Why the Government's new energy strategy won't be enough to keep homes warm

The fuel price crisis and events in Ukraine, means interest in the publication of the Government’s new Energy Security Strategy is sky high. It is already receiving much more coverage and scrutiny than its predecessor. 

The previous strategy set out what now seem like modest plans to phase out coal, and bolster supply by relying more on the global energy market. Events of the last 6 months certainly bring into question the wisdom of relying on politically unstable countries for our energy needs. Additionally, the slow start to decarbonise electricity now feels like too little, too late. 

The new strategy is, in some ways, more ambitious, though for the general observer, it may still seem confusing and contradictory. 

For instance, the ambition that 95% of electricity will be low carbon by 2030, seems to be a clear signal that the UK will have one of the most eco-friendly economies in the world. However, to achieve this, a quarter of our electricity will be nuclear, meaning many new nuclear power stations are needed. This will be unpopular with environmentalists, no matter how necessary it may be, to deal with fluctuations in renewable generation and increased demand caused by the electrification of heat. 

The strategy's ambition for heat is equally as confused as the plan for electricity, but also much more underwhelming. The proposal that 700,000 homes (0.25% of the UK housing stock), will be upgraded by 2025 is, at best, inadequate. The silence on any plan to help the remaining 99.75% of households before 2050, is deafening.

It appears the absence of a serious plan is not due to a lack of money; the Government is investing in helping keep people warm in their homes through the £9.1 billion, Council Tax rebate, worth £150 to each household. While welcome, this is a bittersweet pill, as it represents double the amount of funding committed to improving the energy efficiency of homes over the next 4 years combined. This suggests much more could have been done to support people in fuel poverty, but for unknown reasons, the decision was taken not to do so.

Revealingly, the strategy suggests the market should decide the type and pace of home energy improvements; this is perhaps confusing, since cold homes are a consequence of market failure. The benefits that warm homes provide to society are not reflected in the price of energy or cost of retrofits. Thus, if the market could solve this, 6 million people would not currently be living in fuel poverty.

In the strategy is also the statement: “The British people are no-nonsense pragmatists who can make decisions based on the information”. While this sounds like an angry tweet, the existence of this phrase in a Government strategy is worrying for two reasons. Firstly, it assumes solutions are affordable and accessible, yet decades of uncertainty around energy efficiency policy means supply chains are inadequate. Secondly, it assumes that good information is readily available; however, EPCs are famously inaccurate, and good impartial advice on how to improve homes is hard to find.

The Zero VAT on insulation, identified in the strategy, may be welcome for homeowners, though this only lasts for 5 years. Thus, like all other current retrofit policies, the ambition is too short term to meaningfully support a sustainable or stable retrofit market. 

This energy security strategy provides no new hope for householders struggling to heat their homes. Instead, its focus is on ramping up clean energy supply. There is some logic and efficiency in this approach; retrofitting homes to reduce heat demand is fraught with problems, so the option of tackling the problem at source (the power station) is attractive. However, by ignoring retrofit, there may be a profound impact on the nation’s health and wellbeing. This may put even more pressure on the NHS, which already spends billions of pounds per year on health issues linked to cold homes. 

So, like the strategy says “our homes are our castles” and just like most castles in the UK, they are likely to remain cold, draughty, and expensive to maintain, at least while this strategy persists.