid and future-proof jobs, while reducing our contribution to climate change and the burden of cold homes on public health and the NHS.”
According to a report published yesterday by the Energy Savings Trust ahead of the plan’s publication, ‘Warm Homes Plan: What the UK Needs to Get Retrofit Right’, there are currently not enough skilled retrofit and heat pump installers to increase the number of inefficient homes in Britain.
The UK Government should raise awareness of retrofitting as a career option and encourage young people to work in the sector, as well as existing workers to retrain.
Sachin Vihbute, HVAC and heat pump technical advisor and product training manager at technology company LG, said: “While the plan sets out the funding and ambition, it is lighter on the practical measures needed to scale up heat pump installations quickly.
“To fully unlock the potential of the Warm Homes Plan, A continued focus on installer training, skills and capacity will be critical. Without enough qualified people to deliver these upgrades, progress is in danger of not realizing its potential.”
Energy Savings Trust suggested that financial support to cover the costs of training or certification would help mitigate the disincentive of lower income for those retraining or upskilling.
Political criticism focuses on mythical claims
Campaigns manager for the Campaign to Protect Rural England (CPRE), Jackie Copley, said the group is “delighted that the government will make solar panels standard on all new homes and triple the number of homes with rooftop solar by 2030”.
“The government should take this opportunity to help deliver at least 60% of our total rooftop solar energy needs,” Copley said, adding that “this would help alleviate the pressure that large-scale solar farms are putting on our countryside, generating the renewable energy we need while protecting iconic landscapes and productive agricultural land.”
Although the general response in the politicized debate around solar energy in Britain is that the technology should be installed elsewhere before being mounted on the ground, those most vocally opposed to the technology have had to chart a new course.
Shadow energy secretary Claire Coutinho’s response to the announcement was: “Whether it’s cables, batteries or crucial minerals, Labour’s rush to Net Zero depends on Britain importing tonnes of equipment from China.”
Richard Tice, an outspoken member of Reform UK, which fully opposes any net zero initiative and advocates more oil and gas extraction in the North Sea, also called the need to import components from China “bad for British industry”.
His criticism would have been more in line with Reform’s anti-renewable energy policies had he not been accused of hypocrisy when his real estate company was seen embracing the lower carbon emissions (and, to be fair, the financial incentive) of clean energy technology.
The anti-Chinese import rhetoric ignores the government’s commitments to this end ensuring no slavery in the UK solar supply chainUnpleasant establish domestic production where possible and, under the Warm Homes Plan, a target to ensure that at least 70% of heat pumps installed in Britain are made in Britain.
