Lack of investment costing homes up to £1,900 on energy bills

Cumulative savings of £70bn on the UK’s energy bill could have been made had investments happened over past decade.

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By George Smeeton

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New analysis from the Energy and Climate Intelligence Unit (ECIU) has found that a lack of investment in solar panels, insulation, heat pumps and electric cars over the last decade added up to £1,900 to household bills in 2023. The figure is up from £1,850 in 2022 [1].

Average UK homes (rated Energy Performance Certificate D) without the basics of decent insulation were costing an extra £320 in energy bills in 2023 compared to better insulated homes (rated EPC C), with almost three-quarters (£235) paid by the household and the rest by the government’s price freeze.

Investment in insulating homes was cut in 2013 and the rate at which homes are being improved is currently at its lowest level for more than a decade [2]. The report found that, had government insulation policies been maintained, the cumulative energy bill savings could have been £12bn by the end of 2023. Likewise speeding up the deployment of renewables, such as offshore wind, could have cut bills by almost £20bn over the past few years to the end of 2023.

Dr Simon Cran-McGreehin, Head of Analysis at ECIU, said: “Investment in these net zero technologies brings returns in the form of lower energy bills, reduced vulnerability to volatile international gas markets and the prospect of real energy independence for the UK. A lack of investment leaves families colder and poorer and has left the country in a real hole in the gas crisis at a cost of tens of billions of pounds. Had billions been invested in insulation and renewables, not only would huge savings been made for the bill and tax-payer, but these savings would continue into the future at a time when the gas price is expected to remain high.

“The PM’s decision to remove the onus on landlords to improve the insulation of the houses they let will hit renters who often have to live in some of the UK’s worst homes. On the plus side, the Government’s ZEV mandate will help speed the rollout of electric vehicles, grow the second-hand EV market and so make cheaper electric driving available to more households.”

In the Prime Minister’s speech on net zero in September, he cancelled plans to require landlords to improve the efficiency of their properties [3]. The private rental sector has worse than average energy efficiency, and the new analysis finds that heating an EPC band F home cost £680 more in 2023 than if it had been upgraded to band C, again with almost three-quarters of the cost being on the household bill.

The Zero Emission Vehicle (ZEV) mandate policy started at the beginning of January 2023, requiring car manufacturers to ensure a growing proportion of the cars they sell are electric [4]. This will have a bigger impact on UK energy security than potential new licences to drill for oil [5]. The new analysis finds that, had the UK been further ahead with EVs, like Norway, then drivers could have saved £4bn in 2023, and £19bn since 2010.

The UK is on course for a record year of solar and heat pump installations according to the Microgeneration Certification Scheme [6], but these levels could have been achieved much sooner. The new analysis finds that, had solar installation rates matched their peak level seen in 2011, they would have been added to around 6million more homes saving over £5bn in 2023. And, had government ambitions for heat pumps been put into practice sooner, there could have been 2.8million in 2023 saving £700million.

Bill savings for the UK overall due to net zero technology would have built up over the past decade or so, reaching a cumulative £70bn by the end of 2023. Of that, £56bn would have been saved in the first two years of the gas crisis (2022 & 2023), due to the larger numbers of items operating when prices were highest.

Recent analysis by food price economists for ECIU found that high energy costs and extreme weather from climate change have added £605 to household shopping bills since the start of 2022, amounting to £17bn on overall UK household food bills over just two years [7].

Notes to editors

  1. The report, Cost of Not Zero in 2023 (ECIU, 2024) is available here.
    1. Data sources and calculations are outlined in the report and its methodology section. Savings per item are based on reported energy prices and standard performance values. Savings per household are a maximum value for an average household, i.e. if a household with average energy demand had each of the technologies. Households with higher energy demand could have had larger savings per item (e.g. insulation) and hence a larger total savings if they had all of the upgrades, Savings for UK overall are on the basis of the number of items that could have been deployed, which is lower than the number of households (except for renewables which apply to all homes, and new-build regulations which would apply to all new homes). Note that some figures for 2022 have been updated since the previous report, The Cost of Not Zero in 2022 (ECIU, 2023); most notably, the post-pandemic rebound in average mileage was higher than previously estimated, resulting in larger savings from EVs than stated in the previous report. Overall, the maximum saving for an average household due to net zero technologies is now estimated to be £1,850 for 2022, up from £1,750 in the previous report; the value for 2023 is £1,900.
  2. Headline Energy Efficiency Statistics, 2023
  3. Prime Minister’s net zero speech, 2023
  4. Parliament gives green light to Zero Emission Vehicle Mandate legislation, Business Green, 2023
  5. Electric cars will boost UK energy security more than new North Sea oil licences (ECIU, 2024)
  6. UK enjoys 'best year ever' for solar and heat pump installations, Business Green, 2023
  7. Families hit by £605 food bill as extreme weather and energy crisis bites, 2023

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