How ground source heat pumps can aid fuel poor homes

• 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 67% on annual heating costs
• Nearly 250,000 social homes still rely on outdated electric heating and will be most vulnerable as energy prices rise
• Government’s Warm Homes: Social Housing Fund can help social landlords improve energy efficiency, including upgrading heating systems

Outdated electric heating systems are trapping hundreds of thousands of UK households in fuel poverty.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 supplier 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:

• Household with 10,000kwh heating and hot water demand with 100% efficient electric heating system on an E7 dual rate tariff will have an annual heating running cost of £1,869
• Household with 10,000kwh heating and hot water demand with 100% efficient electric heating system on a standard rate tariff will have an annual heating running cost of £2,450
• Household with 10,000kwh heating and hot water demand with a 400% efficient Shoebox NX ground source heat pump system will have an annual heating running cost of £613

(*Heating and Hot Water demand uses Ofgem consumption assumption for a medium house. Standard rate electricity unit cost from 1^st October 2024. Dual rate tariff unit cost sourced from EDF Electricity Prices from 1^st 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.”

Sources:

• Fuel poverty gap data for Electrically Heated properties – UK Government Fuel Poverty Statistics England 2024, Table 12
• Fuel poverty statistics – UK Government Fuel Poverty Statistics 2024
• Networked heat pumps have cut resident energy costs by up to 66% - Case Study
• Ofgem October 2024 price cap
• EDF Electricity Prices October 2024
• 247,000 social homes estimated to have night storage heating – English homes survey 2023, Annex 5 Table 2
• Warm Homes: Social Housing Fund guidance

Notes to editors:

• National Energy Action (NEA), is the national fuel poverty charity, working across England, Wales and Northern Ireland, to improve the lives of people in fuel poverty. NEA directly support people with energy and income maximisation advice, and advocate on issues such as the current energy crisis and the need to improve the energy efficiency of our homes. See: www.nea.org.uk
• Established in 1999 and headquartered in Truro, Cornwall, Kensa is a fast-growing collection of award-winning British businesses involved in the manufacture and installation of ground source heat pumps and the ownership of associated underground infrastructure.
• Kensa is the leading UK-based manufacturer of ground source heat pumps, with its products accounting for more than half of all UK ground source heat pump installations.
• Kensa ground source heat pumps have been installed in over 6,000 social housing properties.
• Kensa is partly owned by Legal & General and Octopus Energy. Backed by £70m in investment, Kensa is partnering with cities, communities, housebuilders, social housing providers, and installers to create an affordable, low-carbon future.
• Kensa’s mass heat decarbonisation solution, Networked Heat Pumps, is a viable option to decarbonise heat in most UK homes.
• Networked Heat Pumps consist of ground source heat pumps installed in individual properties, whether that’s flats, terraced streets or new-build homes, which are connected to a shared network of underground pipework, providing each property with low-cost, renewable heating, hot water and cooling.
• By the end of the decade, Kensa expects to produce 70,000 British-made heat pumps a year, which will help create over 7,000 UK green jobs.