Under Ofgem's price cap from January 2024, gas bills in homes with poor insulation, rated band F on the Energy Performance Certificate (EPC) scale, will be on average £415 (50%) a year worse off than homes at the Government's target for home energy efficiency of EPC band C, according to analysis by the Energy and Climate Intelligence Unit (ECIU)1. The findings were published on 23 November 2023, ahead of the cap taking effect on 1 January 20241.
When gas and electricity are taken together, the worst rated homes will cost around £730 (42%) more than EPC band C homes1. Even homes at EPC band D, described as average, face bills of around £280 more than if they had been upgraded to band C1. The analysis uses prices under Ofgem's price cap for January 2024, with final values for the whole year not yet known but forecast to be similar or only slightly lower than the first-quarter values; gas and electricity consumption figures are median values for homes in each EPC band1. ECIU notes that band F homes have higher energy use than worse rated band G homes, because band G homes often include secondary heating sources such as a biomass boiler1.
On average, total energy costs are set to be around 1.7 times the level in summer 2021, before the gas crisis1. Comparisons with previous bills are based on a pre-crisis average price cap dual fuel bill of just over £1,100 for the period January 2019 to September 20211. Households will also be worse off as the Government's £400 Energy Bill Support Scheme has come to an end1.
Jess Ralston, Energy Analyst at ECIU, said:
"For millions of people living in leaky homes, 2024 will mean being colder and poorer. The real kick in the teeth is that existing Government insulation schemes started to flatline just as the gas crisis caused bills to soar, despite having worked well in the past."
Insulation rates over the last decade have been 90% lower than their peak of 2.3 million measures per year in 2012, a period ECIU links to then Prime Minister David Cameron deciding to "cut the green crap", and were just 95% of that level at 160,000 in 20221. So far in 2023, only 100,000 measures have been installed, so 2023 could see even lower numbers in total1.
| EPC band | Annual cost compared with band C |
|---|---|
| F (gas only) | £415 (50%) more |
| F (gas and electricity) | around £730 (42%) more |
| D (gas and electricity) | around £280 more |
Source: ECIU analysis of Ofgem price cap prices for January 20241.
Why it matters for households
The gap between a poorly insulated home and one at band C is the practical measure of what a home's fabric costs its occupants under the price cap. A band F home pays more for the same warmth, and the difference is set by the building rather than by the household's behaviour or choice of supplier. Because the £400 Energy Bill Support Scheme has closed, that gap is no longer offset by the temporary support that ran through the gas crisis, as set out in the site's guide to closed energy bill support payments.
ECIU frames insulation as a matter of energy independence, arguing that reducing gas demand reduces reliance on gas imports. Its analysis states that gas prices are set to stay two to three times higher for the rest of the decade1. The number of homes upgraded each year has fallen far below the 2012 peak, so the size of the band F and band D groups is changing only slowly1.
What happens next
The price cap from January 2024 applies from 1 January 20241. ECIU states that final values for the whole of 2024 are not yet known, but are forecast to be similar to, or only slightly lower than, the January values1. No further dated steps are set out in the analysis.