What the Autumn statement means for your home heating

It was expected that the Autumn Statement would contain provision for further energy efficiency investment for both businesses and homes, as well as details on energy costs after April 2023.

It's now been revealed that the government will spend an additional £6 billion on energy efficiency from 2025 to 2028, nearly doubling the planned investment of £6.6 billion already pledged.

It's also planning on raising the cost per unit of gas and electricity from April 2023, while extending support for off-grid consumers with oil and LPG boilers. 

Find out more on: Autumn statement 2022 reveals energy price rises from April

The details of where this £6 billion will be spent haven't been revealed yet and the Chancellor says a taskforce is to be formed. 

But a number of efficiency drives are already in place, and it's expected that retrofit insulation and boiler upgrades for UK homes will be the bedrock of the new spending plan. 

New funding for energy efficiency initiatives

In the Autumn Statement, the Chancellor revealed new funding for energy efficiency initiatives:

'Today, we set our country a new ambition: by 2030, we want to reduce energy consumption from buildings and industry by 15%.

Reducing demand by this much means, in today’s prices, a £28 billion saving from our national energy bill or £450 off the average household bill. This must be a shared mission with families and businesses playing their part – but so will the government.

In this Parliament, we’re already planning to invest, in energy efficiency, a total of £6.6 billion. Today, I’m announcing new funding, from 2025, of a further £6 billion – doubling our annual investment to deliver this new national ambition.

Our commitment to the British people is, over time, to remove this single biggest driver of inflation and volatility facing British businesses and consumers.

The Business and Energy Secretary will publish further details on our energy independence plans and launch a new Energy Efficiency Taskforce shortly.'

It's unclear whether the £450 saving calculation takes into account future energy cost rises. 

Ofgem says the average household energy consumption is 12,000 kWh of gas and 2,900 kWh of electricity, equaling £2,500 spend per year. This is based on a medium-sized household of 2-3 people. The £450 saving is likely to be based on this level of energy usage. 

More help for off-grid customers

The government is doubling its support for domestic off-grid customers using oil and LPG fuel for their boilers. The one-off payment is being doubled from £100 to £200.

The date this support will arrive is yet to be confirmed, but it will be delivered as credit on your electricity bill.

Unlike gas and electric, oil and LPG fuel isn't price capped per unit. So you pay the full cost of your fuel, and this payment is a subsidy delivered to you. 

This support is available to consumers in Great Britain and Northern Ireland both. It is called the Alternative Fuels Payment (AFP). 

Rising prices in April

From April 2023, the Energy Price Guarantee (EPG) will have a raised unit cost for gas and electricity. This means that an average bill of £2,500 per annum will rise to £3,000 per annum, up until April 2024.

The Autumn Statement leaves open the possibility of the EPG being revisited during this term, as well as the possibility of adjusting the cap for households with very high energy usage.

It promises a consultation to make sure vulnerable users (such as those using medical equipment that has a high energy cost) are not negatively affected. 

Until this consultation is complete, the exact limits of what defines too-high usage is not clear. But the Autumn Statement claims that 'the vast majority' of households will not be impacted. 

The last time the price cap was revised, gas costs per unit rose by 36% 10 10.3p while electricity costs per unit rose by 17% to 34p.

This means that if you have gas central heating, you will likely see a higher increase in costs than if you have electricity-fueled heating.

Read more: Autumn Statement 2022: £3,000 bills for an 'average energy use' household

Why reducing demand affects energy bills

If we use less energy because we're more energy efficient, we create less demand on producers and less energy is needed to be bought from the wholesale market.

If demand is controlled, everybody would benefit in less severe bill increases for energy sourced from the national grid, although government policy through price controls, taxes and levies also has a large impact on the bills we pay. 

As part of this, reducing gas demand and decarbonisation reduces our reliance on fossil fuels which have been the most significant driver of current energy price woes. 

From April 2023, the government will continue to cap energy unit rates but costs will still go up for consumers.

Find out more about how the Autumn Statement will impact your money.  

What energy efficiency means for your home

There are two ways that your home heating becomes more efficient: keeping heat in your home, and getting more energy from the fuel you're buying.

Many people, before changing their central heating system, will retrofit insulation such as cavity wall insulation or loft insulation to stop heat from escaping out of your home. 

Targeting insulation before changing your mechanical heating system is known as 'fabric first'.

Not only does this mean you enjoy the heat you've bought for longer, but it means heating systems can modulate and run more mildly, helping them run efficiently and more cheaply.

When it comes to central heating products , a heat pump can deliver typical efficiencies of 200% - 400%, and even higher on some days, while a condensing gas boiler usually has a theoretical maximum efficiency of 92% - 94% (but they are rarely this efficient when we use them).

In addition, heat pumps use electricity as fuel which can be generated by renewable sources. 

This is why the Boiler Upgrade Scheme seeks to help people move from boilers to heat pumps going forward. 

Find out how a combi boiler can be more efficient by changing one simple setting to save up to 8% a year on your heating bill.

How the government currently invests in energy efficient homes

The government currently has a range of grants to help you make your home more energy efficient. 

• the Energy Company Obligation (ECO) has energy suppliers insulating your home or providing you with a new boiler and recovering some of the costs in your energy bills. 
• In England and Wales, the Boiler Upgrade Scheme (BUS) provides up to £5000 off the cost and installation of an air source heat pump or biomass boiler, or £6000 off the cost of a ground or water source heat pump, if you have an energy performance certificate from the last 10 years that has no outstanding recommendation for loft or cavity wall insulation. 
• The Local Authority Delivery Scheme provides cash to local authorities to upgrade low-income homes in England.
• The Home Upgrade Grant (HUG) provides upgrades to low-income homes that are not connected to the gas grid.
• The  Social Housing Decarbonisation Fund targets social housing that is below EPC C to bring it up to that standard. 

The government is targeting 600,000 heat pump installations a year by 2028, with newly announced funding from 2025 likely to support in delivering this. 

Find out more by reading the government's guidance to its energy efficiency schemes.