Households across the UK are set to be able to spread the cost of home energy upgrades over several years. According to The Guardian, the government-backed Warm Home Loans scheme launched on 27 October, offering interest-free or low-interest loans for heat pumps, solar panels and battery storage. The newspaper reports that borrowing ranges from £7,500 to £35,000.
The scheme aims to address one of the main barriers to these improvements: paying for installation upfront. It is not, however, a non-repayable grant. The cost is spread across instalments, and the money borrowed must be paid back — even where no interest is charged.
What can the loans cover?
According to The Guardian, loans of up to £10,000 are available for an air-source heat pump, rising to £35,000 for a ground-source heat pump. Financing is also intended to cover solar panels and battery storage, which allows electricity to be saved for later use.
British Gas is working with Tandem Bank on its offering, while E.On is working with HomeServe, the newspaper reports. That does not mean every loan will be interest-free. The report describes both interest-free and low-interest finance but does not set out full eligibility criteria, specific interest rates, repayment periods or the total cost of individual offers.
Bill savings are estimates, not guarantees
Government estimates cited by the newspaper suggest that combining a heat pump, battery storage and solar panels could cut annual energy bills by up to £550. A time-of-use tariff, under which electricity prices vary depending on when it is used, could increase those savings by a further £300 a year.
Those figures describe the estimated effect of a combination of technologies, rather than guaranteed savings from installing a single device. Nor do they mean that lower bills will cover the loan repayments in every home. For households considering an upgrade, the terms of the agreement — including the interest rate, repayment period and total amount repayable — will therefore matter alongside projected energy use.
