New analysis: Government’s energy strategy U-turn costs 22,500 homes up to £600 each

Energy Company Obligation package could have allowed 22,500 households a year to benefit from insulation upgrades

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By Kathy Grenville

info@eciu.net

Information on this page correct as of:

Today the Government announced its Energy Security Strategy, revealing plans to increase offshore wind capacity and nuclear power generation and speed up hydrogen deployment, but with very limited steps on energy efficiency.

Media reports from earlier this week suggested that the Energy Company Obligation (ECO) home energy efficiency scheme could have been expanded by £200 million per year, but the measure was reportedly dropped by the Treasury following tensions with the Department for Business Energy and Industrial Strategy (BEIS).

New analysis from the Energy and Climate Intelligent Unit (ECIU) shows that this package could have allowed 22,500 households a year to benefit from insulation upgrades. ECO aimed to save each household an average of £300 a year under pre-crisis prices, so the saving would now equate to around £600 and year. [1]

Sepi Golzari-Munro, Deputy Director at ECIU said:

“Soaring gas prices are responsible for adding at least £500 to energy bills, forcing another 2.5million households into fuel poverty. Without help to insulate their homes to bring down gas bills there may be little prospect they can afford to keep their homes warm. Rumours that Chancellor Rishi Sunak blocked moves to boost the successful ECO energy efficiency scheme that’s saved low income households £1.2billion on their energy bills this year, could raise tough questions as the gas price crisis continues to bite.

“It’s all the more striking, since insulation is the public’s top priority in the current gas crisis with 84% backing it as the best way to cut our reliance on gas and cut bills. With any extra UK gas production having no effect on prices, it begs the question whether having gas that households can’t afford to use counts as ‘energy security’ to them.”

Dr Simon Cran-McGreehin, Head of Analysis at ECIU said:

“As Business Secretary Kwasi Kwarteng MP has rightly pointed out over recent weeks, renewables are vital for improving the UK’s energy security and cutting costs. The boost to offshore wind will help to bring down bills, nudging expensive gas power stations off the power grid.

“But because of the apparent success of a small number of backbench MPs turning the government against onshore wind, those same politicians may now have to explain to their constituents why they have locked in higher electricity bills. Onshore is cheap and popular with 80% of people across all political persuasions backing it, which rises to 87% if they can get a discount on their bill from nearby wind farms.”

Other recent relevant analysis:

ENDS


Note to editors:

1. ECIU analysis based on data in ECO4 Impact Assessment, which states annual budget of £1billion and target of 450,000 homes over four years (112,500 per year), so a further £200million would have added 20% more homes (22,500 per year). https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1065825/eco4-final-ia.pdf

2. Note that the saving of £200 a year stated above is based on the price cap data released in February, whereas the estimate of £170 in the previous analysis was based on a lower forecast.

3. Notes that savings for 2022 stated in this report were based on data at the time, whereas repayments are set to be higher due to the worsening gas crisis.

For more information and media bookings:

Kathy Grenville, Communications Officer, ECIU, Tel: 07501 874 214, email: kathy.grenville@eciu.net