Budget 2026: what does it mean for renewables installers?

This year’s Budget brings a mixed picture for renewables installers. The Boiler Upgrade Scheme will continue, but with less funding than previously planned. VAT on qualifying installations will return to 5% from April 2027, while the Warm Homes Loan Scheme offers another route to help customers fund improvements.

Here are the main announcements and what they could mean for your business and customers.

Boiler Upgrade Scheme: funding reduced as demand grows

The government has confirmed £400 million for the Boiler Upgrade Scheme (BUS) in 2027–28, increasing roughly in line with inflation after that. This is £200 million less than the £600 million previously announced, a cut of one-third.

Here’s how previous budgets compare with grants paid:

Our estimate, updated using the September statistics. This is not an official forecast.

We estimate that around 88% of this year’s budget will be spent. However, this includes the quieter first half of the year. September saw record numbers of applications and vouchers issued, with many of these installations still to be completed and paid for.

Some of the rise over July to September is likely linked to the higher £9,000 grant for eligible homes replacing oil or LPG heating, introduced in July. These accounted for 32% of applications during those three months. The higher grant also means more funding is needed per installation.

Some payments will fall into the next financial year. So, while £400 million is more than we expect to be spent this year, it may not be enough if demand stays strong. The cut reduces the funding available just as more customers are applying.

The Budget announcement does not set out changes to individual grant amounts or eligibility.

VAT on qualifying installations returns to 5%

The Budget confirms that the temporary zero rate for qualifying energy saving materials will end as planned, with the 5% reduced rate returning from 1 April 2027.

Installers quoting work for next spring should make sure customers understand the VAT included and how the change could affect their final price. Quotations, contracts and invoicing arrangements will need particular attention where deposits and installation dates fall on different sides of the change.

Heat batteries will also be added to the list of materials eligible for the reduced rate when installed in residential accommodation and charitable buildings, from the same date.

Warm Homes Loan Scheme offers another route to funding

The Budget references the launch of the Warm Homes Loan Scheme, supporting the uptake of heat pumps and other clean technologies.

Access to finance could help customers overcome the upfront cost of improving their homes, providing another route for installers to turn interest into installations.

We’ll cover the scheme in a separate article, including the funding available, eligibility and how it works alongside other support.

Electricity VAT relief extended

The temporary 0% VAT rate on domestic electricity is being extended to 1 July 2027.

The government estimates that the extension will take around £50 off the annualised Ofgem price cap in April 2027. Actual savings will depend on electricity consumption and prices.

This offers temporary support with heat pump running costs. Installers should continue to use up to date tariffs and realistic system performance assumptions when discussing potential savings.

Gas and electricity standing charges set to change

The government has asked Ofgem to abolish domestic gas standing charges in Great Britain, aiming for the end of 2027 or as soon as possible afterwards.

These costs would instead be recovered through gas unit rates, so the effect on individual households will depend on their consumption. Targeted mitigation is promised for households adversely affected. There is also a commitment to reform electricity standing charges, with details due in 2027.

For installers, these changes reinforce the value of a whole-home approach: helping customers understand how installation costs, funding, system performance and tariffs work together to determine the benefits of renewables.