Thermal Storage UK – Written evidence (LES0004)

More about Thermal Storage UK

Thermal Storage UK represents companies who have developed modern thermal storage products. We promote the use of smart thermal storage in buildings in the United Kingdom and other countries to achieve net zero. Our mission is to take the carbon out of heating buildings. Find out more at www.thermalstorage.org.uk

More about Sunamp

Sunamp’s thermal energy storage technology uses Phase Change Materials to make homes and buildings more energy efficient and sustainable, while reducing carbon emissions. Sunamp heat batteries can be charged with large amounts of energy from renewable and other sources, and released to deliver hot water, cooling and space heating on demand across a wide range of temperatures, and for a wide range of residential and industrial applications. Find out more at www.sunamp.com/

More about tepeo

tepeo is developing low carbon heating solutions to decarbonise domestic heating. Their Zero Emission Boiler (ZEB) technology is a direct swap for a fossil fuel central heating and hot water boiler. The ZEB combines electric heating with ultra-high-density dry core thermal storage. Its 40kWh of energy storage provides highly flexible load to enable demand side response and grid balancing services. Find out more at www.tepeo.com/

More about Caldera

Caldera’s forthcoming Storage Boiler uses renewable electricity whenever it is available, converts that electricity to heat and stores this efficiently until it is needed. Depending on the industrial process, this heat can be delivered as steam, hot water, thermal oil or hot air. Find out more at www.caldera.co.uk/

Inquiry questions

How much medium- and long-duration energy storage will be needed to reach the Government’s goal of a fully decarbonised power grid by 2035 and net zero by 2050, and by when will it need to be ready?

Under what scenarios would the grid draw heavily on long-duration storage? How well are these scenarios understood?

What is the range of estimates for likely electricity demand in 2035?

National Grid ESO’s “A Day in the Life 2035”[1] estimates that demand for electricity could roughly double from 275 TWh in 2021 to up to 500 TWh in 2035. Domestic electric heating could increase to 10% of total annual demand or 18% of peak demand. National Grid ESO sees the net zero power system of 2035 offering 80GW of flexibility, including up to 30GW of demand-side flexibility (including thermal storage) and up to 25GW of electrical storage.

Our own analysis with LCP Delta (shared separately with the committee and available on our website) suggests that 2.4 million smart thermal stores could operate with or instead of heat pumps by 2030. Products from companies such as Sunamp and tepeo could provide up to 4.1GW of flexibility on the coldest day of the year by 2030 [2]. To make the most of this opportunity requires encouraging people, networks and heat pump installers to see the financial benefits of heat flexibility.

Maximising demand flexibility is important to minimising the cost of the transition. Electrifying heat and transport without flexibility could see peak demand in winter increase four times by 2050. With flexibility, National Grid ESO’s Future Energy Scenarios (FES)[3] sees winter peak demand doubling from around 57.7GW today to somewhere between 97.5GW and 114.2GW in 2050. Much of the additional peak demand will come from electrified heating.

Building flexibility into heating systems can reduce peak demand and remove the need for at least some investment into the electricity network. Indeed, National Grid ESO estimates in this year’s FES that “between 10-12 GW of heat demand could be flexibly managed in 2050 from the residential sector alone”. The FES highlights the role of smart thermal storage for the future electricity system, stating:

“The growth of distributed flexibility (flexible energy demand resources, such as storage, EVs, heat pumps and thermal storage connected at distribution level) is a key enabler to achieving net zero”

We welcome UK government support for trialling long duration storage, including smart thermal storage. Indeed, as part of its Longer Duration Energy Storage Demonstration Programme, the UK government has said that “Where the end energy need of electricity is heat the most cost effective, efficient and minimal impact on the grid use of that input electricity would be storing the electricity as heat - either at individual building level or at scale in heat networks connecting to multiple buildings”[4].

The figures above suggest the important role of heat flexibility and smart thermal storage in achieving a decarbonised power system by 2035 and net zero by 2050. To give a sense of what this means in practice for homes and businesses, we provide short summaries of how Thermal Storage UK members are trialling smart thermal storage solutions.

tepeo Neat Heat

tepeo are working with OVO Energy and UK Power Networks in Project Neat Heat [5] to demonstrate their Zero Emission Boilers (ZEBs). UK Power Networks is funding the trial through the Ofgem Network Innovation Allowance, to explore how flexible demand can support Distribution Network Operators (DNOs) in the transition to low-carbon heating. As part of the trial, OVO is providing a 'type-of-use' tariff for the ZEB. This tariff gives customers a fixed unit rate for their ZEB's power consumption, letting the ZEBs charge based on market price signals and grid carbon intensity in the background. At the end of the trial, customers keep the ZEB at no extra cost.

Sunamp Project EXTEND

The EXTEND project [6] aims to replace household boilers fired by fossil fuels with thermal energy storage and heat pumps. Sunamp is working with four leading companies in the UK’s transition to a renewable, zero-carbon energy system – myenergi, Energy Systems Catapult, Ripple Energy and Fischer Future Heat. Funding is through Stream 2, Phase 1 of the UK Government’s Longer Duration Energy Storage Demonstration Programme [7].

Caldera demonstrator project

Caldera has developed a novel storage boiler which takes cheap, green off-peak electricity and stores it in heat cells made of scrap aluminium and rock. The high grade heat can then be released as hot water or steam when required. Each heat storage unit will offer 2MWh storage. Caldera have been awarded funds to build a demonstrator project [8] through Phase 2 of the UK Government's £55 million Industrial Fuel Switching Competition, which is part of the £1 billion Net Zero Innovation Portfolio (NZIP).

To support the practical applications set out above, we would welcome enhanced modelling of the future electricity system, both in 2035 and 2050. We recommend that the UK government works with the Future System Operator (FSO) to develop a detailed, real-time, publicly available digital twin of the UK electricity system. With sufficient computing power and investment, this advanced simulation would provide deep insight to improve system planning and for decision-making to better plan and prioritise network investment, heat and transport decarbonisation, energy efficiency and flexibility.

An electricity system digital twin would help DNOs, the FSO, local authorities, energy suppliers, policymakers and manufacturers of flexibility assets (e.g. clean heating appliance and storage devices) to plan the transition. The digital twin would help plan network investment versus incentivising flexibility, allowing for better planning of disruptive and costly upgrades and facilitating a street-by-street roll-out of electric heating and transport.

How sensitive is the amount of storage needed to assumptions about the future balance of supply and demand on the grid?

What role could nuclear power, fossil fuel generation with carbon capture and storage, or other energy technologies, play in reducing the need for energy storage on a net zero grid?

What role could greater grid interconnectivity between Great Britain, Northern Ireland and other nations play in addressing the imbalance between supply and demand?

What role could demand-side management of electricity play in reducing the dependence on storage?

What impact will future climate change have on demand – for example, how much will the seasonal differences in power demand change with warmer winters and greater use of air conditioning?

Our evidence focuses on the question relating to the role of demand-side management of electricity and long-duration storage.

As the UK continues to upgrade the energy system for net zero and electrifies heat, transport and industry, we see a role for a range of technologies to balance supply and demand. Technologies which support maximising the use of renewables includes:

● Distribution-connected demand products such as smart thermal storage (working with or instead of heat pumps) and electro-chemical batteries

● Transmission-connected electricity generation products such as green hydrogen and pumped hydro.

These technologies can all store excess low carbon generation to manage variation in generation. Technologies such as smart thermal storage can support demand-side flexibility, supporting heat flexibility whether working with or instead of heat pumps.

Demand management using technologies such as smart thermal storage is important to deliver the optimal balance between upgrading grid infrastructure and rewarding people for providing flexibility. Electrifying heat and transport without flexibility could see peak demand in winter increase four times by 2050. With flexibility, National Grid ESO’s Future Energy Scenarios (FES) sees winter peak demand doubling from around 57.7GW today to somewhere between 97.5GW and 114.2GW in 2050. Much of the additional peak demand will come from electrified heating.

This is important because, as far as we can tell, the electricity network has not yet delivered the capacity required for the energy transition. Our focus is primarily on Distribution Network Operators (DNOs). While DNOs expect to connect up to three million heat pumps operating with thermal stores to the low voltage network by 2028 [9], DNOs currently have limited understanding of the capacity of that part of the network. It is unclear whether certain parts of the distribution network will start to reach capacity as soon as the mid-2020s or as late as the early-2030s [10]. There is a real risk that electrification of transport and heat demand will outstrip the capacity of at least parts of the low voltage network during the recent RIIO-ED2 price control. This is why Ofgem has required DNOs to reach “100% coverage of the networks by the end of RIIO-ED2 by utilising a combination of physical monitoring and advanced data analytics”[11].

Given the increase in winter peak demand from electrification of heat and transport, we see an important role for demand management. Building flexibility into heating systems can reduce peak demand and remove the need for at least some investment into the electricity network. Indeed, National Grid ESO estimates in this year’s FES that “between 10-12 GW of heat demand could be flexibly managed in 2050 from the residential sector alone”[12].

The current electricity system does not adequately value flexibility, so there may be a role for the UK government to support the deployment of flexible technologies. For large-scale projects such as pumped hydro, this may include providing revenue certainty (as has been the case with offshore wind). For flexible demand assets, this may mean support with capital costs and encouraging flexibility tariffs. The UK government will need to balance providing support to large-scale projects such as pumped hydro with support for flexible demand assets such as thermal storage, batteries and heat pumps. We welcome UK government support for trialling long duration storage, including smart thermal storage.

While the system does not currently adequately value flexibility, steps are being taken. For instance, during winter 2022-23, the National Grid Electricity System Operator (NGESO) set up and ran the Demand Flexibility Service (DFS). While the DFS was established very quickly and with limited promotion by most energy suppliers, over 1.6 million people signed up to provide flexibility to help manage the electricity system [13]. This demonstrates the potential value and scale of flexibility, which will become more important as we electrify transport and heat.

We welcome the continuation of the DFS into winter 2023/24. This values the flexibility that people can provide to the electricity grid, rewarding them for adjusting their behaviour. We recommend that NGESO works to evolve the DFS into an enduring flexibility service, considering transmission and distribution constraints. Demand side flexibility will become an increasingly important part of the electricity system as we electrify heat and transport.

More work is needed to understand how best to reward and protect people offering flexibility. During winter 2023/24, we strongly encourage NGESO to repeat the consumer research undertaken for participants in the DFS during winter 2022/23. We agree with Octopus’ Centre for Net Zero recommendation [14] to require supplier participation in the DFS. Similarly, we recommend that all energy suppliers participating in the DFS are mandated to engage in all aspects of consumer research. We recommend that the consumer research explores how people adjusted their demand, e.g. which Energy Smart Appliances they turned down.

We would like to see consumer research explore any regional variations in participation in the DFS. Such variation would help Distribution System Operators (or Regional System Planners in future) and energy suppliers to understand where demand may be more responsive to price signals.

We also recommend that NGESO considers how to maximise the potential flexibility offered up by small businesses. This may include promoting the scheme with business groups, as well as non-domestic suppliers. There are currently few time-of-use (ToU) tariffs available to small businesses, with the notable exception of Octopus Energy’s “Shape Shifters” tariff (launched in July 2023). We encourage Ofgem to explore whether energy suppliers are offering tariffs that reward small businesses for providing flexibility.

We also encourage the UK government to end the practice of energy suppliers describing electricity tariffs as “100% renewable” based wholly or in part on the use of Renewable Energy Guarantees of Origin (REGOs). The majority of respondents to the UK government’s “Designing a framework for transparency of carbon content in energy products call for evidence”[15] argued that the current approach does not provide a sufficient level of transparency. It is welcome that energy suppliers such as Ovo has moved away from this approach [16], following the likes of Good Energy [17].

Transparency and accurate information about new tariffs and technologies will be key to ensuring consumers are aware of the realities of more complex retail offerings and how they may impact their bills. Getting this wrong will undermine confidence in the transition. For example, take a situation where an energy supplier claims that an electricity tariff is 100% renewable based on REGOs. If that energy supplier then offers a smart ToU tariff, the supplier will struggle to claim there is any carbon reduction benefit from the flexible tariff without admitting that the REGO-backed tariff was not 100% renewable to start with.

The current green tariffs framework risks acting as a barrier to the emergence of more innovative time of use tariffs. We recommend that the framework is reformed to include a role for demand-shifting and other flexibility and a clearer definition of ‘additionality’ is added to Standard Licence Condition 21D. This would encourage people and businesses to use renewable electricity at times when it is generated.

Which technologies can scale up to play a major role in storage?

Which timescales for storage are different technologies most suited to? Is there a preferred technology for medium-duration and long-duration storage?

What are the technology readiness levels for these energy storage technologies?

Is it possible to produce enough domestic green hydrogen to fulfil long-term energy storage demand needs?

Is there a distinct role for technologies that store heat instead of electricity?

We see a significant role for a range of long duration storage technologies to balance supply and demand, including between 4 hours and 24 hours. Technologies which support maximising the use of renewables includes:

● demand products such as smart thermal storage working with or instead of heat pumps and electro-chemical batteries,

● electricity generation products such as green hydrogen and pumped hydro.

There is an important role for technologies that store heat. The UK government [18], Climate Change Committee [19] and National Grid ESO [20] all see electrification as the predominant way to decarbonise domestic heat. The UK government is aiming to increase heat pump installations to 600,000 per annum by 2028 and every heat pump is installed with a thermal store (whether a smart thermal store or a hot water tank).

Decarbonising industrial processes will involve electrifying process heat. British industry accounts for around one-third of total energy demand, much from fossil fuels. We welcome support from the UK government to support innovative companies to build demonstrator projects for industrial fuel switching (such as that run by Caldera), as well as the current call for evidence on industrial electrification [21].

We provide more information below on smart thermal storage products offered by British companies such as Sunamp, tepeo and Caldera.

Sunamp

Sunamp’s thermal energy storage technology uses Phase Change Materials (PCM) to make homes and buildings more energy efficient and sustainable, while reducing carbon emissions. Sunamp heat batteries can be charged with large amounts of energy from renewable and other sources, and released to deliver hot water, cooling and space heating on demand across a wide range of temperatures, and for a wide range of residential and industrial applications.

Sunamp has developed its PCM, Plentigrade, to provide high energy output and an almost unlimited lifespan. The smart thermal stores use latent heat – the energy needed to break the PCM’s crystal structure to change it from solid to liquid – to store energy on melting to a liquid and to release energy at a controllable, constant temperature on freezing to a solid. The trigger temperature for when Plentigrade melts and freezes can be changed from as low as -30C for refrigeration to as high as 118C for applications such as sterilisation.

Sunamp offers a range of products:

● The Thermino heat battery replaces traditional hot water cylinders, either direct (for grid electricity and solar PV) or indirect (for boilers and heat pumps). These thermal batteries are designed for retrofitting to existing hot water systems or specifying for use in new build projects.

● Sunamp Central Bank thermal batteries are a space-saving alternative to hot water thermal stores that reduce energy consumption and carbon emissions associated with heating buildings, process heat and district heating networks. Central Bank thermal batteries are designed to integrate with heating, ventilation and air conditioning equipment (HVAC)

● Sunamp Permafrost thermal batteries are space-saving, cool stores that reduce energy consumption and carbon emissions associated with air conditioning, district cooling networks and freezing.

Sunamp is based in Edinburgh, has operated since 2005, has manufactured more than 25,000 units and is exporting to Poland and the US. Sunamp has secured multiple investments in recent years, with Series A [22] and Series B [23], as well as grant funding [24] from the Department for Energy Security and Net Zero (DESNZ). Sunamp was one of 148 organisations nationally to be recognised with a prestigious King’s Award for Enterprise [25].

tepeo

The underlying concept of thermal storage has been used in some capacity in the UK since the 1960s. Dry core electric storage boilers have been in use for over 40 years. The ZEB is a smart modernised version with a higher heat density (so smaller footprint in the home), and the ability to learn the heating demand of a property and optimise for any electricity tariff, including ‘dynamic’ tariffs that track daily wholesale prices and near real-time carbon intensity of the grid.

The tepeo product provides heat and flexibility in homes where a heat pump would not be viable, for instance because of limited outdoor space. The technology is suitable for homes using up to 12,000 kWh/year gas demand (or up to around 10,000 kWh/year heat demand), with up to 5kW heat loss - typically up to a three-bedroom semi-detached property. The ZEB is equally efficient operating at low flow temperatures and high flow temperatures and is not affected by low ambient temperatures.

tepeo is based in Wokingham, has operated since 2018, launched their ZEB in 2021 and has manufactured and installed more than 100 units. tepeo recently secured £10.5 million Series A funding [26].

Caldera

Caldera is based in Southampton and has operated since 2017. Caldera has secured £4.3 million from DESNZ to develop a demonstrator project [27].

Each storage boiler includes a charging system that allows switching from grid to on-site solar or other low carbon sources, an array of heat cells with solid core ranging from 200C to 500C encased in vacuum insulation and a heat extraction system, including a heat exchanger.

What policy support is currently in place to support deployment of storage technologies? Is it sufficient to support deployment at scale?

How good is the economic case for long-duration energy storage? What policies and market structures need to be put in place to make the business case viable?

How will the grid need to change to support long-duration storage? Which stakeholders (e.g. energy companies, the Electricity System Operator, National Gas) should be planning for these changes?

What role does the Review of Electricity Market Arrangements need to play to support medium- and long-duration storage development?

Is the Government’s current reliance on market actors and technology competitions likely to deliver the storage needs on time?

The UK is not currently on track to deliver the heat flexibility required for the electricity system. This is because flexibility is inadequately valued by the system.

We strongly support the transition to market-wide half hourly settlement (MHHS). MHHS incentivises time-of-use tariffs (ToU) and encourages people to purchase flexible assets. ToU tariffs, which allow customers to access these periods of lower wholesale electricity prices, have existed for decades for domestic customers in the form of basic Economy 7 tariffs. However, the ongoing smart meter rollout and the switch to market-wide half-hourly settlement will enable all consumers to access ToU tariffs. Energy suppliers such as Octopus, EDF and OVO are innovating in the ToU tariff space to develop tariffs that seek to encourage people to provide flexibility.

EV owners have led the uptake of ToU tariffs. Heat is quickly becoming the next market, with the first flexible heat tariff now available through Octopus [28]. By combining these flexible heating systems with ToU tariffs, people will receive payments for operating heating systems in a way that supports the flexible operation of the electricity grid.

This highlights the urgency and importance of delivering market-wide half-hourly settlement, completing the smart meter roll-out and reforming local energy governance and distributed flexibility. There is also a role for the UK government to develop standards for Energy Smart Appliances, reform Energy Performance Certificates (EPCs) and ensure the UK Energy-related Products Framework considers flexibility.

We strongly recommend that the introduction of MHHS is prioritised and brought forward where possible. This programme will more directly link domestic electricity consumption to the costs faced by suppliers, creating greater incentives to develop tariffs that reward consumption at cheaper times of the day. Ofgem forecasts [29] that MHHS will deliver net benefits to GB consumers of up to £4.5 billion from 2021-45 through introduction of new tariffs and innovations that encourage and enable more flexible use of energy.

We encourage the UK government to end the practice of energy suppliers describing electricity tariffs as “100% renewable” based in part on the use of Renewable Energy Guarantee of Origin (REGOs). The majority of respondents to the UK government’s “Designing a framework for transparency of carbon content in energy products call for evidence”[30] argued that the current approach does not provide a sufficient level of transparency. It is welcome that Ovo has moved away from this approach [31], following the likes of Good Energy [32].

The current green tariffs framework risks acting as a barrier to the emergence of more innovative time of use tariffs. We recommend that the framework is reformed to include a role for demand-shifting and other flexibility and a clearer definition of ‘additionality’ is added to Standard Licence Condition 21D for electricity suppliers. This would encourage people and businesses to use renewable electricity at times when it is generated.

The REMA team within DESNZ could play a coordinating role for a wide range of existing programmes. The REMA team brings together civil servants from across the Department. This includes those working on flexibility, clean heat, renewable support, the capacity market, market-wide half-hourly settlement and smart meters. We recommend that the UK government progresses promptly with secondary legislation and regulation for Energy Smart Appliances, ensures that EPCs and the Energy-Related Products framework value distributed flexibility and requires retailers to offer time of use tariffs.

How well developed is the UK industry across different storage technologies, such as hydrogen or redox flow batteries? How does the UK compare to global competitors in these industries?

Are there any storage technologies that have a significant export potential for the UK?

For which technologies does the UK have significant existing research or industrial capacity?

Is the Government doing enough to support the industry to grow and drive exports and economic growth?

British businesses that design and manufacture smart thermal storage solutions have a high potential for exporting those products. For instance, Sunamp is already exporting their smart thermal stores to Europe and America.

We welcome existing UK government support for smart thermal storage. This includes grant funding and innovation support, such as:

● Including smart thermal storage as a solution within the industrial fuel switching competition and providing funding to Caldera

● Including smart thermal storage as part of the longer duration storage competition and providing funding to Sunamp

● Including smart thermal storage as part of the Strategic Innovation Fund and providing funding to UK Power Networks and tepeo

There is also support for British companies from Innovate UK and the Energy Systems Catapult. We welcome this ongoing support.

However, much more is required to maximise the potential for smart thermal storage as we electrify heating and industrial processes. We would welcome further support. Supporting flexibility within electrified domestic properties could involve the UK government:

● Modernising the Energy Saving Materials technology list by adding batteries, smart thermal stores and home EV chargers for VAT relief. Extending this VAT relief to flexibility products will incentivise the rapid uptake of these low carbon, energy saving materials [33].

● Extending the Boiler Upgrade Scheme to include smart thermal stores, for instance where heat pumps are not possible.

● Expanding the scope of the Clean Heat Market Mechanism to include smart thermal stores.

● Updating the Energy Performance Certificate and the forthcoming UK Energy-Related Products framework to incorporate flexibility.

Support for heat flexibility within electrified industrial processes could include the UK government:

● Working with the UK Infrastructure Bank to explore ways of reducing the transition risks for businesses seeking to switch to low carbon technologies. Reducing transition risks will encourage more companies to move more quickly to low carbon manufacturing solutions.

● Working to reduce the cost of electricity relative to fossil fuels. Lowering the relative cost of electricity increases the benefits to businesses of switching away from oil or gas.

● Working with Ofgem and National Grid ESO to incentivise businesses to provide flexibility that supports the electricity grid. This may involve outreach work to these businesses to highlight existing flexibility products

● Working with Ofgem to encourage or require non-domestic energy suppliers to provide time of use tariffs to a wider range of business customers.

In relation to businesses switching fuels for industrial processes, today it is not possible for British businesses to buy off-peak electricity at a price close to gas. Modelling an industrial customer with a demand of 4GWh (1,000 kVA electrical connection or 30,000 kWh/day gas connection) gives a Day Rate of 34p/kWh and a Night Rate of 24p/kWh. This compares with 6.7p/kWh for gas. This discrepancy is because a number of volume (per kWh) based charges are applied to the electricity bill which are not present in the same way for gas. This includes large-scale renewable support schemes (RO, FiT and CfD) which amounts to around 6.4p/kWh. Other significant costs are balancing at 2p/kWh, losses at 1.3p/kWh, transmission costs at 1.0p/kWh and distribution costs at 0.55p/kWh.

Beyond the cost of deploying long-duration energy storage, what major barriers exist to its successful scale up (e.g. the availability of a skilled workforce, the ability to construct the necessary infrastructure on time, or safety concerns around new technologies)?

Are there sufficient training schemes in place to ensure the UK has the workforce to deliver the energy storage the grid will need?

How long is it likely to take to develop the necessary infrastructure?

There are no known safety concerns with smart thermal storage. For instance, Sunamp is the only thermal battery manufacturer in the world to be awarded RAL Certification, the only global standard for Phase Change Material and PCM products. The award confirms the performance of the Plentigrade P58 material with no noticeable degradation to 10,000 cycles in the Thermino product, which is the equivalent of over 13 years of daily use. The underlying concept for tepeo’s dry core electric storage boiler has been in use for over 40 years.

The upfront costs of switching to low carbon electric heating are expected to fall over time, for instance through economies of scale as more products are built. However, there are limits to the upfront cost reductions that are possible, especially when considering any energy efficiency measures installed at the same time. This is why we welcome work from the likes of Nesta exploring financing options and why we expect mortgage lenders and banks to take a more prominent role in financing the transition through low-interest loans. The Scottish government offers [34] 0% interest loans alongside grants for technologies such as heat pumps and thermal stores (including the Sunamp heat battery) and we are aware that companies such as Nationwide have a similar offer [35].

The UK government could reduce the upfront costs by providing funding for a range of heating technologies, including smart thermal storage, air-source heat pumps, ground-source heat pumps, networked heat pumps and heat networks. This could involve expanding grants such as the Boiler Upgrade Scheme and modernising VAT reliefs such as those for Energy Saving Materials to include flexible technologies such as smart thermal storage.

In our view, the main opportunity from heating decarbonisation arises from reducing running costs of low carbon electricity. This involves the energy system valuing heat flexibility properly, particularly valuing reductions in peak electricity demand in winter. ToU tariffs might encourage people to charge their smart thermal store overnight and to preheat their home by running their heat pump during the day. For these tariffs to exist at scale, we recommend delivering market-wide half-hourly settlement, completing the smart meter roll-out and reforming local energy governance and distributed flexibility.

We recognise the work that has already gone into developing frameworks for heating and energy efficiency upgrades. For instance, in relation to the MCS scheme, PAS2030 and PAS2035 for energy efficiency measures, as well as PAS1878 and PAS1879 for flexibility. We support the UK government building on these specifications to develop standards for Energy Smart Appliances such as heat pumps and smart thermal storage. Thermal Storage UK members are actively working to develop these standards with the UK government and recommend that they are introduced no later than 2025.

While the UK has many excellent heating engineers and retrofit installers, there are too few of them to upgrade more than 25 million domestic properties across the UK by 2050. We support the government’s current activities to train more heating engineers and more retrofit assessors and retrofit coordinators.

As we electrify heating with heat pumps and smart thermal stores, it is increasingly necessary to consider the impact of heating on the electricity network, particularly the distribution network. The electrical heating systems being installed in homes today often entirely focus on heat provision within the building. Heating engineers - rightly - focus on ensuring that the heating system keeps the occupants warm. However, these heating systems are installed with very limited consideration of the potential to provide flexibility to the wider electricity system. This is a missed opportunity. For this reason, we encourage the MCS to consider potential heat flexibility when assessing the quality of heat pump installations.

We recommend that the Committee speaks directly with heating engineers and training providers, such as HeatGeek and BetaTeach, to better understand training and assessment standards for heating.

What steps should the Government take now to ensure this storage can come online later in the current decade?

Can the UK learn from other countries that have successful policies for supporting large-scale energy storage, or from pilot projects elsewhere?

We recommend that the UK government pursues long-duration storage solutions that are both large-scale (such as pumped hydro) and small-scale (such as smart thermal stores).

Supporting flexibility within electrified domestic properties could involve the UK government:

● Extending the Boiler Upgrade Scheme to include smart thermal stores, for instance where heat pumps are not possible.

● Expanding the scope of the Clean Heat Market Mechanism to include smart thermal stores.

● Updating the Energy Performance Certificate and Energy-Related Products framework to incorporate flexibility.

Support for heat flexibility within electrified industrial processes could include the UK government:

● Working to reduce the cost of electricity relative to fossil fuels. Lowering the relative cost of electricity increases the benefits to businesses of switching away from oil or gas.

● Working with Ofgem to encourage or require non-domestic energy suppliers to provide time of use tariffs to a wider range of business customers.

31 August 2023