Explore the financial benefits from upgrading residential energy efficiency and the contribution these improvements could make towards the UK’s net zero ambition
Average annual household energy bill savings from upgrading an existing home in England and Wales to its potential
Annual avoided CO2 emissions from upgrading all homes in England and Wales to their potential
Annual energy bill savings for households if all UK properties were upgraded to at least Energy Performance Certificate band C
The residential sector accounts for around 20% of UK CO2 emissions. The sector’s emissions have only fallen by 13.5% since 1990 and actually rose by 1.8% during 2020, due to lockdown restrictions and remote working. To achieve the UK’s net zero target by 2050, it is therefore crucial that policymakers focus on improving the energy efficiency of UK housing. This principally involves:
In this edition of the UK Economic Outlook, we assess the potential financial and environmental benefits of improving the energy efficiency of UK properties.
All Energy Performance Certificates (EPCs) issued in the UK set out suggested upgrades to each property and the potential EPC rating improvement those could collectively achieve. We estimate the gross energy bill savings and emissions reductions that could be associated with such improvements (not accounting for the upfront costs of upgrades, or the emissions associated with making the upgrades).
The savings per household vary by the type of dwelling (i.e. a house or a flat) and whether it is a new property (i.e. built within the last 3 years since the Minimum Energy Efficiency Standard (MEES) was introduced in 2018). As expected, the savings are greater for houses and older properties.
For an average dwelling in England and Wales built before 2018:
Total energy bill and carbon emission savings per year from upgrading properties to their potential EPC rating as determined by MHCLG, England and Wales (£m)
Source: PwC Analysis
Viewed through energy bill savings at the individual level does not fully capture the benefits of improving residential energy efficiency. Our analysis reveals that if all properties in England and Wales were to upgrade to their potential energy efficiency, it could deliver considerable environmental benefits and make a significant contribution to the UK’s emission reduction targets.
Realising these benefits, however, will not be without its challenges. In order to encourage households to make energy efficiency upgrades, some key barriers need to be overcome. First and foremost, the upfront costs of investing in home upgrades can be significant and sometimes need to be spread over multiple homeowners over a period of time. Although upgrading could eventually increase house prices, for low income households in particular, this long clawback time could deter investments.
Clear policy guidance and long-term support to homeowners, landlords and construction-related businesses could incentivise and potentially speed up the progress toward more energy efficient homes, as well as meeting the UK’s ambition for net zero by 2050. This guidance should include emphasising the wider environmental and long-term financial benefits, which include an increase in property values. The return on investment will be higher for households living in regions with higher house prices.
How upgrading home energy efficiency could contribute to net zero CO2 emissions by 2050
Source: BEIS, PwC Analysis
See how the financial and environmental benefits differ at the local level and by property type over time, and the proportion of household disposable income that could be saved using our interactive data explorer below.
The data explores the potential benefits of upgrading properties in England and Wales to:
Find out the EPC rating of your property, and recommended measures to make your home more efficient and sustainable.
Chief Economist and Director of Econometrics and Economic Modelling, PwC United Kingdom
Tel: +44 (0)7714 567297