Study: Stalled energy transition efforts adding £1,750 to average household bills in UK

UK homes are paying, on average, £1,750 more for energy and fuel annually than they would have if the Government had brought forward effective national campaigns on insulation, low-carbon heating and transport and domestic renewables.

Study: Stalled energy transition efforts adding £1,750 to average household bills in UK

 That is the headline conclusion of a new piece of analysis published this week by the Energy and Climate Intelligence Unit (ECIU). The analysis is entitled ‘The Cost of Not Zero’ and assesses the difference between average household energy and road fuel prices in 2022 and the prices which would be likely in a different scenario – one in which the Government had swiftly brough forward joined-up policy support for the adoption of home insulation, heat pumps, rooftop solar and electric vehicles.

On home insulation, the ECIU notes that homes rated ‘D’ under the Energy Performance Certificate (EPC) scheme paid £180 more for their annual energy bills in 2022 than those rated ‘C’, simply because they are paying for energy that is lost. The Government wants all homes to be rated ‘C’ or higher by 2035 but is not on track to meet this target due to multiple failed home energy efficiency schemes, including the Green Deal and Green Homes Grant. The UK is home to one of the least energy-efficient housing stocks in Europe.

The analysis also looks at the savings that those living in new builds would have reaped if the Zero Carbon Homes standard was implemented in 2016. It puts excess heat costs for those living in homes built between 2016 and 2021 at £300.

Regarding cleantech, the ECIU’s analysis looks at what would have happened if the UK Government had pulled its target to install 600,000 heat pumps each year from 2028 to 2021. The Government is, at present, foreseeing heat pumps replacing gas boilers for the majority of homes in the coming 12 years. The ECIU states that the saving for a typical home with a heat pump in 2022 was £145 per year. The saving was higher for more energy-efficient homes.

Also considered are rooftop solar for homes and electric vehicles (EVs). Around 7,300 homes installed solar on their roofs each month between 2011 and 2021, but the peak was 55,000 homes per month, recorded in November 2011. The ECIU assesses what would happen if that peak were retained, concluded that there would be £520 in annual savings for 7.3 million homes.

On EVs, the report acknowledges that the UK is “towards the front of the pack” regarding uptake globally. However, just 1.8% of the UK’s total car fleet is electric, compared with 18,9% in leader Norway. The ECIU has been advocating policy changes such as zero-emission vehicle mandates for manufacturers and clearer subsidy schemes for drivers. It claims that a mid-sized electric car would have been £690 cheaper to run in 2022 than a comparable petrol vehicle. However, the high upfront cost of an EV will have deterred many motorists.

The ECIU’s report also assesses how energy bills would be cheaper if progress was not so slow in deploying additional renewable energy generation. It looks at missed opportunities to speed up the planning and installation process, as well as the fact that the UK Government has placed most of its renewables focus on offshore wind, while excluding onshore wind from Contracts for Difference (CfD) auction rounds for more than four years. The calculated figure is a saving of £200 per household.

Altogther, the ECIU attributes £1,750 in additional household energy and road fuel bills, paid by the average family in 2022, to weak or delayed green policymaking.

“The International Monetary Fund (IMF) says that the UK is over-reliant on gas and that particular chicken has come home to roost this year with many households struggling to pay their bills,” summarised the ECIU’s head of energy Jess Ralston.

“It’s clear that had investments in home insulation, onshore wind and other net-zero technologies been made earlier, homes could be thousands of pounds better off. Upfront investments are needed, but just as green levies on bills have built a renewable energy industry delivering cheap, clean electricity and the paybacks are measured in thousands of pounds for homes and billions for the UK as a whole.”

Lagging on gas

The analysis from the ECIU follows on from a separate study from Imperial College London, which concluded that many other major European economies, including Germany, have cut their gas demand more rapidly in 2022 than the UK.

Commissioned by Drax’s Electric Insights arm, the study found that the UK’s gas use in October 2022 was 19% lower than in October 2021. Germany, meanwhile, achieved a 40% year-on-year saving. The reduction level also exceeded 30% for France and Italy.

Moreover, in June, July and August 2022, the UK recorded lower reductions in gas demand than France, Italy and Germany. The reductions that did occur in the UK in these months were attributed to unseasonably warm weather. In September 2022, the UK actually used more gas than in September 2021.

Dr Iain Staffel of Imperial College London, who led the production of the report resulting from the research, partly attributed Europe’s steeper cuts to stronger public messaging about reducing gas use. The UK only brough forward a public communications campaign on energy-saving behaviours such as adjusting boiler flow and turning down thermostats in December 2022. Germany, meanwhile, brough forward such a campaign in Spring 2022, and has also been mandating businesses to turn off illuminated advertising overnight.

Another contributing factor was Britain’s slow progress in building out homegrown renewables, the researchers concluded.

The research did find that wind, solar, hydro and biomass collectively accounted for 40% of Britain’s electricity generation in 2022, up from 35% in 2021. But gas accounted for 42%.

“If we had not invested in wind, solar and biomass over the past decade our energy bills would have been even higher, as would the risk of blackouts over winter,” said Dr Staffel. “ We need to turbocharge our investment in clean energy technologies to become Europe’s renewable electricity powerhouse, which will cut fuel bills at home and bring money into the economy by exporting power to our neighbouring countries.” 

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