Homes with the worst energy efficiency ratings will cost around £1,750 more to run over the next 12 months than homes at the Government's target of EPC band C, according to analysis published by the Energy and Climate Intelligence Unit (ECIU) on 5 October 2022. The ECIU said the figures reflect the new price cap and the Energy Price Guarantee, both of which were in force at the time of publication1.
For gas alone, the ECIU found that band F homes will pay on average £1,000 a year more than band C homes. Of that gap, these households pay over £550 on their bills and the Government around £450 through the price freeze. When gas and electricity are taken together, the ECIU put the total difference at around £1,750: £950 on household bills and £800 from the Government1.
The analysis states that total energy costs for band F homes are set to be almost £5,500 over the next 12 months, four times the level in summer 2021 before the gas crisis. These households, which the ECIU says tend to be on lower incomes, face bills of £3,000, above the £2,500 for typical households under the price freeze. Government support for band F homes will cost over £2,400 a year, £800 more than if they had been upgraded to band C1.
Average band D homes also face higher costs. The ECIU found they face bills of £370 more than if they had been upgraded to band C, with the Government paying £310 more, taking the total extra cost to £680 for the year1.
The ECIU's figures for each band are set out below. Values are subject to uncertainty in forecasts and have been rounded in the text of the release1.
| EPC Band | Gas costs (£/yr) | Electricity costs (£/yr) | Dual fuel total (£/yr) | Household bill (£/yr) | Government support (£/yr) | Extra cost compared to band C, from Oct-22 (£/yr) |
|---|---|---|---|---|---|---|
| C | 1,877 | 1,850 | 3,726 | 2,100 | 1,626 | |
| D | 2,359 | 2,048 | 4,407 | 2,470 | 1,937 | 680 |
| E | 2,729 | 2,247 | 4,976 | 2,778 | 2,198 | 1,249 |
| F | 2,914 | 2,578 | 5,492 | 3,051 | 2,441 | 1,765 |
Simon Cran-McGreehin, Head of Analysis at ECIU, said:
"With the Energy Price Guarantee set to last for at least two years, unless these homes get some badly needed insulation in the next few months, both bill payers and taxpayers will be on the hook for a lot of expensive, wasted gas."
The ECIU said the Government had recently decided to go ahead with doubling the ECO (Energy Company Obligation) scheme, which it described as a proposal developed by the energy industry. It added that previous analysis showed energy efficiency schemes such as ECO have contributed to savings of £1.2bn per year under prices seen in summer 2022, which it said will have risen further under higher winter prices. A survey by Gemserv cited by the ECIU found 80% of installers say they have capacity to take on 25 to 50% more work, and 96% expect job creation from an enlarged ECO Plus scheme1.
The ECIU also said that had the Government maintained support for insulation after 2012, 10 million homes could have been upgraded by now, cutting their gas use by 15 to 20% and overall gas demand from homes by 10%1.
Why it matters for households
The gap between bands is not only about the size of the bill. It is about how much of a home's running cost is exposed to gas prices, and how much of that exposure the state is currently absorbing. Under the figures, a band F home carries a larger household share and a larger taxpayer share than a band C home, so the same cold winter costs more on both sides of the ledger. For a household, the practical meaning of an EPC rating is the volume of gas needed to hold a given temperature, which is what insulation and glazing address. The ECIU's comparison of the Energy Price Guarantee with the underlying price cap shows how the split between bill payer and Government shifts with efficiency, and how policy costs and levies sit alongside the unit rate. The wider question of how far a household can insulate itself from price shocks is set out in Energy Bills and Energy Independence.
What happens next
The ECIU said the Energy Price Guarantee is set to last for at least two years, and that unless these homes are insulated in the next few months, both bill payers and taxpayers will carry the cost of what it called expensive, wasted gas. It said the increase to the ECO energy efficiency scheme came a full 12 months into the crisis. No further dated steps were reported1.