It’s often been described as the Cinderella of the industry, but energy efficiency offers enormous benefits in terms of emissions, affordability and comfort. That’s why it’s right at the top of Utility Week’s election manifesto.
As many have noted, there remains a conspicuous gap in policy when it comes to getting energy efficiency measures installed in both new and existing homes.
The government has previously stated its ambition to upgrade all homes to Energy Performance Certificate band C by 2035 where “cost effective, affordable and practical”, and all rented homes by 2030. There is also a statutory target to raise the homes of fuel poor households “as far as reasonably practicable” to EPC band C by the end of the next decade.
However, in a report published in July, the Business, Energy and Industrial Strategy Committee said the UK is “off-track” to meet these targets, particularly in England where there is far less funding on offer to make improvements than in Scotland or Wales.
The report welcomed the introduction of new rules preventing landlords from starting new tenancies for properties below band E but said many have been able to secure exemptions on the basis of cost. It said the government’s flagship policy – the Energy Company Obligation – has been used to “mask” a lack of commitment from policy-makers.
Appearing before the inquiry to give evidence in April, the energy and clean growth minister at the time, Claire Perry, was unable to explain how the government planned to unlock the between £35 billion and £65 billion of investment which she confirmed would necessary to meet the targets.
James Griffiths is a policy officer at the Association for Decentralised Energy, which last year absorbed the Association for the Conservation of Energy. Speaking to Utility Week, Griffiths says that even ECO itself is “struggling”.
“Rates of insulation have really fallen and current obligations are being achieved disproportionately through the installations of gas boilers.” He says the scheme’s annual budget of £640 million is “not enough” for the task at hand.
In December 2018, ECO was refocussed on fuel-poor households for its third phase ending in 2022. Griffiths says this has left a big question mark over how the “able-to-pay” households will be encouraged to install energy efficiency measures.
Griffiths says the incoming government should continue to use minimum standards, in particular targeting moments such as house sales, major renovations and new tenancies “because they’re the prime opportunities for making the changes that we need.”
Retrofitting houses will be disruptive to people’s lives and so where possible the work should be done all in one go. He says it is important to first establish what is the “end goal” in terms of standards. Otherwise we could be led down some “technological cul-de-sacs”.
He says finance mechanisms such as green mortgages, which offer preferential terms to buyers of energy efficient homes, will also have an important role to play. But he warns: “What the Green Deal in particular taught us is that you can have the best finance mechanisms available but if you haven’t got the demand to go with it then there’s no certainty they’re going to be taken up.”
Not everyone will be persuaded to make home improvements on the basis on the savings alone. Some may be convinced by the environmental benefits, and others by the improvement in warmth and comfort. The problem requires multiple solutions: “I think you need a range of policies given the different situations people find themselves in and the range of homes we have in the UK.”
Then there is the question of new homes. In 2015, the then-chancellor George Osborne infamously scrapped an already watered down zero carbon homes standard that was due to be introduced the following the year. He faced accusations of caving to lobbying from some housebuilders, who said it would inflate prices and result in fewer homes being built.
The policy was resurrected by his successor Philip Hammond in his Spring Budget statement in March. The Future Homes Standard would be introduced in 2025 and would ban the installation of fossil fuel heating system and mandate “world-leading” levels of energy efficiency.
All of the main political parties have pledged to introduce some such standard in their election manifesto, although with vary levels of detail and gusto (see box below).
Griffiths says there can be no excuse for half-measures: “We need to be very confident that the homes we are building now are net-zero ready and will not require significant retrofit and refurbishment within a decade or two of being built.”
This has been on the cards for well over a decade. Housebuilders have had plenty of time to prepare and they should be able to quickly incorporate the necessary measures into the developments. The upfront costs are easily outweighed by the eventual savings.
High levels of insulation will be essential to the viability of low temperature heating systems such as heat pumps and some heat networks.
“We’ve seen lots of really cool examples in Scandanavia in particular where you have really high efficiency buildings, low temperature networks and they are balancing these heating and cooling demands across cities,” says Griffiths.
They can be fed by a wide range of sources, for example, data centres or underground train lines: “If we’re looking at only high temperature heat, then the range of potential heat sources narrows,” he adds.
It will also “unlock opportunities” for homes to provide flexibility to the energy system by pre-heating to avoid peaks in demand: “You can decouple when you need the heat and when that heat is generated.”
And although new homes are only likely to account for one in five by 2050, they will nevertheless demonstrate to the public the benefits energy efficiency can bring. It will be easier to persuade people to install similar measures themselves once they’ve seen what can now be achieved.
What the main party manifestos say:
The Conservatives say they would invest £9.2 billion in the energy efficiency of homes, schools and hospitals. They would support the creation of “new kinds of homes that have low energy bills and which support our environmental targets”.
Labour say they would “upgrade almost all of the UK’s 27 million homes to the highest energy-efficiency standards, reducing the average household energy bill by £417 per household per year by 2030 and eliminating fuel poverty.” All new homes would be built to a zero-carbon standard.
The Liberal Democrats say they would implement a decade-long energy efficiency programme, investing more than £6 billion annually in zero-carbon heating and home insulation by the fifth year.
They would provide free retrofits for low-income households, cut VAT on home insulation and graduate stamp duty according to the energy efficiency rating of the property. Energy efficiency standards for rented properties would be raised and councils would be empowered to deliver “street-by-street” improvements to minimise costs.
All new homes and non-domestic buildings would be required to meet a zero-carbon standard from 2021, and the more ambitious “Passivhaus” standard from 2025.
The Scottish National Party would reduce VAT on energy efficiency measures and ensure all new homes use renewable or low-carbon heat from 2024.