Insulation impact: how much do UK houses really need?

Insulating homes is a good thing, but it’s not essential for switching homes to heat pumps. As heat pumps generally reduce emissions by more than installing insulation, this report investigates how much insulation is really needed to transition more homes to low-carbon heating.

It is often claimed that the UK’s housing stock needs to be much better insulated before heat pumps can be installed. This is largely untrue. Insulating homes is generally a good thing – it saves energy, makes homes healthier and more comfortable, can ease pressure on the electricity grid – but it is not essential for switching homes to heat pumps. If the aim is to reduce carbon emissions as quickly as possible with a limited budget, then adopting heat pumps typically provides greater carbon savings per pound spent than insulation measures.

What's in the report?

Heat pumps can be installed and work efficiently in less well insulated homes. It is often claimed that homes need to be well insulated to have a heat pump, but this is largely untrue. While better insulation is always beneficial with any kind of heating system, it is not an essential prerequisite for getting a heat pump.

The key factors affecting a heat pump’s efficiency are system design and adequately sized radiators. While insulation plays an important role in reducing heat demand, and can in some cases make heat pumps operate more efficiently, it is not the key factor in heat pump efficiency. Instead, having a well-designed heating system, with correctly sized heat emitters which enable a lower flow temperature, is the most important factor behind a heat pump’s efficiency.

Heat pumps can be cheaper to run than gas boilers, but only if electricity is cheap enough relative to gas. High electricity to gas price ratios from roughly 2016 to 2021 made heat pumps more expensive to run, which may have encouraged installers to couple them with improved insulation. However, the electricity-to-gas price ratio has fallen to a level where efficient heat pumps can compete with boilers on running costs. Government action – including rebalancing electricity levies – could make heat pumps still cheaper to run.

Heat pumps generally reduce carbon emissions by more than insulation. Low-carbon heating can fully eliminate carbon emissions from home heating, while insulation on its own can only reduce emissions. Viewed purely from the perspective of decarbonising, investing in low-carbon heating is an effective way to meet the UK’s climate goals. However, insulation should not be viewed solely in terms of carbon savings.

Insulation brings many benefits to households and society. Besides reducing energy bills and carbon emissions, insulation can also bring a range of other benefits. It can improve comfort and health in homes, especially in households that cannot afford to properly heat their homes. It may enable more flexibility in energy use, which could ease pressure on the electricity grid.

However, insulation is not always cost effective. Some insulation measures, such as draught proofing, loft and cavity wall insulation tend to have lower costs and offer excellent value for money. Other measures, especially solid wall insulation, are often more expensive and do not always justify their cost.

A scatter graph of the cost of energy efficiency measures against annual carbon savings for a semi-detached property. Each dot is coloured to represent the perceived disruption caused, with green indicating small-scale disruption, blue for medium and oran

Our recommendations

We propose a pragmatic approach to insulating homes in the UK alongside a heat pump roll out. In our view, the UK should insulate many more homes, but it is not cost effective to insulate every home to a high standard. Our proposed approach is as follows.

  • We should aim to improve 13 million homes to reach EPC C standard by 2030, with an estimated investment of around £60 billion.
  • Properties with easy-to-treat cavity wall and loft insulation should be targeted as a priority over hard to treat properties.
  • Greater emphasis should be placed on insulating households in fuel poverty, and governments in the UK should aim to insulate fuel-poor households and social housing to a high standard wherever possible.
  • There is a strong case for higher standards in private rental properties, and governments in the UK should regulate for minimum standards of insulation.
  • This insulation roll out should happen alongside a low-carbon heating roll out, and households should not be discouraged from buying a heat pump if their home is poorly insulated.


Max Woollard

Max Woollard

Max Woollard

Analyst, sustainable future mission

Max joins Nesta as an analyst in the sustainable future mission.

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Andrew Sissons

Andrew Sissons

Andrew Sissons

Deputy Director, sustainable future mission

Andrew is deputy director on Nesta's mission to create a sustainable future, which focuses on decarbonisation and economic recovery.

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