Over a million individuals residing in older residences are expected to experience a £720 increase in heating costs this winter, according to a recent report from a think tank.
This news followed Ofgem’s Friday announcement of a drop in the energy price cap to £1,923 from the previous £2,074, starting in October. This reduction is credited to the declining prices of gas and oil.
However, despite this decrease, experts caution that most consumers will still face higher bills compared to last year. This is attributed to elevated standing charges on statements and the absence of governmental support.
The costs are predicted to be even steeper for those living in older, less energy-efficient homes. British homes that have an Energy Performance Certificate (EPC) rating of F or below are anticipated to witness at least a £720 increase in their bills compared to homes with an EPC rating of C, as per findings from the Energy and Climate Intelligence Unit (ECIU).
Currently, there are approximately 1.5 million homes in Britain with such ratings. The National Energy Action charity, focusing on fuel poverty, estimates that the least efficient homes could face costs up to around £900.
For clarity, there are seven energy efficiency bands in total, with A being the top rating and G designated for the least efficient homes.
In 2022, the average energy efficiency rating for homes in England and Wales was band D. This is slightly below the government’s goal of reaching band C for all rental homes by 2028 and for every household by 2035.
Homes rated at band D are projected to have an extra £275 on their energy bills in comparison to the £1,759 that a band C property owner will face.
Factors like the absence of double glazing, missing cavity insulation, floorboard gaps, and misshapen doors and windows can all lead to increased heating costs.
According to the Office for National Statistics, homes in London and apartment buildings rank as the most energy-efficient. Conversely, older homes, particularly those erected before 1930, generally receive the lowest energy efficiency ratings. For the vast number of homes constructed prior to 1900, which totals about 4.2 million, the typical EPC rating is at band E.
Jess Ralston, an energy specialist from ECIU, commented that despite the decrease in the price cap, consumers aren’t fully relieved from potential financial strains.
She pointed out, “Residents in the least energy-efficient homes could face up to an extra £720 in their bills in the coming year, compared to those living in energy-smart homes. Ideally, we should have dedicated the past year to insulating homes to safeguard against potential gas price surges and to increase our national renewable energy sources.
This would reduce our dependency on purchasing costly gas internationally. However, the emphasis seems to have shifted towards the North Sea, which doesn’t directly equate to reduced household bills.”
The analyst noted that the “Great British Insulation Scheme” by the Government, previously called ECO+, has shown no progress.
This initiative for energy efficiency plans to allocate £1bn to insulate 300,000 homes, potentially saving residents up to £400 annually on energy expenses.
Earlier versions of this energy conservation program resulted in over 3.5 million enhancements for about 10% of households. However, detractors argue it’s not achieving its goals now.
In 2022, a study by the Resolution Foundation revealed that close to six million ageing houses were subject to a £320 increase in their energy costs, largely due to inadequate insulation.
Jonny Marshall, the chief economist at the Resolution Foundation, referred to it as a “leaky homes surcharge” on utility bills during that period.
A representative from the government has in the past defended the insulation initiative, stating it would facilitate insulation in 300,000 houses.
