Even More Support For Heat Pump Technology In The new Warm Homes Plan
In exciting news for the heat pump industry, the Government has today launched its Warm Homes Plan, which commits more funding to heat pumps in UK homes. The £15Bn plan will oversee the installation of more heat pumps, solar panels and batteries.
Highlights of the Warm Homes Plan
The Warm Homes Plan will deliver £15 billion of public investment, roll out upgrades to up to 5 million homes that could save them hundreds on energy bills and help to lift up to a million families out of fuel poverty by 2030.
Government launches £15 billion Warm Homes Plan to help millions of families benefit from solar panels, batteries, heat pumps and insulation that can cut energy bills.
A plan for all types of households, with targeted interventions for those on low incomes; upgrades for social housing; new protections for renters; and a universal offer for all households to upgrade homes if and when they want to.
Plan will help lift up to one million families out of fuel poverty and tackle long term energy costs, following Government’s intervention to take an average of £150 of costs off energy bills for all families this April.
How the Funds Are Allocated
The £15Bn investment will be spread across 5 schemes in England:
£5Bn for upgrades including insulation, solar panels, batteries and heat pumps, for people on low incomes. This scheme is the replacement for the Energy Company Obligation, which is coming to an end in March 2026.
£2Bn towards low-cost loans for people who can afford them
£2.7Bn for the Boiler Upgrade Scheme, which has been extended another year to 2030, which is great news for the long term certainty of the heat pump industry.
£1.1Bn for heat networks.
£2.7Bn towards innovative finance through the Warm Homes Fund, which could include schemes like green mortgages with low interest rates for energy efficient homes.
There is also a further £1.5Bn in other funding for programmes in Scotland, Wales and Northern Ireland.
Alto’s Angle
As one of the UK’s leading suppliers of heat pumps and the pioneer of the MCS Umbrella Scheme, clearly this announcement from Government is very positive for us and for the wider heat pump industry. The Boiler Upgrade Scheme is the lifeblood of the developing industry and is helping us to deliver heat pumps, at scale, and enable the market to reach an economically mature stage ready to deliver the mass adoption of heat pumps that the UK needs.
It’s also great to see a replacement for the Energy Company Obligation (ECO) scheme which is highly focussed on renewables. ECO was a scheme littered with problems and challenges. Not just the headlines about poor workmanship on solid wall insulation, but we think it highlighted the wider issue that it’s actually really difficult to retrofit insulation to a lot of Britain’s homes.
The good news is that air source heat pump technology has developed significantly in the last 5 years. The introduction of R290 refrigerant units into the market means we now have products that can easily deliver hot water temperatures up to 75C. This means that the old adage of “heat pumps only work in well insulated homes” is a total myth. With the right design and setup of the heat pump system, heat pumps can deliver running cost savings in most poorly insulated homes, particularly those that are off-gas.
We’re also excited to see further information on the low cost loans. Like electric cars, the UK’s appetite for heat pumps is growing, however cost is still a hurdle. If the Government can develop and introduce a low cost finance option for homeowners, this could be really attractive and significantly boost uptake.
What Next
The goal for Government over the next couple of years needs to be to tackle the areas that currently make heat pumps more expensive to run than they should. This means:
Eliminating taxes on electricity bills, so that the “Spark Gap” ratio of electricity price to gas price is reduced
Come up with a really good proposition for zero or low cost finance
Working with the industry regulators, in particular the Microgeneration Certificate Scheme (MCS), to ensure high standards of installations so that heat pumps deliver the maximum savings possible to homeowners.
If these three areas can be cracked, the heat pump market will increase exponentially.
MCS umbrella scheme
If you want to install MCS accredited heat pumps and help your customers access funding like the Boiler Upgrade Scheme, our Alto Assured MCS Umbrella Scheme is the perfect solution. We’ll handle all the MCS paperwork and compliance for you, and our expert team will also design, supply, and commission the system, so you can focus entirely on the installation.