Energy suppliers will be placed under a new obligation to help customers reduce their energy bills, under legislation announced in the government's Growth Plan. The help is worth £1 billion over three years and starts from April 20231.
The measure was set out in the Growth Plan published in September 2022, alongside a wider package of energy efficiency funding. The government said the obligation would help hundreds of thousands of customers take action to reduce their bills, delivering an average saving of around £200 a year. Support will be targeted at those most vulnerable, but will also be available for the least efficient homes in lower council tax bands. As with previous schemes, the government said it will work with the Scottish Government on arrangements in Scotland1.
The supplier obligation sits alongside the Social Housing Decarbonisation Fund (SHDF) and the Home Upgrade Grant (HUG), which together make up to £1.5 billion available for energy efficiency upgrades to around 130,000 social housing and low-income properties in England. The government said the upgrades would help households save around £400 to £700 a year on their energy bills at current prices, and that the funding could support around 19,000 green energy sector jobs1.
The two schemes differ in scope and eligibility:
| Scheme | Funding | Homes | Eligibility | Estimated average saving |
|---|---|---|---|---|
| Social Housing Decarbonisation Fund (SHDF) wave 2 | Up to £800 million | Around 100,000 social homes | Social housing with an EPC rating of D or lower | Around £400 a year at current prices |
| Home Upgrade Grant (HUG) | Up to £700 million | Around 30,000 properties | Low-income households in privately owned, off gas-grid homes, EPC Bands D to G | Around £700 a year at current prices |
SHDF grant funding must be matched by those applying, doubling the investment under the scheme to around £1.6 billion. Wave 2 builds on £179 million announced through SHDF wave 1 in February 2022, which is upgrading up to 20,000 social housing properties, and on more than 30,000 homes already being upgraded under the SHDF and HUG schemes1.
Measures installed under the funding include external wall and loft insulation, energy efficient doors and windows, heat pumps and solar panels, with multiple measures often installed in a single home. Local authorities and social housing providers can submit bids, and will deliver upgrades from early 2023 until March 20251.
"This help will be worth £1 billion over the next three years, starting from April 2023."
Why it matters for households
The supplier obligation is the part of this package that reaches households outside social housing and off-gas-grid low-income homes. It places a duty on energy suppliers to help customers cut bills, rather than offering grants to landlords or local authorities. The government has not reported which specific measures suppliers will fund, how customers will be identified, or how the £200 average saving will be delivered; those details are not in the announcement1.
For households, the practical effect is that help with the physical fabric of a home, insulation, glazing, heating and solar, is being routed through two channels: grants administered by councils and housing providers, and obligations placed on suppliers. Energy efficiency improvements reduce the amount of energy a home needs to buy, which is the part of a bill a household can control, as distinct from unit prices set by the price cap or wholesale markets. The government described energy efficiency improvements as one of the most effective ways to save money on bills at a time of rising global gas prices1.
The funding sits alongside the Energy Price Guarantee, which limits the amount consumers can be charged per unit of gas and electricity and applies from 1 October 2022, fixing the unit cost at the equivalent of a £2,500 annual bill for a typical household1.
What happens next
Local authorities and social housing providers can submit bids for SHDF and HUG funding, with upgrades delivered from early 2023 until March 20251. The supplier obligation starts from April 20231. The government has not reported a commencement date for the legislation itself, the identity of the suppliers covered, or the mechanism by which the £1 billion will be raised or spent.