Let’s fix financing to kickstart renewable home energy revolution

New Energy Secretary Ed Miliband may want to have a rooftop revolution with solar panels but the people are far from convinced. 

The same goes for heat pumps: awareness of this technology in the UK has never been higher. Hometree’s recent research found that 70% of people are now aware of heat pumps, yet only 30% of people want to install one. 

Decarbonising UK homes is core to the UK achieving its net zero ambitions, now enshrined in law. But there are still too many barriers to adoption, whichever renewable technology you choose.

The Climate Change Committee estimates that to fully decarbonise UK homes, we need an investment of about £250 billion by 2050 (the equivalent of about £9 billion each year). But most people don’t have a spare £10k or £20k sitting around to invest in upgrading their heating system, or putting solar on their roofs.

The UK and European renewable energy market has so far been driven by ‘early adopters’ – customers who are willing to pay cash for solar PV/ heat pumps because they are either enthusiastic about the technology, affluent, or eco-conscious - or all three. 

Yet the upfront costs are still too high for most people, even when homeowners are keen to make the decarbonisation journey. More than half of people asked about heat pumps in our 2024 survey said that cost was the biggest factor influencing their decision on whether or not to get a heat pump, while over 70% said they were concerned about the high costs of installing heat pumps. 

Early adopters are resorting to personal loans to fund their green home decarbonisation and fill this shortfall - last year 12% of European solar customers bought a solar PV system via a home improvement loan, whilst a further 28% took out a personal loan, used a personal credit card, or enlisted finance directly from their PV provider. But the product they are using is generally unsuitable for this purpose - with low term lengths (i.e. 5 years, max 10 years) and high interest rates. 

What we need is a bridge between the capital markets and our homes, creating a better financing model for decarbonisation. That’s why Hometree has worked with Barclays to develop a way of providing low-interest, long term loans that allow homeowners to buy or lease the renewable energy equipment. 

The idea comes from the US where Elon Musk’s company SolarCity pioneered financing, recognising that loans for home improvements have predictable cash flows and are similar to larger scale infrastructure given that they are primarily used by homeowners with good credit scores. 

Getting finance right will help us to accelerate the rate at which we can install renewable energy solutions in the 25 million homes across the UK.