UK homes and businesses could be missing out on up to £3.1 billion of savings every year by not improving energy efficiency in their homes and business premises.

Against the backdrop of the cost of living crisis and the threat of recession, these savings could have a significant impact on daily life.

However, households and businesses are not considering the longer-term gains of energy efficiency as a solution to the tough economic climate – an issue explored in the Cebr’s latest report ‘Powering Energy Efficiency’ published today, created in collaboration with Grundfos.

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This report closely follows an autumn statement in which the Chancellor pledged to invest a further £6 billion into energy efficiency by 2025, kicking an urgent issue into the long grass.

Many businesses face record inflation and volatility, so many may not be in existence by the time this investment makes its impact felt.

What we need, this report reveals, is mass behavioural change at a scale and pace never seen before, among both consumers and businesses.

None of the Chancellor’s announcements tell the public how they can save money in the near term, and the target of reducing energy consumption in buildings and industry by 15% by 2030 is woefully unambitious.

This will not unlock energy savings to the extent that households and businesses sorely need.

Energy efficiency disconnects in the home

The biggest concern in the home this winter for almost two thirds (64%) of people is rising energy bills, followed by boiler breakdowns (25%) and blackouts (22%).

However, more than one in ten (12%) don’t know when they last had their boiler serviced, rising to one in four (23%) who are unsure when their heating system was checked for energy efficiency – despite these being actions that could help alleviate some of these concerns.

Among the lowest income households who are most at risk of energy poverty, this trend of inaction continues with just under one in five (19%) uninterested in energy efficiency measures despite its potential positive impact on quality of life.

Over a quarter of people in rented accommodation (26%) don’t know if their heating system has been checked for energy efficiency.

Frustratingly for renters, three quarters (70%) want to make their homes more energy efficient, but 43% can’t make improvements because they’re not responsible for the efficiency of their heating systems.

Energy issues drive drastic measures at work

UK businesses are at risk this winter due to skipping important heating servicing checks, with more than one in seven businesses (14%) either never getting a boiler service or not having one in the last five years.

This figure increases to one in five (20%) business owners who have not had an energy efficiency check for more than five years (or not at all).

While it seems that the issue has been deprioritised, just under three quarters (74%) of UK business owners are interested in making their heating system energy efficient and more than half (51%) would consider improving the energy efficiency of their facilities to manage the challenges of the energy crisis which has put many at breaking point.

More than half (52%) of business owners are most concerned about rising energy prices, closely followed by rising inflation (49%) and reduced consumer spending (35%).

In order to weather the storm, a third (33%) of business owners have been forced to shift some of the impact of the energy crisis onto their workforce by moving to a remote working model.

Further affecting workers, over a quarter (26%) of UK businesses would consider reducing employee wages in order to recoup costs lost due to the energy crisis, and 15% have already resorted to this measure.

Meanwhile, customers can also expect to feel the pinch, with half of business owners (50%) considering increasing prices to combat the energy crisis, while one in three would reduce trading hours.

What next?

UK businesses seeking a way out of the energy crisis want the government to step in, with more than a third (37%) citing checking eligibility for business grants as a key measure to combat the issues.

Government subsidies would encourage a third (33%) of UK businesses to upgrade their heating system while just under a third (32%) of UK businesses would seek advice on how to improve energy efficiency via an energy audit.

A major barrier for households considering energy efficient measures is high up-front costs, with just under one in three (31%) neglecting to adopt energy efficiency measures due to financial concerns.

This was reflected in the business owner responses, with more than one in three (35%) claiming that the initial expense this was the main barrier preventing them exploring energy efficiency.

While in the short-term, financial concerns are putting people off improving their heating systems, reduced energy bills in the long-term would be the strongest motivation for businesses with 57% saying this would encourage them to explore energy efficiency and 44% of households agreeing that this would be their main incentive.

Glynn Williams, UK Country Director at Grundfos, a global leader in advanced pump solutions and water technologies and the company responsible for the research alongside Cebr, commented:

“At a time when the UK faces a precarious economic outlook, homes and businesses cannot afford to be losing out on more than £3.1 billion in energy efficiency savings.

Yet, there is a clear gap between the barriers and benefits that must be overcome.

In our ‘Powering Energy Efficiency’ report, Cebr underscore the UK’s energy efficiency ambitions, but highlight a lag behind comparable countries on delivering against targets.

They also identify a range of obstacles and misperceptions that influence energy efficiency paralysis.

Whilst there is plenty that the Government can and should be doing, particularly around regulation and enforcement of energy saving measures, there is clearly a large gap in knowledge that must be addressed.

We therefore call on the Government to launch a public awareness campaign that will finally dispel the damaging myths around energy efficiency improvements and lead to the cost savings our households and businesses deserve.”

Rowlando Morgan, Head Environment, Infrastructure & Local Growth, Cebr, added:

“With the ongoing energy and cost of living crises making headlines daily across Europe, our team of economists were pleased to take up the challenge of exploring energy efficiency in both the UK and German markets for Grundfos.

The outcomes of the paper underscore a critical lack of awareness as a key barrier preventing the adoption of energy efficient measures, alongside high upfront costs and a lack of available qualified installers presenting further challenges.

Our findings indicate that the UK government needs to action several new policies including providing clearer information on energy efficiency, targeting schemes to the poorest households and prioritising schemes to offset the upfront costs of installing new heating systems.”

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