UK Energy Research Centre (UKERC) 2024-2029

This paper provides an international policy review on energy efficiency retrofit in owner-occupied homes and recommendations to apply best practices to the UK.

This working paper presents a review of policy design and implementation in OECD countries for increasing uptake of energy efficiency retrofitting in medium to high-income, 'able to pay' owner-occupied households. Renovation measures to help improve energy efficiency and decarbonise homes can include loft and cavity wall insulation, heat pumps and solar PV.

The review uses a rapid evidence assessment of academic and grey literature to address the following research question: Which internationally applied, good practice policies have the most potential to accelerate quality, energy efficiency retrofits of owner-occupied, 'able to pay' households in the UK?

The review reveals that residential energy renovations in OECD countries are mostly shallow single measures, with a small portion comprising multiple measures or deeper renovations. Although some countries such as France, Germany, the UK and the US have retrofitted millions of single measures to homes, this review has not identified any countries which have delivered deep home energy retrofit at a widespread scale.

We identify various review studies on policy instruments which have been applied in different countries and are considered important for implementing residential energy renovation. Policy instruments most commonly emphasised are regulations, financial support and information provision. Most reviews also include policies to develop workforce skills and competencies, supply chains and quality assurance.

Drawing upon our review of international and UK evidence, we make a series of policy recommendations for an effective home energy retrofit policy framework in the UK, with a focus on medium to high-income owner-occupier households:

As the UK intensifies efforts to decarbonise heating, Gas Distribution Networks (GDNs) are grappling with growing uncertainty about how rapidly low-carbon technologies - particularly heat pumps - will be adopted and how this will influence future gas demand. Recently, the Welsh Government has adopted Local Area Energy Plans (LAEPs) to help Local Authorities (LAs) navigate such uncertainties and coordinate local energy transitions using a whole-systems approach.

Designed to support net zero objectives and guide infrastructure investment, LAEPs align national and local ambitions while reflecting the specific characteristics and constraints of each area. They outline energy supply, demand, and storage needs, along with renewable deployment targets that illustrate how local energy systems might evolve.

This report, produced following a six-month placement with Wales and West Utilities, examines the implications of LAEPs from a GDN's perspective. It first assesses the scale of heat pump deployment required to meet LAEP targets, then considers the challenges that gas networks will encounter as heating becomes increasingly electrified, with a focus on the visions for the future of heat delivery outlined across the LAEPs.

The analysis indicates that, without an immediate acceleration in deployment, heat pump roll-out will need to surpass the current rate of gas boiler replacements in many regions, if LAEP heat pump deployment targets are to be met. Furthermore, delays in progress will widen the gap between natural boiler replacement cycles and the rate required to meet LAEP goals - making the transition more difficult to manage sustainably.

By estimating the associated reductions in gas demand, the study also identifies when heat pump uptake is likely to begin significantly affecting the gas network. Results suggest that the 2031-2036 price control period will be a pivotal phase, as heat pump installation peaks. Without sufficient flexibility from the regulator (Ofgem) to address resulting system inefficiencies, GDNs could face substantial financial strain.

The report discusses all of the outlined implications in detail and concludes with recommendations for how energy planning processes could be refined to better achieve their desired outcomes.

The decarbonisation of heat remains one of the most complex and uncertain challenges in achieving the UK's net zero targets. For Gas Distribution Networks (GDNs), the future of heat delivery is unclear, leaving limited indicators to guide long-term investment and operational planning. Among the few available signals are the heat pump deployment targets established through Local Area Energy Plans (LAEPs).

In Wales, the Government has formally adopted LAEPs to support a whole-systems approach to net zero, aligning local decision-making with national objectives. This executive summary condenses a report which was produced following a six-month placement at Wales & West Utilities, to assess the implications of LAEPs from a GDN's perspective. It explores the deployment rates required to meet LAEP targets and examines how these trajectories are likely to influence future gas demand.

The analysis shows that meeting LAEP targets will require a sharp and immediate increase in heat pump installations, with annual deployment rates often surpassing current gas boiler replacement levels. If similar trends are seen across the UK, overall deployment would be higher than what is targeted in the Seventh Carbon Budget. What's more, the longer substantial progress is delayed, the more difficult deployment will be to manage sustainably, as roll-out rates will have to exceed natural replacement cycles.

The findings also highlight the 2031-2036 price control period as a critical turning point when heat pump deployment is expected to peak and begin to significantly reduce gas throughput. These shifts are likely to create new operational and financial challenges for GDNs. Without sufficient flexibility from the regulator (Ofgem) to manage transitional inefficiencies and cost recovery, networks may face increased risk and reduced utilisation.

The report concludes with recommendations for how energy planning processes could be refined to better achieve their desired outcomes.

Novel analysis from this paper shows that while gas-linked revenues accounted for 90% of generation and two-thirds of total costs in 2024, this is expected to fall to 60% and just under half of costs by 2028.

Three years after the energy crisis, residential electricity prices in the UK 2025 are still historically high, and the UK is amongst the highest priced countries for electricity. This paper finds that bills have risen by £150 in real terms since 2021, and that £112 of this increase is due to higher wholesale market prices driven largely by gas.

Britain's electricity system is also going through a profound change. As the share of output with a fixed price contract or CfD rises, the role of gas generation in setting household prices will fall, since increasing volumes of generation will be delinked from gas prices. Novel analysis from this paper shows that while gas-linked revenues accounted for 90% of generation and two-thirds of total costs in 2024, this is expected to fall to 60% and just under half of costs by 2028.

However, this 'automatic' reduction in the share of gas prices in bills is limited in effect by the volume of renewable generation receiving a CfD that is at or below the wholesale price. The authors argue that going further to reduce bills requires action on policy costs. They therefore recommend UKERC's Pot Zero proposal which targets the most substantial policy cost on bills (at £102): the Renewables Obligation (RO). Moving RO-supported projects onto CfDs could deliver consumer savings of £2-8 billion per year in the late 2020s, equivalent to £20-80 per consumer.

Key messages:

In future work, UKERC's Whole Systems mission will explore options to help hold CfD prices down, reduce the costs of curtailment, minimise the costs of network upgrades and refurbishment, and mechanisms to reallocate costs between categories of consumer, for example, through tariff reform.

Novel analysis from this paper shows that while gas-linked revenues accounted for 90% of generation and two-thirds of total costs in 2024, this is expected to fall to 60% and just under half of costs by 2028.

Three years after the energy crisis, residential electricity prices in the UK 2025 are still historically high, and the UK is amongst the highest priced countries for electricity. This paper finds that bills have risen by £150 in real terms since 2021, and that £112 of this increase is due to higher wholesale market prices driven largely by gas.

Britain's electricity system is also going through a profound change. As the share of output with a fixed price contract or CfD rises, the role of gas generation in setting household prices will fall, since increasing volumes of generation will be delinked from gas prices. Novel analysis from this paper shows that while gas-linked revenues accounted for 90% of generation and two-thirds of total costs in 2024, this is expected to fall to 60% and just under half of costs by 2028.

However, this 'automatic' reduction in the share of gas prices in bills is limited in effect by the volume of renewable generation receiving a CfD that is at or below the wholesale price. The authors argue that going further to reduce bills requires action on policy costs. They therefore recommend UKERC's Pot Zero proposal which targets the most substantial policy cost on bills (at £102): the Renewables Obligation (RO). Moving RO-supported projects onto CfDs could deliver consumer savings of £2-8 billion per year in the late 2020s, equivalent to £20-80 per consumer.

Key messages:

In future work, UKERC's Whole Systems mission will explore options to help hold CfD prices down, reduce the costs of curtailment, minimise the costs of network upgrades and refurbishment, and mechanisms to reallocate costs between categories of consumer, for example, through tariff reform.

As the UK intensifies efforts to decarbonise heating, Gas Distribution Networks (GDNs) are grappling with growing uncertainty about how rapidly low-carbon technologies - particularly heat pumps - will be adopted and how this will influence future gas demand. Recently, the Welsh Government has adopted Local Area Energy Plans (LAEPs) to help Local Authorities (LAs) navigate such uncertainties and coordinate local energy transitions using a whole-systems approach.

Designed to support net zero objectives and guide infrastructure investment, LAEPs align national and local ambitions while reflecting the specific characteristics and constraints of each area. They outline energy supply, demand, and storage needs, along with renewable deployment targets that illustrate how local energy systems might evolve.

This report, produced following a six-month placement with Wales and West Utilities, examines the implications of LAEPs from a GDN's perspective. It first assesses the scale of heat pump deployment required to meet LAEP targets, then considers the challenges that gas networks will encounter as heating becomes increasingly electrified, with a focus on the visions for the future of heat delivery outlined across the LAEPs.

The analysis indicates that, without an immediate acceleration in deployment, heat pump roll-out will need to surpass the current rate of gas boiler replacements in many regions, if LAEP heat pump deployment targets are to be met. Furthermore, delays in progress will widen the gap between natural boiler replacement cycles and the rate required to meet LAEP goals - making the transition more difficult to manage sustainably.

By estimating the associated reductions in gas demand, the study also identifies when heat pump uptake is likely to begin significantly affecting the gas network. Results suggest that the 2031-2036 price control period will be a pivotal phase, as heat pump installation peaks. Without sufficient flexibility from the regulator (Ofgem) to address resulting system inefficiencies, GDNs could face substantial financial strain.

The report discusses all of the outlined implications in detail and concludes with recommendations for how energy planning processes could be refined to better achieve their desired outcomes.

The decarbonisation of heat remains one of the most complex and uncertain challenges in achieving the UK's net zero targets. For Gas Distribution Networks (GDNs), the future of heat delivery is unclear, leaving limited indicators to guide long-term investment and operational planning. Among the few available signals are the heat pump deployment targets established through Local Area Energy Plans (LAEPs).

In Wales, the Government has formally adopted LAEPs to support a whole-systems approach to net zero, aligning local decision-making with national objectives. This executive summary condenses a report which was produced following a six-month placement at Wales & West Utilities, to assess the implications of LAEPs from a GDN's perspective. It explores the deployment rates required to meet LAEP targets and examines how these trajectories are likely to influence future gas demand.

The analysis shows that meeting LAEP targets will require a sharp and immediate increase in heat pump installations, with annual deployment rates often surpassing current gas boiler replacement levels. If similar trends are seen across the UK, overall deployment would be higher than what is targeted in the Seventh Carbon Budget. What's more, the longer substantial progress is delayed, the more difficult deployment will be to manage sustainably, as roll-out rates will have to exceed natural replacement cycles.

The findings also highlight the 2031-2036 price control period as a critical turning point when heat pump deployment is expected to peak and begin to significantly reduce gas throughput. These shifts are likely to create new operational and financial challenges for GDNs. Without sufficient flexibility from the regulator (Ofgem) to manage transitional inefficiencies and cost recovery, networks may face increased risk and reduced utilisation.

The report concludes with recommendations for how energy planning processes could be refined to better achieve their desired outcomes.

This paper provides an international policy review on energy efficiency retrofit in owner-occupied homes and recommendations to apply best practices to the UK.

This working paper presents a review of policy design and implementation in OECD countries for increasing uptake of energy efficiency retrofitting in medium to high-income, 'able to pay' owner-occupied households. Renovation measures to help improve energy efficiency and decarbonise homes can include loft and cavity wall insulation, heat pumps and solar PV.

The review uses a rapid evidence assessment of academic and grey literature to address the following research question: Which internationally applied, good practice policies have the most potential to accelerate quality, energy efficiency retrofits of owner-occupied, 'able to pay' households in the UK?

The review reveals that residential energy renovations in OECD countries are mostly shallow single measures, with a small portion comprising multiple measures or deeper renovations. Although some countries such as France, Germany, the UK and the US have retrofitted millions of single measures to homes, this review has not identified any countries which have delivered deep home energy retrofit at a widespread scale.

We identify various review studies on policy instruments which have been applied in different countries and are considered important for implementing residential energy renovation. Policy instruments most commonly emphasised are regulations, financial support and information provision. Most reviews also include policies to develop workforce skills and competencies, supply chains and quality assurance.

Drawing upon our review of international and UK evidence, we make a series of policy recommendations for an effective home energy retrofit policy framework in the UK, with a focus on medium to high-income owner-occupier households:

Novel analysis from this paper shows that while gas-linked revenues accounted for 90% of generation and two-thirds of total costs in 2024, this is expected to fall to 60% and just under half of costs by 2028.

Three years after the energy crisis, residential electricity prices in the UK 2025 are still historically high, and the UK is amongst the highest priced countries for electricity. This paper finds that bills have risen by £150 in real terms since 2021, and that £112 of this increase is due to higher wholesale market prices driven largely by gas.

Britain's electricity system is also going through a profound change. As the share of output with a fixed price contract or CfD rises, the role of gas generation in setting household prices will fall, since increasing volumes of generation will be delinked from gas prices. Novel analysis from this paper shows that while gas-linked revenues accounted for 90% of generation and two-thirds of total costs in 2024, this is expected to fall to 60% and just under half of costs by 2028.

However, this 'automatic' reduction in the share of gas prices in bills is limited in effect by the volume of renewable generation receiving a CfD that is at or below the wholesale price. The authors argue that going further to reduce bills requires action on policy costs. They therefore recommend UKERC's Pot Zero proposal which targets the most substantial policy cost on bills (at £102): the Renewables Obligation (RO). Moving RO-supported projects onto CfDs could deliver consumer savings of £2-8 billion per year in the late 2020s, equivalent to £20-80 per consumer.

Key messages:

In future work, UKERC's Whole Systems mission will explore options to help hold CfD prices down, reduce the costs of curtailment, minimise the costs of network upgrades and refurbishment, and mechanisms to reallocate costs between categories of consumer, for example, through tariff reform.

This paper provides an international policy review on energy efficiency retrofit in owner-occupied homes and recommendations to apply best practices to the UK.

This working paper presents a review of policy design and implementation in OECD countries for increasing uptake of energy efficiency retrofitting in medium to high-income, 'able to pay' owner-occupied households. Renovation measures to help improve energy efficiency and decarbonise homes can include loft and cavity wall insulation, heat pumps and solar PV.

The review uses a rapid evidence assessment of academic and grey literature to address the following research question: Which internationally applied, good practice policies have the most potential to accelerate quality, energy efficiency retrofits of owner-occupied, 'able to pay' households in the UK?

The review reveals that residential energy renovations in OECD countries are mostly shallow single measures, with a small portion comprising multiple measures or deeper renovations. Although some countries such as France, Germany, the UK and the US have retrofitted millions of single measures to homes, this review has not identified any countries which have delivered deep home energy retrofit at a widespread scale.

We identify various review studies on policy instruments which have been applied in different countries and are considered important for implementing residential energy renovation. Policy instruments most commonly emphasised are regulations, financial support and information provision. Most reviews also include policies to develop workforce skills and competencies, supply chains and quality assurance.

Drawing upon our review of international and UK evidence, we make a series of policy recommendations for an effective home energy retrofit policy framework in the UK, with a focus on medium to high-income owner-occupier households:

Novel analysis from this paper shows that while gas-linked revenues accounted for 90% of generation and two-thirds of total costs in 2024, this is expected to fall to 60% and just under half of costs by 2028.

Three years after the energy crisis, residential electricity prices in the UK 2025 are still historically high, and the UK is amongst the highest priced countries for electricity. This paper finds that bills have risen by £150 in real terms since 2021, and that £112 of this increase is due to higher wholesale market prices driven largely by gas.

Britain's electricity system is also going through a profound change. As the share of output with a fixed price contract or CfD rises, the role of gas generation in setting household prices will fall, since increasing volumes of generation will be delinked from gas prices. Novel analysis from this paper shows that while gas-linked revenues accounted for 90% of generation and two-thirds of total costs in 2024, this is expected to fall to 60% and just under half of costs by 2028.

However, this 'automatic' reduction in the share of gas prices in bills is limited in effect by the volume of renewable generation receiving a CfD that is at or below the wholesale price. The authors argue that going further to reduce bills requires action on policy costs. They therefore recommend UKERC's Pot Zero proposal which targets the most substantial policy cost on bills (at £102): the Renewables Obligation (RO). Moving RO-supported projects onto CfDs could deliver consumer savings of £2-8 billion per year in the late 2020s, equivalent to £20-80 per consumer.

Key messages:

In future work, UKERC's Whole Systems mission will explore options to help hold CfD prices down, reduce the costs of curtailment, minimise the costs of network upgrades and refurbishment, and mechanisms to reallocate costs between categories of consumer, for example, through tariff reform.

The energy field for research, development and operation is very multi-disciplinary, it ranges over domains from psychology to heavy engineering, including materials development, economics, politics and agriculture. This spread of domains means that there is not a single community to develop agreed controlled vocabularies but many, each focussed on their needs.