Nesta, an independent research and innovation foundation, published Delivering clean heat: a policy plan on 10 July 2024, together with new analysis of what meeting the UK's carbon budgets would require from home heating1. The analysis finds that over 3 million homes need to install heat pumps or other low-carbon heating over this Parliament, which Nesta describes as a 12-fold increase in installations over five years compared with the last five years1.
The UK installed just an estimated 250,000 heat pumps between 2020 and 2024, while 25.5 million UK homes still use oil or gas boilers, according to the press release1. With 28.4 million households in the UK, Nesta says more than 1 in 10 households need to switch1. Home heating is currently responsible for 14% of the UK's carbon emissions1. Nesta estimates that policy reversals and delays by the previous Government, including scrapping higher energy efficiency standards for landlords and delaying the phase out of boilers in off-gas grid homes from 2026 to 2035, have left the UK around 15% short of the emissions savings from homes needed to meet future carbon budgets1.
The report sets out priorities for the new Government's first 100 days, including creating a new national agency to administer government heat and efficiency schemes, ruling out hydrogen for home heating, and launching pilots of neighbourhood delivery schemes1. It recommends rebalancing green levies towards gas and other fossil fuels instead of electricity, and says social housing and fuel-poor households should have fully-funded low carbon heating installation1. On costs, Nesta says a unit of electricity is currently 4.1 times more expensive than a unit of gas, one of the highest ratios in Europe, and that the Government should aim for an electricity to gas price ratio of 2.5 or lower by 20282. It adds that policy costs add £142 per year to the electricity bill for a typical dual fuel household and £46 per year on their gas bill2.
Nesta says that if the policy changes outlined in the report were all put in place, a typical household switching to a heat pump would see energy bills fall by around £400 per year, based on a typical home as defined by Ofgem's typical consumption values switching to a heat pump with an efficiency of 3.01. Without subsidy, it expects an air source heat pump installed in an average home to cost £800 a year more over its lifetime than a gas boiler2.
"The new UK Government will need to reverse the drift away from energy policies that ensured we would meet the UK's net zero targets. It has inherited a big problem on home heating and will need to take urgent action."
Why it matters for households
The plan addresses the running cost gap between gas and electricity, which shapes what a household pays after any switch. Nesta's figures put the current electricity to gas price ratio at 4.1, and note that because heat pumps are significantly more efficient than a fossil boiler they can still deliver bill savings when the price ratio is as high as 3.32. For homes off the gas grid, the report's recommendation to rule out hydrogen for home heating and its criticism of the delayed boiler phase-out bear directly on what heating options are expected to remain available. The report also covers home heating and energy independence and the wider UK home energy regulation and policy landscape, including hydrogen heating policy and heating a home off the gas grid.
What happens next
The report frames its recommendations as actions for the new Government's first 100 days, including rebalancing energy bills, creating a national agency, ruling out hydrogen for home heating and launching neighbourhood delivery pilots1. It also recommends speeding up and broadening delivery of ECO by late 20261. No implementation dates beyond these have been reported.