Energy efficiency: What’s powering the UK’s energy future?

Glynn Williams, UK Country Director at Grundfos, ponders Government schemes and energy efficiency at a time of skyrocketing energy bills and a cost-of-living crisis

Much has already happened in the energy arena in the first few months of 2023. In the first week of February, the government introduced its plan to allocate £32 million towards smartening the country’s energy infrastructure with the Heat Network Efficiency Scheme. This was after Chris Skidmore MP unveiled his much-anticipated net-zero review on 13 January, underscoring the need for the heightened impetus for the UK to achieve its net zero ambitions.

Of course, these major Government developments certainly do not exist in a vacuum, with the cost-of-living crisis increasing the need for impactful campaigns that put energy efficiency on the map. Add to this the growing consumer awareness around the issue and the strengthened resolve to make good on the UK’s net-zero pledges; there are clearly many factors that will continue to shape the future of the UK’s energy landscape.

Cost-of-living will continue to bite

Britons will continue to feel the sting of the cost-of-living crisis in 2023. This is according to new research from the National Institute for Economic and Social Research (NIESR), which forecasts low and middle-income households to take a financial hit of £4,000 this year. Against this gloomy economic backdrop, Ofgem increased the unit rates for energy on January 1, and the Government is set to reduce its support for customers from April 1.

The coming months will therefore bring higher energy bills that will only exacerbate the ongoing cost-of-living crisis

The coming months will therefore bring higher energy bills that will only exacerbate the ongoing cost-of-living crisis. Continued support will only address a fraction of the issue rather than effectively getting to the root of extortionate energy costs.

Grundfos’ recent research reveals that two-thirds of UK households already harbour concerns about rising energy bills, while one in four is worried about blackouts. The cost-of-living crisis and spiralling energy costs should therefore remain front of mind for policymakers tasked with delivering households and small businesses some respite.

Net-zero ambitions will be greater than ever

Another year brings us yet another step closer to the UK’s deadline of 2050 for reaching net-zero emissions. As suggested in Chris Skidmore MP’s net-zero review, Mission Zero, the road to meeting this target will have to be paved by extensive investment in infrastructure. A rollout of heat networks across all local authorities, for instance, would provide the UK with a cost-effective way to decarbonise our heating infrastructure.

Such a plan would make the water-energy economy more “circular”, closing the loop so that wastage is converted into reuse. This works because heat networks harness surplus energy from one area to satisfy demand elsewhere. Removing unnecessary emissions from industry could therefore help subsidise bills for households.

This plan would also incentivise investment and, looking further ahead, could remove reliance on fossil fuel boilers by 2040. Moreover, by giving the UK an equivalent of the EU’s “Fit-for-55” plan for a green transition, it would address another concern raised by the Skidmore review – namely, that the UK lags behind its international competitors in seizing the economic opportunities presented by the transition to net zero.

While industry and policy stakeholders await Government’s response to the Skidmore review, one thing is certain: Mission Zero has increased the onus on the Government to act and should galvanise all corners of the energy and policy worlds to make good on the country’s net-zero promises.

Efficiency will remain a critical issue

Both economic and environmental issues will make it more important than ever for homes and businesses to improve their energy efficiency.

Yet Grundfos calculates that a whopping 200 million old, energy-wasting pumps are providing heat to homes and buildings worldwide. Replacing these inefficient pumps could save 53.5TWh – the equivalent of Portugal’s annual electricity consumption! Imagine the world of possibilities that can be unlocked by tackling inefficiencies at the root.

Households and businesses could be missing out on up to £3.1 billion of savings

In the UK alone, households and businesses could be missing out on up to £3.1 billion of savings yearly by not improving the energy efficiency of their homes and premises, according to a Centre for Economic Business Research report sponsored by Grundfos.

Brits would benefit from the introduction of mandatory energy efficiency assessments for all building heating systems, with a commitment to assessing 40% of buildings within 12 months.

In a bid to make net-zero ambitions attainable and to reduce energy bills, energy efficiency simply must remain a high-priority item on policy agendas.

While the Government’s “It All Adds Up” campaign shows a welcome concern to raise public awareness around energy efficiency, consumers will increasingly look beyond basic tips such as buying draught excluders and switching off appliances at the plug.

Once customers are aware of new ways to improve energy efficiency in the home, adoption of these measures will follow at pace.

Government schemes will be put to the test

We need more initiatives like the Heat Network Efficiency Scheme, which will give our energy infrastructure a much-needed facelift, encouraging the adoption of heat networks that are an alternative to energy-sapping gas boilers.

Schemes like this go refreshingly further than the ECO+ scheme, which in supporting customers to install insulation, ultimately fails to tackle their energy efficiency issues at the source.

However, this is not to say that financial support for businesses struggling to improve their energy efficiency would not be welcome. Businesses are concerned about the potentially prohibitive costs of energy efficiency improvements, with 35% citing this as the main barrier to adoption. It is unsurprising, then, that a third would be incentivised by government subsidies.

In short, Government will feel intensified pressure to address energy inefficiency in a way that will drive efficiency in the long term. Energy inefficiency is causing us to haemorrhage money and emissions, and it will not be enough simply to place a sticking plaster over this wound.

To efficiency and beyond

Stakeholders can circumvent these issues by accepting initiatives and solutions that will bring us closer to an energy reality anchored in efficiency, resilience and environmental responsibility.

While by no means an exhaustive account of the undercurrents shaping the UK’s energy landscape, the above trends – informed by research and policy developments – will undoubtedly play a strong role in shaping the steps we take in building the future of energy in our country.

Written by Glynn Williams, UK Country Director, Grundfos