The government-backed Warm Home Loans scheme launched on Tuesday for households across the UK. The scheme offers interest-free or low-interest financing ranging from £7,500 to £35,000 for upgrades including heat pumps, batteries and solar panels. Households can install the technologies without upfront payments and spread loan repayments over many years. The government believes the financing will enable thousands more households to install low-carbon energy technologies and reduce energy bills.
British Gas has partnered with Tandem Bank to provide loans directly to customers. E.On has partnered with Homeserve to provide loans directly to customers. The loans carry discounted rates relative to loans from high street lenders. Other participating lenders include HTG Finance, Propensio, Secure Trust Bank, Selina Finance, South Manchester Credit Union, Sunsave, The Money Co-op and This Bank.
Households replacing gas boilers with air-source heat pumps could borrow up to £10,000. Households choosing ground-source heat pumps could borrow up to £35,000. Applicants can also use an existing government scheme offering households grants of up to £9,000 a year to replace fossil fuel heating.
The government says installing a heat pump alongside a battery and solar panels could lower household energy bills by up to £550 annually. The government says a time-of-use tariff could add another £300 in annual savings. Rising energy costs have driven demand for low-carbon home upgrades to record levels over the last year. Energy Secretary Miatta Fahnbulleh said energy must be affordable for everyone. Fahnbulleh said the government-supported loans would help families upgrade homes without upfront costs, improving warmth and reducing running costs.
E.On UK Chief Executive Chris Norbury said a recent Coventry trial showed average annual savings exceeding £250 for customers experiencing fuel poverty. Norbury said those customers combined a home battery with a time-of-use tariff offering cheaper electricity outside peak demand periods. Norbury said the loan scheme offered an opportunity to extend those benefits by reducing barriers to low-carbon technologies.
The government announced the loan terms the day before Chancellor John Healey delivers his first budget on Wednesday. The budget will reportedly contain plans to reduce heat pump grants through the boiler upgrade scheme. The boiler upgrade scheme is not expected to end entirely. However, sources say the scheme's £2.7 billion budget over five years will lose hundreds of millions of pounds. Sources attribute the planned cuts to Treasury officials viewing the scheme as a subsidy primarily benefiting middle-class households.
The boiler upgrade scheme has generally offered grants capped at £7,500 toward a heat pump installation costing £13,600. Households have therefore still needed to fund a substantial balance. Grants of up to £9,000 a year are likely to remain available for households without gas-grid connections that depend on expensive heating oil. Those grants could be combined with low-interest loans to finance the entire cost of a heat pump.
UK Launches Warm Home Loans for Solar Panels and Heat Pumps
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Summary
The UK government has introduced the Warm Home Loans scheme, offering interest-free or low-interest loans of £7,500 to £35,000 for home energy upgrades like solar panels and heat pumps. British Gas and E.On are working with banks to provide the loans, which offer better rates than traditional lenders. The government says combining solar, batteries, and heat pumps could cut energy bills by £550 a year. Meanwhile, the boiler upgrade scheme may face budget cuts in the upcoming budget. CFT measures are being reviewed to ensure liquidity and crypto markets do not impact funding for energy programs.
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