The Clean Heat Market Mechanism (CHMM) began on 1 April 2026, requiring manufacturers of domestic heating appliances to meet a target of 6% of sales with heat pumps, or to acquire credits instead1. The mechanism is described by the Department for Energy Security and Net Zero (DESNZ) as incentivising domestic supply chain investment through incremental targets for appliance manufacturers, helping to stimulate the market investment required to further bring down upfront costs1. The department notes that the scheme precedes the Warm Homes Plan1.
"manufacturers are required to meet target of 6% of sales with heat pumps or acquire credits from 1 April 2026"
The target sits within a wider package of heat and buildings policy set out in the Carbon Budget and Growth Delivery Plan, published in October 2025, which covers policies and proposals to meet statutory emissions reductions targets up to Carbon Budget 6 (2033-2037)1. The factsheet supporting the January 2026 launch of the Warm Homes Plan sets out the following measures and figures1:
| Measure | Detail |
|---|---|
| Boiler Upgrade Scheme | £2.7bn to 2030; £7,500 towards ground and air source heat pumps including water source; £2,500 for air-to-air heat pumps; £5,000 off a biomass boiler; £2,500 for heat batteries once legislation and product standards are in place |
| Oil or LPG replacement | From July 2026, air-to-water and ground source heat pumps replacing oil or LPG systems receive £9,000 for the 2026/27 financial year |
| Warm Homes skills programme | Up to 9,000 subsidised training places for installers and retrofit professionals |
| Heat Pump Investment Accelerator Competition | £90 million for UK-based manufacturing of heat pumps and key components |
| Warm Homes: Social Housing Fund | Additional £295m for FY 26/27, plus a further £100m announced in April focused on solar PV and battery installation |
The Future Homes Standard, which requires new homes to have low-carbon heating such as heat pumps or heat networks and high levels of energy efficiency, had its full technical specification published on 24 March 2026, with standards coming into force on 24 March 2027 followed by a one-year transitional period1. Gas boilers will not meet the required performance standard, and solar panels will be included for the majority of new homes1. On heat networks, a new regulatory regime was introduced as of January 2026, designating Ofgem as the sector regulator to give heat network consumers protections equivalent to those in gas and electricity markets1. DESNZ states it will support at least 10 of the largest English towns and cities to establish heat network zones soon after heat network zoning regulations go live later in 20261.
The factsheet records that a record 125,000 heat pumps were sold in 2025, a 27% increase over 2024, with approximately 45,000 manufactured in the UK1. It cites an aim of 450,000 annual installations per year by 2030, 70% of which are targeted to be manufactured in the UK by 20351. The UK's building stock contributed 81.8 MtCO₂e of carbon emissions in 2024, 22% of the UK total1.
Why it matters for households
The CHMM acts on the supply side, so its effect on a household is indirect: it obliges manufacturers to sell a minimum share of heat pumps or buy credits, which is intended to bring down upfront costs over time1. For a home considering a heat pump, the more immediate figures are the grant levels. The Boiler Upgrade Scheme offers £7,500 towards ground and air source heat pumps, including water source, with £2,500 for air-to-air units and £5,000 off a biomass boiler1. Households replacing an oil or LPG system with an air-to-water or ground source heat pump can receive £9,000 for the 2026/27 financial year from July 20261. A £2,500 grant for heat batteries is stated as available once legislation and appropriate product standards are in place, so no date is given1.
For homes on a heat network, the January 2026 regime brings Ofgem regulation and consumer protections equivalent to those in gas and electricity markets1. The factsheet notes that relative gas and electricity retail prices are an important factor in heat pump adoption and heat network connections, even though heat pumps can be over three times more efficient than boilers1. It also states that high upfront costs and regulatory barriers can get in the way of adoption of clean energy technologies1.
What happens next
The Heat Pump Investment Accelerator Competition Round 2 opened on 21 April 2026 and runs to 5 August 2026, with funding to be provided from April 2027 through to March 20301. The Future Homes Standard comes into force on 24 March 2027, followed by a one-year transitional period, with longer transitional arrangements for higher risk buildings above 18 metres1. Heat network zoning regulations are expected to go live later in 20261. The factsheet does not report a date for the heat battery grant legislation or product standards1.