Analysis from the Energy and Climate Intelligence Unit suggests that investment in home insulation could be cost-neutral for the Treasury before the next election, as reduced bills will cut the overall cost of a price freeze.
It says that if bills are frozen at £1,971, every pound invested in insulation will effectively be paid back by the end of Q4 2024, based on industry price predictions and a steady gas price in 2024 . It assumes that government price freeze support will extend beyond the expected 18-month scheme, given gas prices are predicted to stay high.
In a second scenario where the energy bill price freeze is set at £2,500, Treasury would break even on insulation investments in early 2025.
ECIU says investment of as little as £1,000 per home could cover a basic package of measures that would move an Energy Performance Certificate band D home, the UK’s average, to EPC band C, the Government’s target for 2035. The homes will save an average £450 from their bills.
Jess Ralston, Senior Analyst at ECIU, said: “Investing in the basics of loft and cavity wall insulation for millions of homes could be cost-neutral on the Treasury even before the next election but many will struggle to fund the upfront cost even though for many homes £1,000 could cover the basics.
“With gas prices set to increase even further next year, expanding the Energy Company Obligation insulation scheme could reduce future bill bailouts, lock in lower bills for households, bring down inflation and cut our dependence on the volatile gas market.”
Commenting on the analysis, Rt Hon Andrea Leadsom MP, said: “Conserving energy makes sense at the best of times but with energy prices so astronomically high, the payback from insulation measures will be incredibly quick. I’m convinced the Government will want to do more to help vulnerable households – and new funding for insulating lofts and walls could be a cost neutral alternative to the Treasury handing out subsidies for the next few years. In fact, insulation becomes a win-win option – keeping people warmer and reducing the use of energy – so good for the purse and good for the environment, while creating jobs for small businesses right across the country.”
The Energy Company Obligation (ECO) has provided energy efficiency retrofit into over 2.3 million homes since 2013. The energy industry has confirmed that it could insulate 500,000 homes this winter and 1 million homes per year from 2023 through a ramping up of the scheme.
Recent ECIU polling of Conservative Party members found that the vast majority (85%) support incentives and investment for homeowners and landlords to improve home insulation and energy use.