Government Energy Grants To Fight Fuel Poverty & Improve Energy Efficiency

There are government energy grants available to help combat the growing problem of fuel poverty in the UK. Here, we’ll look at grants that are available and whether you may be eligible to apply. We’ll also look at government energy grants to incentivise energy efficiency. So you can get help towards making improvements around your home that will drive down your future energy bills.
Last update: April 2022

As you may have heard on the news, the UK energy market is currently under an immense amount of stress as a result of a global gas shortage driving up costs and putting several energy suppliers out of business. To learn more about this and stay updated on a daily basis you can read our page on the UK energy crisis.

Many of us in the UK are in an increasingly precarious financial position, which is why it is important to be familiar with all the government energy grants. These grants can help you save on energy bills. Some people have spent much of the year on furlough, while others have lost jobs and had their careers stalled by the recent pandemic. Some are freelancers and small business owners whose ability to trade has been affected. While others are among the most vulnerable in our society, such as our elderly, our disabled and our unemployed are finding it especially difficult at present. As well as feeling increasingly isolated under our current tiered lockdown system, many will also be finding it harder than ever to pay for the essentials.

The government watchdogs Ofgem

Ever since the late 1980s, the UK energy industry has been privatised. But that doesn’t mean that it is completely unregulated. The UK energy industry watchdog Ofgem works with energy companies and the National Grid to ensure that consumers get good value for money, and that they can power their homes without worrying about money.

Of course, some energy companies and tariffs are still much better value than others. Which is why it’s so important to find the right energy deal for your needs.

Government Energy Grant

As well as ensuring that energy companies deliver fairness and value to their customers, Ofgem also ensures that they reach government sustainability targets, and that they invest in renewable energy to help us on our way to a carbon-neutral energy sector.

There are two key mechanisms through which Ofgem regulates the energy sector:

Energy Company Obligation ECO

The Energy Company Obligation is a scheme designed to combat fuel poverty while also reducing the energy industry’s carbon footprint. It was started in 2013, replacing the Home Heating Cost Reduction Obligation. Under the scheme, obligated suppliers are required to promote measures that can help their customers who are fuel poor, on a low income, or otherwise vulnerable to heat their homes. This includes offering incentives like the Warm Home Discount (more on that later), encouraging actions to generate heating savings, and generally ensuring that their prices are as reasonable as possible.

The Energy Price Cap

Introduced in early 2019, the Energy Price Cap sets a maximum annual price that energy companies can charge their customers for both fuels. When a new energy price cap is set, energy companies need to adjust their fixed and variable tariffs accordingly to ensure that customers do not pay over this amount for their energy. If energy companies are found to be in breach of the energy price cap, not only do they have to refund the difference to their customers, they also have to make payments to the Ofgem Consumer Redress fund.

One particularly high profile example of this was Shell Energy, which was found to have overcharged around 12,000 of its gas and electricity customer accounts by a collective £100,736.63.

Once the breach was discovered by Ofgem, all of the 8,800 customers that had been affected had to be refunded. The nascent energy brand (which has just bought out First Utility) also had to make a payment of £200,000 to Ofgem’s Consumer Redress Fund.

In total, the amount paid was around £390,000. Which gives an idea of how seriously Ofgem takes overcharging.

Since its inception in January of 2019, the Energy Price Cap has been adjusted frequently to ensure that it matches the wholesale cost of energy while also giving consumers a fair deal. As of October 2020, the price cap stands at £1,042 for both gas and electricity. This is the lowest that it has ever been, largely due to the low wholesale cost of energy.

Date Energy Price Cap Amount
January 2019 £1,137
April 2019 £1,254
October 2019 £1,179
April 2020 £1,146
October 2020 £1,042

The UK energy ombudsman

If energy consumers have a grievance with their energy supplier, they need to make a formal complaint to ensure that appropriate action is taken. This can be made in writing, via email or even over the phone. Once your complaint has been received, most suppliers resolve the matter within 8 weeks. However, if your complaint has not been resolved to your satisfaction within this timeframe, you can contact the UK Energy Ombudsman service. This is a free service that mediates between energy suppliers and their customers in order to pursue a satisfactory outcome. They are able to intervene in matters such as:

  • Disputes surrounding energy bills and usage
  • Issues that arise as a result of switching suppliers
  • Feed-in-Tariffs and Smart Export Guarantees
  • Problems with your energy supply
  • Issues with District Heating suppliers that take part in the Heat Trust Scheme

The main government energy grants to fight fuel poverty

As well as the work that Ofgem does, there are several specific government energy grants in place that directly target the issue of fuel poverty. These are as follows:

Warm Home Discount

The Warm Home Discount Scheme is awarded to those of pensionable age, or those on a low income. This is a government scheme. However, it is administrated by energy suppliers. The one-off grant of £140 is paid into your energy account to help offset your energy costs through the winter of 2020-2021. So you can heat your home without worrying about lasting implications for your household budget.

In order to qualify for the Warm Home Discount, you need to be in receipt of the Guarantee Element of Pension Credit (this is known as the “Core Group”). Alternatively, you may be eligible if you are a member of the “Broader Group” which means you are in receipt of any of the following benefits:

  • Income support
  • Income based Jobseekers’ Allowance
  • Income related Employment and Support Allowance
  • Low income elements of universal credit

Cold Weather Payment

The Cold Weather Payment is a scheme that’s designed to help the financially vulnerable when temperatures reach extreme lows in the winter months. Under the scheme, energy consumers are awarded £25 for each week where the temperature in their area drops below zero degrees Celcius between 1st November and 31st March.

You are eligible for this payment if your area meets the temperature criteria above and you receive one of the following benefits:

  • Pension Credit
  • Universal Credit
  • Income Support
  • Income-based Jobseeker’s Allowance
  • Income-related Employment and Support Allowance
  • Support for Mortgage Interest

You don’t even need to apply for this payment. It is automatically added to your benefits.

Fuel Direct Scheme

The Fuel Direct Scheme is a voluntary agreement entered into by energy suppliers in conjunction with the Department of Work and Pensions (DWP). It is designed to support households that are reliant on benefits and struggle with cash flow. If you struggle to find the funds to pay your bills, an agreed payment will be deducted automatically from your benefits and paid to your energy supplier on your behalf. This can be used to cover outstanding debts as well as your current use.

Winter Fuel Payment

Finally, the Winter Fuel Payment / Winter Fuel Allowance is designed specifically to support energy consumers of pensionable age in keeping their energy bills manageable. Anyone born on or before October 1954 is eligible for the grant, as are those claiming social security benefits. This does not include Housing Benefit, Council Tax Reduction, Child Benefit or Universal Credit.

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You must also be resident in the UK for at least one day of the week from 21 to 27 September. This is known as the “qualifying week”. If you are eligible for this grant, you should find that it is paid into your bank account automatically.

It’s important to mention that eligibility for one of these government energy grants does not preclude you from being able to claim for any of the others.

Energy-efficiency grants

As well as helping energy consumers to cover the cost of heating their homes over the winter months, there are also grants in place to help households to mitigate the cost of making their homes more energy efficient.

These include:

Green Homes Grant

The Green Homes Grant is a £2 billion government initiative that will fund up to two-thirds of eligible energy saving home improvements in England. If you live in England and receive income-based benefits could get up to 100% of the costs covered by the grant.

The Green Homes Grant is available to both homeowners and landlords. It can be used to cover up tp £5,000 (£10,000 for low-income households) of the cost of any of the following primary improvements:

  • Loft or roof insulation
  • Cavity wall insulation
  • Solid wall insulation
  • Underfoot insulation
  • Park home insulation

If you have made any of the above primary improvements, you may also be able to claim against the cost of secondary improvements such as:

  • Ground / air source heat pumps
  • Hybrid heat pumps
  • Biomass boilers
  • Solar thermal heaters

However, the costs need to come out of the same £5,000 allocation as the primary improvements. As well as meeting the eligibility requirements, applicants will need to get the improvements made by an approved contractor. Click Here to find one near you.

Unfortunately, new applicants will need to get their skates on, as the scheme is only open until the end of March 2021. What’s more, many government approved contractors are starting to get booked up in the first months of 2021.

It’s also important to remember that funding is finite. While the £2 billion pot certainly seems like a lot of money, it will quickly dry up as more and more householders rush to claim.

Government Energy Heat Grant

Renewable Heat Incentive

As well as claiming the Green Homes Grant, you can also claim the Renewable Heat Incentive (RHI). This can mitigate the cost of running renewable heating renovations like ground source heat pumps, biomass boilers or solar thermal heaters. A quarterly payment is made under this scheme which will, over time, offset the cost of your financial contribution to the installation.

More ways to save on energy

You can enhance the energy cost savings made from government energy grants and incentives with some good old-fashioned economising. As well as making energy saving changes around the home like installing CFL and LED bulbs and turning off “electricity vampires” overnight, you can keep switching suppliers regularly to reduce the risk of overspending on your energy.

Although government energy grants and Ofgem’s oversight are extremely useful in ensuring that energy consumers get a fair deal, you may be surprised by just how much you can save simply by switching energy suppliers regularly. Regular switching could save the average household around £300 a year.

Even with the Energy Price Cap in place, there are lots of tariffs that could save you hundreds of pounds on your energy bills. We can help you to find the perfect energy supplier for your needs, and manage your switch from end-to-end, so that you can enjoy cheaper energy, 100% hassle-free.

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What are the top home help schemes and grants?

If you want to make renovations to make your home greener and more energy efficient, but baulk at the cost, there are home help schemes that can help to mitigate the cost. These are the Green Homes Grant and the Renewable Heat Initiative. The former can help cover up to 50% of the cost of new installations, while the latter can be used to offset the cost of maintaining and managing these systems with quarterly payments.

You may apply for both, however, you need to have made any installations covered under the Green Homes Grant and paid your contribution before you can apply for the Renewable Heat Initiative.

What support can I get if I receive pension credit?

If you are in receipt of pension credit, you should automatically receive the Winter Fuel Payment. You can also contact your energy supplier to see if they offer the Warm Homes Discount. All of the “Big 6” energy suppliers and a number of smaller suppliers offer this.

Can I get 100% of the cost of green renovations covered under the Green Homes Grant?

Most households will only get 100% of the cost of renovations covered under the Green Homes Grant, up to a maximum value of £5,000. However, homeowners receiving income-based benefits may receive up to 100% of the cost of renovations (up to the value of £10,000) covered under the scheme.

If I apply for the Winter Fuel Payment, can I still apply for the Warm Home Discount?

Yes. Eligibility for one should not preclude you from being eligible for the other. If temperatures in your area drop below zero degrees celsius you can also apply for the Cold Weather Payment, even if you get one (or both) of these other benefits.

Updated on 24 Jan, 2022

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