British Gas attacks £5bn energy saving market

British Gas, the country's biggest energy supplier, is to tap the £5bn energy efficiency market by setting up a division aimed specifically at households that want to cut their carbon emissions as well as their bills.

The business, British Gas New Energy (BGNE), will provide a range of energy saving devices from fuel efficient boilers and cavity wall insulation to solar thermal panels.

From this June, any house put on the market will have to come with an energy performance certificate costing about £100 as part of the mandatory home information pack.

The average house emits five tonnes of carbon a year, equivalent to a quarter of the total "carbon footprint" of its occupants. British Gas said a home fitted with one of its next-generation fuel-cell microgeneration boilers which produce both heat and power and export surplus electricity back into the National Grid could cut that carbon output by a half. Cavity wall and full loft insulation could save another one million tonnes of carbon.

BGNE, which is part of Centrica and will be run by Gearoid Lane, previously the group's director of energy procurement, also plans to move into the solar power business. It will install solar thermal panels to heat water and solar photovoltaic panels which generate electricity. Including government grants, the cost of installation is put at £4,000 and £7,000 respectively but British Gas said householders could save £100 on their annual heating bills and £360 on electricity - halving the typical annual bill.

British Gas said the market for energy efficient condensing boilers was £3.5bn-£4bn a year while demand for microgeneration could ultimately create a £1bn-a-year market. Assuming 5 per cent of households switched to green energy, that would create a further £500m worth of sales.

Britain is set to beat its Kyoto target of a 12.5 per cent cut in greenhouse gas emissions by 2012 compared with 1990 levels. But it will miss the more demanding goal set by the Government of a 20 per cent reduction in emissions by 2010, with the reduction only expected to reach 16 per cent.

British Gas said it would have 500 of its engineers trained to carry out surveys when the requirement for energy performance certificates takes effect in June. Some 1.4 million houses are sold each year. The company currently installs about 100,000 new boilers a year, but this only amounts to about 7 per cent of the annual market.