Designing Increased Energy Efficiency For A Path Out Of Fuel Poverty

Beyond EPC C – the need for strategy

On the subject of energy efficiency as a country we continue to see EPC C treated as a ‘finish line’ when it is only really a baseline. A home can meet EPC C while still relying on fossil fuel heating and generating high energy bills. As we reflected during our conversation with Nigel, EPC C is more akin to a decency standard – an important step but far from delivering the affordability and carbon reduction the sector needs.

The challenge is  that housing providers should be building comprehensive energy strategies that go beyond compliance linking fabric upgrades with heating choices, on-site generation, tariff optimisation, and resident engagement. Without this, there is the worrying potential that decarbonisation efforts risk increasing costs for those who can least afford it.

How the Zero Bills model works

Nigel outlined the thinking behind the  Octopus Energy Zero Bills model which is based on incorporating low-carbon technology into the build of new homes and offers one route to tackle both carbon and cost. It combines the use of:

• Solar PV sized for maximum on-site generation

• Battery storage to capture and shift low-cost renewable electricity

• Heat pumps with smart controls

• Tariff optimisation software to import energy when prices are low or negative and export when prices are highest

This approach of technology adoption alongside building design allows Octopus to reduce bills to zero for at least 10 years, with they say potential savings of over £1,000 annually. Renewable technology is becoming cheaper – a 400-watt solar panel now costs about the same as a sheet of OSB board – and installation is more straightforward than in the past, as we are learning from increased application.

This approach is being used in a number of new build developments with Octopus partnering with a number of house builders across the country. However, retrofitting the model at scale has challenges. Fabric performance, roof space, and orientation are key constraints, meaning that while many new builds could achieve zero bills, far fewer existing homes will meet the criteria without significant adaptation and intervention.

Equity and the landlord-tenant split

Our conversation highlighted that the landlord-tenant split incentive remains a major obstacle. The capital costs of installation sit with the housing provider, while the bill savings go to the resident. In certain areas, modest rent adjustments can offset these costs while still delivering net savings for tenants, but rent caps prevent this in most cases.

Nigel explained that models such as Octopus’ Tenant Power tariff seek to share benefits between landlord and resident, helping overcome this barrier. For properties without sufficient roof space, microgrids – shared generation with communal batteries – could be part of the answer, though regulatory and technical complexity means these are still at early-adopter stage.

The wellbeing dividend

The potential impact on resident wellbeing is significant. Removing the anxiety over heating costs in winter has clear mental health benefits, alongside the physical health gains from living in a consistently warm, well-ventilated home.

We should see this not only as a cost-saving measure but as a health intervention. Fuel poverty is about more than energy bills – it is linked to respiratory illness, stress, and poorer life outcomes including low income. Where the concept of Zero Bills can be delivered, it can remove one of the core drivers of that cycle.

Policy and market shifts required

While technology can deliver these outcomes, policy changes could make them far easier to achieve at scale. The UK’s decision to load levies onto electricity rather than gas makes electrification less competitive than in other European countries. This is a topic of discussion across both the energy sector and political circles, especially when the cost of decarbonisation is explored in depth.

Any rebalancing would change the financial calculation with many arguing that it would enable and support the wider rollout of low-carbon heating and allow housing providers to focus investment on smart, flexible systems that take advantage of cheap or even negative-price renewable periods.

Practical steps for housing providers

Following the conversation with Nigel, there are some interesting questions to ponder about how the sector should look towards:

• Building integrated energy strategies that link fabric, heating, generation, and tariffs.

• Designing all new builds to be zero-bills-ready, with solar, battery storage, and smart heat pumps installed as standard.

• Exploring benefit-sharing models to address the split incentive problem.

• Investigating microgrid potential for estates and blocks to maximise shared generation.

• Supporting residents to access smart tariffs, ensuring they benefit from low-cost renewable energy periods.

The Zero Bills model is not a universal fix, and indeed when it comes to decarbonisation there is no one size fits all solution, rather it will a collection of complementary solutions., But it demonstrates what is possible and how changes need to happen now and not wait for future developments. For the homes that can meet the technical requirements, this approach could lift households out of the energy-related element of fuel poverty. The challenge – and the opportunity – is to take the principles behind it and embed them into strategies that work across the whole housing stock, ensuring that no household is left behind.