Outdated electric heating causing an energy bill crisis

• Almost 1 in 4 electrically heated homes in England are fuel-poor, with fuel-poverty gaps averaging £857 – more than double the national average – and reaching up to £1,823 in the least efficient homes

• Price cap rise could see electrically heated homes paying close to £2,500 a year – much higher than the £1,717 cap set by Ofgem for a typical dual-fuel home

• Replacing inefficient electric heating with heat pumps can aid fuel-poor households say National Energy Action and Kensa

• Switching to heat pumps could save electrically heated households over £1,200 a year on heating costs

• Government’s Warm Homes: Social Housing Fund can help social landlords improve energy efficiency, including upgrading heating systems

• Nearly 250,000 social homes still rely on outdated electric heating and will be most vulnerable as energy prices rise

  
  

Outdated electric heating systems are trapping hundreds of thousands of UK households in fuel poverty. Fuel poverty charity National Energy Action (NEA) and UK ground source heat pump specialists Kensa are calling for urgent action to protect consumers and aid those struggling to afford basic heating.

Millions of people in the UK are living in fuel poverty, with at least 13% of households in England affected. However, this figure jumps to nearly a quarter among households relying on electric heating. The situation is particularly difficult for these homes, which have an average fuel poverty gap – the additional income needed to not be fuel-poor – of £857, more than double the national average of £417.

This gap is caused by the inefficiency of direct electric heating, such as night storage heaters, and the rising cost of electricity, which has jumped to 24.5p per kWh. As energy prices rise again this winter, electrically heated households could see annual heating costs close to £2,500 – significantly higher than the £1,717 cap for dual fuel homes set by Ofgem. Many households will be unable to afford this, emphasising the urgent need for more efficient affordable solutions.

Furthermore, as household Energy Performance Certificate (EPC) ratings fall, the fuel poverty gap widens significantly, underscoring the direct link between poor energy efficiency and fuel poverty.

• Electrically heated EPC D properties have an average fuel poverty gap of £341

• Electrically heated EPC E properties have an average fuel poverty gap of £1,028

• Electrically heated EPC F and G properties have an average fuel poverty gap of £1,823

  
  

More efficient heating systems will boost EPC scores and, crucially, cut energy bills for these households. A proven solution to do this is networked heat pumps, which use individual ground source heat pumps in multiple properties, potentially offering 400% energy efficiency – far exceeding the maximum 100% efficiency of traditional electric heating systems.

Kensa, the UK's leading networked heat pump provider, has modelled how its Shoebox NX heat pump combined with networked heat pumps could dramatically reduce energy bills for electrically heated homes:

*Heating and Hot Water demand uses Ofgem consumption assumption for a medium house. Standard rate electricity unit cost from 1st October 2024. Dual rate tariff unit cost sourced from EDF Electricity Prices from 1st October 2024. Figures do not include standing charges. Electric heating efficiency 100%. Shoebox NX Ground Source Heat Pump efficiency 400%.

Since 2012, Kensa has upgraded outdated electric heating systems in nearly 4,000 UK homes, cutting energy bills by over half and improving energy efficiency, helping social housing providers meet the requirement for all properties to achieve at least an EPC C rating by 2030.

Through the Government’s Warm Homes: Social Housing Fund, which replaces the Social Housing Decarbonisation Fund, Kensa encourages providers to use the financial support to adopt better heating solutions in their properties. Around 250,000 social homes still rely on inefficient electric heaters, risking fuel poverty. Replacing these with networked heat pumps will protect residents from future energy price increases and ensure affordable heating.

Maya Fitchett, Policy Analyst at National Energy Action, said:

“This winter, the increase in the price cap will mean an estimated six million households are living in fuel poverty across the UK, unable to heat and power their homes. We have known for too long that a disproportionate number of these fuel poor households rely on inefficient electric heating, making them particularly vulnerable to price increases.

“Ofgem’s price cap will mean that customers reliant on electricity for all or most of their energy needs will see additional increases of approximately £70 compared to Direct Debit customers. This means many of these households cut back their energy use to dangerous levels, some don’t heat their home at all.

“It doesn’t have to be this way. When installed alongside appropriate insulation measures, low-carbon technology, such as heat pumps, can help households to significantly reduce energy costs. Often this technology is too expensive for many of the people National Energy Action (NEA) try to support, but the Government’s Warm Homes: Social Housing Fund can be essential in supporting low-income tenants to benefit from this technology. This is also vital to make progress towards statutory fuel poverty and net zero targets.”

Stuart Gadsden, Commercial Director at Kensa, said:

"Since 2020 continuous spikes in energy prices have left millions of UK consumers reeling at the sight of high energy bills, with many struggling to afford to even turn on their heating.

"The fuel poverty gap has been rising, and households with direct electric heating are seeing the gap widen most. Networked heat pumps can provide a much-needed lifeline for these people, shielding households from unstable energy prices and cutting heating bills by over £1,200 a year.

“Social housing landlords have made important commitments on fuel poverty alleviation and the climate. With the Warm Homes: Social Housing Fund, they have a clear pathway to fund these vital projects, improve heating for their tenants and potentially lift them out of fuel poverty all together.”