A Welsh Government scheme designed to tackle fuel poverty and improve energy efficiency upgraded 1,436 homes last year, delivering estimated annual energy bill savings of £594 per household. But with around 340,000 households estimated to be living in fuel poverty across Wales, the latest figures raise important questions about the scale, cost and long-term effectiveness of government intervention.
The figures are contained in the Welsh Government’s Warm Homes Nest annual report for 2025–26, published on 6 November.
The report reveals that £27.5 million was invested in delivering the scheme during the financial year, with 11,113 households receiving tailored energy advice and 1,436 receiving improvements to their properties.
These included replacement heating systems, insulation, solar panels and other measures intended to make homes warmer, reduce energy consumption and lower household bills.
Of the households receiving improvements, 962 were supported through an emergency route for people without heating or hot water.
While the report highlights substantial benefits for those receiving assistance, it also illustrates the considerable challenge of improving Wales’s ageing and often energy-inefficient housing stock.
A quarter of Welsh households estimated to be in fuel poverty
The latest wider assessment published by the Welsh Government estimated that 25% of households in Wales — approximately 340,000 — were living in fuel poverty in October 2024.
A further 16% were considered at risk.
Fuel poverty occurs when households need to spend a disproportionate share of their income on keeping their homes adequately heated.
The problem is particularly severe among people living in poorly insulated properties, households on low incomes and those relying on expensive heating systems.
According to the Welsh Government’s assessment, 58% of households living in properties with the lowest energy-efficiency ratings, F or G, were in fuel poverty.
By comparison, the estimated proportion was 15% among households living in more efficient homes rated A to C.
The figures demonstrate why improving the fabric of homes can be an important long-term response to fuel poverty.
Unlike temporary assistance with energy bills, insulation and heating improvements can deliver benefits over several years.
However, the scale of the problem is considerable.
The 1,436 homes improved through Nest in 2025–26 represent approximately 0.4% of the 340,000 households estimated to be in fuel poverty in October 2024.
This is an illustration of scale rather than a direct measure of programme coverage. Not all fuel-poor households qualify for Nest, other schemes also support home improvements, and the figures relate to different reporting periods.
Nevertheless, the comparison raises an important policy question: how quickly can Wales improve the homes of people struggling to afford adequate heating?
Where in Wales are homes being improved?
The report provides local-authority information showing considerable geographical differences in the number of households receiving support.
Rhondda Cynon Taf recorded the largest number of home improvement packages, followed by Swansea.
| Local authority | Homes improved |
|---|---|
| Rhondda Cynon Taf | 164 |
| Swansea | 130 |
| All Wales | 1,436 |
Rhondda Cynon Taf also recorded the highest number of households receiving energy advice, at 969, followed by Carmarthenshire with 909.
Across Wales, 86% of improved homes were in areas classified as urban under the scheme’s reporting methodology, compared with 14% in rural local authority areas.
This distribution raises questions about the accessibility of support in rural communities, where properties may be older, harder to insulate or dependent on oil, LPG or other off-grid heating systems.
However, the number of improvements delivered in each local authority cannot, by itself, establish whether an area is receiving a fair share.
A meaningful comparison would need to account for the number of eligible households, local housing conditions, levels of fuel poverty and the cost and complexity of improvements.
How much are households saving?
The Welsh Government estimates that households receiving improvements through Nest could save an average of £594 a year on their energy bills.
The figure combines two routes into the programme.
Households receiving standard retrofit packages were estimated to save £573 annually, while those supported through the emergency route were estimated to save £605.
The savings vary considerably between local authorities.
For standard retrofit improvements, the highest estimated average annual savings were recorded in Ceredigion and Wrexham.
| Local authority | Estimated annual saving, standard retrofit |
|---|---|
| Ceredigion | £1,004 |
| Wrexham | £939 |
| Gwynedd | £679 |
| Flintshire | £678 |
| Carmarthenshire | £618 |
| Bridgend | £598 |
| Swansea | £532 |
| Neath Port Talbot | £527 |
| Rhondda Cynon Taf | £509 |
| Blaenau Gwent | £460 |
| Wales average | £573 |
These differences may reflect the condition of properties before improvements, the heating systems being replaced and the types of work undertaken.
The savings are estimates produced using energy-efficiency modelling. They are not independently verified reductions in household energy bills.
Actual savings will depend on energy prices, household behaviour, weather conditions and how much energy residents use after their homes become warmer.
For some households, improvements may mean being able to heat rooms that were previously too expensive to keep warm, rather than achieving the full modelled financial saving.
That distinction is important when assessing the programme’s wider social and health benefits.
How much does each improvement cost?
The £27.5 million invested in Nest during 2025–26 covers delivery of the scheme, including advice and other services, rather than installation work alone.
Dividing total programme investment by the 1,436 completed home improvement packages produces a figure of approximately £19,150 per upgraded home.
However, this should not be described as the average installation cost because the total expenditure also includes other programme activities.
The annual report provides separate information on the average cost of improvement packages by local authority.
The highest average was recorded in the Vale of Glamorgan, at £17,700, followed by Merthyr Tydfil at £16,500.
Gwynedd recorded the lowest average package cost, at £10,700.
The scheme operates with a £35,000 threshold for individual projects, above which additional approval is required.
The Welsh Government says differences in cost reflect the types of properties, technical constraints and the measures needed.
These can include insulation, new windows and doors, heating systems and renewable energy technologies.
The figures raise a difficult question about how to achieve the greatest benefit from limited public resources.
More expensive whole-house improvements may deliver lasting benefits for households living in particularly inefficient properties.
But smaller interventions could potentially allow more homes to receive assistance.
The Welsh Government’s own Warm Homes review, published in July, acknowledged that costs and efficiency required further attention.
It proposed exploring more cost-effective smaller improvements and benchmarking installation costs to help extend the programme’s reach.
What improvements are being delivered?
The latest annual report shows that heating system installations, including boiler replacements and LPG water heaters, accounted for approximately 31% of measures installed.
Solar and other renewable energy measures accounted for 37%.
Air-source heat pumps and associated hot-water cylinders represented less than 1% of installations.
This reflects the scheme’s emphasis on providing improvements appropriate to individual homes and household circumstances.
Many people receiving support live in older properties that are difficult to heat.
Around 44% of upgraded homes were built before 1930, while almost half had two bedrooms or fewer.
Before improvements, 49% of homes were rated F or G for energy efficiency.
Among the 765 properties for which post-installation energy ratings were available, approximately 64% achieved a rating of C or above.
Less than 1% remained in the lowest F or G categories.
These figures suggest substantial improvements in the energy performance of many supported properties.
However, post-installation ratings were not available for 671 of the 1,436 homes when the report was prepared.
That limits the extent to which the published results can be used to assess the performance of every installation.
Older and low-income households receiving support
The report provides further evidence that Nest is reaching households facing financial and practical difficulties.
Of those receiving improvements:
- 36% had a household reference person aged 65 or over.
- 49% reported a combined net household income below £15,000.
- 80% lived in owner-occupied homes.
- 14% lived in privately rented properties.
- 78% reported being in fuel poverty or severe fuel poverty.
Almost half of recipients reported severe fuel poverty, meaning their modelled energy costs exceeded 20% of household income.
The scheme also provides a route for people with certain health conditions, recognising that cold homes can be particularly harmful to people with respiratory, cardiovascular and other illnesses.
During the year, 4,142 households were assessed under the health eligibility route.
Of these, 800 passed the income assessment and qualified for support.
The annual report does not establish that all 800 subsequently received completed installations during the reporting period.
The findings highlight the relationship between housing conditions, poverty and health.
Cold and damp homes can contribute to illness, while households managing existing health conditions may face greater difficulties keeping their properties warm.
Improving energy efficiency therefore has potential benefits beyond lower bills, including better living conditions and reduced pressure on health services.
Those wider benefits, however, require evaluation rather than being assumed from installation figures alone.
Is the scheme delivering value for money?
There are encouraging indicators in the annual report.
Independent quality checks recorded a 98.3% first-time inspection pass rate.
The proportion of installations resulting in upheld complaints was 1.3%, below the scheme’s 3% target.
Among 880 respondents who answered the overall satisfaction question, 92% reported being satisfied.
British Gas, which manages installations, separately recorded a 96% customer satisfaction rate.
These results suggest that many recipients are satisfied with the service and that most inspected installations meet the required standards.
However, satisfaction and installation quality are only part of assessing value for money.
A comprehensive assessment also needs to establish how long improvements last, whether projected energy savings are achieved, the cost per unit of energy saved and whether the programme reaches households with the greatest need.
The Welsh Government has already acknowledged that the current scheme requires further evaluation.
Its July Warm Homes review confirmed that a formal evaluation was under way and was expected to report in 2027–28.
That evaluation will be particularly important in determining whether the scheme’s approach provides the best balance between intensive improvements to individual homes and reaching a larger number of households.
The challenge of expanding support
The Welsh Government’s July review also identified a significant change in the wider funding environment.
The closure of the UK-wide Energy Company Obligation scheme, ECO4, has created uncertainty about future investment in energy-efficiency improvements.
According to the Welsh Government, Wales had previously benefited from approximately 12% of installations under ECO4, with investment estimated at more than £100 million annually.
The review warned that the scheme’s closure had left a gap in investment and contributed to increasing demand for Nest.
It also highlighted problems with the quality of some work delivered through ECO4 and the need to resolve outstanding remedial work.
The Welsh Government reported that £86 million in consequential funding had been allocated to Wales over four years following changes to UK energy-efficiency support.
How that money is used, and whether it can expand the number of households receiving improvements, will be important questions for ministers.
The Welsh Government has indicated that it wants to explore new approaches, including smaller, more cost-effective measures and area-based pilot schemes.
Such approaches could potentially support more households while maintaining targeted assistance for those living in the poorest-quality homes.
The bigger question: how quickly can Wales tackle fuel poverty?
The Nest annual report provides evidence that energy-efficiency improvements can make a substantial difference to individual households.
A warmer home, reliable heating and lower energy costs can improve living standards and reduce financial pressure.
For households experiencing severe fuel poverty, those benefits can be particularly significant.
But the report also highlights the limits of a programme operating against a much larger national challenge.
With hundreds of thousands of Welsh households estimated to be living in fuel poverty, improving around 1,400 homes a year through Nest alone cannot resolve the problem within a reasonable timeframe.
The Welsh Government’s response will depend partly on the role of other programmes, the availability of additional funding and whether delivery can be expanded without sacrificing quality.
There are also difficult decisions about whether public money should prioritise the most expensive and inefficient homes, reach a greater number of households through smaller improvements, or combine both approaches.
The Government’s own review suggests that these questions are now being considered.
The challenge is to translate that work into a programme capable of making measurable progress across Wales.
For the households who received support, Nest may have transformed their living conditions. For the much larger number still struggling with cold homes and unaffordable energy bills, the question is how quickly that support can be extended.
