Marketing Net Zero

I wonder how many UK householders know that part of their electricity bill is a payment to the Hebrew University of Jerusalem?  It won’t be immediately obvious to most electricity users why they are paying them, but it’s a royalty payment for the use of Einstein’s image in the rather crass adverts which the Government uses in an attempt to persuade everyone to have a smart meter fitted.  It’s only one of an increasing number of invisible charges added to electricity bills to persuade users that they should support the Government’s fast-track approach to net zero. 

The campaign’s not working very well, which should be worrying Mr Miliband and his band of merry net zero mandarins at DESNZ (the Department for Energy Security and Net Zero).  So far, the Smart Metering marketing campaign has spent about £500 million trying to persuade us to do something which is free.  If the UK is going to meet the Government’s decarbonisation targets for home energy, their next task is to persuade us all to sign up for something which will cost millions of home owners tens of thousands of pounds each.  The prospects are not looking good.

Politicians have little understanding of technology or marketing.  Neither, it appears, do the civil servants working on our energy future.  When the policy to install smart meters was put together, the UK Government set up a not-for profit organisation called Smart Energy GB, with the task of persuading householders to get smart meters.  That was back in 2014.  It should have been an easy job, as smart meters are free, and installing them should reduce the likelihood of incorrect or estimated bills.  The aim of the Smart Meter deployment plan was that every household in Britain would have a new smart meter by 2018.  The plan was a shambles.  That end date became 2020, then 2023; then, we were all definitely going to have them by the end of 2025.  However, the latest figures show that we’ve only just reached 60% of the target, and 2024 saw a 15% decrease in installations to only 3 million meters.  As these meters are designed for a 15 year life, we’ll soon need to start replacing early installations, which means we’re unlikely to reach full coverage until around 2035.  That’s an overrun of 17 years on a programme that was initially meant to last five years.

We’re also fitting the wrong sort of meters if we want to use them to help us move toward net zero.  We should be fitting SMETERs, which can help us calculate how efficiently our homes are working, but that’s a story for another day.

The marketing campaign has been an abject failure, but that hasn’t stopped Smart Energy GB spending around £500 million, all of which has been added as an invisible charge on our electricity bills.  Despite that, it looks as if the Government is planning on the same approach to their next imaginary target, which is decarbonising home heating by persuading us all to use heat pumps.

At this point, I need to say that I am in full agreement with decarbonising home heating.  We need to move away from burning gas.  The problem is that for around a third of our housing stock, that move will be expensive.  We have around 8 million homes that were built with solid brick walls and single glazing.  They can be heated with heat pumps, but to make them work efficiently you need to improve the insulation.  The catch is that you need to improve it a lot, which gets expensive.

The retrofit dilemma

Houses are different, and will need varying levels of insulation.  For these older houses, the first stage is to do the basic comfort upgrade, which is getting rid of draughts and obvious sources of heat loss.  That generally means replacing windows, draughtproofing, adding carpets and putting in lots of loft insulation.  Depending on the state of the house, that will cost between £5,000 and £25,000, a lot of which will go into replacement windows.  If it’s done well you can probably replace your gas boiler with a heat pump, but it’s likely to need more radiators.  Alternatively, you can wait for the next generation of higher temperature heat pumps.  Either way, the heat pump will be working hard when it’s cold, so your electricity bills will go up significantly.  But you won’t be burning gas to heat your home. 

The second stage is to improve your wall insulation.  If your house is more recent and has cavity walls, you can fill them with insulation.  Otherwise, you’ll need to install external or internal wall insulation.  That’s expensive and disruptive, but your heat pump will love you for it.  Your heating bills will go down, but whether you’ll ever recoup the cost of the wall insulation, which can be tens of thousands of pounds, is dubious.

The issue here is that the home owner needs to pay these costs upfront.  Most will put off spending that money, as there’s little real benefit, other than feeling good about what you’ve done to help slow down climate change.  But if the Government wants to decarbonise home heating, they need to persuade everyone to do it.  And it’s not at all clear how they’re going to do that.  There’s a lot of rhetoric about “investing in the future”, but if it doesn’t increase the value of your home or provide a payback on your energy bills during the time you live in that house, it’s not an investment.  It’s a loss.  And unlike the warning on financial products that it “might result in a loss”, in this case it’s a lot more like “will” than “might”.

What went wrong with Smart Meters?

As I’ve already pointed out, persuading everyone to install a smart meter should have been easy, so what went wrong.  The way the replacement programme was designed, with the responsibility for installing meters given to energy suppliers at the same time that consumers were being advised to regularly change their energy suppliers, sent a mixed message.  A different message became pretty clear once when it became apparent that early meters went dumb if you switched suppliers, which was to wait for DECC to sort it out.  Which is what people did.  The original Smart Energy GB campaigns were silly and patronising (who remembers Gaz and Leccy?), full of errors and missed the mark.  To make things worse, as soon as smart meters started to be installed the energy suppliers shot themselves in the foot, with stories emerging of people being charged thousands of pounds for their regular bill.  How that could happen is almost beyond belief.

If you learn computer programming, one of the things you come across very early on is the conditional statement – IF this, THEN that.  It is the obvious few lines of code that you would expect to be applied as a sanity check to each bill before it’s sent out, which is:

IF new bill > 2 x expected bill, THEN get someone to check it

In other words, don’t send out something which you know is wrong.  But you can imagine what the conversations were like in the Billing departments of our energy suppliers:

Sally.    Mr Lockstock, this bill looks awfully high.  Should I send it out?

Mr Lockstock.   Of course we send it out Sally, that’s what Billing does.

Sally.     But won’t the customer be upset?

Mr Lockstock.   They probably will, Sally.  But that’s why we have a Customer Services department.  They’re trained to talk to upset customers.

Sally.    But I wouldn’t want to get a bill like this just before Christmas.

Mr Lockstock.   Of course you wouldn’t, Sally, But Customer Services have a budget for helping customers and we don’t.  You wouldn’t want everyone in Billing to lose their Christmas bonus, would you?

Sally.   Of course not, Mr Lockstock.   I’ll send it out straight away.

And send them out they did.  The problem is that every time one of these obviously incorrect bills got reported to the media, it resulted in headlines in the national press and TV.  They entered the public consciousness as another smart metering cock-up story, each one undermining a couple of million pounds worth of the marketing campaign.  But nobody seemed to bother – it all went onto the bills.  Meanwhile, the negative coverage resulted in a growing rump of people convinced that they never want a smart meter. 

How anyone in the energy industry thought that sending out these bills without checking them was a good idea, is deeply worrying.  In the gambling industry, the law states that operators have to perform a risk check on any customer depositing more than £500 in a 30-day period.  There’s no such check for energy providers, suggesting they have a significantly lower moral compass than the gambling industry.  Who would have guessed?

That brings us back to the question of how the Government can persuade home owners to individually spend thousands of pounds to decarbonise their homes, when they failed to persuade them to have a free smart meter fitted.  One approach is to subsidise the cost.  A number of schemes have been put in place to encourage that, covering Cavity Wall Insulation (CWI) and the cost of Heat Pumps.  Unfortunately, they’re not running as smoothly as hoped.

The CWI chasers

Everyone has heard of ambulance chasers – the lawyers who chase round after ambulances, hoping that they can persuade the patient in the back to sue someone for causing whatever accident they’ve had.  We’ve now got a new variant – the Cavity Wall Insulation chaser. 

The CWI chaser exists because we’ve not trained anything like enough people to retrofit our homes.  The vast bulk of builders are almost certainly doing their best, but with little training and limited knowledge of the new materials they’re using.  A small percentage are jumping on the gravy train of Government grants and doing a poor job. 

In the case of cavity wall insulation, incorrect or poor application will affect airflow in the house, increasing the incidence of mould and damp.  As problems started to appear, lawyers saw an opportunity to drum up business for “no win – no fee” cases against builders, with adverts like the one below:

It would probably surprise many people to know that there is a whole industry in funding and litigating in these cases, with court cases being packaged and sold on as investments between financial services entities.  Such has been the frenzy to sign up home owners that several of the firms involved in CWI chasing have themselves gone bankrupt, leaving debts of tens of millions and home owners (who thought they could only win) being chased for lost fees.  Both the Law Society and Private Eye have been documenting the unedifying process.  Sadly, the outcome of the media coverage has been to vilify installers and spread the message that net zero driven home improvements, especially those dependent on Government grants are a breeding ground for cowboy builders.  At a point where we desperately need to recruit and train more installers, this is sending exactly the wrong message.  Why would any builder invest time and money in acquiring new skills to perform work which might see them taken to court?

Taken together, the combination of a lack of faith in retrofitting, and its potential high cost, limits the number of home owners who are likely to invest in decarbonisation.  The previous Government tried to tie rental licences to a minimum insulation standard, but that was pushed back, largely because it could end up removing hundreds of thousands of homes from rental because landlords could not afford the necessary upgrades.  So, who is left who is likely to upgrade their home?  Councils and Housing Associations are doing their best with limited Government grants.  Otherwise, it’s largely down to affluent home owners who want to gentrify their neighbourhoods, but even here, there’s a problem.

Repeating Heathrow in Islington

No – I’m not suggesting a new airport in Upper Street.  This is a warning about what happened last week, when Heathrow closed down for a day after a sub-station fire.  The recriminations over that will go on for years, but the basic fact that is likely to emerge is that our electrical infrastructure in barely adequate for today’s need, let alone what we’re hoping to do in the future.

The majority of homes are unlikely to upgrade to a full EnerPHit standard (the retrofit version of PassivHaus, which results in minimum use of electricity for heating and cooling).  It’s more likely that they’ll do the basics, install a large heat pump and run it fairly hard over winter to keep the house warm.  They may install an EV charger as well.  They’re both sensible and logical choices, but will dramatically increase the amount of electricity used.  It will push their energy bills up, but that’s the balance between affordable upfront retrofit costs and ongoing energy charges.  If the majority of home owners take this route, the demands on the local electricity grid are likely to double or treble, and it won’t cope.  Which is what we saw happen at Heathrow.

Developers across London have already reported that they are having to postpone new developments purely because there is not the infrastructure in place to provide power.  It’s happening across the country and particularly in London, where projects have been delayed in West London and Islington.  That will change in time and we will get more capacity, but we have the interesting dilemma that if we push home owners to decarbonise by replacing gas with electricity sooner rather than later, we may have to delay building new homes.  

We know that London needs around 1 million new homes and needs them now.  Any sensible weighing up of needs has to balance prioritising those new builds over decarbonisation of the existing housing stock, as each will be pushing the limits of the current and evolving energy infrastructure.  But I’ve yet to see a single policy document that acknowledges that trade-off.  Kemi Badenoch’s recent rant against Teresa May’s great legacy target of 2050 seems to be mostly about political manoeuvring, which is a shame, as there are serious questions that need to be asked.  But there is a dearth of anyone in Government who wants to face up to the sacred cow of net zero by 2050.  

Marketing Net Zero

Putting all of that together suggests that the current policy is all mouth and no trousers – with home owners sitting watching the collective mismanagement of net zero policies put forward by a cacophony of muppets.  Smart Energy GB has failed to sell something that’s free to users.  Successive Government net zero initiatives, including the smart meter rollout, have led to totally avoidable mistakes which have alienated the important early adopters.  It’s time to step back and assess what is most important to do, and then do it properly, with fully trained, professional staff.  Net Zero is going to need some clever technology if we’re going to make it work, so it is particularly galling to see Smart Energy GB continue to make fun of one of the greatest scientists the world has ever had, while paying an overseas institution for the licence to do that.  Like their adverts, too many people involved in selling net zero appear to have no ability to effect a change.  It’s time to change them.