Designing Increased Energy Efficiency For A Path Out Of Fuel Poverty

Fuel poverty remains a pressing challenge for social housing. Even after recent falls in the wholesale market, typical UK household energy bills sit at £1,600–£1,700 a year – almost double pre-Ukraine war levels. For residents on prepayment meters, high standing charges (close to £1 per day per fuel) are often deducted before any energy is used, meaning that debt and arrears can accumulate quickly.

In our recent discussion with Nigel Banks, Technical Director for Zero Bills and low-carbon homes at Octopus Energy for our Making Housing Better podcast series, we explored how the structure of the UK energy market exacerbates this situation. Electricity prices remain tied to wholesale gas prices, despite the growth of renewable generation and the reduction in cost to produce it. In the UK electricity is currently four times the price of gas. In much of Europe, the ratio is closer to one-to-one, making electrification – the primary route to decarbonisation – far more affordable.

Therefore without intervention, or a change of policy, this imbalance risks leaving low-income households behind as the desired shift to electric heating to decarbonise the energy system accelerates.