The UK government rolled out its Warm Homes Plan in January 2026. They are planning to spend £15 billion to upgrade up to 5 million homes over the next few years. The focus is on heat pumps, rooftop solar with batteries, insulation, and heat networks. The government expects this will pull in another £23 billion from private investors, bringing total investment to around £38 billion.
On top of that, the plan could create 180,000 jobs in construction, manufacturing, and installation. For investors, that means companies supplying heat pumps, solar panels, and insulation are likely to see strong demand for years.
Why It Matters
Homes are responsible for roughly 20 percent of UK emissions, and millions of households still struggle with high energy bills. This plan is different from earlier schemes like the Green Homes Grant because it covers the full picture: heat pumps, solar panels, batteries, insulation, and smart controls.
The government wants upgrades to save people money while cutting emissions. Each home could save hundreds of pounds a year, which makes adoption more likely and gives companies some predictable demand.
How the Money Will Be Used
Here is a quick look at how the £15 billion is being spent:
- £5 billion for low-income households through social housing grants
- £2.7 billion for the Boiler Upgrade Scheme, offering grants up to £7,500 for heat pumps, air-to-air systems, and heat batteries
- £2 billion in low or zero-interest loans for homeowners
- £1.1 billion for heat networks, plus another £1 billion to expand district heating
- £90 million to boost heat pump manufacturing in the UK, aiming for 70 percent domestic production by 2035
- £30 million for innovation in heat pump technology
The targets are ambitious. By 2030, the government wants 5 million homes upgraded, 3 million rooftops with solar, and 450,000 heat pump installations each year. Heat networks should supply 7 percent of the country’s heat demand by 2035, up from 3 percent today.
Where Investors Can Make Money
If you are looking for opportunities, here is the breakdown:
Heat Pumps – The market is set to grow fast. Installation revenue is around £8,000 to £15,000 per home. Companies to watch include:
- Daikin (TYO:6367)
- Mitsubishi Electric (TYO:6503)
- UK firm Ideal Heating (private, but worth following for market signals)
Solar Panels with Batteries – 3 million rooftops are the target, often paired with heat pumps. Companies that could benefit include:
- Tesla (NASDAQ:TSLA)
- Enphase Energy (NASDAQ:ENPH)
- SolarEdge (NASDAQ:SEDG)
Insulation and Building Materials – Millions of homes need retrofits, which will boost demand for high-quality materials. Companies to watch include:
- Kingspan Group (LSE:KGP)
- Rockwool (CPH:ROCK B)
- Saint-Gobain (EPA:SGO)
Heat Networks and Utilities – Over £1 billion is going into district heating. Potential winners include:
- SSE (LSE:SSE)
- Centrica (LSE:CNA)
- Veolia (EPA:VIE)
Green Finance – £2 billion in loans creates opportunities for banks and fintechs offering energy-as-a-service. Companies to watch include:
- Barclays (LSE:BARC)
- NatWest (LSE:NWG)
- Octopus Energy (private, but keep an eye on potential IPOs)
There is also room to look at small UK clean tech companies and global ETFs such as iShares Global Clean Energy (NASDAQ:ICLN). Real-world examples like Ideal Heating’s £12M expansion and Vaillant’s £40M plant show how this policy creates jobs and strengthens domestic manufacturing.
Risks
There are some hurdles to keep in mind. Installer shortages are real. There are only about 10,000 heat pump specialists now, far fewer than the plan will need. Supply chains rely on imports, although domestic production is expected to increase.
Policy changes or high interest rates could slow adoption. Competition may drive prices down, squeezing margins. Other practical issues include planning restrictions, retrofitting historic buildings, and the focus on low-income households, which could limit uptake in other segments.
The government has set aside £140 million for skills and supply chains and £30 million for innovation, which should help, but investors need to be realistic about short-term challenges.
The Big Picture
Overall, the Warm Homes Plan is more than just government spending. It signals a long-term shift toward clean energy in the UK. It could cut emissions, reduce grid costs, and push the market away from fossil fuels.
For investors, the next 3 to 5 years could be a strong opportunity, especially for companies in heat pumps, solar, and domestic manufacturing. Global trends, such as the EU Green Deal and the US Inflation Reduction Act, align with this plan, which could create spillover growth internationally.
Keep an eye on GOV.UK updates, follow the companies listed above, and consider speaking with a financial advisor before making investment decisions.
Forward-looking information is subject to risks and uncertainties. Please read our full DISCLAIMER.
