The Energy and Climate Intelligence Unit (ECIU) has updated its briefing on insulation and gas prices, which carries a publication date of 24 Jan. 2022 and a last updated date of 16 Jun. 2022. The briefing estimates that nine million homes could have been upgraded had support for energy efficiency been maintained over the past decade, and puts the cumulative extra gas bill cost of the missed upgrades at £4.57 billion to the end of March 2023.
The ECIU attributes the shortfall to the 2013 decision to cut support for insulation. It says installation rates fell by around 90 per cent, from a peak of 2.33 million installations in 2012, and have averaged around 10 per cent of that rate since. The briefing states that from 2013 to the end of 2021 a running total of nine million homes missed out on 18 million installations, equivalent to two measures each for one million homes every year.
"Then in 2013, the Government cut support for insulation. Installation rates of insulation fell by around 90%"
"Nine million homes and counting could have been upgraded had support for energy efficiency been maintained over the past decade."
The cost estimate is built from the gap between EPC band D and band C homes. The ECIU says a typical band D home uses 13,200 kWh of gas a year, and that improving it to band C would cut heating demand by 20 per cent, or 2,600 kWh a year. On the October 2021 price cap it puts the band D bill at around £630, £100 more than a band C home; the April 2022 rise would widen that gap to £170. For a band F home, it says the gap to band C would widen to £400 from April 2022.
| Measure | Figure given |
|---|---|
| Insulation installations, 2012 peak | 2.33 million |
| Fall in installation rate after 2013 | around 90% |
| Homes missed, 2013 to end 2021 | 9 million |
| Installations missed, 2013 to end 2021 | 18 million |
| Cumulative extra gas cost to end March 2022 | £3.04 billion |
| Additional cost for 2022/23 | £1.53 billion |
| Cumulative extra gas cost to end March 2023 | £4.57 billion |
The briefing notes that other organisations have reached similar conclusions on different bases. It cites Carbon Brief calculating extra costs of £900 million a year under the April 2022 price cap from low insulation rates alone, and £2.5 billion from a wider range of policy decisions, and E3G calculating that £8 billion could be saved annually if all homes rated worse than band C were improved to band C. The ECIU says its own figures may carry a rounding discrepancy of £0.1 billion.
Why it matters for households
The briefing frames insulation as a permanent reduction in a home's gas demand rather than a one-off payment. It compares the one-off cost of upgrading a band D home to band C, which it says would save 20 per cent on every future bill, with schemes such as the Winter Fuel Allowance, which it says typically provides £200 a year, covering 20 per cent of the average band D bill for 2021/22. The ECIU also says households on lower incomes disproportionately occupy homes with worse energy efficiency, and that two-thirds of homes in Yorkshire and the Humber fall below the Government's energy efficiency target. It adds that 121,000 band F homes are occupied by households in fuel poverty, paying excess heating bills of £48 million a year.
The briefing states that the Government's ambition is to raise the average EPC rating from band D to band C, which it says would cut heating demand by 20 per cent per home and equate to a 15 per cent cut in gas imports. It notes that a package of measures applied to a home with a worse rating might not reach band C and might give a lower percentage saving, but could give similar absolute savings in kWh and the same reduction to the gas bill. The briefing also says the cuts to insulation programmes led to job losses and missed creating thousands of jobs.
What happens next
The briefing says that if insulation were installed at the 2012 rate, an extra 250,000 homes could be upgraded between January and the end of March 2022, before the price rises. It says the main route currently is the Energy Company Obligation, which it reports has installed around 20,000 insulation measures a month on average, mostly loft and wall insulation, meaning around 10,000 homes a month could be upgraded with both, or 30,000 over three months. It notes calls in the UK to retain or increase funding for energy efficiency measures, but does not report a decision on those calls. The briefing also refers to closed insulation schemes and to the costs of insulation and glazing without setting out figures for either.