Budget support for home energy costs and renewables financing gets green light

Last week saw a flurry of government announcements aimed at supporting consumers with their energy bills, against the backdrop of a likely big price hike in January.

The Warm Homes Loan Scheme went live just ahead of the Budget. Households will be able to apply to currently 10 lenders for low or zero-interest loans to install low-carbon technologies, including heat pumps, solar panels and batteries.

The maximum loan amounts vary depending on the technology, with up to £10,000 for an air source heat pump, £15,000 for solar panels and £20,000 for a biomass boiler. Other eligible technologies are storage batteries, air-to-water and ground source heat pumps, heat network connections and micro-renewable systems.

Homeowners will be able to combine a loan with Boiler Upgrade Scheme grants in England and Wales, and with Home Energy grants in Scotland. 

Energy Secretary Miatta Fahnbulleh said: “These government-supported loans will help families across the UK upgrade their homes with no upfront costs to make them warmer and cheaper to run.”

Hamid Salimi, product manager at Daikin, added: “Upfront cost remains one of the main reasons households hold back from switching to a heat pump. Giving people the option to spread that cost over time, at low or no interest, could put the technology within reach of more homeowners.

“The Warm Homes Loan Scheme provides an additional finance route, although its accessibility will depend on the participating lenders, their eligibility requirements and how their products are made available. We hope to see the range of lenders and products expand as the scheme develops.”

Then came the Budget with its Energy Support Package, which pledged to remove standing charges on gas and give £100 as a household energy payment to an estimated 20 million households in council tax bands A to D in England. While the £100 payment is expected to land directly in bank accounts from January 2027, no fixed time was announced for the removing of gas standing charges, with the government asking Ofgem to remove them “as early as 2027”. 

Rumours had circulated ahead of the Budget that the Boiler Upgrade Scheme could be downgraded. Baxi’s Jeff House, External Affairs and Policy director, said afterwards: “Fears and speculation in past weeks over the Boiler Upgrade Scheme (BUS) appear to have been well founded: there is a significant cut to the scheme budget for future years tucked away in the detail. Looking at the commitments in the Warm Homes Plan, published earlier this year, the overall BUS budget for 2027-30 would appear to have reduced by some £750m plus, or around 100,000 fewer funded heat pump installations at the current £7,500 grant level.

“So, whilst we have immediate continuity, the planned BUS expansion becomes broadly flat for the rest of this decade, perhaps an acceptance that growth in the domestic retrofit market remains slow and any significant volume gains will now come from the new build sector.”

CIPHE welcomed the Budget’s measures and financial support but its CEO Kevin Wellmann warned: “Government investment in heat pumps must be matched by investment in the skills and competence of those installing them. Making these systems more affordable is important, but ensuring they are installed safely, correctly and efficiently is essential if consumers are to realise the benefits being promised. 

“With so many plumbing and heating businesses operating as sole traders or micro-businesses, targeted support for training and professional development will be particularly important.”

Dave Hudson, managing director of GTEC Training, added: “Upfront cost has long been one of the main barriers for households considering heat pumps, solar PV and battery storage. By removing much of that barrier, [the Warm Homes Loan] scheme is likely to drive a significant increase in demand across the domestic retrofit market. 

“Installers are the ones who will need to respond to that demand, and customers will expect them to be qualified, certified and able to deliver quality installations from the outset. Training now means businesses are ready to quote with confidence and take full advantage of the opportunity as enquiries begin to grow.”