Written evidence submitted by NHBC (DHH0118)

About NHBC

• NHBC is the leading warranty and insurance provider for new homes in the UK. Our core purpose is to give homeowners confidence in the construction quality of new homes. NHBC sets standards for our warranty and conducts inspections onsite.
• NHBC's ten-year Buildmark warranty covers around 80% of new homes built in the UK, currently protecting around 1.5 million homes.
• NHBC is a non-profit distributing organisation, with no shareholders, authorised by the PRA and regulated by the PRA and the FCA.
• NHBC Building Control Services is the largest Approved Inspector in England and Wales and the UK’s largest single Building Control Body with more than 30 years’ experience delivering technical advice and a high-quality service.
• NHBC does not build or sell homes; it is not a regulator and does not represent any part of the industry. Individual builders are ultimately responsible for the quality of the homes they build and sell to consumers.
• NHBC also provides guidance and training to industry. NHBC delivers approximately 13,500 delegate days of training to the house-building industry per year as well as offer builders other training opportunities, such as apprenticeships.
• The NHBC Foundation regularly produces high quality research to help the industry and policy makers meet the challenges of the day, and practical guidance to help house builders deliver high quality new homes.

Executive Summary

1. Collaboration across industry and Government is key to ensuring that ambitions on zero carbon homes can be achieved.
2. The recent increases in energy use in the UK’s 29 million homes is partly due to the low uptake of energy efficiency measures and limited deployment of low-carbon heating options.
3. To explore what the non-gas home of 2025 might look like, the NHBC Foundation published a report titled: The Future For Home Heating – life without fossil fuels[1].
4. The report concluded that electric heat pumps will likely become the predominant method of heating homes in order to meet the Future Homes Standard target.
5. NHBC believes that as homes become more energy efficient, the share of the energy bill for hot water will increase and the Government should look at the role of heat pumps to counter these costs.
6. NHBC believes that initially, it is likely that there will be a shortage of skilled installers of low carbon technologies, including heat pumps, which could create delays in the supply chain and sub-standard installations.
7. NHBC would be very happy to give oral evidence to the Committee as well as share the findings of our NHBC Foundation research in full if this would be helpful.

Q1 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?

• The Government’s commitment in 2006 to a zero-carbon target led to much debate about how new homes could be designed, specified and constructed to deliver a greatly-improved energy performance.
• In response to this policy, NHBC set up and funded the Zero Carbon Hub to address this challenge.
• The impact of this policy was a collaborative movement, the Hub worked with both Government and industry focusing on raising build standards and reducing the risks associated with implementing zero carbon homes.
• Following the Government withdrawing support of the zero carbon homes policy in 2015, the hub now functions as an online library containing multiple publications on climate change, the 2016 zero carbon definition, and renewable technologies.
• NHBC supports the current policy in this area, the Future Homes Standard (FHS), as a means to contribute towards the Government’s net zero target and to have new homes built from 2025 which are not connected to the gas grid.
• NHBC believes that a home built to the FHS should produce 75-80% less CO2 emissions than one built to current requirements. However, Government and industry will need to overcome a number of challenges to reach the ambitions of the FHS.
• As with the previous zero carbon policy, there must be a collaborative effort across industry and Government to achieve these aims.
• As a member of the newly launched Future Homes Task Force, NHBC is working to share our expertise in this area with policy makers and the wider industry.
• In order to explore what the non-gas home of 2025 might look like, the NHBC Foundation commissioned and published a research report in September 2020 titled: The Future For Home Heating – life without fossil fuels (the Appendix contains a short summary of this report).
• The report concluded that electric heat pumps will likely become the predominant method of heating homes in order to meet the FHS target, however there are a number of obstacles to overcome, including electrical supply capacity, performance and ensuring there is not a shortage of skilled professionals.

Collaboration across industry and Government is key to ensuring that ambitions on zero carbon homes can be achieved. NHBC would be pleased to share our expertise and the full research report on The Future for Home Heating with the Committee.

Q2 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)?

• The Government consultation on the FHS recognises that a major move from gas to electric heating may cause skills shortages.

• Similarly, NHBC’s research also highlights that it is likely that there will be a shortage of skilled installers of heat pumps initially, as the policy comes into force.
• NHBC believes that skills and capacity issues need to be addressed in this Parliament in order to avoid delays in the supply chain and sub-standard installations in low carbon technologies.
• Reliance on traditional trades, an ageing workforce and the lack of vertical integration (sub-contractor reliance) all exacerbate the problem.
• Diversification of skills and improving career perception is essential.
• NHBC believes that more should be done to address the industry’s unattractive image to young job seekers as well as investment in digital skills, as builders adopt more innovative methods of construction.

Why heat pumps are likely to be prioritised in 2025

• One of the biggest challenges facing the housing sector is, that whilst emissions from UK buildings overall have been falling to around 20% below 1990 levels, energy use in the UK’s 29 million homes - which accounts for 14% of total UK emissions – actually increased between 2016 and 2017.
• NHBC’s Foundation report The Future For Home Heating – life without fossil fuels,  notes that contributing to this, is the low uptake of energy efficiency measures and limited deployment of low-carbon heating options such as heat pumps to date.
• NHBC believes that as homes become more energy efficient, the share of the energy bill for hot water will increase and the Government should look at the role of heat pumps as a priority to counter these costs.

• The Government should seek to improve the uptake of heat pumps, because their high efficiency results in both considerably lower emissions and greatly reduced running costs for the residents.
• Heat pumps can operate with upwards of 200% efficiency, (often as high as 400%), providing up to four times as much heat to the home as the electricity that they consume from the grid.
• Importantly, electric heating systems other than heat pumps are also unlikely to comply with the proposed primary energy performance targets in future Building Regulations.

NHBC believes that it is likely that there will be a shortage of skilled installers of heat pumps initially, as the policy comes into force. Skills and capacity issues need to be addressed in order to avoid delays in the supply chain and sub-standard installations. In addition to this, the Government should look at the role of heat pumps as a priority in achieving net zero and to counter increasing costs, as homes become more energy efficient.

Q3 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?

• As previously mentioned, NHBC believes that electric heat pumps will likely become the predominant method of heating homes in order to meet the FHS target and deliver the decarbonisation of heating to achieve net zero emissions by 2050.
• In practice, for most UK housing there is a choice of two basic types of heat pump technology: air-source and ground-source.
• Both types can in principle distribute the heat around the home via the ventilation air or a wet radiator/underfloor system.
• The choice of which type of heat pump and system is most appropriate depends on the built form, size, tenure and physical location of the home.

Types of heat pump

• Air-source heat pumps (ASHPs): heat is taken from the outside air via an external fan-coil unit. A variant of an ASHP is the exhaust air heat pumps (EAHPs) where heat is taken from used ventilation air mechanically extracted from the home.
• Ground-source heat pumps (GSHPs): obtains heat using a liquid-filled loop located in a vertical borehole or a shallower horizontal trench.

Solar heating and photovoltaic (PV) systems

• It is highly likely that the typical low-energy home will include PV panels to generate renewable electricity, possibly with a storage battery which will further reduce its carbon emissions and running costs.
• A common technical configuration of a combined battery and hot water storage system is that the operation will vary from day to night, and at the different times of the year.
• For example, in summer months PV panels can generate more electricity than the home’s appliances require for a few months of the year, which can be exported to the grid or made use of in other ways e.g. to heat the home’s hot water.

Energy storage in homes

• Advances in battery technology have been rapid in recent years and household systems are likely to become an important part of future energy infrastructure, alongside major community-scale battery installations.
• Energy storage has huge potential, not only by reducing peak load on the National Grid, but also in buffering the inevitable day-to-day fluctuations in solar energy supply, making greater investment in renewables a more secure regional or national strategy.
• The NHBC Foundation report Watts in Store[2] is a guide for housebuilders to illustrate in simple terms the key aspects of battery choice for homes, the specification and installation required to ensure that key occupant expectations are met.

NHBC Foundation research calls for the Government to look at the role of heat pumps, as well as other technologies such as photovoltaic systems and energy storage batteries to deliver the decarbonisation of heating and achieve net zero emissions by 2050.

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

• There has been a recognised low uptake of energy efficiency measures and limited deployment of low-carbon heating and heat pumps to date.
• The Government has put in place a number of policies designed to reach net zero by 2050, but it is important to note that if there is  widespread adoption of these technologies, including heat pumps, this will have a range of knock-on effects and potential barriers to scaling up their use.

The effects of widespread adoption of heat pumps

• Installation costs: as previously noted in this response, there is a difference in installation cost depending on the type of heat pump required.
• Good design, installation and commissioning: NHBC research has found that bad design, installation and/or commissioning can cause increasing costs and issues.
• Performance: In order to ensure that the home is warm enough, and that the provision of domestic hot water is adequate, it is vital that specialist advice is sought from a suitably qualified and experienced heating designer.
• Noise: There have been cases where the external fan units of air source heat pumps have been found to be unacceptably noisy. Excessive noise is not inevitable however, it is recommended that house builders ask their suppliers to demonstrate the proposed external fan/compressor unit in a real installation.
• Electrical supply capacity: If standards for the 2025 new homes are rolled out to the existing housing stock, the national electricity infrastructure will face significant challenges. It is likely that more power stations will have to be built and new specifications for energy storage batteries will be needed.

NHBC research indicates that if there is a widespread adoption of heat pumps for new homes this will have a range of knock-on effects across the sector including electrical supply capacity and performance.

Q7 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?

• Collaboration between industry and Government is required to foster a programme of awareness to enable training and installation best practices to industry, as well as increasing public and consumer awareness.
• As with any new technology, this heralds a major change, not just for the home-building sector, which will need to rethink and redesign its products to meet this goal, but also for homeowners who will need to adapt their behaviour and lifestyles to using new heating technologies.
• In order to increase public awareness, there needs to be information available about the benefits of using heat pumps and what having a heat pump will mean for homeowners.

Benefits of heat pumps

• Running cost and carbon emissions: The running costs and carbon emissions of a home heated by an electric heat pump can be considerably less than those of the same home heated by a different system.
• Midwinter Performance: Good design, installation and/or commissioning are important for heat pumps. When done badly this causes the issues with heat pumps rather than by inherent shortcomings in heat pump technology.
• Noise: Excessive noise is not applicable to all models of heat pumps. NHBC’s report recommends that house builders ask their suppliers for demonstrations in a real installation to understand the noise level.

Information for homeowners

• Maintenance: most manufacturers recommend that their products are serviced annually, as is normally the case with gas boiler systems. The cost of a heat pump service is typically slightly more than a gas boiler.
• Radiators: To ensure that the home is warm enough, and in order for a wet-emitter heat pump to work at the highest efficiency, it could be necessary to specify considerably larger radiators.
• Behaviour change: Due to the lower flow temperatures of heat pumps, it is likely that residents will need to adjust their behaviour e.g. in mid-winter it may be necessary to leave the heating on constantly.
• New home design: the 2025 home will not have natural gas cooking, since it will not be connected to the gas main.

In order to increase public awareness, there needs to be information available about the benefits of using heat pumps and what having a heat pump will mean for homeowners. The NHBC Foundation report goes into these issues in detail.

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

• The technologies required to reach the FHS will need well-trained skilled professions to install them into new homes.
• New competencies must be developed as well as a continued drive to recruit more young people into the construction sector.
• Without the correct skilled professional there can be a number of issues which could lead to delays in the supply chain and sub-standard installations.
• For example, when working with heat pumps it is vital to consult a qualified heating system designer who specialises in heat pumps, to ensure that the system is correctly sized and can provide the necessary comfort conditions for the residents.
• This is doubly important with ground-source heat pumps, where the design of the ground loop is in itself a specialist subject.

NHBC expertise in skills and training[3]

• NHBC provides a range of training and qualifications tailored for housebuilders. We provide up to 13,500 delegate days of training per year – focused on site managers but also bricklayer masterclasses and fire-stopping modules.
• NHBC expertise and experience informs the industry and our training raises standards to help builders to produce better quality homes.
• Courses range from NVQs and customer service to health and safety and technical.
• NHBC is involved in three significant work streams through the Home Building Skills Partnership:
• Attract - how to attract new entrants into the industry
• Skills and development – how the industry trains its staff
• Supply chain – the training interface with sub-contractors
• Through our training offer, NHBC is helping the industry to analyse the skills needed in their workforce and provide suitable training to address skills gaps.
• NHBC believes that the Government should continue with its policy of increasing apprenticeship provisions, particularly in construction. NHBC recently launched a Construction Site Supervisor apprenticeship in September 2020[4] and are aiming to have brickwork apprentices at our Tamworth centre in March/April 2021.

In order to successfully deliver low carbon heating, it is vital that well-trained skilled professions are available to install new technologies into new homes. The skills and capacity issues need to be addressed in order to avoid delays in the supply chain and sub-standard installations.

For more information, or if NHBC can be of any further assistance, please contact Lewis Sidnick, Director of Corporate Affairs at NHBC on 0207 648 4077 or lsidnick@nhbc.co.uk

Appendix

Summary of NHBC Foundation Report: ‘The Future for Home Heating – life without fossil fuels’

The NHBC Foundation report – The Future For Home Heating – life without fossil fuels –discusses the implications of the Future Homes Standard for house builders, architects and policy makers when specifying alternative heating systems

Why heat pumps are likely to be the choice for 2025

• The Future Homes Standard will mandate that new homes built from 2025 will not be allowed to be heated by fossil fuels. This report indicates that electric heat pumps will likely become the predominant method of heating homes in order to meet the FHS target.
• Heat pumps can operate with upwards of 200% efficiency, (often as high as 400%).
• They can provide up to four times as much heat to the home as the electricity that they consume from the grid by using a fluid compression/expansion process to move extra ‘free’ heat from the colder outside environment to the interior of the home. 
• The high efficiency of heat pumps results in considerably lower emissions and greatly reduced running costs for the residents.  Importantly, electric heating systems other than heat pumps are also unlikely to comply with the proposed primary energy performance targets in future Building Regulations

The effects of widespread adoption of heat pumps

If, there is a widespread adoption of heat pumps for new homes, this will have a range of knock-on effects. The report sets these out in full, with some of the main effects summarised below:

• Running cost and carbon emissions – The running costs and carbon emissions of a home heated by an electric heat pump can be considerably less than those of the same home heated by a different system.
• Midwinter Performance – Previous issues with heat pumps were concluded to be caused by bad design, installation and/or commissioning, rather than by inherent shortcomings in heat pump technology. 
• Noise – Some heat pumps have been found to be excessively noisy, however this is not applicable to all models, and it is recommended that house builders ask their suppliers for demonstrations in a real installation to understand the noise level.
• Electrical supply capacity – If the proposed standards are rolled out to the existing housing stock, the national electricity infrastructure will face significant challenges, including capacity implications for the individual home, the development, the local distribution network, the national transmission network and the UK’s power stations.

• Skills shortages – The current consultation on the Future Homes Standard recognises that a major move from gas to electric heating may cause skills shortages. 

Conclusion

There has been low uptake of energy efficiency measures and limited deployment of low-carbon heating options (e.g. heat pumps) to date. However, the UK Government has put in place a number of policies designed to reach Net Zero by 2050 – including the Future Homes Standard. 

This report discusses the implications of this policy for a range of groups, coming to some main conclusions:

• In order to ensure that the home is warm enough, and that the provision of domestic hot water is adequate, it is vital that specialist advice is sought from a suitably qualified and experienced heating designer.
• It is possible that there will be a shortage of skilled installers of heat pumps initially, as the policy comes into force.
• House builders should consider the benefits arising from heat networks (or ‘district heating’ schemes) where a network already exists, or it is technically and economically possible to install one from scratch.

December 2020