by Chris Brierley, Head of Corporate Affairs at the Active Building Centre
The cost-of-living crisis has loomed large in the collective psyche of the British public for many months now. Most economists had already priced in soaring inflation, resulting from the post-Covid unlocking and the lift in the energy price cap, at the start of the year. Russia’s invasion of Ukraine in late February compounded the rise in gas prices and supply-chain disruption. And these pressures are forecast to continue building to a crescendo all the way into next autumn and winter.
This is, it is fair to say, a protracted crisis. But last week undoubtedly represented a milestone moment in it. Having previously raised National Insurance contributions for millions of households in April, eating more into disposable income, the Chancellor has now announced plans to relieve the pressure on incomes from rising fuel bills. A doubling of the discount on energy bills (and no longer making that discount a loan), financed by a windfall tax on energy firms, was the key headline, and underlined the fundamental cause of this current crisis: the cost of energy.
Energy transition
The energy crisis has added even greater urgency to our work at the Active Building Centre. Of course, the existential threat of climate change and the need to move towards net-zero was already reason enough to transform the way in which the UK powers and heats its buildings. But with energy prices the single biggest driver of the crunch on personal finances, a national building stock that consumes electricity efficiently, stores it intelligently and generates it renewably has never been more important. The events of last week only served to underline that fact.
As commendable as these announcements may be, and as important as other recently-discussed measures to lower the cost of childcare and car ownership via regulatory changes and one-off rebates are, we will also need substantial capital investment to address the root causes of the current problem.
Our national energy supply, while world-leading in areas such as the utilisation of wind power, is still too carbon-intensive and dependent on overseas imports. It makes insufficient use of ubiquitous renewable energy sources.
Homes as power stations
Perhaps even more pressingly, our demand is inflated by grossly inefficient housing stock and we are unable to ‘load shift’ from peak times through widespread availability of storage technologies. That means surplus electricity generated at non-peak times routinely goes to waste. With ministers reportedly considering electricity rationing at peak hours, having the technology to optimise demand management and load shifting will clearly be more important than ever.
Meanwhile, the Cabinet is also hearing arguments for investment in new housebuilding to help combat inflationary pressures. While greater supply also has the advantage of driving down housing costs, it’s crucial that these new homes embrace energy-efficient design and active principles, so that homeowners and tenants are insulated from this kind of crisis in the future.
Our recommendation
The ABC recommends that new dwellings are designed and built using the Passive House Planning Package (PHPP), given those that have are shown to perform on average as predicted; and that Ofgem’s Smart Export Guarantee is revised to include integrated domestic renewable technologies, to encourage greater demand side response and flexibility from domestic buildings. However, a comprehensive programme of retrofitting existing homes will be just as important a component of this strategy.
We recognise that these are longer-term fixes. Other measures will be necessary to support consumers through the squeeze on incomes in the months ahead.
But this crisis has exposed that our reliance on fossil fuels, inefficient building stock, centralised energy system and lack of innovation in demand-side management has exposed consumers to unprecedented financial risk and thrust millions into fuel poverty. If now is not the time for a radical overhaul and ambitious investment in how our homes are powered and heated, when is?