Utility Week

UTILITY WEEK | OCTOBER 2022 | 13 Energy efficiency out in an interview with Utility Week that energy efficiency is better equipped than any other area of activity to deliver Liz Truss's economic growth ambitions. She added: "I can't think of another area that has more potential for growth. You can create the jobs and the training. Lots of busi- nesses are champing at the bit to be given the certainty and confidence that this is an area the government and investors will get behind if they're given long-term direction on how it's going to work and be supported by regulation." The former Labour MP also said "nobody knows more than" Kwarteng how important energy efficiency is for tackling issues such as fuel poverty and energy security, due to his recent experience as secretary of state for Business, Energy And Industrial Strategy. "It is a no-brainer, to be honest, and it is one of those really important invest-to-save policies that just speaks for itself." With such consensus among commenta- tors that energy efficiency is an obvious win, why have successive administrations been so reluctant to come up with a proportionate package to accelerate it? According to former Npower chief execu- tive Paul Massara, a former member of the CFP, there is a tendency for ministers to see energy efficiency as "not as attractive" as the idea of announcing projects "where a ribbon can be cut". He said: "The second is that we've had a number of failed starts quite frankly. Whether it's the Green Deal or the Green Homes Grant, those have not been success- ful and therefore the government hasn't got a go-to solution for that. So even if they said, 'yes, we want to put more money into it', they're struggling to find the necessary route to do it." Energy efficiency market's long-term decline According to Citizens Advice chief executive Clare Moriarty, speaking before Kwarteng's plan was put forward, energy efficiency is "like the dog that's not barking at the moment". A report published last month by the con- sumer watchdog found the energy efficiency market in Great Britain has "been in decline for the past decade" and that supply chains will need long-term guarantees to have the confidence to invest and expand their capac- ity to meet the demand needed. The report, Insulation Nation, said the average household is paying an "inefficiency penalty" of almost £350 a year, and that those in the worst insulated properties could be spending £950 more than necessary, rep- resenting 31% of their annual bill. It claimed that if all homes were upgraded to EPC Band C, it would save billpayers nearly £8.1 bil- lion a year at current prices. To bring homes to this standard, it said an average £3,800 would need to be invested – a figure already unaffordable for many. People living in Wales, the West Mid- lands, and Yorkshire and the Humber face the highest costs. Almost two thirds (63%) of homes in these areas have EPC ratings below band C. Households in London and the South East, meanwhile, are most likely to be in a better position, yet more than 50% of homes in these regions still have poor EPC ratings. The report also highlighted a lack of awareness of various efficiency schemes, with almost two thirds (64%) of homeown- ers having not heard of the Energy Company Obligation (ECO). Of those who have heard of ECO, almost three quarters (74%) of those on benefits either don't know whether they are eligible or incorrectly state that they are not eligible. The charity said its proposed Great Brit- ish Energy Efficiency scheme would deliver fully funded grants up to £10,000 to improve the energy efficiency of those on the lowest incomes in the leakiest homes. Partial grants would then be awarded to other households on the basis of a sliding scale according to income. It said if the government matched the funding of its £37 billion cost-of-living sup- port package, nearly one third of the UK's homes could be upgraded over the next few years. Moriarty added: "Bills are going through the roof – literally for people in cold and draughty homes, where heat seeps out when they turn up the thermostat. This is burning through many people's tight budgets. "Insulating our homes is the long-term solution that will cut down our bills and reduce our dependence on gas. The govern- ment must make it a top priority." Poor insulation racks up cost of cap A separate report published by the Energy and Climate Intelligence Unit (ECIU) in mid September claimed the government's deci- sion in 2013 to reduce support for home insulation upgrades would add up to £18 bil- lion to the cost of the two-year Energy Price Guarantee. The thinktank pointed out that 2.3 million items of home insulation were fitted in the UK in 2012 but the drive by the prime min- ister at the time, David Cameron, to "cut the green crap" sent annual installations plum- meting by 2 million – or 90%. ECIU said this reduction could cover the installation of lo© and cavity wall insulation in one million homes per year, meaning in the following decade 10 million homes – or 40% of the UK's housing stock – could have been upgraded if the government's support had remained in place. Had these improvements been made, the upgraded homes would be using 15-20% less gas and total domestic gas demand would be almost 10% lower than it is now. The aver- age annual gas bill would be £350-400 lower from this October when the £2,500 price freeze comes into effect. ECIU said taxpayers would have saved around £9 billion over the first year of the scheme and a further £9 billion in the sec- ond year if gas prices remain high. If the Treasury had funded the upgrades, it would completely recoup its investment and still save another £8 billion. On average, homes benefitting from this insulation would additionally have saved over £400 on their energy bills by now and another £600 by the end of 2024. Those upgraded in 2013 would have already saved £800. Dr Simon Cran-McGreehin, head of analy- sis at ECIU, said: "Cutting the green levies on bills during the last cost-of-living crisis has come back to bite the Treasury in the coffers. "If it had instead shi©ed insulation pro- grammes on to the government balance sheet it would not only have made its money back, but saved the taxpayer up to £8 billion as well as trimming hundreds of pounds off the energy bills of millions of homes." ECIU said action taken now would still have a rapid payback. Its earlier analysis suggested that an investment of £1,000 per house, which can o©en cover both lo© and cavity wall insulation, could be recouped by the government by the next election if gas prices remain high as forecast and the Energy Price Guarantee is continued until then. While further details of the government's belated response to this issue had yet to be unveiled as Utility Week went to press, it seems clear that more pressure is needed to find a way of unleashing the full potential of energy efficiency. "It is a no-brainer, to be honest, and it is one of those really important invest-to-save policies that just speaks for itself." Caroline Flint, former Labour MP, now chair of the chair of the Committee on Fuel Poverty

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