Improving energy efficiency in the UK: Navigating opportunities and challenges in the UK housing sector

In this report, we delve into key findings that shed light on the opportunities and challenges ahead, while exploring how Innovate UK KTN can play a pivotal role in driving sustainable advancements in the UK’s housing sector.

Posted on: 24/07/2023

In the face of pressing climate challenges, the UK has taken strides in enhancing energy efficiency within the built environment. With energy consumption decreasing by 18% since 2000 and a surge in the number of households, there has been some welcome progress to reducing carbon emissions and achieving Net Zero objectives.

The urgency to combat climate change is underscored by the government’s ambitious targets, necessitating significant improvements in energy efficiency within buildings. The built environment, encompassing residential and commercial structures, currently accounts for approximately 25% of the country’s total carbon emissions. As such, enhancing energy efficiency in this sector is paramount to curbing our carbon footprint and securing a sustainable future.

Why are we researching this topic?

At Innovate UK KTN, one of our goals is to drive innovation and support the UK’s journey towards achieving the Government’s 2050 Net Zero objective. The Innovate UK KTN Futures team recently worked with colleagues in the energy team to investigate the current state of the industry and identify areas where assistance is crucial to transform domestic buildings into eco-friendly spaces.

This is the second of a series of collaborations the Innovate UK KTN Futures team will be undertaking to provide you with insights into different sectors and the broader UK innovation ecosystem.

We uncover factors influencing UK performance and highlight opportunities for improvement across various indicators. These include IEA (International Energy Agency) energy intensity in buildings, heat loss rate in building elements from the EU building stock observatory and the World Bank’s RISE (Regulatory Indicators for Sustainable Energy) for energy efficiency. Let’s dive into the key findings of our research, shedding light on the opportunities and challenges that lie ahead.

The UK demonstrates strong historic performance in energy indicators

While energy efficiency in buildings has significantly improved, it’s important to recognise that nearly 38% of the UK’s housing stock was built before 1946. This presents both opportunities and challenges when it comes to retrofitting existing homes.

To put things into perspective, when analysing the heat loss rate in building elements (U-values) across selected counties, we discovered that the UK falls behind countries like Germany, the Netherlands, and Scandinavian nations. However, it’s worth noting that the UK outperforms in floor insulation (shown in the figures below). This highlights one key area where improvements can be made.

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The UK’s regulatory regime is somewhat positive, but financial mechanisms are behind other leading countries

High RISE (Regulatory Indicators for Sustainable Energy) energy efficiency score show that the UK has a well-balanced regulatory regime; this is critical for businesses operating in this area. However, there are areas that require attention. Specifically, the UK receives lower scores in financing mechanisms for energy efficiency and minimum energy efficiency performance standards. Addressing these gaps will be crucial in further driving energy efficiency initiatives and ensuring businesses have the necessary financial support to implement energy-saving measures. The figure below illustrates RISE (Regulatory Indicators for Sustainable Energy) energy efficiency scores for the countries compared.

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Long-term funding can encourage further business engagement

To achieve heat decarbonisation and stimulate business investment, it is essential to provide a pipeline of investable, large-scale, and long-term projects. This requires long-term funding commitment and a clear and stable government policy framework. Support schemes such as the Boiler Upgrade Scheme and the Home Upgrade Grant offer funding opportunities, but delays in disbursements, pose a challenge for businesses.

Accessing the right skills and talent is a key piece of the puzzle

One of the challenges facing the retrofit and heat pump market is the shortage of qualified trainers. This shortage is a result of low demand for these services.

To address this gap, knowledge transfer of best practices in retrofit skills development is essential. Industry experts, independent training providers, and college educators can greatly benefit from sharing experiences and insights to enhance the skill sets of professionals in the field.

Moreover, the industry lacks an independent organisation that can guide and standardise training programs for retrofit and heat pump courses. Bridging the gaps between colleges, training providers, and the industry through standardisation efforts will promote a cohesive approach to skill development and training challenges.

What’s next?

The UK’s housing sector has made remarkable progress in energy efficiency, but there are critical areas that demand attention. By focusing on retrofitting older housing stock, strengthening financial mechanisms, establishing long-term commitment funds, standardising training efforts, and fostering talent and skills development, we can drive significant advancements in energy efficiency and contribute to a sustainable future.

By understanding these key findings, we can pave the way for a more sustainable and energy-efficient future. It is crucial for stakeholders, policymakers, and industry leaders to come together, address the challenges, and seize the opportunities that lie ahead.

This report serves as a catalyst for conversations and explores how Innovate UK KTN, through our networks and communities, can play a role in addressing these critical issues. For further information and to hear the latest news about the energy efficiency in the built environment visit the Innovate UK Net Zero Heat programme webpage. The programme works with key partners to overcome barriers to enable a faster roll-out of decarbonised heat for buildings.

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Net Zero Living

Net Zero Living

Innovate UK’s £60 million, three-year Net Zero Living Programme aims to help places and businesses across the UK to accelerate the transition to net zero.


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