Lewis: Extra energy efficiency cash is too late

Michael Lewis has said he is “disappointed” that the £6 billion of extra energy efficiency investment announced by Jeremy Hunt is not coming forward sooner and works out less than the cost of bailing out failed supplier Bulb.

At a meeting of the all-party Parliamentary Renewable and Sustainable Energy Group (PRASEG), held at the House of Commons on Tuesday (23 November), the Eon chief executive responded to the chancellor of the exchequer’s announcement in last week’s Autumn Statement of an additional £6 billion for energy efficiency from 2025 to 2028.

Lewis said: “It’s £6 billion of new money but not until 2025 when the problem is here and now.”

“It’s good but it’s late and this is another telling statistic, it’s less than the cost of bailing out Bulb,” he said, referring to a figure in an Office for Budget Responsibility report last week showing that bailing out the supplier following its collapse into administration last year will cost the government £6.5 billion.

“We’re spending more on cleaning up the problem after the event than we are addressing the fundamental cause of some of these problems, namely, that we import too much gas. We’re reliant on regimes like Putin to deliver our energy and we need to get off gas. Energy efficiency is one of the best ways we can do it.

“It’s the single most important policy intervention the government can make in this energy crisis, aside from the short-term support for customers.”

But pointing out that the government is currently spending £1 billion every three days to support energy, there is a “disparity” in the sums being used to address the “the symptoms rather than the root cause” of the current crisis, the Eon chief said: “That’s not to say I don’t support support for customers, it’s absolutely necessary, but we also at the same time need to tackle the underlying problem.”

Responding to a question by Utility Week, Lewis said while the additional £6 billion for energy efficiency could not be spent “immediately” due to supply chain issues, “certainly, we could ramp it up much more quickly”.

But he said the stop-start nature of energy efficiency support, exemplified by the the recent cancellation of the government’s Green Homes Grant (GHG) scheme, is a disincentive for installers to invest.

Eon had been forced to make redundancies following the closure of the GHG scheme but was able to redeploy staff to other activities, like smart meter installations, he said: “That’s a luxury we have as a large company. Small installers don’t have that and if there’s no visibility, they won’t train people.”

Addressing a question about why businesses are not more enthusiastic about making energy efficiency improvements in the face of rising bells, Lewis said: “There are two fundamental problems. One, they often don’t own their premises; it’s a landlord issue and the question is who makes the investment.”

The second hurdle is that even if they can justify the investment, many firms would rather focus capital on their core business rather than upgrading premises, he added.