Warm Homes Plan: The Factories Making Heat Pumps in the UK

The UK has unveiled an ambitious residential energy upgrade programme, with £15bn (US$20bn) in public funding committed to retrofit up to five million homes with solar panels, heat pumps and battery storage by the end of the decade.

Prime Minister Keir Starmer and Energy Secretary Ed Miliband announced the Warm Homes Plan on 20 January 2026, setting out proposals that could lift a million families out of fuel poverty while accelerating the transition to electrified domestic heating.

The initiative arrives as the UK continues to manage the aftermath of volatile gas prices following Russia's invasion of Ukraine, which according to climate think tank E3G, cost the country £183bn (US$246bn).

Heat pumps made in Britain

The UK represents more than 20% of boiler installations in the European Union, according to Global Market Insights. 

This new plan includes a target for 70% of heat pumps installed in Britain to be manufactured domestically, with government investment in the heat pump supply chain tripling to US$113m.

The UK Government projects 180,000 additional jobs in energy efficiency and clean heating by 2030.

Approximately 122 businesses in the UK manufacture radiators and boilers, and if heat pump demand rises then production lines may need to be changed. 

Some manufacturers have already taken action to prepare for heat pumps. 

Groupe Atlantic invested £60m (US$80.9m) to upgrade its Hull site to include a heat pump production line and Valliant opened a £40m (US$53.9m) heat pump plant in Derby in 2025. 

Charlotte Lee, CEO of the Heat Pump Association UK, describes the funding as "a strong signal to both industry and consumers that the shift to clean, electrified heat remains important for this Government".

Solar Energy UK's Policy Director, Gemma Grimes, says that almost two million small-scale solar installations have already been completed.

Universal access and industry response

All UK homeowners will gain access to zero and low-interest loans for solar installations, with the government pledging to triple rooftop solar capacity by 2030.

A £7,500 (US$10,061) universal grant for heat pumps will be available, including what could be the first government support for air-to-air heat pumps that can cool homes during summer months.

New protections for renters will require landlords to upgrade properties, with government estimates suggesting this could lift 500,000 families out of fuel poverty by the decade's end.

Currently, 1.6 million children live in private accommodation affected by cold, damp or mould.

Greg Jackson, Founder and CEO of Octopus Energy, the UK's largest heat pump installer, says: "Electrifying homes is the best way to cut bills for good and escape the yoyo of fossil fuel costs."

Chris O'Shea, CEO of Centrica, says: "To achieve net zero, we must start where it matters most - in people's homes.

"That means making the transition simple, affordable and within reach for every household."

Delivery and future implementation

The plan will be delivered through a new Warm Homes Agency, consolidating functions currently distributed across the energy regulator Ofgem and other bodies.

Regional mayors will lead local rollout, though details on financing mechanisms and consumer access to loans are expected to be finalised later in 2026.

The government has also committed to implementing the Future Homes Standard in early 2026, requiring solar panels as standard on all new builds.

Critics note that cancellation of the Zero Carbon Homes standard led to more than a million homes being built with higher running costs.

The initiative forms part of the government's wider clean power mission, with buildings currently responsible for more than a fifth of Britain's territorial greenhouse gas emissions.

Total investment across the parliamentary term is projected to reach around £38bn (US$51bn) when private sector contributions are included.