Government energy efficiency scheme has led to annual energy bill savings of £1.2m so far

The £2bn Green Homes Grant (GHG) scheme was launched by the Government in 2020 to increase the energy efficiency of 600,000 eligible homes by providing discounts to incentivise householders to upgrade their homes. The scheme was announced as part of a wider strategy to meet net zero by 2050, “build back greener” after the pandemic, and as part of the plan to reach the Government’s target for as many homes as possible to be Energy Performance Certificate (EPC) Band C by 2030.

As we know, the delivery of the Green Homes Grant scheme did not meet expectations and was scrapped by the Government just six months after its launch, with only a fraction of the available vouchers issued in the period. The objectives of the scheme still remain incredibly important for the North: to reduce carbon emissions from homes, cut household bills, make homes warmer and more comfortable, and bring new jobs and skills to the region. Action to reduce fuel poverty is particularly important to NHC members at the moment due to the ongoing cost-of-living crisis and subsequent pressure to reduce gas demand.

£500m of the initial GHG funding was for the Local Authority Delivery (LAD) scheme for local authorities to target households with an income under £30,000. Though not without its own challenges, this has arguably been the most successful element of the GHG scheme.

The Department for Business, Energy and Industrial Strategy (BEIS) release monthly statistics on the progress of energy efficiency measures installed through the LAD scheme which allows us to track the number and nature of energy efficiency improvements being carried out.

Here’s what we know from the data so far:

Since October 2020, a total of 10,920 homes have been upgraded through the LAD scheme – 9,761 through Phase 1 and 1,159 through Phase 2.

Under Phase 1 of the LAD scheme (allocated to successful local authority bidders), around 12,000 measures have been installed across the country. 60% of these have been insulation measures (the most common type being external solid wall insulation), 19% electricity-related measures (mostly solar PV), 9% window and door measures (such as double or triple glazing), 8% low carbon heating measures (the majority being air source heat pumps), and 4% heat control measures.

For Phase 2 (allocated directly to Local Net Zero Hubs), the proportion of measures so far have been as follows: 55% electricity-related measures (solar PV), 33% insulation measures (mainly internal solid wall insulation and loft insulation), 7% low carbon heat (mostly air source heat pumps), 3% windows and doors, and 1% heating controls.

The data is broken down regionally, showing that around 30% of households with at least one measure installed through Phase 1 are located in the North. For Phase 2, Northern households make up a bigger share of the total of households with at least one measure installed so far, at around 50%. Given the North accounts for 29% of England’s households, and 32% of England’s fuel poor households, these are encouraging results.

The last phase of the LAD scheme was distributed through BEIS’ Sustainable Warmth Competition in December last year (no data available on this yet), which comprised Phase 3 of LAD and Phase 1 of the Home Upgrade Grants which target off-gas homes. Our analysis showed the North only received around 20% of funding through LAD Phase 3.

The most illuminating element of the statistical release is the detail around the savings made by householders because of these improvements. The total estimated annual bill savings for households upgraded through Phase 1 of LAD – a total of 12,143 measures across England – is £1.2m. The majority of these savings come from solid wall insulation measures (£660,000) with the next highest savings from heat pumps (£230,000).

Recent analysis by the Energy and Climate Intelligence Unit (ECIU) has shown that energy efficiency measures were installed in 6m homes across the UK between 2009 and 2019 to bring them up to EPC C. Action taken throughout the decade is subsequently estimated to be saving bill payers £1.15bn this year. The often stop-start nature of government green schemes means this figure could have been a lot higher, but it still demonstrates the impact energy performance improvements have. ECIU analysis shows upgrading homes from EPC D to EPC C will result in a 20% reduction in gas demand per home. This is particularly important at the moment due to our exposure to the volatility of international gas markets impacting energy bills and therefore levels of fuel poverty.

And that’s just on energy efficiency, transitioning to efficient forms of clean heat (such as heat pumps) will reduce demand even further. As the LAD data shows, the highest proportion of energy bill savings have resulted from solid wall insulation and heat pump installation.

There is huge potential to go further on this. The LAD scheme showed that local authorities are able to act quickly using local expertise to bring together partners and supply chains to deliver energy efficiency upgrades to homes and reduce household bills. However, competitive funding arrangements and short deadlines are not the most effective way to upgrade the region’s homes at pace and scale; the NHC will continue to make the case to Government that long-term certainty is needed to build the supply chain and skills capacity to deliver in the North.

Greening our homes is the ‘shovel-ready’ way to reduce the impact of soaring energy bills.

In response to the cost-of-living-crisis and the presence of Russian gas in global markets, the Prime Minister is expected to publish an energy strategy with a focus on moving away from gas to renewable sources. NHC members can play a major role in reducing our reliance on fossil fuels, reducing household bills, and creating healthier homes by upgrading the energy performance of existing homes and transitioning to low carbon heat technologies.

You can see the full list of successful bids for the LAD scheme here.

Please do not hesitate to follow up on any of this with the NHC by contacting Anna Seddon (Policy and Public Affairs Manager) at anna.seddon@northern-consortium.org.uk.