Heat and buildings strategy: Key points

On 19 October, the government released the Heat and Buildings strategy outlining how the government will tackle the decarbonisation of the built environment to help meet the UK net zero ambition. Our experts have taken a quick look at the strategy and highlighted the key points.


The strategy makes commitments to phase out the installation of new natural gas boilers beyond 2035 “once costs of low carbon alternatives have come down”. They have set a “clear” ambition for the industry to reduce the costs of installing a heat pump by at least 25-50% by 2025 and to ensure heat pumps are no more expensive to buy and run than gas boilers by 2030.

To encourage consumers to switch to a heat pump, the government will provide a clean heat grant called the Boiler Upgrade Scheme. This will give households a £5,000 grant when they switch to an air source heat pump or £6,000 when they switch to a ground source one.

A £60mn Net Zero Innovation Portfolio (NZIP) ‘Heat Pump Ready’ Programme will support the development of innovation across the heat pump sector, including improving customer experience.

Energy bills

In response to reducing electricity costs, the government has said it is considering rebalancing energy levies (such as the Renewables Obligation and Feed-in-Tariffs) and obligations (such as the Energy Company Obligation) away from electricity to gas over this decade. This will include looking at options to expand carbon pricing and remove costs from electricity bills. We explore this in our insight paper – Who pays for supporting the net zero transition.

The electricity network

The strategy acknowledges that the electricity system will need to accommodate increased electricity demand. The government has said that they will work with Ofgem, distribution network operators, and others to plan the network. They will also consider the role of flexibility.

We looked at the electricity network and the net zero transition in this insight paper.


A decision on the potential role of hydrogen in domestic heating buildings will be made in 2026, following the completion of a Hydrogen Village trial in 2025, supported by the government and gas network operators.

For more information on hydrogen please see Understanding the backdrop of the UK hydrogen economy and Industrial decarbonisation key for UK low carbon hydrogen.

Energy efficiency

The strategy mentions continued drives to improve poorer performing homes throughout the 2020s so as many homes as possible can achieve an EPC band C by 2035.

The strategy announced boosting funding for the Social Housing Decarbonisation Fund – investing a further £800mn over 2022/23 to 2024/25 – and Home Upgrade Grant investing a further £950mn over 2022/23 to 2024/25, both aim to improve the energy performance of households.

A full analysis and commentary on the Net Zero Strategy will feature in next week’s Energy Spectrum. To request a free trial or discuss a subscription, please contact Robert Buckley on r.buckley@cornwall-insight.com.

Related thinking

Power and gas networks

New Fault Ride Through compliance arrangements introduced for transmission-connected generators

Ofgem approved Workgroup Alternative Grid Code Modification 1 (WAGCM1) of GC0151 Grid Code Compliance with Fault Ride Through (FRT) Requirements on 5 November. In short, this decision introduces a new, legal process, into the Grid Code – the legal text that governs those connecting to the electricity transmission system -...

Power and gas networks

Location, location: The increasing complexity of embedded benefits

There is growing recognition of the need to reform our current network arrangements to support a more dynamic and flexible electricity system as we undergo the transition to net zero. Among the network elements currently going through a period of review are Distribution Use of System (DUoS) charges, which recover...

Regulation and policy

Just the bill please – who picks up the costs of market exits?

This article is an extract from our Energy Spectrum Nutwood. find out more about a subscription to Energy Spectrum here. Between 9 August 2021 and 19 November 2021, 22 energy suppliers exited the market impacting more than 2mn mainly domestic customers. Supplier exits result in a number of costs being...

Regulation and policy

Keeping an eye on compliance

In response to the rising wholesale energy prices, Ofgem published a letter on 29 October setting out the steps that it is taking to protect the short- and long-term interests of consumers. In addition to its intention to consult this month on the current price cap methodology, Ofgem set out...

E-mobility and low carbon

Net Zero Strategy: key points

Yesterday, the government announced its long-awaited Net Zero Strategy, a 368-page document that provides a route the nation will take to a net zero economy. The strategy outlines how spending will be prioritised for power, fuel supply and hydrogen, industry, heat and buildings, transport, natural resources, and greenhouse gas removals....

Home supply and services

Shaken, not stirred: The fate of the supply market

This Energy market perspective was taken from our Energy Spectrum publication on 4 October 2021. To find out more about a free trial to Energy Spectrum, find out more here or contact Robert on r.buckley@cornwall-insight.com. As we enter the winter 2021-22 trading season, the energy supply market remains in intense...

Home supply and services

Rocketing energy prices and failing suppliers—what is happening?

Sky high gas prices and energy suppliers going out of business have been key headlines in the news over recent weeks, but what is actually happening?  Through the COVID-19 pandemic we saw much lower gas prices, which have been surging upwards since the spring and risen rapidly through the summer, a time...

Home supply and services

The default tariff cap and the law of unintended consequences

With all eyes on the immediate challenges facing the energy supply market and the impact of the default tariff cap as a contributing factor, it is important to note that the cap for the coming winter period should not be considered in isolation and that attention will swiftly turn to...