Two documents published in July 2026 set the direction for every UK business that installs heating, power, charging or controls.
On 17 July, the European Commission published its Electrification Action Plan. A few days earlier, the UK government, Ofgem and NESO (the National Energy System Operator) published the first update to the Clean Flexibility Roadmap.
The EU plan does not apply in the UK. But it sets the benchmark UK policy will be measured against. It will shape the European supply chains UK installers buy from. And it lands while the UK and EU are negotiating over electricity market links.
The UK roadmap does apply, and it contains changes that will reach installation businesses within the next 12 to 24 months.
This briefing covers what each document says, then what it means for each of the seven sectors we work with: HVAC contractors, electrical contractors, heat pump installers, solar and battery installers, EV charging installers, building controls businesses and retrofit businesses.
What is the EU Electrification Action Plan?
The Commission published the Electrification Action Plan on 17 July 2026 as part of a wider package that also included a proposed review of the EU Emissions Trading System and a legislative proposal on network charges. Energy Commissioner Dan Jørgensen presented it alongside Climate Commissioner Wopke Hoekstra and Executive Vice-President Teresa Ribera.
The problem it is designed to solve is simple. Around 70% of EU electricity now comes from homegrown clean sources, but electricity’s share of energy demand has been stuck at 23% for a decade. The grid has decarbonised. What runs on it largely has not.
Broader environmental sustainability strategies for business also depend on this kind of infrastructure-level change, since operational decisions increasingly follow policy direction rather than preceding it.
The headline target
The plan sets an indicative target of 46% electrification by 2040, to be assessed as part of the post-2030 Energy Union package. The Commission estimates reaching it could cut the EU’s fossil fuel import bill by €260 billion a year by 2040. It builds on an existing reference point of 32% by 2030, set under the Clean Industrial Deal and the Affordable Energy Action Plan.
The 46% target is indicative today, not legally binding. The European Environmental Bureau has described it as a target the Commission intends to write into law in a later package, so its status could change.
The barriers it targets
The Commission identifies four main barriers: electricity often costs three times more than gas, grid connections can take years, too many innovative technologies never reach commercial scale, and companies have too little incentive to switch.
Key measures in the EU plan
Closing the electricity–gas price gap. The plan proposes cutting national electricity-to-gas price ratios to a maximum of 2.5 for households and 2.0 for industry by 2030. Under the accompanying proposal, Member States would be required to tax electricity at a rate no higher than natural gas. It also proposes an EU framework allowing Member States to reduce VAT on heat pumps, electric vehicles and household batteries.
Heat pumps. The plan wants annual heat pump installations to rise from 2.4 million in 2025 to 4 million a year by 2030. According to the European Heat Pump Association, it proposes mandatory heat pumps in public buildings, plus support for manufacturing, installer skills and workforce development, including a new Electrification Action Plan Alliance spanning manufacturing to installation. The Commission will also explore a Clean Heat Market Mechanism by 2027 to cut upfront costs.
Buildings. For buildings, the plan focuses on five areas: heat pumps replacing fossil boilers, smart grid-integrated electrification, sector coupling, building-level battery and thermal storage, and active cooling.
Upfront costs. To tackle the upfront cost of heat pumps, the plan proposes expanded financing and social leasing, using public procurement to drive uptake, and better price transparency for consumers.
Smart meters, storage and network charges. The network charges proposal is formally COM(2026) 600. It sets minimum smart meter coverage of 50% of final customers by 2030, rising to 75% by 2033. It also sets a storage target of 200 GW by 2030, up from around 55 GW in 2026, and 500 GW by 2040. Network charges make up roughly a quarter of household electricity bills. The proposal makes time-of-use pricing, locational pricing and non-wire solutions the expected standard for tariff design.
EVs and vehicle-to-grid. The plan launches a framework for regulatory sandboxes to enable vehicle-to-grid projects. The Commission will also adopt network codes allowing EVs to respond to grid signals, and has committed to review the Alternative Fuels Infrastructure Regulation in 2026.
Industry. The plan states that around 60% of industrial fuel-based energy demand can be electrified using heat pumps. Industrial heat pumps and electric boilers can already deliver process heat up to 400–500°C.
Finance. The EIB Group has committed more than €75 billion over three years for energy. The ETS review plans a reinforced Industrial Decarbonisation Bank with funding of up to €100 billion.
What critics say
- Refrigerants. The European Environmental Bureau welcomed the plan but criticised it for not steering Member States towards heat pumps using natural refrigerants, which avoid future PFAS and F-gas restrictions.
- Delivery. Bellona pointed out that no Member State has yet fully transposed the revised Renewable Energy Directive, despite a May 2025 deadline, and the new aim is full transposition by summer 2027.
- Transport. Transport & Environment said the plan relies heavily on voluntary national demand-side measures.
What is the UK Clean Flexibility Roadmap 2026 update?
The Clean Flexibility Roadmap is the UK’s plan for making the electricity system flexible enough to run on clean power. Flexibility here means shifting when electricity is used, storing it, and paying households and businesses to respond to the grid. The original roadmap was published jointly by DESNZ, Ofgem and NESO in July 2025, and the first update followed on 13 July 2026.
It is not an electrification target. But it contains the practical rules that determine how electrified homes and buildings will be sold, installed and operated.
The UK starting point is similar to the EU’s. Electricity accounts for less than a quarter of UK final energy consumption, even though renewables supplied 47% of UK electricity generation in 2024.
Key UK measures for installation businesses
Warm Homes Plan. The Warm Homes Plan commits £15bn of public investment in heat pumps, solar panels and batteries, upgrading up to 5 million homes and lifting up to a million families out of fuel poverty by 2030. It includes £1.1bn for low carbon heat networks over this parliament.
Smart mandate for electric heating. The government has consulted on draft legislation for a smart mandate for electric heating appliances, minimum standards for smart battery storage and tighter rules for smart EV chargepoints. It expects to introduce secondary legislation in Parliament later in 2026. Manufacturers of relevant energy smart appliances will have to provide flexibility guidance with devices at point of sale.
Flexible tariffs for grant-funded kit. The government will assess whether households receiving support for low carbon technologies should use a flexible tariff, with an opt-out, and set out plans by Q1 2027.
Heat pumps favoured over storage heaters. Government analysis found electric storage heaters put a higher burden on the electricity system than heat pumps, even allowing for their greater flexibility and lower capital cost.
EPC reform and landlord deadlines. Domestic Energy Performance Certificates will get four headline metrics: Fabric Performance, Heating System, Smart Readiness and Energy Cost, launching in the second half of 2027. By 1 October 2030, private landlords must reach EPC C on fabric performance plus either the heating system or smart readiness metric, unless exempt.
Commercial demand flexibility. NESO has a target of 750MW of industrial and commercial flexibility in its markets by 2030, and its first-year target of 170MW has been met.
Levy removal. An up to £20m trial will test removing final consumption levies for businesses and households that increase demand when there is surplus wind. It runs for 18 months across two winters, starting in winter 2026. The government will also take primary powers to remove final consumption levies from electricity exported back to the grid, a key industry ask for vehicle-to-grid and domestic batteries.
Half-hourly settlement and time-of-use tariffs. Half-hourly settlement means meters are billed on actual half-hourly usage, which is what makes time-of-use tariffs workable. By mid-June 2026, more than 11.3 million smart meters had moved to half-hourly settlement, with all meters due to migrate by May 2027. The first phase of standardised time-of-use tariff data sharing between suppliers is due in February 2027.
Public sector buyers. The Government Commercial Agency is designing new energy procurement frameworks for schools, hospitals and government buildings, with routes to flexible tariffs and aggregator-led services.
The UK–EU link. Negotiations between the UK and the European Commission on UK participation in the EU Internal Electricity Market began in May 2026, following the UK–EU Common Understanding. The UK is also a partner in the Electrify Now initiative, launched with the Commission at London Climate Action Week on 23 June 2026.
EU vs UK electrification policy at a glance
| EU Electrification Action Plan | UK Clean Flexibility Roadmap and related policy | |
| Electrification target | 46% of final energy by 2040 (indicative) | No electrification-share target in the roadmap |
| Heat pumps | 4 million installations a year by 2030 | Warm Homes Plan: up to 5 million homes upgraded by 2030 (all technologies) |
| Electricity vs gas pricing | Price ratio caps of 2.5 (households) and 2.0 (industry); electricity taxed no higher than gas | Levy removal limited to surplus-demand use and exported power |
| Smart requirements | Smart meters for 50% of customers by 2030 | Smart mandate for electric heating appliances; flexible tariffs linked to grant support |
| Buildings deadline | Heat pumps proposed as mandatory in public buildings | Private landlords at EPC C by 1 October 2030 |
| Storage | 200 GW by 2030 | Grid-scale storage expansion and long-duration storage support |
What electrification policy means for HVAC contractors
The direction is set against fossil heating. The EU plan treats heat pumps as the replacement for fossil boilers. UK government analysis favours heat pumps over electric storage heaters on grid impact. For HVAC contractors whose revenue relies on gas boiler installation and servicing, both documents point the same way.
Commercial HVAC load becomes a flexible asset. With NESO targeting 750MW of commercial and industrial flexibility, heating, cooling and ventilation plant in commercial buildings is increasingly valued for its ability to shift demand, not just meet it. EU policy also names active cooling as a priority for buildings.
Operational impact.
- Engineer retraining takes capacity off billable work.
- Design responsibility rises: heat loss, sizing and controls set-up drive whether a job makes money.
- Service contracts written around boilers need restructuring.
Commercial priority. HVAC businesses with recurring low carbon service revenue will be valued above gas-dependent competitors. Buyers will look at what share of maintenance revenue survives the transition.
Related: Fractional COO for HVAC businesses
What electrification policy means for electrical contractors
Every electrified system needs electrical enabling work. Heat pumps, EV chargers, batteries and smart controls all need supply capacity, load assessment and correct integration. The EU’s smart meter minimums and the UK’s half-hourly settlement rollout both increase the amount of metered, grid-responsive equipment on UK circuits.
Grid connections are a bottleneck. Both documents identify slow grid connections as a barrier. Electrical contractors who can manage network operator applications and load management design become the critical path on multi-trade projects.
Operational impact.
- High volumes of small enabling jobs attached to other trades’ projects.
- Margin lost to coordination, waiting time and unbilled variations.
- Rising smart and cyber security requirements on connected equipment.
Commercial priority. Price enabling work as a defined service, not a variation. Electrical capability is what heat pump, solar and EV businesses most need, which makes well-run electrical contractors strong acquisition targets or platforms.
Related: Fractional COO for electrical contractors
What electrification policy means for heat pump installers
Demand drivers are strengthening on both sides. The EU target of 4 million heat pump installations a year will absorb European manufacturing capacity and skilled labour. In the UK, the Warm Homes Plan and the expanded Boiler Upgrade Scheme continue to drive domestic demand.
The product becomes smart by law. The UK’s proposed smart mandate for electric heating appliances means heat pumps will need to connect to flexibility services and time-of-use tariffs. If grant support is linked to flexible tariffs from 2027, customer journeys will change: tariff set-up and consent become part of the sale.
Operational impact.
- Commissioning expands to include connectivity, controls and tariff configuration.
- Running-cost performance becomes the customer’s measure of success. Poor design becomes a remedial.
- Engineer capacity, not demand, sets the growth ceiling.
- Refrigerant choice matters more as F-gas rules tighten, a point critics say the EU plan underplays.
Commercial priority. Standardise survey, design and handover. Evidence first-time performance and low remedial rates. That evidence supports lending, investment and valuation.
Related: Fractional COO for heat pump installers
What electrification policy means for solar and battery installers
Batteries become income-generating assets. The EU storage target of 200 GW by 2030 and the UK plan to remove levies on electricity exported back to the grid both strengthen the case for domestic and commercial batteries. The UK is also setting minimum standards for smart battery energy storage systems.
The EU is cutting VAT on batteries. The proposed EU VAT framework covers household batteries alongside heat pumps and EVs. If UK policy follows the EU price-signal approach, the economics of solar and storage will keep improving.
Operational impact.
- Smart battery standards raise commissioning and data requirements.
- Customer expectations of payback rise, so set-up errors become disputes.
- Monitoring and aftercare become a real cost most pricing ignores.
- Integration with heat pumps and EV chargers turns single-product installs into system design.
Commercial priority. Package monitoring and optimisation as a paid service. Solar and battery businesses that add heat pump or EV capability move towards whole-house electrification, where margin and valuation are higher.
Related: Fractional COO for solar and battery storage businesses
What electrification policy means for EV charging installers
Vehicle-to-grid moves from pilot to policy. The EU plan creates regulatory sandboxes for vehicle-to-grid projects and network codes for EVs to respond to grid signals. The UK is taking powers to remove levies on exported electricity, which improves the commercial case for bidirectional chargers.
Smart charging rules are tightening. The UK government will run a formal consultation by the end of 2026 on communication standards for charge points to support smart charging and vehicle-to-everything. The EU is reviewing its Alternative Fuels Infrastructure Regulation in 2026.
Operational impact.
- Rising interoperability and smart standards expose inconsistent installation quality.
- Bidirectional charging creates a more technical installation category with more grid connection complexity.
- Fleet and public sector clients expect uptime reporting and service levels.
Commercial priority. Move from install-and-leave to install-and-operate. Contracted maintenance and monitoring revenue on commercial and fleet sites is valued far above one-off domestic installs.
Related: Fractional COO for EV charging businesses
What electrification policy means for building controls businesses
Controls become the layer that makes flexibility pay. The UK is building interoperability standards for energy smart appliances. It will future-proof those specifications in 2027 so they can extend to vehicle-to-everything charging and Home Energy Management Systems. A new Smart Readiness metric will be added to domestic EPCs.
Commercial buildings are in scope. The EU plan places smart, grid-integrated buildings and building-level storage at the centre of its buildings measures. In the UK, public sector procurement frameworks will open routes to flexible supply for schools, hospitals and government buildings. That creates demand for controls that can deliver it.
Operational impact.
- Projects need tighter integration with heating, electrical, storage and charging trades.
- Data, cyber security and interoperability responsibilities increase.
- Value moves from one-off commissioning to ongoing optimisation.
- Technical knowledge concentrated in a few senior engineers caps growth.
Commercial priority. Document commissioning standards and turn optimisation into recurring contracts. Controls businesses with contracted service revenue sit closest to the model investors value most.
Related: Fractional COO for building controls businesses
What electrification policy means for retrofit businesses
EPC reform changes what retrofit is measured against. From the second half of 2027, domestic EPCs will report fabric, heating system, smart readiness and energy cost separately. The October 2030 private rented sector deadline turns those metrics into a compliance requirement for landlords.
Integrated retrofit is now the policy model. The EU plan’s buildings measures combine heat pumps, smart electrification, storage and sector coupling. The UK Warm Homes Plan funds heat pumps, solar and batteries together. Both favour providers who can deliver several measures as one programme.
Operational impact.
- Multi-trade sequencing and quality control become the core operational skill.
- Assessment, evidence and funded-work paperwork consume margin.
- Reliance on subcontractors without shared standards leaves the retrofit business carrying the risk without the control.
Commercial priority. Retrofit businesses are the natural hub for bringing heat pump, solar, electrical and controls capability together, through acquisition or a structured partner network. A retrofit firm that owns its delivery standards is a platform. One that brokers subcontractors is a pipeline.
Related: Fractional COO for retrofit businesses
Key dates for UK installation businesses
| Date | Event |
| Later in 2026 | UK secondary legislation expected on smart mandate for electric heating, smart batteries and chargepoints |
| By end of 2026 | UK formal consultation on EV chargepoint communication standards |
| Winter 2026 | UK final consumption levy trial for demand turn-up begins |
| February 2027 | First phase of UK time-of-use tariff interoperability |
| By Q1 2027 | UK plans on linking low carbon technology support to flexible tariffs |
| May 2027 | UK half-hourly settlement migration due to complete |
| By 2027 | EU to explore a Clean Heat Market Mechanism |
| Second half of 2027 | New UK domestic EPC metrics launch |
| 2030 | EU targets: 4m heat pumps a year, 50% smart meter coverage, 200 GW storage, price ratio caps |
| 1 October 2030 | UK private rented homes must meet new EPC minimum standards |
| 2040 | EU indicative target of 46% electrification |
Frequently asked questions
No, not directly. It applies to EU Member States. It affects UK businesses through European supply chains for heat pumps, batteries and components, through UK firms operating in EU markets, and through ongoing UK–EU negotiations on electricity market cooperation.
Not yet. The Commission describes it as indicative, to be assessed in the post-2030 Energy Union package.
It is proposed legislation requiring electric heating appliances, including heat pumps, to meet smart and interoperability standards so they can respond to grid signals and flexible tariffs. The government expects to introduce secondary legislation later in 2026.
It is under assessment. The government has committed to assess whether consumers receiving support for low carbon technologies should use a flexible tariff, with an opt-out, and to set out plans by Q1 2027.
New domestic EPC metrics for fabric performance, heating system, smart readiness and energy cost launch in the second half of 2027. Private landlords must meet EPC C on fabric performance plus either the heating system or smart readiness metric by 1 October 2030, unless exempt.
Across all seven sectors, the policy direction creates demand. What it does not create is the operating capacity to deliver it profitably.
Smart commissioning, flexible tariff set-up, performance guarantees, recurring service contracts and multi-trade coordination all add work between the quote and the invoice. The businesses that win will have standardised that work before volume arrives.
If you run a £1M–£50M installation business and want to see where your operation will break as this demand lands, book a call with Rostone.
