DHH0041

Written evidence submitted by NexGen Heating

About NexGen Heating

NexGen Heating is a British innovator and manufacturer in the heating industry, committed to delivering sustainable and efficient home heating. With the UK facing significant challenges in achieving net zero targets and addressing fuel poverty, we believe NexGen’s cutting-edge Far Infrared heating technology presents an opportunity for transformative change as an alternative technology and route to deliver low carbon heating, it also being the most optimal system to be packaged with renewables and energy storage.

Founded on breakthrough Intellectual Property in the use of Carbon Nano Technology in a next generation resistive heating element, NexGen is redefining residential comfort, warmth and affordability with our Far Infrared heating solutions, and agile granular control solutions. Our technology delivers energy more efficiently than any convection-based system, emitting Far Infra-Red at the exact wavelength of sunlight, directly heating residents, objects and the entire fabric in a room with almost no convection effect, ultimately heating the air from recirculating energy emitting out of structure. This manifests uniquely as thermal mass storage, at its optimum level it creates the equivalent of a room/house size storage heater.

This approach not only reduces energy consumption to levels comparable in the heating season to Air Source Heat Pumps (ASHPs) and circa 50% better than other direct electric systems or storage heaters, NexGen also significantly lowers carbon emissions by three times against fossil fuel systems, making a substantial contribution to environmental sustainability. We currently have innovation-funded installation and pilot programmes underway with the Scottish and Welsh Governments, as well as 45 social housing providers using NexGen, particularly in hard to heat and hard to treat properties, as our technology is agnostic to housing type and fabric.

Benefits of NexGen’s cost-effective Far Infrared heating technology

We believe that our Far Infrared heating technology has a key role to play in ensuring a just transition to net zero homes which delivers the best value for money for government, social housing providers, residents and ultimately consumers.

However, heating policy up until now has primarily focused on heat pumps at the expense of alternative low carbon technologies. While heat pumps will clearly form an important part of the decarbonisation solution in the residential sector, they are not the only solution, and evidence is clear that they are technically and economically limited, particularly when considering decarbonisation of the UK’s circa 10 million harder to heat homes[1].

The Climate Change Committee (CCC) projects that domestic heat pumps will be needed in between 50% and 80% of UK homes by 2050 in order to reach net zero[2]. This means that there are a significant number of homes where heat pumps may not be the most suitable or cost-effective decarbonisation solution, hence alternative low carbon heating technologies will be required. Unfortunately, there is currently a policy and funding vacuum for alternative low carbon heating technologies from government, which risks leaving these homes and their residents behind in the transition to net zero. It is imperative that the Government takes a more technology-agnostic approach to home decarbonisation policy and funding, which prioritises the most appropriate and cost-effective heating solutions for individual homes and their residents. The adoption of a technology-agnostic approach minimises the amount that needs to be spent on fabric upgrades because technologies such as NexGen are able to demonstrate lower thermal losses than heat pumps.

NexGen’s Far Infrared heating technology promotes smart, room-by-room zonal heating, even sub-zoning to give residents absolute choice of when and where to heat within their homes - which increases efficiency, reduces heat wastage, and lowers cost. The potential for energy, CO2 and grid demand savings as a result of all 28 million UK homes refraining from heating unused room space is huge. As a result, it delivers high carbon savings compared to fossil fuel boilers and substantial energy savings compared to other low carbon heating technologies. Real-life testing shows that, compared to mains gas, NexGen reduces CO2 emissions by a minimum of 86% and requires three times less energy (in kWh) during a 24/7 heating cycle. In pilots carried out in social homes, NexGen has saved tenants 40%-50% on their energy bills compared to other electric heating systems, and delivered performance on par with various ASHP systems. As the technology is maintenance-free and anticipated to last the lifetime of a home, through life costs are highly favourable.

Electricity is currently four times more expensive than gas per kWh[3]. This means there is a significant risk that households will be subject to higher energy bills when moving from a gas boiler to an electrified low carbon heating system. National Energy Action estimate that 6 million households are in fuel poverty[4], while data from the Office for National Statistics show that 41% of all energy bill payers are struggling to afford payments[5]. Therefore, protecting residents from higher energy prices and preventing households from falling into fuel poverty must be a central consideration during the transition to net zero homes. By delivering significant reductions in both carbon emissions and energy bills, NexGen’s technology has the potential to lift households out of fuel poverty, while also contributing to the UK’s net zero targets. As such, our technology will ensure a just transition to net zero that protects the most vulnerable households. NexGen’s technology will also help the Government to meet both its legal emissions reduction obligations and its statutory fuel poverty targets.

The low CAPEX cost of our Far Infrared heating technology makes it a more cost-effective option than heat pumps for government, local authorities and residents. The CCC has estimated that it will require £162 billion of additional investment to install low carbon heating in UK homes between 2020 and 2050, compared to the cost of like-for-like boiler replacements[6]. This will be significantly higher if all homes have to be insulated to a sufficient level for heat pumps to operate efficiently and cost-effectively. Moreover, the cost of heat pump installations has not fallen as quickly as the Government expected. In 2021, DESNZ set an ambition for heat pump installation costs to reduce by at least 25%-50% by 2025 and for heat pumps to be no more expensive to buy and run than gas boilers by 2030[7]. However, the average cost of installing a heat pump only decreased by 6% between 2021 and 2023 and heat pumps remain four times more expensive than installing a gas boiler[8], hence it is unlikely that the Government’s 2030 cost parity target will be achieved. By contrast, a comparative test carried out in two identical EPC C flats in the same building, found that the CAPEX installation cost of NexGen’s technology is 40% lower than ASHPs, and retains 20% to 40% cost savings over its lifecycle, as NexGen has no maintenance costs, or upgrade requirements. Thus, our Far Infrared technology represents a better value for money decarbonisation option than an ASHP. Considering the scale of investment required, it is important to maximise the value for money of home decarbonisation for government, local authorities and residents.

Given the current funding crisis affecting local authorities, it is particularly important that local authority schemes like the Social Housing Decarbonisation Fund (SHDF) receive the best value for money for the low carbon heating systems they fund. The cost of retrofitting all of the UK’s social homes (4.5 million in total)[9] to EPC C will be significantly lower using NexGen’s Far Infrared heating technology rather than heat pumps. Modelling and testing done with our clients has shown that moving all these homes to EPC C with an ASHP would cost c.£234 billion (£52,000 per property). However, to upgrade all these homes to EPC C with NexGen’s Far Infrared heating technology would only cost c.£171 billion (£38,000 per property). Thus, for the social housing stock alone, NexGen could deliver a £63 billion saving in capital programme costs over 16 years to 2040, representing £3.9 billion of savings per year. As such, NexGen’s technology represents excellent value for money for local authorities and central government. This lower CAPEX cost makes NexGen’s technology an extremely cost-effective decarbonisation technology for taxpayers.

NexGen’s Far Infrared heating technology has particularly useful potential applications when it comes to decarbonising ‘hard to treat’ (or complex to decarbonise) homes. There are an estimated 10 million hard to treat homes in the UK, including 1.575 million in the social housing sector, which are challenging to retrofit with insulation or low carbon heating[10]. When trialled in an EPC E, hard to treat social home, our technology delivered over 50% lower energy usage than standard electric convection radiators. It also managed to maintain a comfortable heat within the property (18-19OC as defined by the tenant), where previously the electric radiators had failed to provide comfortable or affordable heating. In many hard to treat properties, it may be technically infeasible or financially prohibitive to reach a high level of thermal efficiency, meaning heat pumps may not run efficiently or cost-effectively. The Government is yet to adopt a clear approach towards hard to treat homes and is due to consult on this later in the year.  By recognising NexGen’s technology, the Government can ensure that these homes and their residents are not left behind on the transition to net zero, without spending vast sums of money on extremely costly energy efficiency upgrades.

Our technology can also help to improve some of the lowest quality properties in the country. The UK has one of the highest proportions of sub-standard properties in Europe, with 15% of homes failing to meet the Decent Homes Standard in 2020[11]. It is estimated that many of these homes are in such a poor state that they are uninhabitable, often because of serious issues with damp and mould. Traditional remedial works for removing damp and mould can take 3-6 months, however NexGen’s Far Infrared heating technology can kill damp and mould in just 3-6 days by drying out internal walls, evaporating surface moisture on colder surfaces and reducing humidity levels. In Scotland and Wales with support of both devolved Governments, NexGen is the key technology in moves to eradicate damp and mould in social housing. It can be highly influential in the move to bring uninhabitable homes back into circulation, most of these homes being both hard to heat and highly infiltrated by damp and mould. In this way, our technology can unlock more homes for people to live in and help to alleviate the UK’s housing crisis.

The effectiveness of NexGen’s Far Infrared heating technology at combatting damp and mould can also deliver transformative health improvements to residents. In the UK, 1 in 5 children are exposed to damp and mould at home[12]. This is extremely harmful to health and, as we have seen with the tragic case of Awaab Ishak, can be fatal. We are pleased that the Government has recently introduced ‘Awaab’s Law’ to guard against this. Our technology can help social landlords to become compliant with this new regulation and most importantly stop any more preventable tragedies like this from occurring again.

As well as the direct health benefits provided for occupants, NexGen’s Far Infrared heating technology also has the potential to deliver wider public health and economic benefits to society. In 2019, the Local Government Association estimated that the NHS spends £2.5 billion per year as a minimum on treating illnesses that are directly linked to cold, damp and unsafe homes[13]. Our technology represents a good value for money investment for government because it will provide direct economic benefits to society by reducing the amount of money that the NHS needs to spend on treating these avoidable illnesses.

Another significant benefit of NexGen’s Far Infrared heating technology as an alternative low carbon heating option is the fact that it is quick and easy to install, meaning it can be installed by the current workforce (generally electricians) with no upskilling required. It also requires zero maintenance once installed. As such, it does not suffer from supply chain constraints and skills shortages, which are one of the main limiting factors holding back the installations of other low carbon heating technologies, such as heat pumps. The Heat Pump Association estimates that 33,700 FTE skilled heat pump installers will be needed by 2028 to achieve the Government’s target for 600,000 heat pump installations per year[14]. Industry estimates suggest that there are approximately 14,000 qualified heat pump installers in the industry at the moment[15], meaning that a rapid scale up will be required over the next few years. Recruiting and training so many new entrants to the heat pump sector in such a short space of time will be very challenging and costly.

By contrast, workforce requirements are not a constraint for our technology and there are no limitations on the scalability of our manufacturing capacity. Within just 24 months, NexGen can increase its capacity to manufacture 600,000 home systems annually. As such, our Far Infrared heating technology can be rolled out at scale much more quickly, thus enabling an immediate decarbonisation of heat to be realised. With an Appendix Q accreditation process and appropriate SAP/HEM/EPC scoring available, there would be a strong movement of potential buyers for this technology if it had an equivalent grant structure to ASHPs. It would be particularly logical to target this at the lower end of the market with hard to heat homes and fuel poverty being in direct correlation, both of which can be addressed by this technology at the same time as making even greater proportional savings in CO2.

The ease at which NexGen’s Electric Wallpaper can be installed is also an important benefit for residents. Whereas the Government’s Electrification of Heat project in 2020-21 identified disruption as a key barrier to consumers installing heat pumps[16], installation of NexGen’s technology requires minimal disruption, which is beneficial for residents. This can therefore support the greater decarbonisation of home heating.

What are our policy recommendations?

In light of the benefits outlined above we believe that our Large Surface Area, Ultra Low Voltage, Far Infrared heating technology should form a key part of the Government’s approach to home decarbonisation, particularly for hard to treat homes where heat pumps are not a viable or cost-effective solution. Unfortunately, the current policy landscape is not supportive of alternative low carbon heating technologies like ours. Therefore, we believe that a number of policy changes are needed to more effectively promote innovative low carbon heating solutions and ensure a transition to decarbonised heating that maximises value for money for government, social housing providers and residents alike.

The Government should take a more technology-agnostic approach to decarbonising home heating by providing funding to a greater range of low carbon heating options across its energy efficiency schemes.

Funding schemes often provide funding to only a limited set of low carbon heating solutions, thus excluding innovative technologies like our Far Infrared heating technology. The limited range of low carbon options offered by government schemes (only heat pumps and biomass boilers in the case of BUS) do not reflect the wide variety of effective low carbon heating technologies on the market. It also means that, for hard to treat homes where heat pumps are not a viable or cost-effective option, they are not able to access subsidies for low carbon heating systems. This risks leaving these homes behind in the transition to net zero. Instead, government energy efficiency schemes should provide residents with a range of technology-agnostic choices for heating and hot water.

Furthermore, the heating systems supported by many government energy efficiency schemes do not reflect the most cost-effective options for government. Since our technology is significantly cheaper to install than heat pumps, it would not require as expensive subsidies from government. This would provide more value for money for government and mean schemes like SHDF and BUS could reach a greater number of homes than could be reached using the same overall pot of funding. It would also reach a much wider range of demographics, including people living with the challenge of fuel poverty.

The process by which innovative new decarbonisation solutions can be recognised within building regulations and energy efficiency schemes must be streamlined.

It can be an extremely time-consuming and costly process for new innovative solutions to be recognised within SAP and building regulations. This is impeding the pace at which homes can be decarbonised as it stymies innovation and prevents consumers from being able to choose from the most effective, up-to-date and affordable low carbon heating solutions. Innovation is critical to bring down the cost of low carbon heating systems and make the decarbonisation of homes more cost-effective for government and residents. The Government needs to support British innovators and help exciting innovations come to market by making this process more efficient and less costly.

SAP reform must make it easier for innovative heating solutions to be recognised.

We welcome the Government’s proposals to introduce a new Home Energy Model (HEM) to replace SAP and to reform the Appendix Q process. This is urgently needed because many effective low carbon heating systems are excluded from energy efficiency schemes because of limitations with the SAP process. For example, our Far Infrared heating technology was denied SHDF funding for a 182-unit block of flats due to its SAP score. Instead, the social housing provider had to install storage heaters, which were £400,000 more expensive to install, as well as having more expensive operating and maintenance costs for the lifetime of the heating system. The whole life cost of heating and maintenance for this project will be 40% higher over 20 years as a result.

Our technology has already been recognised as an effective, reliable and safe technology by key stakeholders across government and industry. The Welsh Government has approved NexGen as an Innovation in its Optimised Retrofit Programme and have funded a 255 home pilot in winter 2023-2024 after testing of NexGen’s technology showed a significant net saving in energy costs. E. ON have also agreed to sponsor NexGen as an ECO4 Innovation Measure. We are applying for the creation of a new SAP Appendix Q category for Large Surface Area - Far Infra Red Heating. Our application is currently under consideration by the Building Research Establishment (BRE). If our application is successful with the BRE, it is important that the Government agrees to incorporate this new heating category into the HEM. This will allow residents to benefit from more effective and innovative heating technologies like ours, which deliver excellent value for money for government and consumers.

The Government should champion low carbon heating solutions invented and manufactured in the UK.

The majority of heat pumps are manufactured outside of the UK, 40% of these in China[17], whereas NexGen’s product was invented and is manufactured in the UK. To realise our ambition for the UK to be a world leader in the net zero transition, it is imperative that the Government supports home-grown green industries and manufacturing in line with the British Energy Security Strategy[18]. This will enhance our national energy security, boost the economy and provide exciting export opportunities.

April 2024