The Chancellor announced in the Autumn Statement a further £6 billion of energy efficiency funding from 2025, alongside a new ambition to reduce energy consumption from buildings and industry by 15% by 20301. The funding runs from 2025 to 2028 and nearly doubles the £6.6 billion already planned for energy efficiency in this Parliament1.
"Today, I'm announcing new funding, from 2025, of a further £6 billion, doubling our annual investment to deliver this new national ambition."
The government says the 15% reduction would mean, in today's prices, a £28 billion saving from the national energy bill, or £450 off the average household bill1. Which? reports it is unclear whether that £450 figure accounts for future energy cost rises, and that it is likely based on Ofgem's average household consumption of 12,000 kWh of gas and 2,900 kWh of electricity, equalling £2,500 spend per year1. The details of where the £6 billion will be spent have not been revealed, and the Chancellor said the Business and Energy Secretary will publish further details on energy independence plans and launch a new Energy Efficiency Taskforce shortly1. Which? reports that retrofit insulation and boiler upgrades are expected to be the bedrock of the new spending plan1.
The Autumn Statement also set out changes to bills. From April 2023 the Energy Price Guarantee will have a raised unit cost for gas and electricity, meaning an average bill of £2,500 per annum rises to £3,000 per annum up until April 20241. The statement leaves open the possibility of the guarantee being revisited during this term and of adjusting the cap for households with very high energy usage, and promises a consultation to ensure vulnerable users, such as those using medical equipment with a high energy cost, are not negatively affected1. Until that consultation is complete, the exact limits of what defines too-high usage are not clear, though the statement claims the vast majority of households will not be impacted1. The last time the price cap was revised, gas costs per unit rose by 36% to 10.3p and electricity costs per unit rose by 17% to 34p1.
Support for off-grid households using oil and LPG for their boilers is being doubled, with the one-off Alternative Fuels Payment rising from £100 to £2001. The date the payment will arrive has not been confirmed, but it will be delivered as credit on the electricity bill, and is available to consumers in Great Britain and Northern Ireland1. Oil and LPG are not price capped per unit, so households pay the full cost of the fuel and the payment is a subsidy1.
Existing schemes include the Energy Company Obligation, the Boiler Upgrade Scheme, the Local Authority Delivery Scheme, the Home Upgrade Grant and the Social Housing Decarbonisation Fund1. The Boiler Upgrade Scheme provides up to £5,000 off the cost and installation of an air source heat pump or biomass boiler, or £6,000 off a ground or water source heat pump, where there is an energy performance certificate from the last 10 years with no outstanding recommendation for loft or cavity wall insulation1. The government is targeting 600,000 heat pump installations a year by 20281.
InstaGroup, an insulation distributor, said the funding marks a vital step forward and supports the drive towards net zero by 20502. It said increasing the energy efficiency of homes could save households across England and Wales more than £10 billion a year, nearly £400 per household, and that the industry needs to return to insulating in excess of half a million homes a year after a dramatic drop over the past 10 years2.
"With the Government's pledges to boost existing schemes, create a new 'Energy Efficiency Taskforce' and launch a public information campaign, this is a positive move for people all over the UK."
Why it matters for households
Energy efficiency spending affects how much of a household's bill is spent on heat that stays in the home rather than escaping through the fabric of the building. Which? notes that a heat pump can deliver typical efficiencies of 200% to 400%, and higher on some days, while a condensing gas boiler usually has a theoretical maximum efficiency of 92% to 94%, rarely achieved in use1. Insulating before changing a heating system, an approach known as fabric first, means heating systems can run more mildly and cheaply1. Reducing demand also lowers the volume of energy that must be bought from the wholesale market, which affects the severity of bill increases, though government policy through price controls, taxes and levies also has a large impact on bills1. The Energy Price Cap: How the Default Tariff Cap Is Set explains how unit rates are set, and the DESNZ: The Government Department Behind Home Energy Policy page covers the department responsible for the schemes. Further regulation and policy changes, including the new energy efficiency standards for privately rented homes in Scotland, sit alongside these funding decisions.
What happens next
The Business and Energy Secretary will publish further details on energy independence plans and launch a new Energy Efficiency Taskforce shortly1. The new funding begins in 20251. From April 2023 the Energy Price Guarantee unit cost rises, with an average bill of £2,500 per annum rising to £3,000 per annum up until April 20241. A consultation on vulnerable users and high energy usage is promised, with no date given1. The date for the doubled Alternative Fuels Payment has not been confirmed1.
Sources2 cited
- What the Autumn statement means for your home heating - Which?, which.co.uk
- The Autumn statement - InstaGroup, instagroup.co.uk