1. Introduction
1.1. Include an introduction to you or your organisation and your reason for submitting evidence.
1.2. Naked Energy Ltd is a BEIS-backed UK company with a unique offering: a high‑temperature photovoltaic-thermal solar energy collector that can deliver simultaneous power and high-temperature heat for sanitary hot water, space and process heating in residential, commercial, agricultural and industrial buildings. Having successfully sold and deployed 55 kW of pre-certified units in 2018/2019, we are now beginning full commercial launch following the achievement of Solar Keymark certification. Our solar thermal collector has successfully achieved its certification, and we expect our solar hybrid photovoltaic-thermal collector to accomplish it in 2Q 2021. We have developed a pipeline of nearly 2,000 kW and are forecast to deploy 150 MW in the UK in 2021-2024 if scalable support for solar heat is continued. This expansion will transform solar heat in the UK and bring its uptake towards that in countries like Japan, where 10 – 20 kW are deployed per 1,000 inhabitants.
1.3. Naked Energy Ltd, as an organisation dedicated to decarbonise heat, is submitting a response to this inquiry because we feel that our technology and those like it are necessary as part of the range of measures and technologies seeking the decarbonisation of residential buildings. We believe solar thermal technology will be integral to the government strategy for reaching residential net-zero emissions by 2050.
2. Call for Evidence: Responses
2.1. What has been the impact of past and current policies for low carbon heat, and what lessons can be learnt, including examples from devolved administrations and international comparators?
2.1.1. The policy impact for low carbon heat in the UK has been positive, yet insufficient to reach the net-zero target. Our customer feedback indicates there still is hesitation from homeowners to uptake low and zero-carbon technologies for residential heating given:
- the upfront costs,
- lack of information and understanding about the different alternatives,
- fear of an increase in monthly bill payments, especially given the price differentiation between natural gas and electricity. Monthly bill increase might happen for a homeowner that replaces their natural gas boiler to electricity fuelled one, such as an air source heat pump.
2.1.2. For our experience and customer feedback these are the lessons learnt. Firstly, subsidies and policies must be technology agnostic so the innovation of new technologies and improvements of current ones can continue to develop. Secondly, the government must adhere to the principles of market-driven, technology-neutral policymaking. Finally, the government must recognise that considerable implementation of additional technologies will be required to meet the UK net-zero emissions targets, and the challenge to decarbonise heat does not lie on a sole technology.
2.1.3. Given the global focus of our company, we have found various examples from international policies supporting low carbon heat, which have accelerated the uptake of zero-carbon technologies, such as solar thermal, in the residential sector. Examples of these are:
The Spanish building code[1] including obligations for new builds and retrofits to have a minimum contribution of renewable energy for domestic hot water (DHW).
The Uruguayan Law No. 18585[2] of 2009 on Solar Thermal Energy, which requires new builds and retrofits of Sports Centres, Health Centres, Hotels and public buildings to install solar thermal collectors to generate DHW.
Other countries, including Austria, Denmark, France, Ireland, Germany and the Netherlands have shown that appropriate levels of government support for solar thermal energy results in the development of the supply chains necessary for large-scale deployment. In these countries, solar thermal forms an important part of the low-carbon heat portfolio, as it should do in the UK.
2.2. What key policies, priorities and timelines should be included in the Government’s forthcoming ‘Buildings and Heat Strategy’ to ensure that the UK is on track to deliver Net Zero? What are the most urgent decisions and actions that need to be taken over the course of this Parliament (by 2024)?
2.2.1. We believe, on the back of our customers' feedback, the continuation of a renewable heat incentive beyond the current one is key. However, the incentive needs to recognise the value of solar thermal and solar hybrid technologies. BEIS states “there are a variety of technologies with the potential to contribute to the transformation necessary to meet 2050 targets – including heat networks, heat pumps, hydrogen and biogas.”[3] The value of solar thermal and hybrid technologies for decarbonisation needs to be recognized and supported as it is part of the mix needed to achieve net-zero on time.
2.2.2. Even though the solar resource in the United Kingdom is not the most abundant in the world, it is sufficient to provide a significant thermal contribution to residential, commercial and industrial sectors. To illustrate, if we consider the guidelines of Domestic Hot Water (DHW) usage published by the Chartered Institution Of Building Services Engineers (CIBSE)[4] and solar irradiation data from the Satellite Application Facility on Climate Monitoring (CM SAF)[5], our model forecasts that an apartment block with 20 units in SW1 London has a monthly DHW demand of 97,333 litres. VirtuPVT, our hybrid solar PV-thermal technology can provide 50% of the annual heat demand besides generating electricity for the building, at no cost for fuel.
2.2.3 Therefore, we strongly believe there should be a technology-agnostic obligation for multi-dwelling residential new builds as well as social housing, to include low carbon heating technologies, and gradually include retrofits as well. For urban areas, further development of district heating networks should be prioritised, here large scale solar district heating presents a robust solution to decarbonising heat.[6]
2.3. Which technologies are the most viable to deliver the decarbonisation of heating, and what would be the most appropriate mix of technologies across the UK?
2.3.1. As stated in answers to previous questions, there is no silver bullet technology for the heat decarbonization challenge. The solution lies in the integration of several complementary technologies to achieve the ultimate goal of decarbonization. Solutions must be focused on carbon abatement by taking a system-lifetime view.
2.3.2. From our experience in residential applications the integration of technologies such as thermal storage, a combination of ground sourced heat pumps with solar thermal, air-source heat pumps with solar hybrid photovoltaic-thermal, batteries are the key for decarbonizing heat in homes.
For residential projects with enough ground space, integration of ground source heat pumps and solar thermal can provide year-round low carbon heating. For individual homes with no ground available, a combination of air/water source heat pump with solar thermal technologies would provide low carbon heat without increasing the monthly bills for the residents.
Moreover, hybrid technologies, such as VirtuPVT, can generate thermal and electrical output for residential the sector with limited roof space, like multi-dwelling, which can provide electricity for A/C as well as hot water for the year-round DHW demand. Moreover, considering decentralised solutions, such as solar thermal and solar hybrid, can make the energy system more resilient.
2.4. How can the costs of decarbonising heat be distributed fairly across consumers, taxpayers, business and government, taking account of the fuel poor and communities affected by the transition? What is the impact of the existing distribution of environmental levies across electricity, gas and fuel bills on drivers for switching to low carbon heating, and should this distribution be reviewed?
2.4.1 Heating bills constitute a high proportion of income for many vulnerable groups. Solar thermal energy has considerable potential to alleviate energy poverty in social housing where low-income individuals struggle to pay monthly heating bills. For example, Western Solar Ltd in Wales has developed an affordable housing concept, Tŷ Solar, which has managed to reduce energy consumption by 88% compared to a traditional house. The addition of solar thermal energy could reduce this to zero, eliminating annual energy bills for these social housing residents therefore eliminating what some refer to as the choice between heat or eat. Protecting the vulnerable becomes key in a just transition to a low-carbon economy, resulting in resilience to confront future national downturns.
In the frame of the Sustainable Development Goals (SDGs), goal number 7 is Affordable and Clean Energy and indicator 7.1.2 is the Proportion of population with primary reliance on clean fuels. Solar thermal energy provides a pathway to achieving SDG 7 by providing a long-term solution to significantly reduce heating demands year-round.
Local governments can also benefit from the installation of solar thermal energy generation in emergency housing, including B&B and homeless hostels, reducing any fees to users. This way, homeless individuals in the transition to more permanent housing can benefit from reduced expenses and improved living conditions which are in line with social protection policies. Further supporting the reduction of inequalities within the UK is relevant to the SDG 10, Reduce inequality within and among countries.
2.4.2. From our analysis for potential customers in the residential and commercial and industrial sectors, if transitioning from a gas boiler to an electric heat generator such as heat pumps or electric heaters, the monthly bill of the consumer could significantly increase, given that the average cost per kWh of natural gas is £0.06 and electricity is £0.13. Concerns have been raised around the additional cost of electrifying heat would regressively affect those already suffering from fuel poverty. Those in this situation could be provided with refunds or exemptions to ensure there was no undue social impact of such an emissions reduction mechanism.
Furthermore, electricity consumption is expected to grow as homes become smarter, electric vehicle up-take increases and electrification of heat happens. Thus, reserving electricity usage for hard to decarbonise activities, such as transportation should be prioritised. Solar thermal technologies can reduce the reliance on electricity and provide heat.
2.4.3. The indirect subsidy of reduced VAT on natural gas (a fossil fuel) needs to be phased out and replaced for subsidies for installation costs and capital expenditures of low carbon technologies.
2.5. What action is required to ensure that households are engaged, informed, supported and protected during the transition to low carbon heat, including measures to minimise disruption in homes and to maintain consumer choice?
Policies need to be market-driven, and technology-neutral for emissions reduction. Moreover, these need to encourage market competition and innovation. From customer feedback, we have learned residential customers want to have the choice of the low-carbon technology installed in their properties, so it goes accord to their specific needs, which are sometimes price-driven but can also be aesthetics and carbon abatement potential.