UK launches no- and low-interest loans for home solar panels and heat pumps

Overview

Updated Yesterday

A UK homeowner can now borrow up to £20,000 at zero or low interest to replace a gas boiler with a heat pump, or £15,000 for rooftop solar, with no upfront cash. The government-backed Warm Homes Loan Scheme launched Tuesday across England, Scotland, Wales and Northern Ireland with ten participating lenders.

The loans cover heat pumps, batteries, solar panels, biomass boilers and heat network connections. Households can stack them on top of an existing £9,000 heat pump grant, with the goal of cutting bills and turning these upgrades from niche purchases into mainstream home improvements.

Why it matters

The scheme could cut thousands of UK households' energy bills by up to £550 a year with no upfront cost — the test of whether heat pumps finally go mainstream.

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Key Indicators

£550/year

Potential annual bill savings

Typical saving from a heat pump, battery and solar combo, plus up to £300 more with a time-of-use tariff.

£7,500–£35,000

Loan range by technology

Ground source heat pumps top the range; solar panels and batteries cap at £15,000 each.

Initial participating lenders

Includes Tandem Bank, Homeserve, Sunsave and the South Manchester Credit Union.

Maximum interest rate reduction

A government grant cuts up to five percentage points off regular loan rates.

Voices

Curated perspectives — historical figures and your fellow readers.

People Involved

Miatta Fahnbulleh

Minister for Energy Consumers, Department for Energy Security and Net Zero

Co-signed the Warm Homes Loan Scheme factsheet

Martin McCluskey

Minister at the Department for Energy Security and Net Zero

Co-signed the Warm Homes Loan Scheme factsheet

Organizations Involved

Department for Energy Security and Net Zero

UK government department

Runs the Warm Homes Plan and the loan scheme

The UK department created to manage energy security, net zero and consumer energy policy.

Tandem Bank

Digital bank

One of the first approved lenders in the scheme

A UK digital bank offering reduced-rate loans for solar panels and heat pumps through the scheme.

Homeserve

Home assistance company

Participating lender, partnering with E.On

One of ten approved lenders, offering reduced-rate loans in partnership with energy supplier E.On.

Timeline

2025 October 2026

4 events Latest: Yesterday

Tap a bar to jump to that date

October 2026
Warm Homes Loan Scheme launches across the UK
Latest Policy

Government-backed no- and low-interest loans for heat pumps, solar and batteries become available from ten lenders across England, Scotland, Wales and Northern Ireland.
Yesterday
September 2026
Final scheme rules published
Policy

Warm Homes Loan Scheme rules laid out the financial mechanism: a capital grant of up to 20% of loan value, paid to lenders in arrears after verified installations.
September 2026
June 2026
Nearly 150,000 solar installations in first half of 2026
Market

Solar panel installations across the UK approached 150,000 in the first six months of 2026, driven by high energy prices.
June 2026
2025
Heat pump sales hit record high
Market

UK heat pump sales reached a record annual high for 2025, according to the government.
2025

Scenarios

Warm Homes loans top 50,000 installations in first year

Likely Resolves by Oct 31, 2027

Discussed by: Government projections and Energy UK's Warm Homes Plan analysis

Strong demand from households facing high energy bills pushes uptake past initial projections. The ten initial lenders expand their offerings, and DESNZ extends the £1.7 billion facility to more technologies. Adoption mirrors the roughly 150,000 solar installations seen in the first half of 2026.

Loan uptake stalls below expectations, scheme scales back

Possible Resolves by Oct 31, 2027

Discussed by: Cautionary parallels with the 2020 Green Homes Grant, closed after months of low uptake

Credit checks filter out many applicants, and households hesitate to take on debt despite the reduced rates. If installations stay well below target, lenders slow their lending and the government shifts subsidy toward grants rather than loans, repeating the pattern of the failed Green Homes Grant.

Scheme expands to new lenders, technologies, and fund levels

Likely Resolves by Q2 2027

Discussed by: DESNZ factsheet: 'further lenders and products expected to join the scheme as it develops'

The initial lender cohort proves popular, prompting DESNZ to add lenders, raise loan caps for battery storage, and integrate with the broader Warm Homes Plan grants. The £1.7 billion facility is drawn down faster than planned, and the loan range widens beyond the initial ten lenders.

Historical Context

3 moments from history that rhyme with this story — and how they unfolded.

2020-2021

Green Homes Grant (2020-2021)

The UK government launched a £1.5 billion voucher scheme offering up to £5,000 (£10,000 for low-income households) toward insulation and heat pumps. The scheme was plagued by delays, a complicated application process, and a shortage of certified installers.

Then

Far fewer installations than expected were completed before the government closed the scheme to new applications in March 2021.

Now

The Green Homes Grant became the cautionary tale for UK home energy finance — a well-funded program undone by poor distribution and administrative friction.

Why this matters now

The Warm Homes Loan Scheme is the government's next attempt to fund home upgrades. Its success depends on avoiding the distribution failures that sank its predecessor.

2010-2019

UK Feed-in Tariff (2010-2019)

The feed-in tariff guaranteed payments to households for electricity generated by rooftop solar panels. The guaranteed income stream drove a boom in UK solar capacity, which grew from less than 1 GW in 2010 to over 13 GW by the time the scheme closed in 2019.

Then

Solar panel installations surged as homeowners earned a steady return on their investment.

Now

The tariff was eventually judged too costly and closed to new applicants, but it left the UK with a large installed base of rooftop solar that still generates power today.

Why this matters now

The feed-in tariff shows how a reliable financial mechanism can scale clean home technology at pace — and what happens when the cost of that mechanism outstrips its political support.

2022-present

Boiler Upgrade Scheme (2022-present)

A grant program that pays households toward the cost of installing a heat pump. The grant has risen over time and now stands at up to £9,000 per installation (per the Warm Homes Loan Scheme factsheet).

Then

The scheme made heat pumps cheaper but still left a gap for households unable to cover the remaining cost.

Now

The Warm Homes Loan Scheme is designed to complement the Boiler Upgrade Scheme, letting households combine a grant with a loan to cover the full installation cost.

Why this matters now

Direct grants alone haven't reached the 'able to pay' market. The loan scheme fills the gap the grant program left behind.