Low energy new homes - the cost of getting them wrong

By Steven Heath, Technical Director
July 31, 2023

Government will soon consult on how our ‘Future Homes’ will be built. The 2025 Future Homes Standard (FHS) will set out a requirement for low-energy, low-carbon homes.

That means high insulation and air tightness standards and, for most, electric heating & heat pumps. Efficient home fabric supporting well-installed heat pumps will deliver warm, comfortable, low-carbon homes that are low-cost to run. Or at least if the standard requires some on-site measurement they will. Fail to require that measurement, and some might get the homes described in our case study below.

The home Energy Performance Certificate (EPC), whether supporting Building Regulations or retrofit subsidy programs, requires no physical measure of home energy efficiency performance. Measurement technology adoption is creeping forward in home retrofit - our Manchester retrofit project shows why the shift is so desperately needed. A real performance study on 20 occupied new homes built by a small builder in the Northwest shows results that should resonate with all.

Before the results, a short description on what’s being measured. Raw data collected via small sensor boxes is worked on by an algorithm to create multiple real performance metrics: one being kWh pa home heat requirement in ‘averaged’ conditions. Knauf Energy Solutions (KES) can measure the efficiency of the home (the ability of the home to slow heat loss to the outside) and then plug a ‘basket of average weather, thermostat & heating system timer settings’ through that model to give a kWh heat demand over a year. Very similar to an Energy Certificate’s space heating estimate – but accurate, reliable, and trustworthy.

The EPC space heating demand estimates for the 20 homes in our study were all around 3,000 kWh pa. Heating bills should be low in these new homes relative to the average 10,000 kWh required to heat the UK’s existing “typical” homes.

Before we began the project, we anticipated the measured reality would be different. Common build errors seen elsewhere were present in these homes suggesting we would measure both greater variation between homes and a higher average expected heat demand across all homes. The size of the performance gap measured – 2.6 times higher than the EPC predicted kWh space heat demand – surprised us. The energy bills likely surprised the occupants.

In the 2025 Future Homes Standard, similar homes are likely to be heated with heat pumps. Energy Systems Catapult’s recent heat pump study on 290+ homes mostly replicated previous studies on heat pump efficiency. Some occupants realised the magic trick of 4 units of heat for each unit of electricity over the year. This efficiency level will see occupant bills come back down in line with, or even below, gas boiler running costs. Heat pumps can & do ‘work’. But other homes in the study, the majority, did not see this efficiency, and the study is uncertain why the differing experience:

‘…whilst the average performance has improved, performance variation remains high…. generally this variation is difficult to explain’

There are only 4 credible suspects on what’s causing that ‘difficult to explain’ variation. The heat pump (product or install), the heat distribution set up (flow temp), occupant behaviour and the home fabric (is it as efficient as presumed?). The culprit will be one, or a combination, of these 4.

We can use the EPC estimated heat demand and the KES measured one for our case study homes to build best, and worst, case heat pump running cost scenarios. In the best case, home occupants received the home efficiency promised in the EPC (c3000 kWh of heat needed to keep homes warm under average occupancy) with these efficient homes supporting the top end of heat pump efficiency seen in the catapult study of 4 kWh of heat per unit of electricity. In our worst-case scenario, poor fabric efficiency, as measured in this study, undermined heat pump performance to deliver a lower efficiency of 2kWh of heat per unit of electricity seen in the catapult study.

In the best-case scenario, home running costs are lower than traditional boilers while homes would become increasingly lower carbon over time as the grid decarbonises. In the worst case, running costs for home occupants peak at 9 times the best case. This can’t be acceptable.

While running costs are vital to ensure consumer buy-in, it is not the only thing we care about. Delivered energy for home heating in our worst-case scenario goes through multiplier effects – firstly, the required heat is higher than promised in the design and, secondly, the modelled halving of heat pump efficiency, driven by poorer performing fabric, means twice the electricity is needed to provide that higher heat requirement. Our worst-case scenario required up to 6 times the energy demand to achieve the same indoor comfort outcomes as our best-case scenario. In addition, that energy will be required at peak winter-time at the peak time of day – in other words it will represent additional low-carbon generating capacity that needs to be built or fossil fuel reserve power that will have to be turned on.

The difference between best, and worst, case scenarios translates to £20,000 & 69,000 kWh per year across the 20 home estate. Remember, this Government set up an Energy Efficiency Taskforce to work with ministers to reduce total UK energy demand by 15% from 2021 levels by 2030. A remit that includes domestic properties. This new build case study, like other real performance studies, points to a headwind in achieving that target we should be desperate to avoid.

A point of clarification here. We have confidence our home efficiency measurement describes annual heat demand accurately. We don’t yet know the impact poor fabric efficiency has on heat pump efficiency. No-one has described the link at scale so far. Yet heat pump and fabric clearly work collectively as a ‘whole system’; without understanding one we can’t understand, and manage, the performance of the other. Future success relies on new homes:

  • Retaining heat in winter highly effectively
  • Generating the required heat highly efficiently (i.e. heat pumps achieving a high COP)
  • Providing flexibility, with smart controls managing the timing of heat that works optimally for the grid as well as occupants.

How much you use and when you use it will govern future energy bills.  

The Future Homes Standard can’t leave unsuspecting homebuyers to carry the risk these outcomes aren’t delivered. The technology is here, and is being assessed by Government’s SMETER programme[1], to measure home fabric efficiency. Affordable, scalable technology that can tell occupants if they received the efficient home promised in the design. Heat meters in the radiator heating circuit will likewise tell occupants if the promised heat pump efficiency is being delivered.

The FHS should require at least 5% of homes to be real performance measured by an approved technology. This figure should double each year so that, by the end of the next parliament, the occupants of many of the 1m new homes built in that time will have the security that their new homes will not see the operating costs observed in our case study.  

The role of measurement is also there to tell the housebuilder what’s working. And closing much of the performance gap is not likely to be too challenging. We mentioned common build errors seen in most of the 20 homes. This included poorly fitted rigid board insulation in the walls, unsealed service penetrations (wires, pipes etc) into the loft and poorly fitted loft insulation.

While the dressed stone finish to the homes did not allow us to fix the wall insulation, we were permitted to enter the loft space to identify and fix the existing problems by:

  • Removing all existing loft insulation
  • Sealing all service penetrations to minimise air (and heat) flow from the heated rooms below
  • Fitting a lower lambda loft insulation product, while tackling the bits that are often ignored, including the crucial connections with wall insulation at the soffits and gable ends.

I’ll leave the reader to puzzle through what should, & shouldn’t, be in the loft & wall images below.


If we consider a house a heated cube, addressing issues in just one face of that six-sided cube saw significant improvements. A 14% reduction in average heat demand under standardised conditions across all homes masked the fact that improvement was significant in some (circled green in the graph) but barely noticeable in others (circled red). We couldn’t do further diagnostics on exactly what was happening in the walls or floor of the homes. However, we shouldn’t have been able to make any improvement to any of the homes by improving the loft alone. These were new homes built to the relevant building regulations.  But this study, and other real performance work we and others have done, suggests it’s readily achievable to get down to the design target fabric efficiency if the right insulation is specified and the same care and attention we gave to the loft is given to external & party walls and floors.

The key point for policy makers to take? We did not search out these homes knowing they would underperform. The EPC ignores the quality of install in these homes. In the FHS, a heat pump will likely be installed, sized on the assumption that the homes’ efficiency matched the EPC design target. We do not believe all homes perform like those in our study, we can’t know how many do. But it is surely incumbent on the FHS to manage this risk rather than leave it to home buyers. Once published, search the FHS consultation for reference to ‘real performance’ measurement to know whether the policy has any chance of giving new home buyers the warm, low-energy, low-carbon, low-cost-to-run homes they are paying for.

[1] Smart meter enabled thermal efficiency ratings (SMETER) technologies project: technical evaluation - GOV.UK (www.gov.uk)