Retrofitting homes for net zero

There is a clear and urgent need to provide long-term certainty for the sector through the Government’s retrofit support schemes. Stop-start measures and short funding cycles have undermined the confidence of consumers, installers and the wider supply chain. The Government has not clarified how it will support retrofit beyond 2026, when key schemes are due to expire. (Conclusion, Paragraph 38)

It is critical that the Government streamlines and simplifies its support schemes, especially their eligibility requirements. Many schemes are too complicated and have failed to support fuel poor households, while also failing to incentivise able-to-pay households to invest their own money. (Conclusion, Paragraph 39)

The Government must announce a long-term programme for how it plans to support home retrofit beyond 2026 in its Warm Homes Plan. This should include a reduction in the number of schemes offered; significantly relaxed eligibility criteria to prioritise uptake; funding commitments until at least 2035; and a strategy to facilitate area-based retrofit. (Recommendation, Paragraph 40)

Many consumers have a fundamental lack of awareness of the benefits of home retrofit and where to access quality, impartial information and advice. This is preventing them from making informed decisions and delaying the retrofit of their homes. (Conclusion, Paragraph 50)

There is a clear need for a single, trusted source of free information and advice on home retrofit that can be accessed via multiple sources. Such provision already exists in Scotland and Wales but does not in England. Consumer advice should also be better embedded within communities and the Government should seek to encourage the sharing of experiences between neighbours and among the workforce to increase engagement around low carbon home retrofit. (Conclusion, Paragraph 51) 60

One-stop-shops have proven successful in many neighbouring countries, especially when affiliated with a workforce accreditation scheme that signposts consumers to trusted installers. There are clear and tangible links between their introduction in countries such as France and the success of their low carbon heating rollouts and high levels of consumer engagement. Such an approach would be easily replicable in the UK. (Conclusion, Paragraph 52)

We recommend that the Government establishes a national warm homes advice service for England to signpost consumers to independent advice, trusted installers and financial options. This should be available online, over the phone and in person. While it may be publicly-funded at first, it should be affiliated with a retrofit workforce accreditation scheme that can signpost consumers to trusted installers and provide a model for the service to become financially self-sustaining over time. A pilot should be launched ahead of winter 2025. (Recommendation, Paragraph 53)

We are deeply concerned that Energy Performance Certificates, as currently calibrated, provide some consumers with poorly conceived advice and have a strong bias against low carbon, but initially more expensive, heating systems. As a cost-based metric, Energy Performance Certificates are not, as they stand, an effective tool for decarbonising UK homes. To the contrary, they are deterring consumers from making the switch to low carbon heating. (Conclusion, Paragraph 62)

Energy Performance Certificate assessments vary greatly in quality and consistency. It is therefore troubling that they are expected to perform such a range of functions that they were never initially designed for, such as determining eligibility for government support schemes. If the Government is to continue using Energy Performance Certificates for such purposes, reform of the Energy Performance Certificate metric must come quickly. The validity of Energy Performance Certificates for 10 years is also too long to say with confidence that all assessments and recommendations remain relevant. (Conclusion, Paragraph 63)

This report highlights the high and stagnating levels of energy poverty in the UK and the current disincentive that Energy Performance Certificates have on low carbon heating options due to price concerns. We therefore recommend that the Government reforms the Energy Performance Certificate metric with a renewed focus on both emissions and energy costs. This should be used to recommend home improvements to households who should then be signposted to independent advice following an assessment. (Recommendation, Paragraph 64) 61 Decarbonising home heating

Uncertainty over the UK’s technological direction for decarbonising heat is undermining consumer confidence and supply chain development. In particular, the Government’s failure to decide on the role of hydrogen for home heating is obstructing the rollout of proven electric technologies such as heat pumps. Consumers, installers and the supply chain require long-term certainty to invest in low carbon heating technologies. (Conclusion, Paragraph 89)

Electricity is much more expensive than gas in the UK because gas generation sets the marginal wholesale price and most levies are placed on electricity bills, rather than gas. This is a significant disincentive for consumers switching from fossil fuel to electric heating and a major barrier to decarbonising homes. Lowering the price of electricity relative to gas has been the tipping point needed to encourage the mass uptake of low carbon heating systems in some European countries. (Conclusion, Paragraph 90)

Levels of public awareness of electric heating systems are worryingly low. Many consumers are simply unaware of technologies such as heat pumps, let alone their benefits and support available to them. This is compounded by misinformation and factionalism in parts of the home heating sector, which undermines the credibility of proven technologies and obstructs consumers from making informed decisions. (Conclusion, Paragraph 91)

We recommend that the Government, by the end of 2025, considers reducing the policy cost difference between gas and electricity bills, creating an incentive for households to adopt electric heating systems. The Government should do this carefully, recognising that almost all gas use is for essentials such as heating and cooking, differentiating gas from electricity. During this process, the Government must provide support for those who lose out due to the policy cost changes. (Recommendation, Paragraph 92)

The Government must produce an engagement strategy to set out the costs and benefits of electric heating and build confidence for consumers, installers and the supply chain. This should include a plan to tackle misinformation and introduce consumer and workforce champions who can share experiences of electric heating systems. Measures must be focused on supporting and encouraging those least likely to be able to afford a transition, low income households. (Recommendation, Paragraph 93)

Delaying a decision on the role of hydrogen for domestic heating until 2026 continues to create profound uncertainty. This means that consumers are delaying their switch to low carbon heating systems and Ofgem is unable to prepare to regulate our future energy networks as effectively 62 as it otherwise could. With hydrogen trials being cancelled and a weight of evidence in place, it makes sense to take a decision this year. (Conclusion, Paragraph 115)

We are concerned that the Government has not set clear guidelines for the end of the installation of new fossil fuel heating systems on and off the gas grid. Without certainty, consumers, manufacturers and the wider supply chain lack the confidence that they need to make informed decisions. The Government should consider the lessons that can be applied from announcing the end of the sale of new internal combustion engine vehicles in encouraging the uptake and increasing market share for low carbon heating technologies. (Conclusion, Paragraph 116)

The Government urgently needs to develop a plan for repurposing the gas network. Whether hydrogen plays a role in our future heating system or not, much of the gas network will need repurposing, presenting an enormous and costly infrastructural challenge that is only likely to become more expensive. It is concerning that the previous Government’s preparations were only at a preliminary stage. This Government should address repurposing of the gas network as a matter of priority. (Conclusion, Paragraph 117)

We urge the Government to take a decision on the possible role of hydrogen for domestic heating no later than summer 2025, alongside the publication of its Warm Homes Plan. This should be informed by the existing evidence gathered through trials and independent analysis. (Recommendation, Paragraph 118)

The Government must provide consumers, installers and the supply chain with certainty that most home heating will be powered by electricity in future. It must also set out its view on whether new on-grid and off-grid fossil fuel heating systems should continue to be installed in homes from 2035 and explain how it will minimise the use of fossil fuels in homes by

The Government must set out comprehensive plans and an analysis of the costs and benefits for repurposing the gas network and clarifying who would bear the costs. It should set out a preliminary analysis by the end of 2025, including a clear timeline and a progressive approach to funding the costs. (Recommendation, Paragraph 120) 63

The Government should review and assess measures designed to shape and influence the clean heat market, including but not limited to the Clean Heat Market Mechanism, to determine if they remain the most effective ways to increase heat pump uptake. (Recommendation, Paragraph 121) Workforce and skills

The UK has a skilled home heating workforce but its transition to work on low carbon retrofit is not happening at the pace required to upgrade homes at scale. This is compounded by a twin underlying crisis: few new entrants to the sector and an ageing workforce. (Conclusion, Paragraph 135)

Training providers are reluctant to invest in courses on low carbon retrofit due to low demand for training. This is underpinned by the uncertain future technical direction of the sector, inadequate training grants, weak promotion of careers in retrofit and low consumer demand for low carbon energy home improvements. (Conclusion, Paragraph 136)

The Heat Training Grant does not adequately incentivise workers to take time off work to upskill on low carbon retrofit or compensate them for lost earnings. Many workers in the retrofit sector are self-employed and cannot afford to take time off work to commit to a multi-day course. (Conclusion, Paragraph 137)

We recommend that the Government resumes work undertaken by the previous Government to prepare a Net Zero and Nature Workforce Action Plan. This should be published by the end of 2025 and include a specific roadmap for meeting the skills needs of the home retrofit sector, including via the Growth and Skills Levy mechanisms. It should also ensure that training courses and qualifications for heating engineers cover work on low carbon heating technologies as part of the core curriculum, rather than an add-on. This should be a cross-government endeavour with the Skills Minister accountable to ensure full engagement between the Office for Clean Energy Jobs, Skills England, the Department for Energy Security and Net Zero and the Department for Education. Once it is fully established, Skills England should also prioritise the skills needs of the low carbon retrofit sector. (Recommendation, Paragraph 138)

The Government should increase the value of the Heat Training Grant to provide workers with full compensation for lost earnings when taking time off work to upskill on low carbon retrofit. This should take effect until market demand provides sufficient incentives for the workforce, supply chain and employers to self-fund training. (Recommendation, Paragraph 139) 64

The consumer protections and workforce accreditation landscapes are excessively complicated, which makes it challenging for consumers to know who to trust. Many consumers are simply unaware of which schemes they can rely upon and what avenues for redress they have if things go wrong. Recent home insulation scandals, including measures installed under government-funded schemes, have further undermined consumer trust. (Conclusion, Paragraph 159)

We are especially concerned about the lack of consumer protections and mandatory standards for retrofit work not covered by government grants. This is allowing rogue traders to operate unimpeded. We believe that those who fail certification to carry out government-funded retrofit work should not be allowed to operate in the sector elsewhere. (Conclusion, Paragraph 160)

We recommend that the Government introduces a national workforce accreditation scheme and a national contractor licensing scheme as a prerequisite for carrying out any retrofit work. These should be granted powers to revoke licenses or impose financial penalties for poor quality work and provide consumers with clear avenues for redress. A small registration fee would help fund a national warm homes advice service, which would signpost consumers to certified workers. The national workforce accreditation scheme could replicate the successful model adopted by the Gas Safe Register. (Recommendation, Paragraph 161)

We found it incredible that the Residential Property Surveyors Association has reported that around 250,000 homes could be un-mortgageable due to spray foam insulation and that the accountability to remedy things remains unclear. We recommend that the Energy Company Obligation, as a policy to put responsibility on installers and commissioners for poor quality work, needs serious improvement. (Recommendation, Paragraph 162) 65