Cutting energy bills for fuel-poor households through home upgrades

Improving the energy efficiency of Britain’s fuel-poor homes could deliver substantial reductions in household energy bills, while cutting emissions and making households less exposed to future energy price spikes.

New analysis by Frontier Economics, commissioned by WWF-UK and ScottishPower, examines what different combinations of insulation, heat pumps, solar panels and batteries could mean for fuel-poor households across Great Britain.

Figure 1: Upgrade packages modelled

Source: Frontier Economics

Under the most comprehensive package of measures (which includes an insulation upgrade, heat pump, solar PV and a battery), our modelling finds that annual bill savings can exceed £900 for a typical fuel-poor household, living in a terraced home with a gas boiler. Installing solar PV panels by themselves could save the same household more than £300 a year.

Figure 2: Bill savings for a fuel poor band D rated terraced household with a gas boiler

Source: Frontier Economics

Note: Savings do not include the upfront costs associated with installing the measures. ‘Insulation’ means an insulation upgrade to bring the household up to band C

The analysis also highlights the scale of benefits from further government support. An additional £1.5bn of public funding each year, alongside existing Warm Homes Plan funding commitments targeted at low-income households, could significantly expand the number of fuel-poor households saving on their bills through energy efficiency and low-carbon measures. This scale of funding injection would, in effect, fill the funding gap left by the closure of the existing Energy Company Obligation (ECO) scheme and the Great British Insulation Scheme in 2026. Combined with plans for new minimum energy efficiency standards in the private and social rented sectors, this would mean that around 2.1m fuel-poor households could receive bills savings through upgrade measures by 2031.

The scale of the potential bill savings for these households are substantial. On average, we estimate that households receiving funded home energy upgrades gain an annual bill saving of roughly £475.

Our modelling also explores what could happen during another globally driven energy price spike. Measures reducing households’ reliance on fossil fuels could provide significantly greater protection against volatile prices. For a fuel-poor terraced household with a gas boiler, for example, the annual saving from an insulation upgrade combined with a heat pump is 48% higher in the year of the modelled price spike than under the central price scenario.

The analysis builds on Frontier’s 2024 Warm Homes Mission research and extends the modelling to a wider range of technologies, household types and future energy price scenarios.

The report was produced by Claire Thornhill, Emma Kearney and Charles Lawless at Frontier Economics.

Click here to read our full report, Better homes, lower bills: securing savings for fuel-poor households