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Projected energy savings of Green Deal measures have been over-estimated, claims leading environmentalist
Published:  23 January, 2014

A recent blog by Chris Goodall has brought to light various issues with the projected energy savings government has used to promote the Green Deal and other energy efficiency schemes.

Schemes like the RHPP and Green Deal are being championed by government as a way to install these measures with less monetary cost to the household, but there have been claims that the levels of savings homeowners can achieve may have been over-estimated.

A recent blog by leading environmentalist Chris Goodall has brought to light various issues with the projected energy savings government has used to promote these schemes.

Government has claimed that loft insulation will save homeowners up to £180 a year, and a new boiler can cut as much as £310 off your bills.

Mr Goodall’s analysis of the Department of Energy & Climate Change’s (DECC) first official study on the true impact of energy efficiency measures installed in British households indicates that the actual financial savings have been around half the amount predicted.

He estimates that the annual savings from loft insulation on 21,000 homes tracked by DECC have been around £15.50 a year, compared with the ‘up to £180’ figure promoted by government bodies, and the typical annual saving on bills has been around just £70 a year.

This is in stark contrast to figures from the Energy Saving Trust (EST), which currently estimates that a new boiler will save householders between £105 and £310 a year.

The EST is reviewing its financial guidance later this month, and will downgrade the savings it tells consumers they can expect to earn from installing some energy efficiency measures as appropriate, but also said it does not fully agree with Mr Goodall’s interrogation of the data.

The figures Mr Goodall refers to are contained in the National Energy Efficiency Data-Framework (NEED) published by the DECC in November 2013.

It examined observed savings from loft insulation in 21,000 homes, new boilers in nearly 14,000 homes, and cavity wall insulation installed in 16,000 homes, and compared them with properties that did not have the measures installed.

Even with all the measures added together, Mr Goodall calculates that the households made a saving worth just £139.46 off their gas bills – half the Energy Saving Trust's headline estimate of £270.

"Home insulation measures deliver half the savings that are claimed," he said, adding that the smaller than expected reductions in energy use mean that the typical UK householder could lose hundreds of pounds a year from taking out a Green Deal loan. His analysis is published on his blog, carboncommentary.com.

“The implications for the Green Deal, the government’s main energy efficiency policy, are very troubling indeed,” said Mr Goodall.

“According to the EST figures, the typical householder installing loft and cavity insulation and a new boiler would need to take out a loan of about £3,050 to pay for the measures. At an interest rate of 8% and repayment over 20 years, the annual addition to the electricity bill would be £342.87, compared to the average savings on the gas bill of £139.46. In other words, a family taking out Green Deal finance would be over £200 a year worse off as a result of doing what the government suggests and improving the energy efficiency of their home,” he suggested.

A spokesperson for the EST, said: “Our energy savings are based on the most robust methodology and datasets available, and these figures are renewed annually to include the latest fuel prices and statistical evidence.

“The information we use to calculate our figures come from a cross-section of sources including our own in-situ field trials, energy prices and UK-wide housing data.

"In keeping with our annual updates, we will be releasing new figures at the start of February. Although we expect energy savings to fall for some measures we do not agree with Chris Goodall’s limited interrogation of the data. Mr Goodall’s analysis does not take into account the variation of the types of energy efficiency measures recorded in the NEED.”

When DECC was approached by the Guardian to comment on the findings, it also disputed the accuracy of Mr Goodall's figures. "The Carbon Commentary comparison of costs and savings is inaccurate, whereas DECC has developed a methodology – approved by independent experts on the Committee on Climate Change – to calculate savings from energy efficiency measures. No one can borrow more than they will pay back in energy savings, so no one will lose money by taking out a Green Deal loan."

While the government maintains that Mr Goodall's analysis is not completely accurate, he has echoed industry concerns that that the Green Deal is “excessively complicated, over-bureaucratic and expensive”.

Mr Goodall recommends that before households consider investing in expensive energy saving measures such as a new boiler, they should first do all they can to make their home airtight by reducing draughts.

"You lose much more heat than you'd expect from small leaks around the home," he says. "It's a bit laborious, but what everybody should do is get down on their hands and knees with insulation tape and look for draughts. Get a smoke pen, which will show you where the draughts are and how strong they are. You will spend no more than £50 on insulation and you will get a very good return on your investment."