Support for low-income households

1002.  Support for lower income households exists but is not delivering at the pace and scale required. However, current measures aimed at supporting households to manage the high upfront costs of decarbonising reach only 12%-22% of households in the bottom three deciles.714 The Energy Company Obligation (ECO) scheme requires energy companies to support low-income households to access energy efficiency measures (including solar). The Review welcomes government announcing that it will expand the ECO scheme. As well as ECO, there are the following other support schemes currently running - the Home Upgrade Grant (HUG) and the Social Housing Decarbonisation Fund (SHDF).715

1003.  The government has heard positive feedback on the Boiler Upgrade Scheme (BUS), which provides grants of up to £5,000-£6,000 for heat pumps. So far this year around 10,000 vouchers have been given out, significantly short of the trajectory needed to meet government's target for 600,000 heat pumps to be installed by 2028, also taking into account it is not the only policy needed to reach the 600,000 figure.

1004.  Evidence provided to the Review by the Building Engineering Services Association (BESA) representing more than 1,000 members with combined turnover of £3.6 billion recommends that:

"Government consider where quick wins can be secured". They suggest example initiatives including "increasing the Boiler Upgrade Scheme funding over to encourage a wider range of heat pump types." BESA also called on government to "work with the wider domestic heating sector on establishing a system upgrade scheme focused on delivering simple and quick wins that would deliver immediate and affordable solutions. This might include swapping out internal components in existing heating systems and, where compatible with an existing boiler, using weather compensation technologies to be reactive to outdoor temperatures. BESA would be happy to recommend a series of low-cost measures (sub £100)."716

1005.  The World Wide Fund for Nature (WWF) representing nearly 100 companies globally recommends that the government: "scale up the Boiler Upgrade Scheme over time and extend it beyond 2025".717

1006.  The Heat Pump Association told the Review that "whilst welcome, [the Boiler Upgrade Scheme] is not expected to lead to growth at the scale needed to meet the 600,000 target."

1007.  New analysis carried out by the Review shows that supporting low-income households to decarbonise is essential (see section 5.1).

1008.  Further measures will be needed to distribute the cost of the gas grid fairly as more households move away from using the grid. Government will need to ensure that households that cannot access the finance to upgrade their homes are not left to pay for the upkeep of the gas grid as the transition progresses. Stakeholders pointed out that if lower- income households disconnect from the grid in slower time, their costs might increase irrespective of the fuel gas price. Government should consider how to prevent this from 2025 onwards, and by 2030 at the latest.

1009.  The Review recommends that government considers ways in which it could go further by bolstering existing schemes with additional funding support. For example, with the increase in energy prices, owner-occupiers now have a strong incentive to retrofit their homes to save on energy prices. Grant funding for owner-occupiers, in parallel with the Boiler Upgrade Scheme (BUS), would catalyse the transition. The government could also consider linking these measures to demand measures, such as installation of smart controls and smart meters.