£12,000 solar-panel grants for thousands of homes confirmed

Households will be given £15bn in grants and loans to install solar panels, heat pumps and batteries to help lower bills, under new legislation to boost energy resilience in the UK.

A new Energy Independence Bill, announced as part of the King’s Speech, will also seek to shave money off people’s bills if they use power during sunny or windy periods when the grid is producing excess electricity.

But the most eyecatching element of the new legislation is the creation of the new Warm Homes Agency, which will oversee the Government’s vast rollout of energy electrification over the coming years.

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Low-income homes

Under the Warm Homes Plan, around £5bn will be made available to fund free home improvement plans for low-income families. The packages would be tailored to what would be most suitable for people’s homes, whether that is installing solar panels, heat pumps, insulation or draught proofing. It is expected that households with a total income of around £35,000 or less would receive a grant of between £9,000 to £12,000.

Mid-to-high income homes

The Plan will also provide around £2bn of government funding to back no and low interest loans for higher income households to fit heat pumps and solar panels and batteries to help take them off the “roller coaster of fossil fuels”. Ministers had hoped to fast-track the rollout of the plan to help insulate households from the impact of higher energy bills later this year in the wake of the US-Iran war.

Solar panels

According to the Department for Energy Security and Net Zero, the war in the Middle East has led to soaring interest in fitting solar panels and batteries. The department has calculated that an owner-occupier three-bed mid-terrace house with solar panels and battery fitted could save around £450 on their bills each year. The Government is also tweaking regulations to allow those renting or living in flats to buy plug-in solar panels that could save them around £110 a year on their energy bills.

Heat pumps

The new technology has suffered from difficult media coverage, with the cost of fitting heat pumps usually cited at more than double that of a new gas boiler or around £11,000. Under the Government’s boiler upgrade plan, homeowners can apply for a grant of up to around £7,500. Officials have estimated that a three-bed detached house with solar panels and a heat pump could save £550 a year.

Energy discounts

The legislation will enable the removal of charges on power consumers export to the grid, for example from solar panels, and allow discounted energy at times of excess generation to give families more control over bills as renewables increase. Currently, when there is excess power being generated – for example on a sunny, windy weekend day – grid operators have to pay generators to reduce what they are putting into the grid, increasing costs for consumers and wasting clean power when it is most available.

Uncoupling electricity prices from gas prices

A separate piece of legislation, called the Electricity Generator Levy Bill, will aim to lower the cost of energy bills by cutting the link between electricity prices and gas prices. Under the current system, households can end up paying higher bills because the price of electricity is set by the last unit of electricity needed to meet demand at any given time. This is usually gas-generated electricity, meaning when gas prices spike, such as during international conflicts, electricity prices go up. The Government hopes to weaken this link and deliver cheaper, more stable bills.

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