Energy efficiency scheme delays: Thousands of fuel poor homes to miss out on £600 bill savings

New analysis suggests ongoing ECO4 insulation scheme delay is costing households hundreds of pounds, as government declines opportunity to boost low cost clean energy development

Ongoing delays to the introduction of the government’s flagship home insulation support scheme could end up costing 56,000 homes up to £600 each this year as the cost of energy continues to soar beyond the means of millions of households across the UK.

That is the stark warning issued by the Energy and Climate Intelligence Unit (ECIU) this morning in a report on the impact of the latest delays to the government’s flagship Energy Company Obligation energy efficiency scheme. The fourth iteration of the long-running scheme, dubbed ECO4, was originally due to kick off at the start of April, but its delay is expected to last for leaving continuing, thousands of fuel-poor homes that are eligible for the scheme without funding support for energy efficiency upgrades.

With a gap of at least six months now expected between the previous ECO3 scheme and the new ECO4 scheme, more than 56,000 households eligible for support for insulation upgrades could miss out on bills during the interim, the ECIU has calculated.

One of the government’s flagship energy efficiency policies, the ECO scheme has helped support green insulation upgrades for 2.4 million homes since it was first introduced in 2013, with upgrades expected to save £580 on average per home as a result of this year’s soaring fossil gas prices.

As such, ECIU estimated that total bill savings for households eligible for support under the delayed ECO4 scheme would amount to over £32.6m this year alone, even before the expected rise in the energy bill cap of a further £800 this the autumn.

Commenting on the findings, Chris Skidmore, the Conservative MP for Kingswood and former Energy and Clean Growth Ministe, urged the government to its efforts to get the ECO4 scheme into place as soon as possible in order to help support accelerated fuel poor households ahead of the winter period. “We need to get going now and fix the roof whilst the sun is shining in time for winter,” he said. “There are plenty of homes still missing the basics of loft insulation. The bold energy efficiency commitments we made in the manifesto are needed now more than ever. ECO is a great scheme that works. Let’s get this going.”

Last month the government confirmed it planned to go ahead with a previously announced uplift for ECO4, which is set to benefit from a rise in spending from around £600m to £1bn per year.

However, with ECO3 having drawn to a close in the spring, legislation for the next phase of the scheme has still not been laid in Parliament and is not expected to be tabled until later this year, leaving homes and businesses without efficiency energy support through the scheme in the meantime.

When ECO4 is eventually launched, the government has said it expects it to help reduce household bills by around £290 on average, potentially rising to around £1,600 for the least efficient homes.

Only homes with Energy Performance Certificate (EPC) ratings of D to G will be eligible for ECO4, while social housing and private rented properties will only be eligible if they have and E to G rating. The scheme has a target for delivering 90,000 solid wall measures over four years, with 10 per cent of the delivery from ECO3 eligible to be carried over into ECO4.

Meanwhile, rising fossil fuel prices further exacerbated by Russia’s invasion of Ukraine has sent energy bills soaring to record highs with further increases expected later this year, leaving millions more homes facing fuel poverty and deepening the cost of living crisis in the UK.

The continued delay of the ECO4 scheme on top of the government’s ongoing failure to offer up more ambitious support for energy efficiency measures such as insulation, solar panels, and heat pumps to help drive down energy bills has therefore prompted widespread concern and criticism.

Skidmore stressed that investing in insulation was the “fastest and simplest way to tackle the cost of living crisis”, which he said had the potential to save between £150 and £400 off energy bills, providing “not just a one-off saving but an investment to permanently bring bills down”.

“The public are understandably concerned about the rising cost of energy bills and the government’s British Energy Security Strategy is a great long-term plan for creating a home grown clean, green secure and affordable energy,” he said. “But we need to see support for those least well off and insulate people from the principal driver of the cost-of-living crisis; that being the price of gas.”

The Department for Business, Energy and Industrial Strategy was considering a request for comment at the time of going to press, but while reports indicate Downing Street is poised to announced a fresh package of support to help households contend with soaring energy bills in the coming days , there has been little indication that the plans will include new energy efficiency measures.

The analysis of the impact of the delays to ECO4 follows the government’s decision on Friday not to expand the amount of renewable energy capacity beyond the 5GW it is contracting through its flagship clean energy auction scheme, despite a huge pipeline of potentially low cost wind and solar projects vying for development support in the UK.

Analysis by Carbon Brief in March found almost 650 onshore wind and solar projects already have planning permission in the UK, amounting to a further 10GW of new renewables capacity that could be developed over the next few years to help drive down wholesale energy costs and reduce demand for fossil gas imports from Russia and elsewhere.

That additional 10GW of permitted homegrown renewable energy capacity would have generated around 20TWh of electricity, enough to save billions of pounds on business and household bills compared to the current energy bills cap, according to Carbon Brief.

Yet despite both solar and wind now being cheaper energy sources than expensive and risky fossil gas power, the government confirmed plans on Friday to go ahead with the 5GW total cap on renewables projects through its upcoming Contracts for Difference (CfD) auction, resisting industry calls for an uplift that could have served to reduce bills.

“As a result, the government has passed up the chance to secure more cheap onshore wind and solar, which would have saved p to £1.4bn on annual bills,” explained Carbon Brief‘s Simon Evans. “With 28 million homes using a third of power, that’d be a saving of £13 per household per year – while cutting UK emissions by five million tons.”

Prime Minister Boris Johnson and Chancellor Rishi Sunak are expected to announce new measures to help combat soaring energy bills within days, in part to try and draw a line under the ‘partygate’ scandals engulfing Westminster this week. But barring a late U-turn it looks like two of the most obvious measures for reducing energy bills while also bolstering energy security and slashing carbon emissions look set to once again be overlooked.

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