All the things I could do: financing green home upgrades

Testing options to help homeowners decarbonise

To reach the net-zero goals set by governments across the UK, we urgently need to make progress on reducing carbon emissions from our housing. We know that the best way to do this is to change how we heat our homes, but take-up of green upgrades such as heat pumps, solar panels and insulation is low. For many homeowners, affordability is a barrier. To explore some possible solutions to the financing challenges, we worked with the Development Bank of Wales to gain a better understanding of the kinds of financial support needed to help encourage and support people to make green home improvements.

What's in the report?

In partnership with the Development Bank of Wales, we conducted a randomised control trial involving 8,000 homeowners across the UK. Our main findings are below.

  • 55% of people would make green home upgrades in the next three years if they had some financial support.
  • Most people (72%-85%) think the government should offer ‘green finance’.
  • Key features of a successful product would include a low interest rate, flexible repayment terms and a complementary support package.
  • Providing support such as a home assessment, advice on which measures to choose and how to find competent tradespeople is equally, if not more, important than the details of a finance product itself.
  • Over 50% of respondents would choose a financial incentive incorporating a low-interest loan and cashback. This could lead to CO2 savings of 1,429kg annually per home.

Our recommendations

  • A government-backed finance service, paired with good support, has the potential to succeed twice. Firstly by directly financing upgrades, but secondly by creating the right environment for homeowners to borrow with confidence from other lenders.
  • We would like to see the UK government reenter this space, taking a more considered approach, rooted in behavioural testing.
  • Finance for heat pumps should be a priority as this achieves the greatest decarbonisation impact.

Authors

Andy Regan

Andy Regan

Andy Regan

Mission Manager, sustainable future mission

Andy works within the Nesta Cymru team as mission manager for a sustainable future.

View profile
Alasdair Hiscock

Alasdair Hiscock

Alasdair Hiscock

Design Lead, Design & Technology

Alasdair is the design lead for Nesta's sustainable future mission, which is focused on the development and testing of innovation to decarbonise homes.

View profile
Dimitris Sarsentis

Dimitris Sarsentis

Dimitris Sarsentis

Analyst, sustainable future mission

Dimitris joined Nesta’s sustainable future mission as an analyst after graduating from his MSc.

View profile
Andrew Schein

Andrew Schein

Andrew Schein

Lead Behavioural Scientist, sustainable future mission

Andrew was the lead behavioural scientist for Nesta's sustainable future mission.

View profile
Andrew Sissons

Andrew Sissons

Andrew Sissons

Deputy Director, sustainable future mission

Andrew is deputy director on Nesta's mission to create a sustainable future, which focuses on decarbonisation and economic recovery.

View profile
Julia Suter

Julia Suter

Julia Suter

Junior Data Scientist, Data Analytics Practice

Julia was a junior data scientist in the sustainable future mission team. She developed solutions for reducing carbon emissions and increasing productivity in the UK.

View profile

Jordan Whitwell-Mak