This insight is more than 2 years old
Heat & homes

Gap in low-carbon heating policy risks leaving some households out in the cold

Date
October 9, 2025

Table Contents

At a glance

Some 1.8 million homes in the UK fall into the ‘heat gap’ between low-carbon heating policy. These are homes where individual heat pumps are very difficult to deploy due to severe space constraints, and where a lack of nearby commercial anchor loads means that commercially led heat networks are unlikely to be developed. Without a strategic approach from policymakers, these homes will likely be stranded with high-cost, high-carbon heating.

Heat policy has two key technology strands. Heat pumps have rightly been identified as the dominant technology for decarbonising domestic heat, and low-carbon heat networks are also expected to play a significant role, with the UK government aiming for them to meet 20% of heat demand by 2050. Both strands have policy mechanisms to fund and support their deployment. But we have identified that a significant minority of homes that are falling through the gap between the two.

Produced as part of Innovate UK’s Net Zero Living programme, in which we provide expert support on policy and regulation to the 52 participating local authorities, Mind the Gap explores how government and regulators can unlock compelling opportunities to decarbonise these homes effectively.

Key recommendations

  • Deliver a methodology to identify homes in the heat gap. Comprehensive spatial analysis would provide clarity for all buildings, reduce uncertainty and accelerate low carbon heat.
  • Commission research and innovation to clarify the best approach to decarbonise space-constrained households. There is a need to develop compelling delivery models that provide low-carbon heat, affordable bills and effective community engagement.
  • Remove barriers to delivering low-carbon heat in space-constrained homes.

Among the actions we're calling for to overcome the barriers to delivering low-carbon heat in space-constrained homes are:

  • Broadening the reach of existing policy to close the heat gap: UK and devolved governments should ensure that heat network delivery and grants for low-carbon heating are made more inclusive to narrow the gap.
  • Reducing the ‘spark gap’: the UK government should reform levies and restructure electricity markets to reduce electricity bills, alleviate fuel poverty and support the uptake of low-carbon heat through all electric technologies.
  • Capturing the network value of clean heat deployment: Ofgem should require DNOs to engage with low-carbon heat delivery in order to mitigate electricity network investment.
  • Unlocking opportunities for communal heating in individual buildings through revised regulation: the UK government should explore the legal and regulatory barriers to communal heat projects.

Powering up low-carbon homes is one of Regen's strategic goals. To read more about this area of our work, reach out to Peter Griffin.

STAY INFORMED

The Dispatch

Sign up to receive our monthly newsletter containing industry insights, our latest research and upcoming events.

Submission successful
Thank you for signing up to The Dispatch.
There was an error submitting the form. Please check the highlighted fields in red.