Many politicians and activists claim that enforcing Net Zero compliance on households will ultimately reduce their energy bills.
But retrofitting homes with insulation and heat pumps, and other “energy efficiency” measures is not cheap. According to the UK Parliament’s Environmental Audit Committee of MPs, the current government has significantly underestimated the costs of making homes compliant with Net Zero:
19 million UK properties need energy efficiency upgrades to meet EPC band C, and the EAC heard in evidence that it can cost on average £18,000 (before a heat pump installation). Therefore, the cost is likely to be far greater than the Government’s estimate.
And this may be an underestimate. In a policy experiment run by Kirklees Council, eight houses were retrofitted. According to the local authority,
Initial results have shown a reduction in carbon emissions by 50%-75%, saving tenants between £190-£350 a year on their energy bills.
This experiment has been highlighted by the Labour Party in their new policy agenda. But what neither they nor Kirklees council explained was how much this retrofitting cost. This was revealed by an investigation for the Daily Mail newspaper.
The Opposition Leader praised a Labour council’s green energy housing scheme to cut fuel bills in his conference speech – but failed to mention the eye-watering cost.
He said the pilot project to retrofit eight council houses in Huddersfield, West Yorkshire, with the latest energy-saving insulation and fittings had saved residents ‘over a grand’ on their winter fuel bill.
But retrofitting each house cost around £60,000. It means doing the same for the nation’s 1.6 million council houses would cost £96 billion.
This is consistent with estimates produced last decade by the now defunct Energy Technologies Institute (ETI), which found that,
Although very deep retrofits are technically feasible, their cost could potentially be similar to the cost of rebuilding the entire UK housing stock (in excess of £2 trillion)
At the time of writing, the average interest rate on a five year fixed-rate mortgage was 6.36%. This means that the interest payments on a £60,000 loan on a home would be £3,816 per year — more than ten times the savings achieved by the Kirklees experiment.
Assuming the EAC’s estimate plus the cost of a heat pump is equivalent to half that cost (i.e. £30,000), interest payments on such a loan would still be five times the reduction in energy bills. And, of course, repayment at that rate means the debt will never be repaid.
Net Zero is not going to reduce energy bills — the exact opposite.