Explaining the Government's Warm Homes Plan: What It Means for Sussex Homeowners

The UK government has recently announced the Warm Homes Plan (WHP), a £13.2 billion initiative led by Ed Miliband, Secretary of State for Energy Security and Net Zero. 

This new scheme replaces the existing ECO grants system when it ends in April 2026, and it appears to be a large shift in how the government prioritises supporting people to install renewables and energy-efficient products in their homes and properties.

In this post, our CEO and founder, Michael Yeoman, explains what the Warm Home Plan is, what it’s worth for Sussex residents who want to take advantage of it, and how you can apply.

‍

What is the Warm Homes Plan?

The Warm Homes Plan is a range of government grants and loans for installing energy-efficient and/or renewable energy products in Britain’s homes.

It is essentially a reallocation and expansion of the current Energy Company Obligation (ECO) scheme, aiming to help reduce emissions associated with home energy, and support low-income people to save money on their heating bills. 

While ECO currently provides £1 billion annually, the new plan will triple this investment to £3 billion per year from 2026 to 2030. The scheme aims to create "zero-bill" homes by dramatically reducing energy costs through renewables, such as solar panels, batteries and heat pumps, and improved insulation. 

There are three main parts to the Warm Homes Plan:
‍

• Low-income households are the predominant focus: Those with incomes under £36,000 or on certain benefits can receive grants of between £9,000 and £12,000 to cover the installation of solar panels, batteries, heat pumps and insulation, at no cost.
  ‍
  
• All households: Government-backed, low or 0% interest loans to help families buy solar panels, batteries and heat pumps. These can be used alongside the existing Boiler Upgrade Scheme. Maximum borrowing amounts or loan periods haven’t been released, but the government says it will be high enough to cover multiple projects. Details will be released in 2026.
  ‍
  
• Landlords & tenants: Private landlords must ensure their properties have at least an EPC Band C rating by 2030. Landlords will have access to various financing options to meet this deadline.
  ‍

Who is eligible for the Warm Homes Plan?

The Warm Homes Plan targets households with lower Energy Performance Certificate (EPC) ratings of D to G, in privately owned or rented properties. To qualify for grants, you typically need to meet one or more of these criteria:
‍

• Combined gross annual household income under £36,000
  ‍
• Receipt of specific government benefits
  ‍
• Under the Great British Insulation Scheme Flex: household income under £31,000 or a household member with severe health conditions affected by cold homes

How much is the Warm Homes Plan worth?

Eligible low-income households could receive up to £15,000 for upgrades or installations of solar panels and insulation, plus another £15,000 for low-carbon heating systems such as heat pumps. No homeowner contribution required if you meet these criteria.

‍

‍

The Reality for Most Sussex Homeowners

For the majority of homeowners in East and West Sussex considering solar PV and battery systems, the Warm Homes Plan is unlikely to be relevant. Put simply, the narrow eligibility criteria mean most households will fall outside of its scope.

Also, various parties have had mixed success with intervention in this sector before. While the Feed In Tariff (FIT) was a resounding success in encouraging people to install solar panels, the Green Deal was largely a failure.

It charged interest rates starting at around 8% per annum, plus assessment fees of several hundred pounds. By comparison, personal loans from supermarkets such as Tesco and M&S or high street banks typically offered interest rates of around 5.8% per annum, with no initial costs.

‍

Why Solar is Still an Excellent Investment

The good news? With typical returns of 8-12% per annum from solar panels and battery systems (depending on technology, system size, and household energy usage), there's rarely a need for subsidies to make these investments worthwhile. 

Solar installations pay for themselves through energy savings, and with current energy prices, the financial case for going solar has never been stronger. For example, a typical family home in Sussex, with a 10-panel (4.5kWh) system, could expect to pay to break even in around 8-10 years.

What’s more, there are still several incentives to take advantage of, which are available to all households immediately:
‍

• 0% VAT on Energy Saving Materials (ESM): Until April 2027, the installation of energy-saving materials, including solar panels and batteries, carries zero VAT in residential properties. This represents a 20% saving on installation costs and applies regardless of income.
  
  
• Smart Export Guarantee (SEG): This ongoing scheme ensures energy suppliers pay you for any surplus electricity your solar panels export back to the grid, providing an additional income stream from your investment, allowing you to be paid up to 23p per kWh for excess solar.

The economics of solar remain incredibly compelling, and while we welcome any assistance that encourages people to embrace solar, waiting for grant funding that you're unlikely to qualify for means missing out on immediate savings. 

Additionally, these schemes can sometimes have the unintended impact of raising the cost of solar equipment. If you’re ineligible for the Warm Homes Plan, but are still interested in exploring how solar panels and battery storage could work for your East or West Sussex home, the time to act is now, while VAT remains at 0%. 

Contact us today to find out more.