Written evidence submitted by Ambion Heating (DHH0036)

Introduction

Ambion[1] is a British technology company that is a relatively new entrant to the strategically important electric heating market. Ambion has developed a unique, computer-controlled infrared heating system to support the UK’s transition to a low carbon future. At present, home energy makes up 26% of the average person’s carbon footprint in the UK[2], mostly due to home heating and hot water, and, as a result, is an important sector to decarbonise. 

Ambion’s heating system is manufactured in the UK and is competitive with Air Source Heat Pumps (ASHPs) but is significantly lower cost and easier to install. 

Ambion is located in Wakefield. It has recently secured support from the Future Fund and is now ramping up activities to be a national champion in high-tech, low carbon heating.  In the first three to five years alone this will create more than 100 manufacturing jobs in Wakefield, with a particular requirement for low-skilled manufacturing roles in the local area.

Ambion’s system is easily retrofitted to existing properties and supports housebuilders, developers, housing associations and the commercial property sector in providing healthier and more comfortable living and working conditions.

Reason for submission

As a relatively new technology, Ambion’s systems are less known among the solutions for improving the energy efficiency of homes, cutting costs and reducing residential carbon emissions. Ambion is submitting this evidence to the ‘Decarbonising heat in homes’ inquiry to highlight the role that computer-controlled infrared technology (CCIR) can play in supporting the decarbonisation of homes. We highlight our views below on the Government’s current energy efficiency targets, how they can be improved, and the additional policy required to stimulate the market for energy efficiency and low carbon heating solutions.

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?

Past schemes, such as the Renewable Heat Incentive and the Green Deal Insulation Programme did not have the desired uptake. To avoid this for future policies, the Government must make significant efforts in ensuring public buy-in and uptake of new renewable measures. The Green Homes Grant scheme, for example has done a good job at gaining traction and interest amongst the wider public. However, due to the quick nature in which the scheme was implemented there are supply problems that potentially may damage any future interest from the public in these types of schemes.

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 by the course of this Parliament (by 2024)?

This Parliament must expand the eligibility of future funding opportunities to avoid stifling innovative solutions in the renewable energy sector. The Clean Heat Grant scheme, for example does not include computer-controlled infrared (CCIR) as an eligible technology, despite it being a low carbon solution that can be immediately and easily deployed.

An additional priority should be to bring the current target to upgrade as many houses as possible to EPC C by 2035 forward to 2030. Following in the steps of the Scottish Government which brought forward the target from 2040 to 2030. The Energy Efficiency Infrastructure Group has also been calling on the Government to adopt the ‘Buildings Energy Infrastructure Programme’ which includes bringing the target forward to 2030.[3] This would hugely help to decarbonise the sector and would support the UK in getting on track to net zero and building back better.

The Government’s energy efficiency targets should also be put into legislation to avoid issues faced in the past with policies being scrapped i.e. the zero carbon homes standard. Having a legal commitment would require a more consistent and long-term approach that would provide investors and the public with long term signalling and certainty needed for investments to be made.

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?

Heat pumps have a key role to play in delivering the decarbonisation of heat, however it is crucial that other technologies are prioritised alongside them to decarbonise buildings that cannot accommodate heat pumps.

For example, the Committee on Climate Change highlighted that for a sizeable minority of homes (1.3 million), it will be difficult or impossible to install heat pumps due to building safety concerns, space restrictions or the heritage of the homes[4]. This particularly excludes rural and off-grid communities from being able to upgrade their homes with heat pumps. Given the variety and range of buildings in the UK, a mix of heat pumps, biomass and CCIR technology would be the best way of ensuring that the UK’s housing stock is decarbonised quickly and cost effectively.

CCIR heating systems, like Ambion’s system, are one of the most viable solutions. Although a lesser known technology, it is a cost-effective solution for improving energy efficiency and supporting the decarbonisation of homes across the UK. CCIR offers an alternative to carbon-intensive heating systems by using sensors and fully integrated computers to turn homes and other buildings into intelligent super-efficient heaters. Infrared heating warms the building directly, rather than heating the surrounding air, dramatically reducing heat loss through air.

Ambion’s system provides significant cost benefits, with running costs comparable to air source heat pumps (ASHP) but with 40% lower installation costs[5]. Furthermore, Ambion’s system has a replacement cycle of 20 years, in comparison to 12.5 years for an ASHP, making it a more sustainable and cost-effective solution to decarbonising heat in the home.

Furthermore, Ambion’s performance ratio (the energy efficiency of the system) is not affected by the EPC rating of a household, making it more accessible to a wider selection of homes, including draughty Victorian houses[6]. Ambion’s panels can also be easily installed in flats, without any plumbing or piping work required, making the clean energy transition as smooth as possible for households.

In addition to being a good alternative to heat pumps, CCIR is also competitive with gas in terms of running costs. With a Performance Ratio of 2.67 (meaning that CCIR produces 2.67 times more effective heat per kWh electricity than a conventional electric heater), CCIR uses less than 40% of the energy of gas heating, with commensurate CO2 savings[7].  CCIR can also deliver savings of over 20% per unit of electricity (on a flexi tariff) because it has a flat demand profile with no morning or evening peaks in demand. The combination of these energy savings with the unit cost savings makes CCIR as cheap to run as gas heating, which is a breakthrough for electric systems given the relatively high unit cost of electricity compared with cheap gas.

4. What are the barriers to scaling up low carbon heating technologies? What is needed to overcome these barriers?

Cost is a huge barrier to scaling up low carbon heating, making Government support through funding and grants a vital part of overcoming barriers. Local stakeholders and government are best situated to support the transition to low carbon heating due to a higher level of trust and understanding of the communities. However, even prior to the Covid-19 pandemic many councils’ budgets were cut by nearly 50% between 2010 and 2018 meaning that local authorities are lacking the capacity and funding to develop and oversee such programmes[8].

A further barrier is that the support cost of gas is kept artificially low, meaning there is little incentive to switch. To support the energy sector in the net zero transition, the Government must price gas correctly and can look to the work of Zero Carbon Commission[9] and Green Alliance[10] who have proposed carbon pricing reforms like the carbon charge and VAT reform respectively. Such incentives will make switching to greener energy sources more financially attractive to people and companies and can also create a revenue stream to support additional clean energy projects and to offset any rises in energy bills.

The most significant barrier, however, is the Government’s current support for only a small number of renewable heat technologies. This narrow support is currently slanting the market towards only a few technologies that are currently available, such as air source heat pumps, and (inadvertently) stifling the entry of new solutions to the clean energy market. Paradoxically, under the current approach, new technologies may even fare better if Government withdrew all grants and left a level playing field.  

Ambion’s system is currently not eligible to receive Government support but with a small level of support (£2000) it would be cost competitive with gas and heat pumps. However, the Government currently has a limited focus on heat pumps and has not yet engaged with innovative technologies like CCIR, despite the numerous benefits as listed above.

To avoid restricting innovation in the sector, the Government must ensure that viable routes to the market exist for new technologies alongside support for well-known technologies. For example, allocating a percentage of total grants for new technologies in the upcoming Heat and Buildings Strategy could help create a level playing field as well as lower costs for consumers.

5. 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?

It is important that the cost of decarbonising heat does not solely fall on consumers as this will significantly impact the uptake of new technologies like CCIR. So far the costs of zero emission subsidies (such as the Renewables Obligation and Contract for Difference) have simply been added to electricity bills with little awareness by consumers, making them four times[11] as expensive as gas bills and not leading to large-scale behaviour change. Fuel bill rises are largely opposed by the public, so a different approach is required to incentivise the uptake of low carbon heating systems.

Addressing the unequal impact of the current subsidy regime with tax reform could help level the difference in cost between gas and electricity. Taxation would also be a better revenue-raising tool from the perspective of fuel poor and vulnerable households, as the level of taxation is properly weighted against ability to pay[12]. 

ECO3, which encourages a wider range of low carbon heating technologies to be installed in households with support from large gas and electricity suppliers, could also offer a means through which a wide set of households can decarbonise their homes and, if correctly funded and implemented across the UK could be an useful tool to distribute the costs of decarbonising heat fairly. However, as it is not compulsory for all councils to be involved with ECO3, some households that are eligible for funding won’t be supported through the council.

There are also limitations as to which energy efficiency measures can be funded. For example, inefficient gas boilers can be upgraded but only in homes that also require wall insulation[13].  A further issue is that the installation of insultation through the ECO scheme dropped 97% between 2013 and 2018[14].

6. What incentives and regulatory measures should be employed to encourage and ensure households take up low carbon heat, and how will these need to vary for different household types?

Both regulatory and market-based levers are needed to incentivise households to invest in low carbon heating. This includes strengthening energy efficiency targets and their enforcement, as well as setting out a clear pathway and timeline for heat decarbonisation to achieve net zero.

Additional financial incentives should be provided in the form of grants like the Green Homes and Clean Heat Grant, provided they are accessible for new technologies and offer enough visibility for investors to make long-term decisions. The UK could also learn from the experience of Germany, which has introduced tax incentives and loans for homeowners to carry out energy efficiency and heating upgrades.

Furthermore, incentives could be based on real-use data of technologies, rather than estimations provided by SAP / EPC calculations. The Ambion system, for example, through an inbuilt processor can provide data per household that could be used to assess support and ongoing requirements per household. 

7. 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?

Work commissioned by the Committee on Climate Change[15] has emphasised the need for widespread public engagement on the energy efficiency and low carbon heating measures that are available to them, as well as on existing support mechanisms to help address any cost barriers.

Support for low carbon heating systems like CCIR will aide in the transition to low carbon heat as the design and installation process involves minimal disruption in homes. The system is easy to install and does not require any planning permission, civil works, centralised infrastructure or water-filled radiators and pipes. The system can be simply retrofitted in existing homes, helping drive energy, cost, and carbon reductions at short notice.

To engage households, low carbon systems must offer more benefits than traditional heating systems to incentivise consumers. CCIR for example provides additional benefits beyond emission reductions, including comfort and quality of life. Infrared heating is far more comfortable than conventional central heating. By warming fabrics rather than the air, it provides an even temperature across the whole room, reduces the risk of damp and mould, and lessens circulation of dust and allergens.

Because of the characteristics of infrared heating, Ambion’s system is most efficient operating for the full 24-hour cycle meaning temperature remains comfortable the whole time, benefitting those working from home, families with young children, and the elderly. Alongside cost and energy savings, these features have made Ambion’s system a popular choice with housing associations and we are delighted to count the NHS amongst our customers.[16]

8. Where should responsibility lie for the governance, coordination, and delivery of low carbon heating? What will these organisations need to deliver such responsibilities?

The decarbonisation of heat in homes needs to be as simple as possible for both suppliers and consumers, to avoid repeating the errors of the Green Deal or challenges faced by suppliers with regards to the Green Homes Grant. A single central coordinating body would be helpful, particularly as heat schemes are currently administered by Ofgem, BEIS, MHCLG as well as local authorities and third parties, making it had for both consumers and installers to navigate the system.

However local and regional actors, such as local enterprise partnerships and councils should still play a key role in the planning and delivery of low carbon heat, since they are more trusted than central government and knowledgeable local dynamics and requirements.[17] Given the widespread underfunding of local authorities, additional funding should be provided to ensure effective roll out of low carbon schemes across all parts of the country. Such schemes should also be based on data and best practice, to ensure learning between different areas, greater flexibility with regards to what technologies are installed where and ensure that households are provided with systems that work for them.

November 2020