UK seeks to electrify home heating with warm homes plan

Currently, most homes in the UK are heated by gas-powered boilers. The government wants to change that with a view to achieving the triple aims of reducing energy bills for homeowners, improving the UK’s energy security, and enabling decarbonisation in response to the climate emergency.

Last week, the government outlined how it plans to deliver that change via a new ‘warm homes plan’ (152-page / 79.8MB PDF). It contains measures relevant to developers of new homes, as well as landlords, homeowners and businesses that deliver retrofitting works and homes energy solutions. A new Warm Homes Agency is to be established to support delivery of the plan.

Peter Feehan of Pinsent Masons said: “The warm homes plan is a positive step forward to helping the fuel poor and helping households ultimately save money, but its success will depend on access and availability of skilled delivery, fair costs and learning from previous initiatives to ensure households get the true benefit of the plan.”

The warm homes plan is backed by a £15 billion public funding commitment up to 2030. That funding, it said, will be spread across various schemes designed to encourage home “upgrades”. For example, depending on individual circumstances, homeowners will be able to access loans or grants to switch out their existing boilers for new home heating solutions powered by solar panels or heat pumps, or to install battery storage systems.

Other improvements to the “fabric” of properties could also receive public funding, such as insulation or draught proofing measures, but while the government said that “fabric insulation measures, when installed with appropriate ventilation, remain a cornerstone of energy efficiency” it implied that the eligibility criteria for support for installing those will be tightened.

However, in noting that some insulation measures, particularly solid wall insulation, have become “less viable” in cost terms, the government said “alternative technologies – such as rooftop solar and home batteries – are likely to offer significantly more cost-effective routes to reducing energy bills and maintaining thermal comfort.” It added: “[We] will therefore prioritise fabric measures that deliver strong value for money and support the efficient operation of clean heating systems.”

The government is not mandating a particular “clean heat” technology for installation through its updated incentive schemes, instead providing homeowners with a choice – including in relation to heat pump technologies, confirming that its boiler upgrade scheme applies not just to ground and water source heat pumps but to air-to-air heat pumps too. It said it will “continue to encourage innovation” and would “bring new, highly efficient products into government schemes as quickly as possible”.

The government said it is also keen to support innovative financing solutions from private sector lenders to support home heating upgrades. One example it gave was enabling homeowners to “increase their mortgage” instead of taking out a separate loan. The government said it will back new financial products with public money “to significantly lower the cost of the loans for consumers”. It is establishing a strategic partnership with the green finance sector to build and diversify green financing options.

For new build residential and non-residential property in England, the government has committed to lay regulations before the end of March to implement a new Future Homes Standard and new Future Buildings Standard. “Under these standards, new homes will have low-carbon heating, high levels of energy efficiency and solar panels by default,” it said. This seems to confirm press speculation that the Future Homes Standard would not require any energy storage measures.

Of relevance to the private-rented sector (PRS) in England, the government reiterated its plans to impose an updated Decent Homes Standard (DHS) from either 2035 or 2037 and to “consult on timescales for implementing Awaab’s Law to the PRS in due course”. Awaab’s Law is a reference to legislating requiring landlords to act quickly in response to serious health hazards within the properties they own.

In relation to leaseholders, the government said it would explore options to make it easier for leaseholders to install clean heat solutions where the terms of their lease do not permit them to do so unilaterally in the absence of freeholder permission.

The role for hydrogen-powered solutions, if any, in home heating, will be the subject of a further consultation in due course. The government said: “As hydrogen is not yet a proven technology for home heating, a role would come later and likely be limited.”

A major focus of the warm homes plan is on realising the potential of heat networks for delivering heating and cooling in buildings in an efficient way. The government continues to expect low-carbon heat networks to meet around a fifth of “all heating demand” by 2050 – up from 3% now – and for the first time has set an interim  target of more than doubling the amount of heat demand met via heat networks in England by 2035, to at least 7%, which equates to 27 TWh.

The government has confirmed it will adopt heat network zoning from 2026. It is already tackling consumer protection and quality issues by regulation to make heat networks regulated on a part with other utilities. The government has opened a consultation on the new standards (111-page / 2MB PDF) and intends to apply them from some time in 2027.

Ofgem will also set authorisation conditions for heat networks, which “will include conditions around financial management and continuity of supply, amongst others”, the government added.

The Green Heat Network Fund supports the construction and expansion of low-carbon heat networks. The warm homes plan contains a commitment to “further capital support under the GHNF, with funding of £195 million/year during this spending review period” and envisages increasing blended and alternative finance for networks with a role for the National Wealth Fund.

The government said the warm homes plan “will cut bills” on energy and create 180,000 “additional high-quality, well-paid, future-proofed jobs in energy efficiency and clean heating by 2030”. Energy secretary Ed Miliband said it is “a landmark plan to make the British people better off, secure our energy independence and tackle the climate crisis”.

As well as funding solutions, the warm homes plan contains confirmation of important regulatory measures on ‘energy performance certificates’ (EPCs) and ‘minimum energy efficiency standards’ (MEES) designed to increase the electrification of home heating and improve the energy efficiency of residential properties.