An open letter to BEIS Secretary Kwasi Kwarteng

Neil Hargreaves, Managing Director | Knauf Insulation Northern Europe

The Rt Hon Kwasi Kwarteng MP     
cc The Rt Hon Michael Gove MP

Dear Mr Kwarteng,

A key Energy Security action must be to reduce demand for gas and protect the most vulnerable from rising bills. Yet home energy efficiency remains the bridesmaid to energy supply’s bride because firm demand reduction couldn’t historically be measured.

With insulation – retrofit or new build homes – the Energy Performance Certificate (EPC) has had to assume correct install. As a homeowner, I can’t know if the installation I’ve paid for is delivering 100%, 90% or even just 50% of the promised efficiency.

This uncertainty undermines both energy security and net zero aspirations. At a housing stock level, that cumulative efficiency ‘performance gap’ will inevitably translate to electricity generating capacity we needn’t have built as we electrify heating. If we don’t measure home efficiency, the gaps will remain, and we will build more power stations.

Measurement technologies able to deliver these outcomes have progressed through a Government R&D programme[1] and are now commercial, while their wider adoption is set out in the UK Government’s Energy Performance Certificate Action plan.

“EPCs will need to move from a reflection of the features of a building to the true measure of ‘in-use’ building performance”

^{MHCLG & BEIS joint publication[2]}

This transition to home efficiency measurement was to begin with retrofit programmes. The Social Housing Decarbonisation Fund (SHDF) wave 1 was to require before-and-after retrofit measurement while the Energy Company Obligation (ECO) was to trial a ‘pay for performance’ model which would pay home retrofitters per unit of proven home energy reduced. The perfect Energy Security Strategy guaranteeing each kWh of avoided gas is precisely that; all risk is moved to the supply chain and away from the homeowners and Government schemes. The supply chain offering assured home efficiency improvement in retrofit would then support new home regulation in time for the 2025 Future Homes Standard.

But we understand key elements of the plan have stalled:

• The ECO ‘Pay for Performance’ element - up to £100m per annum - has been postponed at least 18 months citing legislation drafting challenges
• The SHDF has not been resourced to run a procurement exercise for in-home measurement nor a budget to support a growing ‘assured efficiency measurement’ supply chain.

With no ‘early-stage’ market deployment, there will be little chance for these technologies to support new build home performance measurement at scale in 2025. Just as the imperative for these technologies has grown, officials have become mired in complexity – legal and procurement. This challenge appears to desperately need ministerial intervention to unblock. Options include:

1. A separate ‘feed-out-tariff’ scheme equivalent to the stalled ECO ‘pay for performance’ element. Government buys proven units of energy reduction – negawatt hours - as measured by accredited measurement technologies.
2. Supporting the SHDF programme by separately procuring approved technologies onto a Government Framework and supporting that framework with a measurement budget. Successful SHDF projects could then use those providers to support projects to deliver high quality retrofits every time.
3. Use the same procured framework to drive in-use performance measurement in a growing percentage of new homes up to the 2025 Future Homes Standard. In new build, the cost for measurement can sit with house builders but with a government requirement placed on developers to use that framework.  
4. Allow suppliers to bid in home energy-efficiency negawatts to the capacity market while also offering mechanisms to reward electricity demand load shifting to support the heat pump roll out. If allowed to, in-home efficiency measurement can dramatically de-risk heat electrification for occupants and the UK’s growing reliance on variable renewable electricity supply.  

Given the urgency, why not all the above? Knauf Insulation is the largest manufacturer of non-combustible insulation in the UK, and has diversified into smart home efficiency measurement in the knowledge those living in homes with our products want the outcome they offer when installed well. Net zero needs that transition to in-use performance while a cost-effective Energy Security Strategy demands it. The EPC in its current guise, where retrofit schemes rely on theoretical estimates, is now standing in the way of that transition.

We look forward to the Energy Security Strategy’s publication and desperately hope the planned transition to real performance can be put back on track – and then turbocharged. We stand ready to invest in UK capacity where the business case exists.

Kind Regards

Neil Hargreaves

Managing Director – Knauf Insulation Northern Europe

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