Carrying out the energy efficiency upgrades suggested in the Energy Performance Certificates (EPCs) for existing homes in England and Wales could cut annual bills by £6.7 billion, analysis by PwC has found, with the savings rising to £80 billion over 10 years.
The average household could expect to reduce their yearly bills by around a quarter – or £178 – and save a total of £2,150 over a decade.
The figures pertain to homes built prior to the introduction of minimum energy efficiency standards in 2018. In its economic outlook for June, the company noted that 83 per cent of properties built in the meantime have an EPC rating of B or higher and said this is reflected in their annual energy bills which are £374 lower on average.
PwC said the potential annual savings for upgrading existing homes in England and Wales increase to around £7.4 billion when adding the monetary value of the avoided carbon dioxide emissions and more than £9.8 billion when also accounting for the rising price of carbon.
It said the upgrades could lower annual CO2 emissions by 46 million tonnes – or 14 per cent of the remaining reduction required to hit net zero – and cut total emissions by 2050 by 1.4 billion tonnes.
Despite the significant bill savings on offer, PwC said its analysis found that it would take 10 years on average to fully clawback the upfront costs. It said the payback period is significantly longer for houses and bungalows that tend to be bigger, older and require major upgrades, meaning the initial investment may need to spread over multiple owners.
In a survey of 1,000 households undertaken by the firm in May, high upfront costs were the most common reason given for not upgrading the energy efficiency of their home over last five years, being cited by 26 per cent respondents. The second most common reason given (22 per cent) was that they were unable to as they were living in rented accommodation. Just 9 per cent cited practicality challenges such as disruption or being unable to find a suitable installer.
To encourage homeowners to carry out the upgrades, PwC said government policy should therefore focus on providing stronger financial support to help them overcome cost barriers, adding that measures “should not be designed as short-term stimulus but long-term incentives.”
It said policy should also recognise the increased complexity associated with rental accommodation, which has the greatest potential for savings, and ensure incentives are just as strong for landlords. Progress on this front could be aided by education and marketing on the benefits outside of energy bill savings, which accrue to tenants, most notably the impact on property prices.
Jonathan Gilham, chief economist at PwC UK, said: “With more than half of UK households currently at EPC band D or lower, the Clean Growth Strategy can make a significant contribution to achieving net zero targets whilst reducing the cost of living for households.
“Yet while the willingness is there from the public, there are clear barriers in terms of costs and awareness. There is a real risk where policies aimed at protecting the environment are seen to disproportionately benefit wealthier homeowners, whilst leaving renters and those without the means to pay out in the cold.
“To deliver on the Clean Growth Strategy’s goals, policy-makers should consider ways to boost public awareness of the benefits and solutions to improving home energy efficiency. They may also consider providing long-term financial incentives for households and landlords to upgrade.”
The report also highlighted the different savings on offer in different regions in the country, being greatest in the South East, North West and London.
