Energy price cap: poorly insulated homes to cost £340 more to heat from April

When gas and electricity costs are taken together, least energy efficient homes will cost over £600 extra.

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By George Smeeton

info@eciu.net

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Under Ofgem’s price cap from April 2024, gas bills in homes with poor insulation, rated band F on the Energy Performance Certificate (EPC) scale, will be on average around £340 (around 50% more) a year more than homes at the Government’s target for home energy efficiency of EPC band C, new analysis from the Energy and Climate Intelligence Unit (ECIU) has found. [1]

With the gas crisis also inflating power prices, when gas and electricity are taken together, the worst rated homes will cost around £600 (around 40%) more than EPC band C homes.

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Whilst households living with the worst energy efficiency are facing the highest bills, even those in an average home, EPC band D, are facing overall bills of around £230 (15%) more than if they had been upgraded to the Government’s target of band C.

Jess Ralston, Energy Analyst at ECIU, said: “For millions living in cold, leaky homes, insulation is crucial for lowering bills. But with energy independence remaining a top concern for the public and politicians alongside the cost of living, insulation is now also key to reducing our demand for gas. Unless we start to use less gas, we’ll just have to import more from abroad as the North Sea continues its inevitable decline, regardless of new licenses.

"Government insulation schemes are not delivering at target levels and fixing them does not seem to be a priority, despite the bill and energy security benefits. The next Government, whatever colour it is, rapidly needs to increase deployment of energy efficiency measures if it wants to gain energy independence and lower bills.”

At times over the last decade, insulation rates have been 95% lower than their peak of 2.3 million measures per year in 2012, coinciding with then Prime Minister David Cameron deciding to “cut the green crap”. In 2023 just 295,000 energy efficiency measures were installed across multiple government programmes [2] which is around 85% lower than in 2012.

In September the Prime Minister Rishi Sunak scrapped Minimum Energy Efficiency Standards for the private rented sector, which could leave 2.8 million privately rented households colder and poorer, with nearly 250,000 households found in the most marginal seats in the last Election [3].

Notes to editors:

  1. ECIU analysis uses prices under Ofgem’s price cap for April 2024, applying these prices to a whole year’s demand for different EPC bands, in keeping with Ofgem’s approach of calculating illustrative bills using annual typical consumption (approximately EPC band D). A household’s overall energy costs in 2024 will likely higher than those based on Q2 prices because prices were higher in Q1 and are forecast to rise again later in the year (see discussion around Figures 2 & 3 in April Fools (ECIU, 2023)). Data for gas and electricity consumption are median values for homes in each EPC band. Note also that band F homes have higher energy use than worse rated EPC band G homes because these EPC G homes often include the secondary heating sources (such as a biomass boiler).
  2. The total number of measures installed under the Energy Company Obligation, Great British Insulation Scheme and Social Housing Decarbonisation Fund. Data found in Household Energy Efficiency Statistics, February 2024; Great British Insulation Scheme Statistics, February 2024; and Social Housing Decarbonisation Scheme Statistics, February 2024.
  3. PM scrapping energy efficiency regulations to hit renters in swing seats hardest, December 2023.

For more information or for interview requests:

George Smeeton, Head of Communications, ECIU, Tel: 07894 571 153, email: george.smeeton@eciu.net