Policy paper

Warm Homes Plan: Technical annex

Published 21 January 2026

Deployment

Estimates of deployment of fabric measures, low-carbon heating technology, and energy generation and storage technology in the ‘Warm Homes Plan’ are the result of the aggregating impacts across multiple policies. We use the National Buildings Model (NBM), a housing stock model based on the English Housing Survey, supplemented by other policy-specific models. For each policy, we identify the households in scope and estimate the measures installed as a result of that intervention, taking into account interactions between policies.

While the NBM and policy-specific models go through continuous review and robust quality assurance, the results of the modelling are subject to uncertainties, real world behaviour may not match the modelled outcomes for several reasons. Therefore the actual deployment depends on final policy design and choices made by households, landlords and developers.

The following sections provide more detail on specific metrics and targets presented in the ‘Warm Homes Plan’:

Heat pump market target

Our aim is to grow the heat pump market to deliver more than 450,000 annual heat pump installations in existing and new buildings by 2030. For new build, the analysis uses estimates of the new homes to be constructed to Part L 2021 or Future Homes Standard (FHS) performance standards which use a heat pump route to compliance. In 2030 around 200,000 heat pumps are estimated to be installed in new build homes. Build rate assumptions should be taken as an indicative trajectory and do not represent an official forecast of housing supply. In existing homes, the analysis uses modelled heat pump installations supported by government policies over the current Spending Review period, with an extrapolation made to 2030 informed by historic year-on-year growth in the heat pump market. This is a UK-level ambition and assumes proportionate heat pump deployment in existing homes within the devolved administrations, equivalent to that projected under UK government policies.

Homes upgraded

The analysis presented includes estimates of homes upgraded from July 2024 – December 2030 based on Official Statistics of scheme delivery published to date and modelling of potential future policy impacts at the geographic scope of the policy. The estimate includes homes treated under:

• capital funding schemes and retrofit schemes (including the Boiler Upgrade Scheme (BUS), the Warm Homes: Social Housing Fund (WH:SHF), the Home Upgrade Grant, the Warm Homes: Local Grant (WH:LG), Energy Company Obligation (ECO) and the Great British Insulation Scheme (GBIS) to the end of March 2026, provisional estimates of the impact of the additional low income £1.5bn capital delivery route announced at Budget 2025 from 2027/28 onwards, and HMG backed low-interest loans through the Warm Homes Fund (WHF) and other market-led domestic solar photovoltaic (PV) installations
• investment from Private and Social landlords to meet the Minimum Energy Efficiency Standards (MEES) proposals, based on estimates provided in the regulatory impact assessments^{[footnote 1]} and adjusted for overlaps with other policies to avoid double counting; and;
• estimates of the number of new build homes constructed to FHS performance standards which use a heat pump route to compliance or are built with solar panels. Build rate assumptions should be taken as an indicative trajectory and do not represent an official forecast of housing supply

The estimate of low-income households benefitting from these policies was based on the number of households in the bottom 4 income deciles (equivalised, after housing costs) modelled to receive measures. New build homes were not included in this estimate.

Solar PV installations

Estimates of future domestic solar PV installations up to and including 2030 are comprised of modelled deployment from Private Rented Sector and Social Rented Sector MEES regulatory impact assessments^{[footnote 2]}; estimated new build homes built to the FHS performance standards with solar PV; the WH:SHF and the WH:LG; the continuation of market-led deployment based on domestic retrofit installs in 2024/25, and provisional estimates of the impact of the new low income £1.5bn capital delivery route from 2027/28 onwards and the Warm Homes Fund.

Estimated deployment under new schemes reflects latest analysis or published positions where applicable but is subject to final policy design. Geographic coverage varies by policy. For example, Private Rented Sector MEES applies to England and Wales; Social Rented Sector MEES and FHS to England only. The deployment estimates include assumptions around landlord choices. For example, assuming all Social Rented Sector landlords choose smart readiness (proxied for with solar PV) secondary to meeting a primary fabric performance target, under the £10k cap per home.^{[footnote 3]} The element of choice amongst landlords means that the degree of solar PV deployment realised may differ from that in the modelled projection.

Deployment from these schemes is additional to historic domestic solar PV deployment, sourced from DESNZ published statistics,^{[footnote 4]} and future market led deployment where homes take up solar PV outside of government schemes.

Heat networks

The National Zoning Model identifies buildings in England, where heat networks are expected to offer the lowest-cost solution for decarbonising heat. Using outputs from this model, we expect around 20% of UK heat supply to come from heat networks by 2050. Interim targets have been set in order to be consistent with the trajectory required to meet this level.

Targets are presented in 2025 terms, i.e. they are not adjusted for future changes in heat demand due to factors such as changes in population, temperature or energy efficiency.

Bills

Estimates of domestic bill savings are calculated through one of the following approaches:

• dynamic simulation of typical housing archetypes, building on the Cost Optimal Domestic Electrification (CODE) study^{[footnote 5]}
• NBM based estimates of example archetypes under different policies

CODE

Our estimate of a typical household being able to save up to £550 a year from adopting a package of a heat pump, solar PV and battery is based on CODE. The following assumptions have been applied:

• the coefficient of performance for the heat pump is 2.8
• the modelled PV installation is equivalent to 4 kW of PV panels, and the battery is equivalent to 4 kWh of storage
• 4 kW of PV panels represents a common installation size which can fit on most roofs, though PV installations smaller than 4 kW for terraced and semi-detached houses would result in lower estimated bill savings
• with a conventional tariff the battery is run to maximise self-consumption of the generated PV
• solar PV installations are not optimally laid out, with PV laid on the East and West facing roofs. It may be possible for an optimally installed PV array to generate more electricity than modelled
• the model assumes that archetypes have had a basic level of energy efficiency measures applied (cavity and loft insulation of 100mm) to begin with as well as double glazing
• model assumes that households adopting a heat pump no longer pay the gas standing charge. Households which continue to use gas, such as in cooking appliances, would therefore experience lower bill savings

Additional analysis has been undertaken to estimate the potential savings from adopting an illustrative time-of-use tariff and setting up the battery to charge during off-peak hours. The estimated additional bill savings from adopting a time-of-use tariff - alongside a heat pump, solar PV, and battery - is based on the following assumptions:

• figures are based on average energy prices for 2024, for a household in Yorkshire (selected to reflect weather conditions representative of the country overall)
• time-of-use tariff assumed to offer 8 hours of electricity at off-peak rate, 13 hours at standard rate and 3 hours at peak rate
• the battery charges during off-peak hours and aims to maximise self-consumption of solar PV and avoid peak hours

Estimates on bill savings, including those from time-of-use tariffs, are presented separately. Combining or aggregating estimates on bill savings would lead to misinterpretation and therefore all figures should be considered independently.

Example archetype bill savings

Example housing archetypes have been derived from the Quarterly Energy Prices (QEP) Statistics, NBM and CODE, with projected prices for 2028 applied as set out below. The example archetype bill savings for each policy represent a specific set of installations in a specific dwelling to give an example of how a household could see bill reductions under a ‘Warm Homes Plan’ policy. This is different to the average savings expected across a policy, which will average across a larger set of homes combining smaller and larger impacts. For example, the average PRS MEES bill saving across the policy are estimated to be £210/year per household while the example archetype has bill saving of £410/year.^{[footnote 6]}

Gas price projections for 2028, used to estimate bill savings for the example archetypes, have been taken from the Green Book supplementary guidance.^{[footnote 7]} To split prices into standing charge and unit rate an illustrative future standing charge projection for gas and electricity has been estimated based on 2024 average standing charges from QEP.^{[footnote 8]} An implied gas unit rate was then estimated from green book gas prices using 2024 average actual consumption.^{[footnote 9]} To produce an electricity unit rate price series more reflective of current prices, the electricity to gas ratio from the Q1 2026 Ofgem’s default price cap was applied to estimated unit gas prices.^{[footnote 10]}

The following policy adjustments were then made to reflect the announcements to remove particular costs from gas and electricity prices at Budget 2025.^{[footnote 11]} These impacts have been calculated against baseline prices produced using 2025 values taken from Ofgem’s default price cap^{[footnote 12]}, using summer and winter demand weights to produce an annual average value paid by those on single rate metering arrangements. Future £/MWh prices have been adjusted to account for changes in aggregate sales, using the DESNZ Energy and Emissions Projections gas and electricity demand projections.^{[footnote 13]}

• 75% of Renewable Obligation (RO) funded by exchequer from April 2026 until March 2029. Baseline RO cost projections have been taken from Office for Budget Responsibility November 2025 Economic and fiscal outlook
• Energy Company Obligation (ECO) and Great British Insulation Scheme (GBIS) levy funding ends in April 2026. Baseline ECO/GBIS costs have been assumed to remain flat in real terms until 2030

The illustrative impact of a higher performing heat pump with a Time of Use (TOU) tariff demonstrates what some households could achieve in the nearer term from switching from a gas boiler to a higher performing heat pump. This is based on average actual electricity and gas consumption for 2024 taken from QEP statistics. Prices are based on the Q1 2026 price cap, adjusted for changes announced at Budget 2025. Gas demand converted to heat-pump consumption based on 8% demand uplift, 84% boiler efficiency and 311% heat pump efficiency and assumes heat pump household no longer pays the gas standing charge. Savings from adopting a time of use tariff are consistent with a 10% reduction in the unit rate for electricity, based on a review of evidence of time of use tariffs in relation to heat pumps and adjusting for the role of other demand shifting technologies in shifting electricity to lower price periods.

Jobs supported

Estimates of jobs supported by the ‘Warm Homes Plan’ includes estimates of both direct and indirect jobs, which can be defined as:

• Direct jobs: the roles involved in the deployment, installation and maintenance of technologies such as heat pumps, heat networks, energy efficiency measures and solar PV and batteries
• Indirect jobs: intermediary roles in the supply chain, such as manufacturing

The 2030 estimates are for jobs supported by the Plan but do not measure net additional jobs across the sector. The 2030 figure is inflated by the assumption that a large proportion of private rented sector homes will be treated in that year, in time for the regulations. The overall job impact, from this policy, estimated at 180,000, may be more spread out, reducing the 2030 figure. Further details of how the number of for jobs supported are estimated are detailed in the ‘Clean Energy Jobs Plan Technical Annex’.^{[footnote 14]} This applies to both UK and regional estimates, with equivalent policy actions assumed in devolved governments.

Investment

Estimates of investment over 2024 to 2030 are calculated by aggregating estimates of gross capital expenditure for multiple policies (new build standards use net capital expenditure to avoid counting the impact of general construction costs). Estimates include both public investment through spending review settlements and private investment, for example Housing Association Co-funding.

The gross capital expenditure for each policy is calculated based on measures costs; it therefore does not include additional costs needed to administer policies. The capital expenditure is calculated based on the geographical scope of the policy, however, where devolved governments are expected to take similar actions, an appropriate scaling factor is applied to the gross capital expenditure to account for this.

The public funding committed in the ‘Warm Homes Plan’ - £15bn this Spending Review period – is the largest capital allocation to schemes improving the energy efficiency and heating of homes to date. This is based on a comparison of the £15bn committed under the ‘Warm Homes Plan’ to the following comparable historic funding commitments and outturn funding:

• 2025/26 – 2027/28: £6 billion capital funding committed for homes, public sector and industrial decarbonisation^{[footnote 15]}
• 2022 – 2025: £6.6bn capital funding committed for homes and public sector decarbonisation^{[footnote 16]}
• In 2013 – 2015, £540 million committed over 3 years for energy efficiency upgrades^{[footnote 17]}
• In parallel, since 2014 the Renewable Heat Incentive has to date made £1.2bn of payments^{[footnote 18]}
• From 2000/01 – 2012/13, the Warm Front scheme funded £2.9bn of heating and energy efficiency upgrades for qualifying households^{[footnote 19]}

1. Social Rented Sector MEES consultation stage impact assessment Improving the Energy Efficiency of Socially Rented Homes in England - GOV.UK; Private Rented Sector MEES Impact Assessment to be published alongside the ‘Warm Homes Plan’. ↩

2. Social Rented Sector MEES consultation stage impact assessment Improving the Energy Efficiency of Socially Rented Homes in England - GOV.UK; Private Rented Sector MEES Impact Assessment to be published alongside the ‘Warm Homes Plan’. ↩

3. For further detail see the Social Rented Sector MEES consultation stage impact assessment Improving the Energy Efficiency of Socially Rented Homes in England - GOV.UK; Private Rented Sector MEES Impact Assessment to be published alongside the ‘Warm Homes Plan’. ↩

4. DESNZ (2025) ‘Solar photovoltaics deployment’ (GOV.UK) ↩

5. See the full CODE study for further details: BEIS (2021) ‘Cost Optimal Domestic Electrification (CODE)’ (GOV.UK) ↩

6. For further detail see the Private Rented Sector MEES Impact Assessment to be published alongside the ‘Warm Homes Plan’. ↩

7. DESNZ (2023) ‘Green Book supplementary guidance: valuation of energy use and greenhouse gas emissions for appraisal’ (GOV.UK), data tables 1 to 19: supporting the toolkit and the guidance ↩

8. DESNZ (2025) ‘Annual domestic energy bills’ (GOV.UK), QEP Average unit costs and fixed costs for gas for GB regions and electricity for UK regions, Table 2.3.4 and Table 2.2.4 ↩

9. DESNZ (2025) ‘Annual domestic energy bills’ (GOV.UK), QEP Average annual domestic gas bills by various consumption levels, Table 2.3.5 ↩

10. Ofgem (2025) ‘Energy price cap (default tariff) levels’, 1 January to 31 March 2026, ‘Policy Cost Allowance Methodology (Annex 4)’ ↩

11. DESNZ (2025) News story: ‘What does the Autumn Budget mean for your energy bills?’ (GOV.UK) ↩

12. Ofgem (2025) ‘Energy price cap (default tariff) levels‘,1 January to 31 March 2026, ‘Policy Cost Allowance Methodology (Annex 4)’ ↩

13. DESNZ (2024) ‘Energy and emissions projections: 2023 to 2050’ (GOV.UK), ‘Annex F: Final energy demand in TWh’ ↩

14. DESNZ (2025) ‘Clean Energy Jobs Plan technical annex’ (GOV.UK) ↩

15. DESNZ (2023) News story: ‘Families, business and industry to get energy efficiency support’ (GOV.UK) ↩

16. DESNZ (2023) News story: ‘Families, business and industry to get energy efficiency support’ (GOV.UK) ↩

17. DECC (2013) News story: ‘Government action to help hardworking people with energy bills’ (GOV.UK) ↩

18. Ofgem (2025) ‘Domestic Renewable Heat Incentive Annual Report: April 2024 to March 2025’ ↩

19. House of Commons Library (2013) ‘Warm Front Scheme Research Briefing’ (PDF, 249 KB, 7 pages) ↩