The government's Warm Homes Fund represents one of the most significant domestic cleantech investment opportunities in a generation. With £3.3 billion of innovative finance on the table, the design choices made over the coming months will determine whether that capital builds a lasting British industry or simply subsidises imports.
Cleantech for UK has submitted a response to the Call for Evidence setting out what the Fund needs to get right.
The UK has world-class cleantech innovation. What it consistently fails to do is convert that innovation into scaled, commercially viable businesses. The reason is structural. Venture capital exits before companies reach commercial manufacturing volumes. Infrastructure investors require bankable revenue streams that early-stage businesses cannot yet provide. Growth-stage hardware companies, those building heat batteries, demand flexibility platforms, smart thermal systems and grid-edge technology, fall between the two.
Grant funding alone cannot bridge this gap. What these companies need is patient equity: longer-horizon capital that de-risks scale-up decisions and crowds in private investment alongside it. The Warm Homes Fund's innovative finance envelope is the right instrument. But only if it is designed to reach the companies that need it most.
This is also a moment of acute political importance. Technologies that cut household energy bills are not simply a climate intervention. They are a cost-of-living intervention. Designing the Fund around that reality, backing accessible, affordable innovations and ensuring the benefits reach households beyond the top income quartile, is not just good economics. It is the condition on which public consent for the clean energy transition will ultimately depend.
Our submission makes six specific recommendations to government. We call for a dedicated growth equity co-investment facility within the Fund, with a fast-track approval pathway to meet the fundraising timelines of real companies. We call for a reduction in VAT to 0% on early-stage cleantech products eligible under the Fund, bringing heat batteries and demand flexibility hardware in line with the treatment already applied to solar panels and heat pumps. We call for grant support to be rebalanced away from a single technology toward a broader basket of accessible innovations. And we call for long-term demand signals to be placed on a legislative footing before the Fund begins deploying equity, because finance alone will not unlock private capital if policy remains uncertain.
We also argue that the Fund should build verified outcome measurement into its design from the start, treating measurement and verification infrastructure as a core market-enabling capability rather than an optional reporting layer.
Clean Power 2030 sets a vital direction of travel, but generation alone will not deliver the transition. The missing link is the consumer-facing layer: the networks that can flex and respond, and the appliances and products that allow households to participate actively in a smarter energy system. The Warm Homes Fund has an opportunity to back that layer, anchor the intellectual property and manufacturing capability in the UK, and build an industry that delivers for households and the public finances alike.
We look forward to engaging with government as the Fund's design is finalised.
Read our full submission here
