Millions of uninsulated, cold homes face £385 bill ‘hit’ this winter…or switching off
Households with poor energy efficiency left paying nearly £2.5 billion more for gas this winter, with bills of more than £650 in the colder months
By Jess Ralston
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Energy bills under Ofgem’s new price cap are due to rise by 10% to £1,717 for the typical dual fuel bill on 1st October 2024 [1]. New analysis from the Energy and Climate Intelligence Unit (ECIU) finds that even with households being estimated to cut their gas and electricity demand in response, by 15% and 10% respectively, bills this winter are still expected to be 55% higher than before the gas crisis. [2].
This means that a typical home at the Government’s target Energy Performance Certificate (EPC) band C would pay £900 for gas and electricity over the winter compared to £580 before the crisis.
However, households with poorer energy efficiency, for example those that are not properly insulated, will pay even more. The least efficient homes, rated EPC band F, will pay around £1,290 over the course of the winter, around £440 more than pre-crisis and £385 more than one rated EPC band C.
Even with households cutting energy use this winter, homes in the UK rated EPC band D or worse will collectively pay up to £3.7bn more this winter in gas and electricity bills, compared to if they were all rated EPC C. Of these extra energy costs, £2.4bn would be spent on gas and £1.3bn on electricity.
Commenting on the analysis, Jess Ralston, Energy Analyst at the ECIU, said: “Millions of households are facing higher bills this winter in cold homes that simply leak heat. Investment in improving energy efficiency through government schemes has dropped over the past decade and fallen even further in the first six months of this year. At a time of energy bill crisis, this makes very little sense.
“Insulating a home brings down its bills once and for all, meaning people won’t simply turn off the heating to get by which jeopardises their health. This is why government plans for minimum standards for privately rented homes are so important given they are the coldest and dampest properties.
“All eyes will be on the Budget to see what investment and plans the Government will muster to tackle this and the ongoing energy crisis. Improved efficiency means less gas burnt in boilers and less gas needed from international markets, thereby boosting British energy security.”
Dual fuel bills per EPC band, under suppressed use in winter 2024/25 | ||||
EPC band | 2024 costs per home (£) | Pre-crisis costs (£) | Extra per home in 2024 vs pre-crisis (£) | Extra compared to EPC band C (2024) (£) |
EPC A | 868 | 560 | 307 | |
EPC B | 819 | 528 | 291 | |
EPC C | 903 | 584 | 318 | |
EPC D | 1052 | 683 | 368 | 149 |
EPC E | 1179 | 768 | 410 | 276 |
EPC F | 1288 | 844 | 444 | 385 |
EPC G | 1186 | 780 | 406 | 283 |
However, if demand is not suppressed by 10-15% as a result of higher prices, the findings are even more stark. Winter energy bills would be 75% higher than before the crisis, with a typical home at EPC C paying around £1,000 for energy this winter, compared to around £580 pre-crisis.
The most inefficient homes (EPC F) at higher demand levels would pay around £1,450 this winter, over £600 more than pre-crisis and around £440 more than a more efficient home at EPC band C.
This would take the total cost of inefficient homes this winter up to £4.2bn compared to if they were EPC band C; £2.8bn more for gas and £1.4bn more for electricity.
The latest set of Government statistics about energy efficiency schemes reveals that there has been little progress over the last decade or so, largely after the Government rowed back on energy efficiency schemes significantly in 2012-13. For example, since 2012, insulation rates have dropped by over 90% which has resulted in household bills being higher especially during the gas crisis when high wholesale gas prices forced bills to increase on a huge scale [3].
Pre-election, the Labour party committed to the Warm Homes Plan which aims to upgrade 5 million homes to be more energy efficient, lowering bills and gas demand to improve the UK’s energy security.
Since then, the Government has announced that by the end of the year it will consult on tightening standards in the private rented sector (PRS) so that these homes would have to meet EPC C by 2030. It also set out more details of changes and consolidation of existing energy efficiency schemes – i.e. the Local Authority Delivery and Home Upgrade Grant – to try and boost uptake of measures, for example by: lengthening the delivery window; simplifying the application process; and widening criteria for the minimum required home improvement. It has also confirmed that public sector and social housing energy efficiency schemes will continue.
However, it is thought that more support may be required to tackle the Government’s target of 5 million homes with insulation, as well as boost heat pump uptake which helps to lower the UK’s dependency on foreign gas as the North Sea continues its inevitable decline.
The Government’s manifesto set out plans to introduce other schemes like low interest loans to try and incentivise uptake of energy efficiency and low carbon heat measures, but further details are yet to be set out. In addition, the Government has not yet confirmed if it will press ahead with the Clean Heat Market Mechanism, a policy that would see fossil fuel boiler manufacturers obliged to sell an increasing proportion of electric heat pumps relative to their fossil fuel boiler sales.
Methodology:
- High prices during the ongoing gas crisis have had a stark effect in suppressing UK consumption of gas and electricity. Whilst there will always be some annual variability, especially temperature-related gas use, the values for 2022 onwards are extraordinary. Looking at the reduction in overall UK household annual demand up to 2023, and median demand by EPC band up to 2022, there appears to be some inconsistency between datasets in 2021, but the trends before and after are very similar. Compared to the pre-crisis averages of 2017 to 2020:
- UK household gas demand was down by 13% in 2022, and 20% in 2023
- UK household electricity demand was down by 10% in 2022, and 13% in 2023
- Analysis uses the following unit rates for 2024/25:
- 2024 Q4: Ofgem’s price cap data states: 6.2p/kWh for gas – which is 180% of the pre-crisis level and 24.52p/kWh for electricity – which is 150% of the pre-crisis level
- 2025 Q1: Cornwall Insight’s latest forecast states 6.4 p/kWh for gas – which is 185% of the pre-crisis level and 24.52p/kWh for electricity – which is 155% of the pre-crisis level.
- It is reasonable to apply forecast levels of demand suppression to the various EPC bands. This is not an exact process, which is why we have been approximate and conservative in the estimation of demand suppression. However, the data shows that demand for gas and electricity in almost all EPC bands fell by percentages that were at least as large as that the reductions in overall UK household demand. It seems reasonable to expect that something similar would be seen in EPC data for 2023, when it becomes available. Looking at median demand by EPC band, we can calculate the following winter cost, with and without demand suppression estimates.
EPC Band | Costs [£] for Regular Demand | Costs [£] for Suppressed Demand | ||||||
Gas | Elec | Dual | vs C | Gas | Elec | Dual | Vs C | |
C | 519 | 491 | 1,010 | 450 | 453 | 903 | ||
D | 645 | 538 | 1,182 | 173 | 557 | 495 | 1,052 | 149 |
E | 744 | 585 | 1,329 | 319 | 641 | 537 | 1,179 | 276 |
F | 788 | 665 | 1,453 | 443 | 679 | 609 | 1,288 | 385 |
Unknown | 653 | 679 | 1,332 | 322 | 564 | 622 | 1,186 | 283 |
- Finally, we can use the distribution of EPC bands within the overall housing stock to estimate the total extra winter energy bills for the UK owing the many homes being rated EPD D or worse. The distribution of EPC ratings is estimated starting with the National Energy Efficiency Database (NEED): Tables 27 and 28 state the number of homes in England and Wales at each band, or unknown, and their median demand, for gas and electricity. The percentage at each band is then applied to the UK’s total housing stock: c.29million for electricity, and c.24million for gas. Note that at least 4million homes use alternative heating e.g. oil boilers, electric storage heaters, etc, for which the extra costs caused by inefficiency are likely to be higher than those for a house with a gas boiler and low efficiency. Therefore, the estimates in this analysis are likely to be underestimates of the total extra energy costs.
For more information or for interview requests:
George Smeeton, Head of Communications, ECIU, Tel: +44 (0)7894 571 153, email: george.smeeton@eciu.net