The Cost of Not Zero for Households in 2026

Successive Governments in the UK have implemented policies backing technologies that reduce our use

of fossil fuels, such as renewables, insulation, heat pumps and electric vehicles. Successive fossil fuel

crises over the past five years have added thousands of pounds to household bills for gas, electricity

and fuels. The only households which have been in some way shielded from fossil fuel prices are those

that have net zero upgrades.

This report finds that a typical household is likely to save almost £1,600 this year if it has four key net

zero improvements: £330 from insulation upgrades and an electric heat pump, £650 from solar panels

with a battery, and £600 from an EV, all supported by a specialist electricity tariff. However, many

households do not yet have these upgrades, and the higher bills that they are still paying are the ‘cost

of not zero’.

For homes that had originally been at the worse level of EPC band F, with higher heating bills, the

savings this year would be around £1,750. Again, many households are still paying these higher bills.

For each of these net zero technologies, either the upfront cost is already cost-competitive or

Government support is available to assist households. The upfront costs are lower if, rather than being

retrofitted into existing homes, the technologies are installed when homes are built. However, major

improvements to building standards have been delayed by over a decade, and will finally come into

force in 2027, over 20 years since the first Government consultation on zero carbon homes.

Heating a new home is cheaper than for the average home, but is costing more than it should – up to

£460 more this year than if it had been built with better insulation and a heat pump to the standard

that will finally be implemented in 2027. Added to the savings from solar panels and an EV, and the

cost of not zero for a household in a new home can reach £1,700 this year.

Investment is clearly required, but in the background renewables are helping to protect households

from volatile gas prices affecting electricity bills. Contracts for Difference contribute to greater price

stability, and pay back to customers when wholesale prices are high. And all renewables help to push

gas power generation off the system and so limit its opportunities to set higher prices, with large wind

farms cutting the day-ahead wholesale price by up to a third last year, compared to if most of the

wind power had instead been provided by gas power generation.

While not quantified in this analysis, fossil fuels also contribute to higher food prices through the costs

of fertilisers and energy used throughout the supply chain, alongside the impacts of climate change in

the UK and overseas, with foods hit by extreme weather rising in price four times faster than others.