Energy price crisis: Government launches £67m energy efficiency grant scheme

HUG was first confirmed last year

The scheme, called the Home Upgrade Grant (HUG), was first announced last February as part of the Department for Business, Energy and Industrial Strategy’s (BEIS) plans to tackle fuel poverty. It will see money from Whitehall coffers provided to local authorities, which will invite households to book in for free wall and roof insultation and replacement heating systems.

BEIS has stated that up to 4,300 homes will benefit from the initial £67m funding round under HUG. All upgrades should be delivered within a year, and will be offered, in the first instance, to low-income houses that are not currently connected to the gas grid and are ranked as Energy Performance Certificate (EPC) band D or lower.

Through to 2025, £950m will be allocated through the HUG scheme. 22 local authorities will receive funding.

With gas prices currently four times as high as they were last year and electricity prices also skyrocketing, regulator Ofgem announced earlier this month that it will be increasing the price cap for dual-fuel household annual bills by 54% in April.

BEIS is encouraging households to participate in HUG by touting a reduction of up to £200 in annual dual-fuel bills. The climate benefits are not being emphasized by BEIS as much at this point.

Business and Energy Minister Lord Callanan said HUG will “keep more money in people’s pockets, at the same time as making homes warmer, more comfortable and greener”.

The launch of HUG comes as Ministers face increasing pressure to take a broader look at the role energy efficiency could play in shielding the public from the energy price crisis.

There have repeatedly been calls for a replacement to the failed Green Homes Grant, which had covered some £2bn of funding, but only 10% of this budget was spent. HUG will provide less than half of the Green Homes Grant scheme’s level of funding.

Calls are also intensifying for the Treasury to consider temporarily scrapping VAT on retrofitting.

Sarah George

Comments (5)

  1. Keiron Shatwell says:

    While this is a welcome start it is a drop in the ocean of what is needed to help those who need it most benefit the most from upgraded insulation. But forget, for the moment, about doing anything to heating systems. An Air Source Heat Pump costs 2x to 3x as much to run as an oil fired boiler and are only effective in super well insulated homes. With our poor quality housing stock that leaks like the proverbial sieve they are a poor choice for low income households.

    Then what about the rest of us? Those on average wages who are struggling with heating bills because of poor insulation in rented properties? Those on above average wages who might be struggling as their owned home needs upgrading but they too can’t afford to shell out a couple of thousands for insulation or other material upgrades (new windows/doors etc)?

    How about an interest free loan for everyone to apply for specifically for home insulation improvements. It’s not a grant but would help a household "invest" in the future energy efficiency of their home.

    It’s a start but we (the UK) have got to do a lot more to insulate our buildings

  2. Andy Cook says:

    Hi Kieron,
    This study by energy systems catapult concluded that heat pumps are suitable for all UK housing types:

    However, I agree that costs, both capex and opex, are an issue and insulating homes is important to lower running costs and reduce energy demand. With added thermal comfort benefits.

    I haven t dug into the detail of the report yet but it is a comprehensive study on the possibilities for the UK adopting heat pumps.

    It s also worth nothing that the govt recognised in their Net Zero strategy released last year the need to create a market for heat pumps that would be competitive with boilers. I can t remember them providing any detail but you would expect price reductions due to economies of scale as the market increases.

  3. Ian Byrne says:

    Ironically, homes not connected to the grid (and so reliant on electricity) may have smaller percentage increases, although in absolute terms are still likely to be the most expensive to heat. So while this is welcome, it’s work noting that the money won’t go very far (crudely 67mn = 3 per UK household, although it is a lot better targeted than that!) and seems only to be through 22 local authorities.

  4. Keiron Shatwell says:

    Hi Andy,

    I don’t disagree that under ideal circumstances Heat Pumps can be suitable for most UK homes but it is a big caveat that it is under "ideal" circumstances.

    Take my own home for instance: I have microbore piping to standard size radiators and a 300L hot water tank. In order to be effective and to heat my HW to a legionella killing 60 C any heat pump has to be able to heat to at least 65 C (ideally 70 C). My oil fired boiler (A+ rated condensing) can do this without a problem in all weather conditions the West Highlands can throw at us. From what I have researched there isn’t a HP that can manage this (although I stand to be corrected I know). And to install one means ripping out 300m of perfectly serviceable copper pipe, 300m of pipe insulation, destroying walls, lifting floors, cutting holes in joists to replace it all with 300m of larger copper pipe, pipe insulation, repairing plasterboards and floors, plastering, painting. Hardly sustainable when you add it all up.

    If there is a Heat Pump that can heat my CH/HW to 70 C and run through my microbore pipes and standard radiators I’ll certainly consider it if and when my boiler dies.

    Heat Pumps and other Thermodynamic systems do work. The Finns and Swedes have been using them for years but then they use them with underfloor heating in uber insulated, draught free homes not the low quality, cookie cutter, build em cheap sell em high, bits of insulation missing buildings we have.

  5. Philip Aspinall says:

    Air Source Heat Pump performance is improving and becoming capable of achieving higher output temperatures (70’C) even at low outside air temperatures (3’C).
    The cost for the higher performance also goes up exponentially!
    Keiron is correct in his comments regarding the UK housing stock and his old leaky home in the West Highlands.
    There is no point quoting laboratory conditions for efficiency of heat pumps, the mis-quoted COP of 3.5 claims the heat pump creates 350% more heat energy than the electricity it consumes. In real situations, in real houses the heat pump will be expensive to install and expensive to run. Oh yes – I forgot to mention that the electricity used by a heat pump is not some special ‘green electricity’ it comes from the same mix of fossil fuel, nuclear, wind, solar, biogas, ‘French nuclear’ and ‘other’ as available at the particular time and day of the year. Renewable electricity normally less than 50% on average.

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