Green energy measures saving households £1,000 a year – analysis

Savings come largely from efficient electrical appliances and boilers but insulation could halve future bills

Energy efficiency measures have already saved the average British household about £1,000 a year in energy bills, and further insulation and home improvements could halve future bills, analysis has shown.

But the future savings are unlikely to be realised unless the government focuses swiftly on insulation, as the savings to date have come largely from efficiency improvements in electrical appliances and boilers, which will not be repeated.

The energy price cap is forecast to rise to £2,000 for a typical household in April, owing to the gas crisis, from about £1,300 today. But average household energy bills would be £3,000 a year if it were not for a range of regulatory measures that have brought down energy use in the last two decades, according to the Regulatory Assistance Project (RAP), an analyst organisation.

Jan Rosenow, director of European programmes at RAP, said the analysis showed the failures of the government in the past decade to take action that would have staved off much of the current energy price crisis. “If the government had acted, we could have had a properly funded programme that would have reduced greenhouse gases and energy bills,” he said.

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Electrical appliances such as lightbulbs, fridges and washing machines now use much less power than 20 years ago, owing to EU directives. A 2005 UK government regulation mandating the use of condensing boilers has brought down average gas use significantly.

Energy consumption overall has declined by 16% since 2000 despite a 15% increase in the number of homes, the average home being 10% larger and the rise in appliance ownership, the RAP said.

Insulation, double glazing and similar home upgrades have also somewhat reduced energy use, Rosenow said, but by far less than could have been possible, as the UK has fallen behind on such improvements. Insulation rates have plummeted in the past decade, after successive government schemes have been scrapped and not replaced.

At least 14m households have missed out on insulation because of the abandonment of the green deal scheme, which was set up in 2013 and stopped in 2015, with only about 15,000 homes upgraded. A further 47,500 were improved in the most recent successor scheme, the green homes grant, instead of the 600,000 promised, when the scheme was scrapped after only six months.

The “stop-start” nature of the government’s insulation efforts has also stifled the growth of the insulation industry, which requires skilled workers and a broad network of suppliers, Rosenow added. Thousands of jobs have been lost in the industry over the past decade.

The RAP analysis suggested it would be a mistake to cut the energy company obligation (ECO), which the government is considering. The £1bn a year programme, the cost of which is added to energy bills, channels funding to insulation for people on low incomes. Cutting ECO “would slow down the much-needed transformation of our housing stock and leave more people exposed to rising energy prices in the future”, RAP said.

The RAP findings tally with separate estimates from Carbon Brief that cutting insulation programmes in the past 10 years has added about £1bn a year to the UK’s energy bills.

Rosenow said the failure to keep up consistent action on insulation was a massive missed opportunity, but that action now could still reduce bills in future years. Some analysts have forecast high gas prices for at least the next two years, as the world recovers from the coronavirus pandemic and economic shocks.

“Gas boilers are now about as efficient as they can be. The big area for improvement is insulation,” said Rosenow. “You can’t get to net zero without insulation. It’s impossible, it would be far too expensive and impractical.”

Some Conservative MPs and rightwing commentators have argued that the net zero target should be reconsidered in light of the energy crisis, and have called for more oil and gas exploration. However, analysts have shown that renewable power has reduced the cost of electricity generation, and that overreliance on gas is the leading cause of high prices.

“Green” Tories have also stepped up their defence of the net zero targets in recent days. Alok Sharma, president of the Cop26 climate summit, in a speech to the Chatham House thinktank said: “Clean is competitive, and the global race to supply the technologies and solutions a net zero world needs is on. The train is pulling out of the station and countries and companies that want to remain competitive need to leap on now.”

Grant Shapps, the transport secretary, told the Bright Blue thinktank: “People who are sceptical about net zero worry that it’s going to add to the cost of energy bills … [But] this is all about taking a lead, jobs and exports. We can steal a march on the world by learning how to decarbonise. For decarbonisation, we want to be the pilots, not the passengers.”