What does the Warm Homes Plan mean for the UK's energy and infrastructure sector?

The UK Government's Warm Homes Plan sets out its vision for the transition from fossil fuels to low carbon energy for residential accommodation in the UK. We discuss the implications for businesses involved in new build projects, heat networks and other clean energy technology, together with the retrofit of existing properties, including the private rented sector. We also highlight the opportunities that the plan offers for businesses interested in providing finance for energy efficiency upgrades.

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New Build

Understandably, given that the vast majority of the UK's housing stock was built before the 1980s and much of it is over 100 years old, the main focus of the Warm Homes Plan is on retrofit (see below – particularly sections 3, 4 and 5). However, the Warm Homes Plan also confirms that new build properties will be required to have "low carbon heating, high levels of energy efficiency and solar panels by default". This is obviously good news for businesses supplying and/or installing those products, as it can be expected to drive demand from developers.

When will the Future Homes Standard be published?

The detailed requirements for new build properties will be set out in the Future Homes Standard, on which the Government has been consulting. This should answer questions such as:

exactly what levels of energy efficiency will be required?
what types of low carbon heating will be acceptable?
how much solar capacity will builders be expected to install?

The Warm Homes Plan contains a commitment to lay the relevant secondary legislation before Parliament in Q1 2026; this suggests that we can expect the publication of the Government's response to its consultation on the Future Homes Standard shortly.

What role for hydrogen and biomethane?

As to what types of low carbon technology will be acceptable in new build projects, the Warm Homes Plan gives an answer of sorts as regards hydrogen (probably not, at least for the time being) and biomethane (possibly in certain circumstances) – see further section 8 below. In practice, this means that in the short to medium term, heat pumps and heat networks are likely to remain the primary low carbon heating solutions for new homes in the UK.

Heat networks

The two key points in the Warm Homes Plan as regards heat networks are as follows:

Growth target and financial support: the Government has set a target for 7% of heat demand to be met by heat networks by 2035 (about double the current percentage), rising to "about 20%" by 2050. Financial support for this expansion will be provided through the Green Heat Network Fund (with funding of £195 million a year) and the National Wealth fund (see also section 5 below)
New zoning authority: the proposed Warm Homes Agency is to be designated as the national heat network zoning authority, with a view to ensuring a coordinated approach nationwide.

Heat network zoning is still expected to come into force in 2026. For more on heat networks, particularly the new regulatory regime (which came into force on 27 January 2026), see our short guide to heat networks in the UK and our briefing Heat networks: less than 3 months until "go live" date for regulation.

Private rented property

The Warm Homes Plan sets out how the Government plans to require landlords of existing properties to improve their energy efficiency. The deadline for this will be October 2030 but landlords will not be expected to spend more than £10,000 per property. They will remain eligible for the Boiler Upgrade Scheme (BUS) and improvements made from Oct 2025 can count towards property's cost cap in 2030. For more detail, see The Warm Homes Plan: clarity at last for residential landlords.

Finance to support the clean energy transition

The Warm Homes Plan sets out ambitious proposals to provide finance to support the retrofitting of existing properties, with "up to £5 billion" (from the £15 billion earmarked for the Warm Homes Plan as a whole) to be allocated to a "new Warm Homes Fund (WHF) to make investments in and loans to the home upgrade sector."

Support for low or zero interest consumer loans

"Up to £1.7 billion" would be allocated to new low and zero interest consumer loans for home energy efficiency upgrades, available to lenders who apply to participate. This would be combined with up to £300 million of other government funding to lower costs of loans to consumers. The loans could be used for technology including solar panels, batteries and heat pumps and could be combined with the Boiler Upgrade Scheme (BUS) grant (see section 6 below). In addition, the Consumer Credit Act may be amended to remove obstacles to certain green finance initiatives. Watch this space.

Financial support for businesses

A call for evidence is to be launched in early 2026 to identify where the WHF can make the greatest impact and what role Great British Energy and the National Wealth Fund could play. This could include loans to or equity investments in businesses involved in clean energy or retrofit technology and services. The Government is also interested in exploring how funding could support energy subscription/"energy as a service" models or bulk purchasing. In addition, the Warm Homes Plan outlines a range of measures intended to support skills training, although the funding available for these is relatively low (in the tens of millions).

Heat pumps

The Warm Homes Plan confirms that the existing Boiler Upgrade Scheme (BUS) will continue to offer grants of up to £7500 per property for installation of heat pumps. Whilst other financial support outlined in the plan may only be available to consumers on lower incomes, the BUS grant will continue to be universal, with no means testing. A £2500 grant per property will also be available for air to air (as opposed to air to water) heat pumps which can also provide cooling, together with the heat batteries that are often used alongside such technology. However, providers/installers of heat pumps and other low carbon energy technology will be disappointed that the Warm Homes Plan did not include a phase-out date for gas boilers.

        
            Other measures on heat pumps
        
Smart functionality: The Government is consulting on proposals to require heat pumps and certain electric heating appliances to have smart functionality (in line with current requirements for EV chargers). It aims to bring these requirements into effect in 2027.

Support for manufacturing: funding for the Heat Pump Investment Accelerator Competition will be tripled to £90 million to support UK manufacturing capacity.

EPCs: The Government proposes to remove the requirement for Energy Performance Certificates under the BUS.

Permitted Development Rights: There will be a consultation on extending permitted development rights for heat pumps beyond the measures brought into force in May 2025.

Connection approval: Electricity Distribution Network Operators (DNOs) will be expected to speed up the process for approval of heat pump connection, where this is required.

Consumer protection

The Warm Homes Plan recognises that poor standards undermined confidence in the (now discontinued) schemes for solid wall insulation. It also notes that the current framework of standards is fragmented and confusing for both installers and consumers. It therefore proposes to consult on:

simplification of certification bodies in the energy efficiency and microgeneration space; and
bringing oversight of installation under government schemes under the Warm Homes Agency, so that consumers know where to go for redress.

Hydrogen and biomethane

The Warm Homes Plan states that the UK Government will consult "in due course" on whether hydrogen should have any role in heating homes – but notes that hydrogen is "not yet a proven technology for home heating" and therefore any role would "come later and likely be limited." However, the Government considers that biomethane could have a role to play in properties with few other options to decarbonize and will consult on this in Spring 2026.

What's the problem with hydrogen?

In principle, hydrogen looks an attractive option for low carbon heating, as it could be produced by electrolysing water (powered, for example, by wind turbines or solar) and then piped into homes in the same way as natural gas. Hot water could be generated in domestic properties using boilers similar to those already in use for natural gas. Supporters of hydrogen therefore argue that it would be less disruptive than installing alternatives such as heat pumps. However, critics note that there is no large scale production of either green hydrogen (produced by electrolysing water using renewable power sources) or its less environmentally-friendly cousin, blue hydrogen (produced by reforming natural gas with steam). A further problem with blue hydrogen is the need to store the carbon dioxide produced as a byproduct of the process. Perhaps a more significant objection is that a boiler running on green hydrogen uses six times as much electricity as a heat pump to create a unit of heat – so if the technology were to be adopted at scale, the UK would need even more electricity. Finally, it is likely that upgrades would be needed to make use of existing natural gas storage and distribution networks, which would add to the cost. These objections may explain the Government's apparent scepticism towards the use of hydrogen.

How we can help

With dedicated sector specialists embedded within our market-leading transactional teams, we can help your business take full advantage of the opportunities offered by the transition to net zero in the UK and beyond – whether you're an investor or a business involved in the supply, installation and/or operation of clean energy technology such as heat networks, heat pumps or solar. Recent experience includes advising:

GTC, the UK's largest installer and operator of last mile multi-utility networks, on its new partnership with UK-based ground source heat pump provider, The Kensa Group
Levelise, a home energy management system that links high numbers of domestic battery systems to a suite of advanced algorithmic controls, on its customer offering
Arjun Infrastructure Partners on the increase of its stake in Danish biogas platform Bigadan
in relation to the financing for the lenders supporting the acquisition by Swiss Life and Schroders Greencoat of Equans District Heating business

For our latest insights, see Infrastructure and Energy Spotlight – Autumn/Winter 2025.

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