Beyond Clean Power 2030: The urgent need for a Clean Home Energy Strategy by 2035

Jennifer Arran discusses why the government should not overlook the crucial role the residential sector could play in progressing decarbonisation in the UK. 

The UK’s Clean Power 2030 Strategy is a bold and ambitious plan that demonstrates the country’s commitment to decarbonising the power sector. By prioritising investment in large-scale renewable energy, grid modernisation, and market reform, it sends a strong signal to the rest or the world that the UK is serious about tackling climate change and attracting investment in the energy transition. 

However, while Clean Power 2030 is a critical step forward, it’s only part of the picture. The focus on utility-scale projects and industrial energy users leaves a glaring gap: the downstream, residential sector. There are ~25 million homes in the UK, and they account for around 20% of UK carbon emissions, yet there is no overarching strategy to decarbonise them.

What’s missing is a ‘Clean Homes 2035’ target—a clear and complementary vision that sets the direction for the residential sector, drives policy action, and aligns stakeholders around a shared goal. To achieve net zero by 2050, we must phase out new fossil fuel-based technologies by 2035. This means replacing approximately 1.5 million gas boiler installations/year and 1.7 million internal combustion engine (ICE) vehicle sales each year with clean alternatives. Without decisive action now, the UK risks undermining its national progress in the power sector by overlooking the critical role households play in the path to net zero. 

Why we need a Clean Home Energy Strategy 

A comprehensive strategy to decarbonise residential energy by 2035 would bring widespread benefits across every region of the UK. Beyond aligning the residential sector’s ambitions with Clean Power 2030, it would drive large-scale investment and projects in towns and cities nationwide, accelerating the transition to a cleaner, more sustainable future by providing:

• Clear direction and ambition: Just as Clean Power 2030 has given investor confidence and encouraged innovation in the power sector, a Clean Homes 2035 target would focus efforts on transforming the residential sector and provide certainty for investors and innovators alike.
• Policy alignment: A long-term vision would help bridge the policy gaps that have hampered progress on home energy efficiency, low-carbon heating, and smart energy solutions – and provide a framework instead for a consistent policy narrative and appropriate incentives. 
• Market certainty: By providing a clear roadmap, the government can encourage private-sector investment in technologies like heat pumps, energy storage, and solar PV, as well as create jobs in green industries across the supply chain. 

What gaps would the strategy need to address? 

Despite some progress, key barriers are slowing the residential energy transition, and a Clean Homes strategy must address these gaps to unlock the sector’s potential. 

• Upfront and running costs hampering adoption: Short-lived or underfunded policies like the Green Homes Grant and Boiler Upgrade Scheme have left homeowners with minimal support. High retrofit costs for insulation, heat pumps, and solar PV remain significant barriers, while electricity pricing—distorted by wholesale market design and an imbalance in levies and taxes compared to gas—keeps running costs unnecessarily high for low-carbon heating. As a result, heat pump sales are falling far short of the 600,000 annual target for 2028. Meanwhile, the sluggish rollout of smart meters and home batteries further slows progress. Expanding access to home energy management solutions and solar PV could help customers take control of their energy costs and strengthen the case for adoption and take advantage of innovative tariffs or demand side response as it becomes more widely available. 
• Energy Efficiency Standards: The UK’s housing stock remains one of the least energy-efficient in Europe, with a significant proportion (around 38%) of homes built before 1946. There is no comprehensive national retrofit program, and energy performance standards for new builds still fall short of net-zero targets, allowing inefficient homes to be constructed. While the Future Homes Standard, expected later this year, will drive some progress, substantial efficiency improvements will largely focus on renovations and new builds in the short to medium term. With only 41% of homes in England achieving an EPC rating of C or above, there remains a considerable challenge ahead. Approximately 15 million homes in England still need to meet this target, so there is an urgent need for broader, more inclusive action, which ties together regulations, policies and incentives.
• Lack of Integration with wider net zero plans: While the UK has set ambitious targets for zero-emission vehicles (ZEVs) by 2035 and Clean Power by 2030, there is no integrated vision linking residential energy use with these broader goals. For example, vehicle-to-grid (V2G) technology and home charging infrastructure are critical to decarbonising transport but also require action at the household level. The opportunity to integrate into localised energy plans should also be explored and maximised. 

How the Clean Home Energy market is evolving 

The market for residential energy solutions is expanding, driven by innovation from companies like Octopus Energy, OVO, and disruptors such as Aira and Tomato Energy. However, without a coordinated national strategy, progress risks being fragmented and slow. 

Recent insights from LCP Delta’s New Energy Strategies research demonstrates the stark impact of policy commitment on installations by 2030. In a 'pragmatic policy' scenario—characterised by a business-as-usual approach with patchy policy support and trade-offs between economic, environmental, and geopolitical priorities—we see growth, but it remains subdued. In contrast, a 'green world' scenario demonstrates the transformative potential of sustained, long-term commitments to the energy transition, and takes us much closer to installation targets by 2030. Critically, in all scenarios we see growth, but not at the scale required to meet the ambitious installation levels needed to get close to net zero.   

Crucially, across all scenarios, the market requires two to three years to ramp up, reinforcing the need for early and decisive policy action to unlock its full potential. 

Annual installation of electrification assets in the UK

Reference: New Energy Strategies, State of the market 2024

A Clean Homes 2035 strategy would ensure that every home meets high energy efficiency standards, low-carbon heating technologies like heat pumps become the norm, and households actively participate in the energy transition through distributed generation, storage, and dynamic pricing models and would drive growth faster and better.

A call to action: Commit to transforming home energy by 2035

The UK must establish an overarching strategy for residential decarbonisation, setting clear milestones for energy efficiency, low-carbon heating, and home energy solutions. To make clean energy homes a reality to 2035 the key commitments and milestones are essential:

• Commit to heat pump targets: Set a realistic deadline for achieving the 600,000 annual installation target and implement the necessary campaigns, energy efficiency support, and incentives to accelerate adoption and reach this goal.
• Support zero-emission vehicle (ZEV) 2035 plans: Integrate residential energy planning with transport decarbonisation by supporting the installation of vehicle-to-grid technology, home EV charging infrastructure, and smart energy solutions in both new and existing homes. This ensures the seamless integration of clean energy in all households.
• Encourage local and community action: Empower local governments and communities to lead energy projects, such as group purchasing schemes for solar panels and localised retrofit programs.
• Lead in future technologies: Position the UK as a global hub for innovation in residential energy solutions, from AI-driven energy optimisation to V2G systems and dynamic pricing models. The UK could be a market leader in unlocking flexibility values for the customers and making the downstream energy transition financially beneficial for customers.

Clean Power 2030 is a crucial milestone in the UK’s energy transition, but it cannot succeed in isolation. Without an ambitious and coordinated strategy for decarbonising homes, the UK risks falling short of its net zero goals.

Homes are not just passive energy consumers – they can (and need to) become active participants in the energy transition – but without considering the key role households will play, the UK risks missing its carbon emission targets, and the economic benefits that will bring. A Net Zero Homes 2035 target would provide the direction, ambition, and market confidence needed to transform the residential sector and enable the UK to establish itself as a leader in the global energy transition.