The residential sector poses one of the most complex and critical challenges in achieving national and international climate goals. The UK Climate Change Committee has made it clear: Without near-total decarbonisation of the UK’s approximately 30 million homes, legally binding net-zero emission targets will not be met.
The Department of Energy Security and Net Zero (DESNZ), through the recently delayed Warm Homes Plan (and ECO5 or the “Warm Homes Obligation”), must address persistent barriers, including:
Recognising these challenges, the energy regulator Ofgem is considering which stakeholders should play a more active role in targeting and delivering energy efficiency measures and low carbon technologies, looking to secure to minimise supply chain costs and optimise network planning, among other benefits.
One proposed model involves DNO-led, area-based coordination of retrofit measures in homes. Local authorities, DNOs, suppliers, and community partners would collaborate to plan and deliver upgrades within defined zones. They would target shared visibility of developments and joint decision-making, particularly concerning investments to alleviate fuel poverty.
Target areas would be identified by combining DNO planning data with demographic and housing insights. Aligning technical and social priorities allows funding to be focused on efforts where they will have the greatest impact—improving household outcomes, enhancing system resilience, and optimising public and obligations-based funding.
Effective coordination requires tracking trends in localised energy demand, such as housing developments, heating electrification, and broader low-carbon technology rollouts, among other factors. To foster collaboration and accountability, early pilots should:
Regular engagement with other stakeholder groups such as housing developers, community representatives, and financial institutions is essential. This ensures flexibility, local relevance, and responsiveness to real-world feedback—creating a more adaptive, inclusive delivery model that also supports network planning.
Coordinating energy efficiency efforts across multiple regional stakeholders offers significant operational and strategic advantages. An immediate benefit is the ability to distribute project management costs across multiple homes in one area, reducing overhead and improving resource efficiency. This is particularly valuable in large-scale programmes where administrative burdens can otherwise become a barrier to progress.
Coordination also enables bulk procurement, lowering unit costs and supporting consistent quality and installation standards. Workforce planning benefits, too, as stakeholders can forecast scale and location of demand, invest in training, and avoid delays caused by labour shortages.
Concentrated interventions help DNOs anticipate and manage demand changes. While regional energy strategic plans will support this, additional local data will be vital during ED3 (2028–2033), Ofgem’s next regulatory period. Unprecedented changes in demand and the corresponding infrastructure upgrades are expected during that timeframe.
Joint planning can also streamline grid connections. For example, if local authorities and DNOs jointly identify zones of planned development or retrofit activity, DNOs can proactively assess grid capacity and plan reinforcements in advance. Crucially, joint planning creates a shared understanding of what development and energy efficiency activity is expected—providing a clear basis for DNOs to make timely, confident decisions on connection viability and reinforcement planning. This shared understanding can help minimize uncertainty, avoid piecemeal approaches, and align investment with delivery timelines.
DNOs are well-positioned to lead or support this coordination. The next step is to forecast and test the scale and feasibility of achieving these benefits.
Area-based coordination improves outreach by engaging entire communities rather than working with individual households—an approach that has often resulted in fragmented delivery and low uptake. The community engagement model builds trust and encourages participation, especially when residents see neighbours benefitting.
Customer acquisition is one of the most costly and difficult aspects of retrofitting homes. Coordinated, area-based efforts enable tailored communication campaigns, local events, and peer-to-peer advocacy—boosting participation and satisfaction. This approach also allows suppliers and local authorities to build relationships with trusted community figures acting as intermediaries and programme champions.
This is particularly valuable in vulnerable or hard-to-reach areas facing language, accessibility, or digital barriers, ultimately strengthening programme impact and sustainability.
Public grants like the UK government’s Boiler Upgrade Scheme are vital, but typically funded through taxation or energy bill levies—both politically sensitive measures during cost-of-living crises. Attracting private-sector financing for retrofit delivery to complement public grants could alleviate this strain on public resources.
Area-based delivery can aggregate demand by bundling thousands of homes into a single programme. Aggregation transforms retrofits from isolated, high-risk interventions into bankable infrastructure projects. Investors prefer large, coherent programmes with clear governance, predictable timelines, and measurable outcomes.
Reducing uncertainty makes retrofit programmes more attractive to investors, unlocking long-term funding for retrofit delivery and network upgrades while reducing reliance on short-term public grants.
Ontario, Canada, offers a successful example of such area-based efforts. The Independent Electricity System Operator (IESO), the not-for-profit corporation that manages Ontario’s grid, has pioneered the use of targeted energy efficiency measures to address grid constraints in urban centres. In both Toronto and Ottawa, the IESO identified critical transmission and supply constraints that would traditionally require costly infrastructure upgrades. The IESO sought to include these non-wire solutions as a way to address these grid constraints and defer investments through targeted energy efficiency interventions.
To achieve these objectives, Guidehouse designed and implemented the BizEnergySaver programme—a first-of-its-kind initiative in Canada that offers incentives for eligible energy-saving measures in Toronto and Ottawa. The programme’s ongoing delivery model includes continual improvement efforts, regular engagement with trade allies, and adaptive updates.
To date, the programme has completed more than 1,500 building assessments, identifying more than 28 MW of peak demand savings and 215 GWh of overall potential energy savings. Independent third-party evaluation of the programme’s first year has confirmed strong cost effectiveness, underscoring its success in delivering measurable grid and customer benefits.
To make area-based retrofit delivery coordination a reality, DESNZ, in partnership with networks and local governments, could:
As part of our work with both the Warm Homes Plan & Obligation and Ofgem’s RIIO-ED3 Sector-Specific Methodology Consultation, Guidehouse experts continue to share insights on what the DNOs’ role should be, pose nuanced questions of how they should be obligated or incentivised to provide support, and suggest pilot structures to lay the groundwork for scalable, resilient retrofitting delivery.
Published October 23, 2025
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