Households could save up to £1,000 annually
Three times as many fuel poor households than currently planned could receive upgrades and save an average £475 per year, through a boosting of government energy efficiency spending.
A new report commissioned in partnership with WWF has found that an investment injection of less than 15% of what the government has spent on emergency energy support in recent years would help lift hundreds of thousands of families out of fuel poverty long-term.
The study by Frontier Economics found that investing £1.5bn of annual Government support would allow almost two thirds of fuel poor households to receive improvements that would significantly reduce their bills.
The Office for Budget Responsibility estimates that the UK government’s net spend on emergency energy and cost-of-living support policies during the last global energy crisis was over £50 billion.
Delivered alongside the existing Warm Homes Plan commitments, £1.5billion of annual funding – which would help plug the gap left by closure of the Energy Company Obligation (ECO) scheme and the Great British Insulation Scheme – could see upgrades made to around 2.1 million households across Great Britain by 2031.
The modelling found that the average D-rated terraced house on gas receiving fully funded upgrades to improve energy performance would save around £475 a year.
The report provides a range of possible changes and savings for the same terraced house on gas, starting from adding insulation alone – still an annual saving of £62 – and up to changing from a gas boiler to solar, battery and heat pump technology, with additional insulation, which could save the same household £959 a year.
Funding levels equivalent to the Warm Homes Plan allocation for low-income households could see 400,000 homes receive upgrades. The funding suggested in the report could improve 800,000 more – a total of 1.2million.
Crucially, the study points out these upgrades also help protect the most fuel-poor homes against future price spikes caused by energy crises like the ones seen in 2022 and since the start of the Iran War.
The report - Better homes, lower bills: locking-in savings for fuel poor households – is published as our CEO Keith Anderson prepares to deliver the keynote address at the Energy UK conference, in which he will urge the Government to go further than the commitments already set out in the Warm Homes Plan.
He said: “We’ve seen government have to step in with emergency measures which have cost tens of billions for the public purse, with no lasting legacy. This report sets out solutions for a fraction of that cost which will have a real impact for households and families throughout Great Britain for generations to come.
“By taking this more targeted and strategic approach, we could really see hundreds of thousands of families given a helping hand to leave fuel poverty behind. And this scale of funding injection could be partly based on reallocating some of the overall Energy Department funding.
“This can be delivered as part of an improved Warm Homes Plan, with accelerated delivery of the Warm Homes Agency providing a one-stop shop in communities with trusted advice and supporting place-based delivery.”
Kate Norgrove, WWF’s Chief Impact Officer said: “Winter is coming and every year people are forced to choose between heating and eating. It doesn’t have to be like this, and this report shows how the government can fix millions of cold homes while cutting bills and protecting the planet.
“The UK Government must invest in our cold and leaky housing stock and fill the funding vacuum left by the scrapping of the Energy Company Obligation and the Great British Insulation scheme. This will also deliver greater energy security for Britain’s future.”
Claire Thornhill, Director for Frontier Economics’ Energy Practice said: “Nearly 3 million households in Great Britain are in fuel poverty. Frontier’s analysis finds that home energy upgrades can deliver large bill savings for these households. Annual bill savings from a heat pump with insulation are around £200 per household, while savings from solar and battery can reach £600 per year for a representative household.”