A report by the Energy & Climate Intelligence Unit (ECIU) found that, had the delay in the UK’s deployment of renewables been avoided, households could have saved roughly £1,750 on theirs bills in 2022.
This, paired with an additional £400 extra paid in food bills due climate change and oil and gas prices, amounts to £2,150 added to household bills.
The Cost of Not Zero in 2022 report explored the exact impact of delays in decarbonisation policies to UK household bills as a whole.
Heat Pumps
Heating currently accounts for 14% of UK emissions according to the ECIU and heat pumps are one of the most likely routes to decarbonise homes.
At present, heat pumps have replaced a fifth of gas boilers in Europe, but the UK is lagging behind European installation rates at 63 heat pumps per 100,000 people in comparison to Estonia which installed 1,583 per 100,000 people.
Had Britain matched Estonia’s installation rates, the ECIU noted, the nation’s domestic gas use would have been a third lower during the ongoing gas crisis.
The UK Government’s Boiler Upgrade Scheme (BUS) aims to bolster the uptake of heat pumps with a target of 600,000 installations a year by 2026. However, despite the ECIU reporting a 10% month-on-month growth in heat pump installations in May this year, the report estimated that the scheme will only fund 90,000 installations until its close in March 2025.
Replacing a gas boiler with a heat pump offers a number of economic benefits including removing the standing charge of around £100 a year.
Heat pumps also run on electricity which, although is more expensive per unit, the heightened efficiency of heat pumps (at least three times more efficient than gas boilers) results in a total lower cost of heating.
Taking this into account, the typical home could have saved £145 if they had a heat pump installed. This figure bumps up to £350 when combined with insulation upgrades to band C.
This means, had the Government’s heat pump target come five years earlier (600,000 heat pumps by 2021) the nation could have generated savings of £320 million in 2022, almost all of which, the ECIU continued, would have gone directly off household bills.
Renewable energy
The increase in renewable energy generation – largely supported by the Contracts for Difference (CfD) scheme – has given the UK access to cheaper, greener energy.
Wind, the ECIU noted, has already paid back an estimated £660 million in 2022 through the CfD scheme, which amounts to £10 per household.
Despite government targets of 50GW of offshore wind, 70GW of solar by 2035 and 45GW of onshore wind as set out in the Energy Security Strategy, the ECIU warned that government decisions have put hurdles up for renewable infrastructure. Namely, the de facto ban on onshore wind as well as the exclusion of onshore wind and solar from two CfD auctions have led to “stalling deployment.”
Had the government had set its renewable targets earlier and issued CfDs for renewables at a constant rate which meets those targets then by 2022, the ECIU claimed, Britain could have had an additional 9GW of onshore wind, 17GW of offshore wind and 17GW of solar.
Paired with CfD renewables Britain could have saved £6.6 billion in this year on top of current savings. This equates to £100 extra per home.
Faster switching to renewables could also have enabled power generators to improve performance and cut prices sooner, potentially saving £17bn or £260 per home in 2022.
EVs
Research by the ECIU found that electric vehicles (EVs) are typically three times cheaper to run than their ICE equivalents. A mid-sized EV would have been 3.4 times cheaper to run last year, saving £690.
These savings occur if the majority of charging is typically done at home using domestic power rates.
At present, there are 620,000 EVs on our roads, said the ECIU, which saved £430 million on energy costs in 2022, however it is just 1.8% of the UK’s total car fleet of 35 million.
Had the UK incentivised EV uptake in a similar way to Norway (which has 77.7% of new cars sold being electric) there would be a further 6 million EVs on our roads, which would save £4.1 billion in energy costs in 2022.
“The impact of climate change hit home for the British public this summer with temperatures rising to 40.3°C, setting a new record. The heatwave was made ten times more likely by climate change. At the same time the energy crisis, caused in part by Russia’s invasion of Ukraine, created an extra strain for bill payers with gas prices hitting new highs.
“Britain was the first G7 countries to commit to reach net zero emissions and now 91% of global GDP is covered by net zero targets. But progress on climate and energy policies to shift to newer, cleaner technologies has in some ways slowed in recent years, for example, with the ban on onshore wind farms,” the ECIU stated in the report’s Executive Summary.
“The analysis has found that if the UK had not delayed in deploying renewables, insulation, rooftop solar panels, heat pumps and electric vehicles, some households could have saved around £1,750 on bills in 2022. Plus, homes are facing more than £400 extra in food bills this year because of the impact of climate change and oil and gas prices on the farming and food system. This amounts to a potential £2,150 added to household bills.
“While this analysis focuses mainly on households, businesses could also have benefitted from faster deployment. For example, UK farms could have saved up to £1 billion over two years if they had been helped to install solar panels. Deployment of these technologies would have involved significant initial investment, but these upfront costs would have already begun to pay off in the form of lower bills as well as stimulating growth in industries such as building, car manufacture and renewables.”