21 November 2024
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Up to 300,000 households will benefit from home upgrades in the next year, as the Government announces new steps to help households of every kind take up measures that can help save money on their bills and deliver cleaner heating.
This includes boosting the budget for the Boiler Upgrade Scheme to support more households switch to a heat pump – which can save families around £100 a year compared to a gas boiler by using a smart tariff effectively, and insulating more homes across the country – potentially saving homeowners around £200 per year.
The wide-ranging package is another important step in delivering the Warm Homes Plan and reaches across all households, supporting:
- homeowners in England and Wales to get a £7,500 heat pump grant through the Boiler Upgrade Scheme, which had the highest number of applications ever in October according to Ofgem
- households install an air source heat pump without needing to submit a planning application in England – removing the 1m rule, with figures from Octopus showing 34% of those who order a heat pump are discouraged or drop out for reasons attributed to planning permission
- social housing residents, lower income householders and renters to receive funded energy efficiency upgrades - including insulation and low-carbon heating - through the Warm Homes: Social Housing Fund and Warm Homes: Local Grant respectively
Working alongside the Government’s mission to make Britain a clean energy superpower, the Warm Homes Plan will ensure millions more households benefit from homegrown energy delivered by every new turbine, solar panel or pylon built on the path to energy independence.
Minister for Energy Consumers Miatta Fahnbulleh said: “The idea at the heart of our Warm Homes Plan is a simple one – all families deserve the security of a home they can afford to heat.
“But for too long, that has been out of reach for far too many people who have been left with draughty homes and sky-high bills. That is why we are taking immediate action today to make cleaner heating available to more households.
“This follows our plan to lift over one million households out of fuel poverty by consulting on boosting minimum energy efficiency standards for all renters by 2030, delivering warmer homes and cheaper bills.”
Households have paid the price in recent years of the energy bill crisis, following Putin’s illegal invasion of Ukraine, which exposed years of overreliance on international gas markets.
The Government is now overturning this legacy by investing in homegrown, cleaner energy free from the control of dictators.
Today’s steps help:
Support thousands more households with home upgrades
- Helping thousands more families to get £7,500 off the cost of a heat pump, with an extra £30 million for the Boiler Upgrade Scheme this financial year, while almost doubling the budget to £295 million for the next financial year
- Overseeing around £3.2 billion of investment in warmer homes across 2025 to 2026 from government, social housing providers and supplier obligations, delivering measures to help lower bills and support cleaner heating to up to 300,000 households
Deliver new regulations to back consumers and encourage innovation
- Lifting over 1 million households out of fuel poverty under plans to consult on increasing minimum energy efficiency standards for all rented homes by 2030
- Consulting on plans to increase energy efficiency standards for new boilers and heat pumps, saving households with a new gas boiler £30 a year on running costs
- Allowing more households in England to install an air source heat pump without the need to submit a planning application from early next year, by removing the rule requiring them to be installed at least one metre from a property’s boundary. This will provide greater flexibility, with rules still in place around listed buildings
Back British manufacturers
- Introducing a reformed Clean Heat Market Mechanism on 1 April 2025, with new changes to make sure manufacturers have the time they need to scale up supply chains, making heat pumps an even more attractive choice for households and boosting sales without penalising those buying a new gas boiler. There will also be government support available for each and every heat pump installation that is required under the mechanism in 2025 to 2026
- Supporting industry by investing over £5 million in Ideal Heating as the very-first award from the Heat Pump Investment Accelerator competition, kickstarting a homegrown heat pump industry to boost the UK’s energy security and support hundreds of low-carbon jobs
- Working with trade unions to ensure good jobs throughout the supply chain, backing Britain’s world class traders
This follows a landmark announcement from the National Wealth Fund, whose financial guarantees enabled up to £1 billion of funding from Barclays UK Corporate Bank and Lloyds Banking Group to help housing associations provide warmer, more energy efficient homes to tenants across the country.
By charting a bold new approach to delivering warmer homes and taking immediate action to speed up the rollout of cleaner heating, the government will cut energy bills, tackle fuel poverty and create new opportunities for jobs and skills right across the country.
Stakeholder reaction
Juliet Loiselle, Editor of Heat Pumps Today and Heat Pump Your Home said: “This is fantastic news, but I'm conscious that homeowners will still need to be made aware of these opportunities/changes. Especially the Warm Homes Grant - https://lnkd.in/eqqfxtH5.
“As press within the sector, we can do our bit through our Heat Pump Your Home portal, aimed at homeowners and ACR Journal & Heat Pumps Today media channels, but I do hope to see some strong media marketing throughout traditional news outlets by the Government.
“I have done a little survey myself amongst friends and colleagues, and whilst the Warm Homes grant was within the recent budget, none of them knew about it. Many believe the Government won't publicise it because they won't really want people to claim it - something I would hope to disagree with. They certainly weren't aware of the Boiler Upgrade Scheme either.
“Until we ensure that homeowners are given the correct knowledge, including; understanding the benefits, the processes involved in the installation, what grants are available, and that we have enough skilled engineers within the sector, the targets will be very hard to meet.
“This is not meant to be a negative post as folk who know me, know I'm extremely pro heat pumps, just increasingly frustrated with the lack of positive and pro-active marketing from the Government(s) which would help drive demand to ultimately meet our net zero targets."
Mike Foster, Chief Executive, Energy and Utilities Alliance, said: “Minister Fahnbulleh has constructively engaged with industry and British manufacturers, who have warmly welcomed this new approach. By working in partnership, we have an outcome which no longer unfairly penalises business and consumers. That is a big win for households across the country.”
Chris O’Shea, CEO, Centrica, said: “We are delighted that the government is making it easier for households to install heat pumps by removing the outdated 1m planning rule in England and increasing the funding available in the Boiler Upgrade Scheme. Heat Pumps will play an integral role in decarbonising home heating, and we look forward to supporting customers transitioning from gas boilers to heat pumps, through our Hive Heat Pump offer which can save customers up to £456 on their energy bills.”
Greg Jackson, CEO, Octopus Energy, said: “More than a third of customers who order a heat pump drop out because of planning issues, leaving them stuck with dirty, inefficient gas boilers. Removing outdated and unnecessary red tape is an urgent priority to grow this sector and get low cost, safe, clean heating technology into British homes.”
Dhara Vyas, CEO, Energy UK, said: “It is welcome to see the government increase funding for the Boiler Upgrade Scheme (BUS), set out more detail on the Clean Heat Market Mechanism (CHMM), and remove planning barriers to heat pump installations. This is a clear recommitment to heat decarbonisation, which will play a vital role in improving energy security and reducing our reliance on gas. The BUS is enabling consumers to install heat pumps at record rates, with demand for low carbon technologies increasing.
“It is right that the government does not further delay delivery of the CHMM, as this mechanism is vital to increasing availability of heat pumps and attracting investment into UK manufacturing. The industry stands ready to work with government to ensure the CHMM is effective and ambitious, enabling customers to choose when they make the transition, while also developing robust low carbon heat supply chains and markets in the UK.”
Aira UK CEO, Daniel Särefjord, said: “Today’s announcement will be a game-changer for heat pump adoption across the UK. It is a much needed and welcomed intervention from the government to ensure customers can save serious amounts of money on heating costs and enable our country to meet net zero targets. Clean heating solutions are essential for driving the UK’s transition to a lower-cost, lower-carbon, and more stable energy market, with heat pumps playing a central role in this evolution. This step highlights a strong commitment to tackling climate change while supporting the growth of the clean energy-tech sector and creating thousands of new jobs within the green skills workforce across the country.”
Jason Speedy, Ideal’s Heating’s Chief Operations Officer, said: “We’ve been manufacturing market-leading heating products in the UK for well over a century. cross the heating industry we’re now seeing a significant transition from gas boilers to sustainable solutions, such as heat pumps. That aligns closely with the UK’s net zero targets.
“This funding is a vote of confidence in our business and our position at the forefront of the industry’s move to low carbon heating solutions. It will enable us to accelerate our plans for heat pump production and complements the broader programme of investment across our operations as we lead the industry to a greener, low carbon future.”
Carl Arntzen, CEO of Worcester Bosch, said: “We welcome the announcements from DESNZ on the removal of some of the siting barriers for heat pumps and the extra funding being made available for the Boiler Upgrade Scheme. We are hopeful these measures will enable more homeowners to view heat pumps as a realistic heating alternative.
“We’re also happy the minister has recognised the need to revise the CHMM and that further policy changes are required to increase heat pump demand and adoption in the UK.”
Henrik Hansen, Managing Director at Vaillant Group UK, said: “Today’s announcement represents a positive step forward addressing specific challenges felt by homeowners when considering the installation of a heat pump. By easing installation requirements, it addresses some of the barriers that have previously discouraged the adoption of this technology and shows what can be achieved by business and government working together.
“We welcome the boosted budget to the Boiler Upgrade Scheme allowing more homeowners to access funding when installing a heat pump. Additionally, we look forward to further announcements in support of the government’s Warm Homes Plan, to achieve the UK’s goal of reducing emissions and lowering the use of energy for households across the UK.”
Kate Henderson, Chief Executive of the National Housing Federation, said: “With England’s homes producing more carbon each year than all the country’s cars, housing associations are committed to playing their part in tackling the climate emergency and supporting the government to meet its net zero targets, through decarbonising their homes.
“We welcome the confirmation of the boost in funding, which is essential to this work, kickstarting the government’s Warm Homes Plan and helping tackle fuel poverty. The policy measures announced today will be essential to this shared mission, scaling the supply chain and driving down the costs of the clean, efficient home heating systems of the future.
“We look forward to working with the government ahead of next year’s Spending Review on the design of the full Warm Homes Plan, and in bringing forward their manifesto commitment of a significant increase in funding for retrofitting homes.”
Adam Scorer, National Energy Action’s Chief Executive, said: “National Energy Action (NEA) welcome this significant additional investment which kick starts the emerging Warm Homes Plan. Warm homes are the foundation of healthier, happier, more productive lives, especially for fuel poor households facing higher costs on the lowest incomes. NEA knows that these households often suffer ill-health which is worsened in cold conditions. We look forward to work with government to realise the full ambition and benefits of a comprehensive plan for Warm Homes.”
Jan Rijnen, Managing Director UK & Ireland, Baxi Heating, said: “Today’s announcement of additional funding for the Boiler Upgrade Scheme is welcome, together with amending planning rules which will help simplify heat pump installations. We are committed to working with government to deploy practical and affordable solutions that help decarbonise homes, with the support of customers, industry, and manufacturers like Baxi. We will continue to work with government to further improve the Clean Heat Market Mechanism in the years ahead.”
Chris Galpin, energy expert at E3G, said: “These welcome changes will make it easier for people to upgrade their heating systems. After years of uncertainty and delay, this clear direction is a much-needed boost for the industry. Whilst we will need to see further investment next year, this is the right first step towards lowering energy bills and creating new, good quality jobs in British manufacturing.”
Stew Horne, Head of Policy at Energy Saving Trust, said: “This package of announcements brings welcome detail on how the UK government will support people in practice to install low carbon heating and incentivise the supply chain to meet demand. We welcome the removal of a key barrier to heat pump installation and confirmation of additional funding for the Boiler Upgrade Scheme.
“Likewise, the Clean Heat Market Mechanism will play an important role in reducing the upfront cost of heat pumps, encouraging manufacturers to offer competitive deals. It also provides much needed certainty for industry and the supply chain to scale up to meet the UK government’s ambition. Signalling the upgrade of 300,000 homes to make these warmer, more affordable to heat and cutting carbon, is a welcome start to the Warm Homes Plan that offers a benchmark for scaling up. We look forward to seeing more about the programme of delivery to make this happen.”
Charlotte Lee, CEO, Heat Pump Association, said: “The package of measures announced by the Government today demonstrates their commitment to accelerating the decarbonisation of heat in the UK.
“We welcome the clarity provided on the long-anticipated Clean Heat Market Mechanism and the confirmation of additional funds for the BUS, both of which enable the sector to invest with confidence. The changes to the Permitted Development Rights will help to streamline the heat pump installation process for installers and consumers and support an accelerated deployment of heat pumps over the coming years.
“Whilst these are all very pleasing developments, the sector remains steadfast in its call for action to address the UK’s high electricity-to-gas price ratio. Changing such is vital to unlocking the widescale growth in electrified heat needed to meet UK carbon emission reduction targets and we hope to see a commitment to tackling this in the coming months.”
Bean Beanland, CEO, Heat Pump Federation (HPF), said: “The incoming government has come flying out of the blocks on macro-energy policy, but has been more measured in its approach to the energy transition at domestic scale. This set of announcements by the Secretary of State marks, what we hope will be, a series of initiatives over coming months, designed to encourage the uptake of decarbonised heating solutions in homes across the UK.
“From the work undertaken by the Heat Pump Federation with community groups across the land, it’s clear that the appetite for genuine and robust information, and for a positive set of messaging, is strong. Measures such as those announced today, together with future changes that are already in consultation or discussion, will continue to build confidence with both consumers and with our sector’s supply chain, so that homeowners and landlords are assured that the transition away from fossil fuels can be taken as their existing boiler reach end-of-life.
“The HPF very much looks forward to working with ministers to maximise the values to be realised, including the development of a vibrant and profitable UK heat pump manufacturing sector, and a workforce with enhanced skills in the clean industries of the future. The opportunity for significant social good, by way of warmer homes, lower energy costs, great jobs and improved air-quality, is real, ensuring that everyone can benefit from a zero carbon future.”
Madeleine Gabriel, Director of Sustainable Future at Nesta, said: “Today’s announcements will make it easier for people to upgrade to heat pumps. This gives a clear signal to the public and industry that the government is committed to supporting the transition to low carbon heating.
“In particular, these changes rightly cut the red tape that was creating extra cost and hassle for homeowners and more work for local councils. Heat pumps are proven to be an efficient and reliable technology, and removing the ‘1-metre rule’ will make it easier for people to choose a low carbon future for their homes.”
Ian Rippin, CEO at MCS (Microgeneration Certification Scheme), said: “The confirmation of the Clean Heat Market Mechanism is a positive step for the sector and the changes to support the scaling up of the industry address concerns previously expressed. We look forward to continuing our work with the scheme to ensure that heat pump installations are to industry-recognised standards and are accurately recorded and reported. This is crucial in giving everyone confidence in the technology.
“Today’s announcement of changes to Permitted Development Rights are another welcome move that will support the deployment of heat pumps. We have worked to coordinate the industry’s responses and support with updates to tools and our standards, such as the MCS Planning Standard for Permitted Development Installations of Air Source Heat Pumps (MCS 020), to facilitate these changes.
“The Boiler Upgrade Scheme has been a great success in supporting the industry – we welcome any additional funding and look forward to the scheme continuing to grow and expand.”
Mark McManus, Managing Director, STIEBEL ELTRON UK said: “We welcome these changes that will help drive forward the adoption of heat pumps. The 1 metre rule in particular has been a thorn in the side of customers and installers and has on its own been a reason that many projects have been abandoned as it is often impossible to comply with UK homes built so closely together.
"Heat pumps have become increasingly quiet in operation as technology and design have improved, with quality products like STIEBEL ELTRON models now whisper-quiet even when working at full power and offering silent modes for night time operation. So concerns about noise are now really a thing of the past and the rule is no longer needed.”
“Removing the size restrictions on the units themselves is also a common-sense measure alongside the ending of the 1 metre rule as slightly larger units allow for better sound proofing to be built in.
“With more money available to the BUS scheme, now is the time for the government to consider increasing the funding for individual projects in the Spring Spending Review as a way to really turbo charge the adoption of heat pumps and consider measures to address the structure of energy pricing to favour clean electricity rather than fossil fuels”
Katrina Young, Practice Manager – Heat Policy & Local Energy, at Energy Systems Catapult said: “We welcome today’s announcements of the first steps of the government’s Warm Homes Plan, especially the commitment to increase funding of the Boiler Upgrade Scheme next year and the removal of planning barriers to heat pump installation. This clarity is essential for planning, and it provides some much-needed stability for both households and the industry as we work toward reducing emissions and improving home energy standards.
“Scrapping the requirement for heat pumps to be installed more than 1m from property boundaries in England and increasing the permitted size will be a boost to heat pump adoption. Many people start on the journey to upgrading their heating system but get put off by the lengthy waiting times of unnecessary planning applications. The changes will mean that placement of heat pumps will be considered on actual impacts such as noise, rather than arbitrary red tape. Including the oft-neglected air to air heat pumps in permitted development rules is a good step at supporting a wider range of technologies and finding the right solution for each home.
“But it’s clear that simply extending funding isn’t enough to address the full challenge of home decarbonisation. Beyond the further funding that we will need to see in the Spring spending review, we need to see rapid progress on key enabling policies that will unlock a more efficient transition. This includes reforming Energy Performance Certificates (EPCs) to better reflect a home’s environmental impact, addressing the price imbalance – often called the ‘spark gap’ – between electricity and gas, implementing the Clean Heat Market “Mechanism in a way that is inclusive and technology-neutral.
Targeted and strategic use of funds is also critical to making a real difference. Services such as Warm Home Prescription® show us that thoughtful approaches that prioritise people and places with the greatest need can maximise impact and help households facing the toughest energy costs. Just throwing money at home decarbonisation won’t cut it – without bold reforms and smarter policies, we’ll keep wasting resources while leaving households in the cold.”
The Ground Source Heat Pump Association (GSHPA) applauds the UK government's recent announcements aimed at bolstering the heat pump industry and advancing the nation's green energy objectives.
Policy Stability and Investment: "Policy certainty and stability are critical for continued investment in the UK's heat pump sector and its ability to support green growth," stated a GSHPA spokesperson. "The government's recent announcements are major steps in the right direction, providing much-needed clarity and funding commitments that enable businesses to make informed investment decisions."
Clean Heat Market Mechanism: The GSHPA strongly supports the confirmation of the Clean Heat Market Mechanism's introduction in April 2025. This policy is pivotal for expanding the UK's heat pump market, driving up installation numbers, and instilling confidence within the industry to invest and scale up. The association acknowledges the balanced approach in setting initial penalty levels for boiler manufacturers, ensuring a smooth transition while addressing potential market disruptions.
Boiler Upgrade Scheme: The association welcomes the £30 million increase in funding for the Boiler Upgrade Scheme, which provides households with grants of up to £7,500 for installing heat pumps and biomass boilers. This initiative aims to make heat pumps more cost-competitive with traditional gas boilers, encouraging widespread adoption and contributing to significant reductions in energy bills and carbon emissions.
Warm Homes Plan: The GSHPA is encouraged by the early details of the Warm Homes Plan, which includes the Warm Homes: Local Grant and the Warm Homes: Social Housing Fund Wave 3. These programs are designed to provide energy performance upgrades and low-carbon heating solutions to low-income households and social housing, addressing fuel poverty and promoting energy efficiency across the nation.
Future Homes Standard: However, the GSHPA notes the absence of a clear timeline for the Future Homes Standard, a central policy for reducing reliance on gas and normalizing heat pumps in UK homes. The association urges the government to implement this standard promptly to accelerate the transition to sustainable, affordable heating solutions, benefiting both the environment and household finances.
The GSHPA remains committed to collaborating with the government and industry stakeholders to advance the adoption of ground source heat pumps, contributing to the UK's net-zero carbon emissions goal by 2050.
Mark Krull, Director for LCL Awards & Logic4training said: “I am pleased by the Warm Homes announcement, which overall shows the government’s continued commitment to the drive to Net Zero and the Electrification of Heat. The additional funds put towards the Boiler Upgrade Scheme (BUS) in 25/26 will support market growth and changes to the Clean Heat Market Mechanism are pragmatic, allowing UK manufacturers to invest in heat pumps and ultimately bolster our economy. The move to a low carbon future has financial as well as environmental benefits.
“Well done to Ideal Boilers for winning over £5m to bolster heat pump production capacity. Let’s hope that better supply chains and increased volume will lead to reduced costs to the consumer.”
Paul Smith, MD for NIBE: “At NIBE, we applaud the ongoing expansion of the Warm Homes Plan and the government’s move to streamline heat pump installations by cutting red tape around permitted development.
“However, to accelerate the transition to heat pumps, the installer network must also be expanded. We’re already driving this change through our industry-leading training programme, hands-on technical guidance and business support that extends far beyond the classroom. But we believe government-backed initiatives are essential to bolster these efforts and ensure a skilled workforce ready to meet the demands of the renewable heating market.
“Also, we join the Heat Pump Association in urging policymakers to address the spark gap, which remains a significant barrier to the widespread adoption of heat pumps.
“Finally, we also welcome the boosted budget for the Boiler Upgrade Scheme, which is a vitally important mechanism for retrofit homes. However, to truly unlock the potential of renewable heating, the scope of the scheme must be broadened to include a wider variety of heat pump solutions, such as Exhaust Air Heat Pumps, to further accelerate decarbonisation.
“ With NIBE’s unwavering commitment to innovation and collaboration, we are determined to lead the charge toward a more energy-efficient future.”
Griff Thomas, MD for GTEC & Heatly, both part of the United Living Group: “It’s great to see DESNZ making positive moves to deliver the Warm Homes Plan, which promises to upgrade 5 million homes over the next 5 years, including a notable £1.29 billion towards social housing. The measures announced yesterday (21/11/24) put the UK on track to achieving this target, while making heat pumps more affordable and accessible. I am particularly pleased to see the removal of the 1m rule, giving installers flexibility to deliver the best solution for each property and removing a major hurdle that might push homeowners away from heat pumps.
“The Clean Heat Market Mechanism provides much-needed clarity for the industry, encouraging investment and supporting the scaling up of heat pump supply chains. This time around, it seems that manufacturers have broadly welcomed the proposals, demonstrating the benefits of a collaborative approach to developing practical policies that balance industry needs with the UK's net zero goals.”
www.gov.uk/government/news/help-to-save-households-money-and-deliver-cleaner-heat-to-homes
