Fresh calls for policy intervention as UK’s least energy-efficient homes set to pay £1000 extra on gas bills

New analysis by the Energy and Climate Intelligence Unit (ECIU) has found that houses performing poorly on energy efficiency could face energy bills almost £1,000 higher than what the Government is targeting as a minimum standard for energy efficient buildings, prompting fresh calls for policy intervention to combat the energy cost crisis.

Fresh calls for policy intervention as UK’s least energy-efficient homes set to pay £1000 extra on gas bills

The ECIU has found that homes rated band F on the Energy Performance Certificate (EPC) system will likely have to pay gas bills that are £968 higher than those rated band C. The Government is notably aiming for the UK’s housing stock to reach a minimum on band C by 2035.

Currently, the average UK home is rated in band D and these homes will have to pay around £420 more for gas this winter compared to those in a higher band. The ECIU notes that wholesale gas costs have added £2,500 to energy bills during the current cost of living crisis, when electricity is also accounted for, the worst performing homes will need to pay almost £2,000 extra compared to band C homes.

The findings suggest that more policy intervention is required to bring more homes up to the EPC band C before 2035.

An ECO extension has been advocated by groups including the Sustainable Energy Association, Construction Leadership Council, National Insulation Association and EDF. However, to date, the Government has kicked the metaphorical can down the road on extending ECO. The current scheme ran out at the end of March 2022 and its next phase, due to run through to 2026, is yet to be finalised. The ECIU found that energy efficiency schemes such as ECO have contributed to savings of £1.2bn annually under the current cost of energy.

ECIU’s senior analyst Jess Ralston said: “These stark differences between highly insulated and poorly insulated homes show the real-world impacts insulation could have in time to dent exorbitant bills this winter. The most vulnerable, such as the elderly, tend to live in colder homes and these are the groups that are being placed at risk by inaction from the government on energy efficiency.

“The ECO insulation scheme has worked well and is knocking at least £600 a year off the bills of fuel-poor households, but government is non-committal on doing more. We have to consider security of supply too, but more UK gas won’t come online anytime soon, so insulation is our best bet to shield us from the whims of Putin and lower bills during this cost of living crisis and each year after.”

Calls for immediate action

New research published on Tuesday (9 August) by Cornwall Insight has warned that household energy bill costs could surpass £4,200 early next year, bringing in fresh concerns that the UK is failing to respond to the energy cost and supply crises.

Cornwall Insight’s estimates suggest that households would end up paying £355 a month for a dual-fuel bill, compared to £164 currently.

In response, the Association for Decentralised Energy (ADE) is calling for more Government action, notably on scaling energy efficiency solutions.

ADE’s energy efficiency policy manager Chris Friedler said: “With bills set to soar to more than £4,000 a year for the average household, the economics for household energy are changing incredibly quickly. Equally, the Climate Change Committee estimates two-thirds of homes would only need £1,000 to be permanently retrofitted to an acceptable standard.

“Given that the UK’s least efficient homes are likely to pay almost £2,000 more than acceptably insulated homes next year, the numbers for energy efficiency do not lie – it makes complete financial sense to upgrade homes right now. The Government must urgently provide a path for these households to protect themselves this winter and every winter to come.”

Energy companies have been in the headlines for posting sky-high profits, while UK homes are being told to prepare for annual energy bills of £4,000+ next year. With the transition away from gas needed to bring down costs and emissions, how are the biggest suppliers preparing? Click here to find out.

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