The Energy Secretary made headlines this week with moves to further decouple the electricity price from the price of gas. It’s part of a bigger plan to grow green energy initiatives and accelerate electrification. Can it work? And what role will the construction sector play?

While the move to further decouple the price of electricity from the price of gas garnered most of the headlines, Ed Milliband made a number of announcements while speaking at the Good Growth Foundation in Westminster on 21st April focused on building greater energy security for the UK.

For construction industry businesses, the focus on clean energy was striking.

What clean energy initiatives were announced?

Milliband announced a further £100 million top-up to the Warm Homes Social Housing Fund. The Government has already invested £1.2 billion into the fund to upgrade social homes over the next two years. Grants from the fund are distributed to housing associations and local authorities to decarbonise the homes.

In addition, he announced a £25 million fund to finance a pilot programme for plug-in solar panels. This will be operated in partnership with local authorities and regional mayors. The idea is to take a street-by-street approach to the programme so that tens of thousands of low-cost solar panels are delivered to those most in need.

Some of the householders worst hit by the energy price spike following the Strait of Hormuz closure are those in properties heated by oil and liquified petroleum gas. For these homeowners, Milliband announced an increase to the Boiler Upgrade Scheme grant – raising the allowance from £7,500 to £9,000. These grants help homeowners to electrify by switching to a heat pump.

A further £90 million of Government funding has been earmarked to help build and expand heat pump factories in the UK. This is expected to create around 2,000 new jobs.

And how will these initiatives affect construction industry firms?

The immediate impact will be to the suppliers of green energy solutions. The new funding will be a welcome boost, helping to strengthen market demand. While most of the funding is focused on local authority and social housing, we hope the increased focus on the need to electrify – and the economic benefits of doing so – will also drive wider demand beyond social housing schemes.

For example, moves to make it easier to install electric chargers, including at the roadside, and relax planning rules around electric heat pump installations will help drive wider demand. The Government also plans to work with schools to help them to build rooftop solar panels.

The measures were welcomed by housing associations and developers. Gavin Smart, chief executive of the Chartered Institute of Housing, told Inside Housing, “As another international crisis starts to push energy bills even higher, it is right that the government looks to accelerate the Warm Homes Plan. Every piece of loft insulation or solar panel that we install helps to keep homes warmer and cheaper to power, while reducing our reliance on volatile fossil fuel markets.”

It’s also good news for renewable energy generators and renewable generation construction specialists. Part of the announcement focused on the fast-track building of wind, solar and battery installations on public land. Milliband said, “We’ve got vast amounts of public land that could be used to make us more secure and generate revenue.”

He plans to work with Great British Energy, the Ministry of Defence, Network Rail, Forestry England and other public landowners to build on “untapped public assets” including railway warehouses and unused brownfield sites.

Why is the Government investing in these clean energy initiatives?

According to Ed Milliband, the Government believes that clean energy is the great industrial and economic project for the UK in the twenty-first century.

He told the Good Growth Foundation audience that, “As we face the second fossil fuel shock in less than five years, the lesson for our country is clear: the era of fossil fuel security is over and the era of clean energy security must come of age.”

Milliband said that efforts to build clean power at speed and drive electrification across the economy “must now be faster, deeper and more wide-ranging if we are to protect our security.”

How should the construction industry respond?

While these measures are focused on helping those most vulnerable, it’s great to see the case being made for electrification and clean energy.

There are already some good initiatives happening in our industry. Some construction businesses are working with energy suppliers to advance this agenda. For example, at yesterday’s AWS summit in London, Octopus Energy showcased its partnerships with over 50 housebuilders, including major developers such as Bellway and Persimmon.

Octopus first launched its “Zero Bills” initiative in 2022. It’s a world-first energy tariff that guarantees no energy bills for five to ten years for customers who move into approved homes. These new homes are fully kitted out with state-of-the-art green tech – including a heat pump, a battery and solar panels.

In November 2024, Bellway Homes announced plans to build a 250 Zero Bills homes in partnership with Octopus Energy at a development in Bedfordshire, with the potential for more sites to follow. And Vistry Group, the UK’s largest housebuilder, is piloting the delivery of Zero Bills homes across several developments, with an ambition to scale this initiative at pace in future projects.

Last year, Octopus joined with Homes England to create phase two of the Greener Homes Alliance. This supports small and medium-sized housebuilders whilst encouraging greener building practices.

The alliance will commit £150 million of funding, £42 million of which will be provided by the Agency’s Home Building Fund. This gives SME housebuilders access to further loan finance to build high-quality, energy efficient homes in England.

Phase one of the Greener Homes Alliance made a significant impact, with 20 loans completed totalling £150million – an average loan size to SME developers of £7.5 million. Phase two of the Greener Homes Alliance will seek to support the creation of more sustainable homes by introducing ten new criteria, four of which must be met for developers to benefit from a 1.25% discount on their interest rate. If six or more criteria are met, developers will be eligible for a 2% discount.

We hope that this week’s announcements further hasten the pace of change across the construction sector towards clean energy and decarbonisation solutions.