NIBE Energy Systems
BEIS Committee: Decarbonising Heat in Homes Inquiry
Written evidence submitted NIBE Energy Systems UK (DHH0123)
About NIBE Energy Systems
NIBE Energy Systems Limited is a subsidiary of NIBE Heating and acts as one of Europe's leading manufacturers in the domestic heating sector. NIBE is one of the UK’s leading manufacturers of heat pumps and other low carbon heating systems. NIBE focuses solely on the renewable heating market in accordance with its principles of offering low carbon, efficient products that deliver energy for life. With a growth model that focuses on private properties, NIBE has an excellent understanding of the renewable heating installer base, and the opportunities and barriers to growth.
Summary of Response
NIBE welcome the launch of the BEIS Committee Inquiry. Decarbonisation of the UK housing stock is essential in ensuring the UK can deliver net zero by 2050. Broadly speaking, there is an importance for long-term policy, with clear priorities and timelines for achieving these. To date, policy has been highly exposed to a change in Government.
NIBE welcomed the introduction of a target to install 600,000 heat pumps every year by 2028, as outlined within the Prime Minister’s 10 Point Plan. However, the subsequent National Infrastructure Strategy lacked detail as to how this would be attained.
Future policy must consider lessons learned from previous schemes such as the Renewable Heat Incentive (RHI), Condensing Boiler Legislation and Boiler Scrappage Schemes, to avoid the creation of ‘boom and bust’ markets.
A multi-lever approach is required, combining measures including, but not limited to:
- Regulation, such as limiting the maximum flow temperature to 55 ˚C in new build and retrofit installations of heating systems.
- Fiscal measures, such as minimisation of the ‘spark gap’, through taxation.
- Green finance, such as green mortgages.
- The adoption of smart technology, such as systems that respond to time of use tariffs.
- Direct subsidy, including grants, to ensure that vulnerable and fuel poor consumers are not adversely impacted by the transition.
The responsibility does not solely lie with National Government; industry have an important role to play in training installers and increasing consumer awareness and there is a clear role for Local Government to play in enforcement and delivery. However, without a clear road map to decarbonisation of the heat sector, progress will be restricted.
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? | |
Over the years, we have seen much chopping and changing of heat and energy efficiency policy leading to the creation of boom and bust markets. An example of this is the Renewable Heat Incentive which sees significant peaks in applications before a quarterly degression is due to be introduced. There is a need for a long-term stable policy framework to drive increased deployment of low carbon heat. The upcoming Heat and Buildings Strategy has the opportunity to deliver this and must take into account lessons from previous schemes and policies introduced in other countries.
Learnings from International Comparators Regulation has proven effective in several markets across Mainland Europe. In 2017, the Norwegian Environment Minister announced that “those using fossil fuel oil for heating, must find other options by 2020.” This regulation applies to both new and old buildings and spans across domestic and non-domestic buildings, including those owned by the public sector [i]. Austria have taken a stepwise approach, commencing with a ban on oil boilers in new-build properties, as of January this year [ii]. Key learnings about the role of regulation and subsidy, used in combination as part of a ‘carrot and stick’ approach, can be drawn from France. In France, the introduction of the ‘Coup de Pouce’ offer, in line with the introduction of regulation to phase out oil boilers within 10 years, resulted in an increase in heat pump installer training by 264% in the first half of 2019, compared to the same time period in 2018. The ‘Coup de Pouce’ offer is a grant for those homes replacing oil boilers with heat pumps [iii]; [iv].
Scandinavian markets have been particularly effective at employing fiscal instruments to incentivise the uptake of heat pumps. In Sweden, the price of electricity is approximately ~6 pence/kWh, less than double the price of gas at ~ 3.5 pence/kWh. By contrast, in the UK, the price of electricity is four times that of gas (12 pence/kWh compared to 3 pence/kWh). The high taxation on burning gas and low taxation on electricity, incentivises households to invest in heat pumps, with the rate of heat pump uptake in Sweden ~ 35 x greater than that in the UK [v]. In addition, Sweden employ a time of use tariff, with tariffs adjusted in accordance with supply and demand, seasons, and weather conditions. This alone is sufficient to incentivise consumers to shift demand away from peak periods. However, NIBE heat pumps also employ smart technology to respond to these tariffs, automatically adjusting to minimise household energy costs and thus shift demand away from peak periods, this further improves the financial case for installing heat pumps [vi]. It is important to note for context that Sweden has no large-scale gas grid; decarbonisation is therefore more complex in the UK [vii]. The transition in Sweden was also supported by subsidies including direct investment grants and low interest loans; these mechanisms have also been employed by the Finnish Government, which cover 20% of the installation costs associated with the switch from oil to renewable heating vi.
The benefits of time of use tariffs have also been demonstrated in Denmark, through the eFLex Project. Household heating automation systems were installed in participant properties, with the system automatically interrupting heat pump operation during periods of peak demand. On average, customers only overrode these events 1% of the time. However, it is important to note that an increase was observed during periods of cold weather vii.
The concept of ‘heat as a service’ is being investigated across several markets. In Denmark, a boiler scrappage scheme has been introduced, whereby energy service providers are responsible for the ownership and installation of heat pumps, alongside the provision of O&M services. In return, the consumer initially makes a one-off payment, followed by a subscription fee and a supplied heat fee. This reduces the capital cost barrier, whilst simultaneously reducing the risk that consumers are exposed to, thus helping to develop consumer confidence and build the market [viii]. This concept has also been explored in the US by Dandelion, a Google start-up. Under this scheme, consumers are charged a monthly fee, linked to the installation of a Ground Source Heat Pump (GSHP). Initial findings indicate that this scheme has been successful, with consumers reporting savings compared to their previous heating system [ix].
Learnings from UK Legislation Learnings may also be drawn from previous UK Legislation. The Condensing Boiler Legislation stated that from 1st April 2005, all boilers installed had to be A or B SEDBUK Rated. This is perceived to have been a highly effective policy and resulted in an increase in installation from 6% in 2004 to approximately 43% by 2011 iii. At the time there was doubt amongst industry bodies and consumers. However, effective support mechanisms were implemented, such as training programmes and the clarity and unambiguity of this policy sent a clear message, to both installers and homeowners, which ensured the success of this policy (ibid). The UK Government’s 2010 Boiler Scrappage Scheme demonstrated the importance of publicity and ensuring consumer satisfaction in policy development. The scheme was introduced through a launch programme, which generated consumer interest. The ease of application through the use of an online portal led to high rates of consumer satisfaction, which is thought to have contributed to the success of the scheme(ibid). A significant shortcoming to the Renewable Heat Incentive (RHI) is that by providing incentive over time, through a tariff, it fails to address the capital cost barrier associated with the deployment of low carbon heat. In light of this shortcoming, NIBE welcome the Clean Heat Grant to replace the RHI, as the provision of an upfront grant will better address this barrier. However, NIBE advocate for a ‘carrot and stick’ approach as highlighted above and as a result, a strong regulatory framework is essential as a grant scheme alone is unlikely to drive large scale adoption. Lessons may also be learnt from the Devolved Administrations (DAs), particularly regarding fuel poverty. Government support is particularly important in the transition to low carbon heat for fuel poor households, as the high capital cost of low carbon heat can be a significant barrier to deployment. In the DAs, ECO is accompanied by fiscal revenue to support additional properties in the transition, we believe further support should also be available in England, to ensure that fuel poor properties are not left behind in the transition. | |
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)? | |
NIBE welcome the UK Government’s target to install 600,000 heat pumps every year by 2028, as announced within the Prime Minister’s 10 Point Plan [x]. However, significant intervention is required in order to attain this target, given that in 2018, only 27,000 heat pumps were installed in the UK [xi]. It was anticipated that the National Infrastructure Strategy would set out a clear trajectory of how the Government’s target would be achieved. However, it lacked detail, simply indicating that in order to meet the target of 600,000 installations, “strong regulation [would be required] to drive behaviour change and investment from those able to pay, while ensuring that the government supports those who need it[xii].” As discussed, we welcome the proposed introduction of the Clean Heat Grant However, we maintain that this alone will be insufficient to unlock the scale of deployment required for low carbon heat. Broadly, there is a requirement for a range of long-term policy levers, in order to support targets and create stability within the industry. Some important components of this framework include; regulation, carbon taxation, planning policy and financial incentives iii; iv. We support the policy strategy recently proposed in the Heat Pump Association’s Net-Zero Report as it aligns with ours, drafted in our recent Heating Our Homes Report.
The Government has recognised the need to improve standards for new build homes, and have stated that the UK “Need to avoid new homes needing to be retrofitted later and ensure that they can all accommodate low carbon heating. This could involve all new homes off the gas grid from the mid-2020s being heated by a low carbon system such as a heat pump” [xiii]. However, this does not go far enough; it is important that properties on the gas grid are also future proofed.
We agree with the HPA’s recommendation that three emissions thresholds (see below) should be introduced imminently. Although the latter two thresholds would not come into effect until 2030 and 2035 respectively, it is important that these standards are communicated and introduced now to develop industry confidence, investment and provide a framework for future retrofit plans.
| |
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? |
We recognise that a multi-measure approach to heat decarbonisation is required. We also recognise that there are challenges associated with ensuring sufficient generation capacity and electricity storage to minimise the impact of heating electrification on the grid. However, it is important to note that heat pumps are a proven technology and are already widely deployed across Europe. Furthermore, these challenges have been overcome in other markets and much can be learnt from these early adopters. For example, in Sweden, our heat pumps respond to time of use tariffs which reduces the impact of heat electrification on the grid and provide cost savings for consumers.
It is likely that a range of technologies are likely to contribute to the decarbonisation of heating, including Hydrogen and Biogas. However, there is further evidence required to understand the practical feasibility of Hydrogen at scale and there are sustainability concerns surrounding the use of Biogas. Furthermore, whilst industry bodies have indicated that the cost of green hydrogen could fall over the next decade, it is predicted that this will largely be as a result of a fall in the cost of renewable electricity vii. As a result, the cost differential between green hydrogen and heat pumps may be unchanged. That said there is no ‘silver bullet’ and we recognise that a range of measures are required. As noted in the National Infrastructure Strategy, the UK is only two heating system replacements away from 2050. As a result, proven low carbon heat technologies, such as heat pumps must be deployed now, through large scale installation, in “no regret” scenarios[xiv].
New homes off the gas-grid are currently being constructed with Oil or LPG Heating, thus leaving property owners with high cost, high carbon heating systems [xv]. Heat pumps are a proven technology and can offer homeowners an affordable, low carbon source of heating. As a result, we believe that heat pumps should certainly be utilised in off gas grid, new build properties as a priority.
| |
What are the barriers to scaling up low carbon heating technologies? What is needed to overcome these barriers? | |
We conducted a market survey in 2017, which found that the largest barrier to the uptake of low carbon heating technologies was cost, followed by a lack of consumer understanding [xvi]. Low carbon heating technologies have a higher capital cost than conventional systems, this is exacerbated by the fact that the installation of a low carbon heating system and therefore a higher EPC rating, does not necessarily lead to a higher property value. As a result, there is lack of incentive to invest in low carbon heating(ibid).
There are several mechanisms that may be employed to overcome this barrier.
An additional barrier is that there exists a lack of understanding of low carbon technologies, amongst the UK Population. The Energy and Climate Change Public Attitude Tracker (Wave 28) found that 55% neither agreed nor disagreed that renewable heating systems would heat their home better than their current heating systems and 53% neither agreed nor disagreed that renewable heating systems were less reliable than conventional heating systems [xvii]. The respective values for the option ‘don’t know’ were 11% and 10%. The provision of reliable advice from independent sources is required in order to help overcome this barrier x. Awareness of heat pumps is particularly low; the recent Public Attitudes Research, focused on transforming heat, found that whilst 71% of respondents were aware of solar thermal, awareness of Ground Source Heat Pumps (GSHPs) and Air Source Heat Pumps (ASHPs) was significantly lower at 33% and 27% respectively, with 76% of respondents having not heard about or not knowing anything about either type of heat pump. Perhaps promisingly, the survey found that those off the gas grid, using high carbon heating, knew either ‘a lot’ or ‘a little’ at least one type of heat pump (50%) than those on the gas grid (23%)[xviii].
Other barriers identified within our market survey included the disruption caused by installation, a lack of government support and regulatory barriers xiii. It is important to highlight that government support has improved since our market survey was conducted. We welcome the Government’s decision to extend the Green Homes Grant to March 2022, as announced in the Prime Minister’s 10 Point Plan x. We believe that Government’s decision to extend the scheme will ultimately be critical to its success. Prior to the extension of the Green Homes Grant, we conducted a survey of our installer base and whilst the sample size was small, our installers cited concerns around the short delivery window, with one respondent citing that it takes time to train renewable heating engineers. It is hoped that the extension will provide industry with the certainty it needs to invest in workforce upskilling, in order to ensure that the sector is primed to deliver. | |
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? |
The Energy Company Obligation (ECO) is inherently regressive. Energy companies ultimately pass on the costs of decarbonisation to consumers through increased energy bills. Since fuel poor households spend a greater proportion of their household income on energy bills, they pay a greater proportion of their income towards heat decarbonisation, than households with a greater income [xix].
We believe that it is fundamental that vulnerable and fuel poor households are not left behind and that they are supported in the transition to low carbon heat. The Institute for Public Policy Research published a selection of alternative measures to ECO. These include; the use of tax revenue, the development of energy performance contracts between local councils and installers, the redistribution of benefit payments and the development of local growth deals, focused on addressing fuel poverty(ibid).
Currently, electricity prices are exposed to greater Climate Change Levies (CCLs) than gas, despite the fact that gas is notoriously more difficult to decarbonise than electricity. Although domestic properties are exempt from CCLs, as Dieter Helm notes in his Cost of Energy Report, these costs are ultimately transferred to consumers through increased costs of goods and services [xx].
Furthermore, the majority of low-carbon policy costs, such as support for renewable electricity are levied on electricity and as such, these costs often ultimately transferred to the consumer through increased electricity bills. As a result, the price of electricity for domestic properties has steadily increased, whilst the price of gas for domestic properties has been largely unaffected [xxi].
As discussed, closing the ‘spark gap’ has proven effective at incentivising consumers to install low carbon heating and adjusting levies, such that levies are more evenly distributed between gas and electricity would help to do this. It is important that efforts are focused on addressing the capital cost barrier to the large scale electrification of heat but it is essential that any operational cost barriers are also considered and that consumers are not exposed to electricity costs beyond those that are reasonable [xxii].
The Sustainable Energy Association (SEA) cite that the Government’s action to freeze CCL levies for electricity indicates that it values this approach [xxiii]. However, further action is required, particularly surrounding wider ‘green levies’ that are directly transferred to consumer’s energy bills. That said, if not adequately managed the introduction of levies on gas e.g. through a carbon tax, can be regressive, such that fuel poor households are disproportionately affected. The Grantham Institute state that to eliminate the regressive nature of a carbon tax, revenue should be used responsibly, with at least a third reserved for compensating fuel poor households [xxiv]. | |
5. | 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? |
Financial Support: Fuel Poor Particular care needs to be taken to support fuel poor households in the transition. We recently surveyed our installers and 43% of respondents highlighted that cost is a significant barrier to the deployment of heat pumps. However, oil prices are becoming increasingly volatile which can create uncertainty for households living in fuel poverty [xxv]. As a result, it is important that the Government focus efforts on addressing the capital cost barrier for fuel poor households through grants. The additional support available to vulnerable households under the Green Homes Grant (GHG) is welcomed and it is hoped that increased uptake will result from the Government’s decision to extend the Green Homes Grant to March 2022.
Incentives: Able to Pay For the able to pay sector, a combination of regulation, taxation, building and planning standards and incentive is likely to be effective, as has been observed across other markets i. In the first instance, incentive is required to develop the market and unlock economies of scale, so we welcome the proposed replacement of the Renewable Heat Incentive with the Clean Heat Grant. Future funding mechanisms and policy support should initially be focused off-grid properties heated by oil, to enable the industry to build on key learnings and unlock the highest possible carbon savings iii. For on-gas grid, able to pay properties, reducing the spark gap is likely to play an important part in the switch to low carbon heat. As discussed in Q1, the cost of electricity per kWh is significantly higher than the cost of gas per kWh. Furthermore, the ratio between the two values is higher than in other markets where heat pumps are more widely deployed, such as in Sweden v.
Regulation: New Build and Heating System Replacement Whilst financial support and incentives are important, as outlined previously within this response, these mechanisms must be supported by a strong regulatory framework. The cost disparity between heat pumps and conventional heating systems is, in part, due to the requirement to replace heating emitters as heating systems are not low temperature heat ready. Although the Domestic Buildings Compliance Guide states that ‘systems with condensing boilers should be designed to have low primary return water temperatures, preferably less than 55°C, to maximise condensing operation’, this is best practice and therefore not enforceable iii. Ensuring the creation of a level playing field, through regulation, would minimise the disparity in the installation costs of heat pumps versus conventional heating systems.
The following mechanisms should be included within Building Regulations Part L (ibid).
Furthermore, Government should ensure that preparations are made such that the Future Homes Standard can be delivered in 2025 and should work to close the loopholes that exist, such that Building Regulations can be ‘frozen’ site-wide on large development projects, through very limited commencement of work xvii. As noted previously within this response, NIBE welcomed the initial confirmation that the Future Homes Standard would be brought forward to 2023. However, this has since been removed from the Prime Minister’s 10 Point Plan. NIBE believe that bringing forward the Future Homes Standard and particularly the ban on gas boilers within new build properties, would be pivotal for the low carbon heat sector and we await further information from the Government on the proposed timescales for implementation.
The Clean Growth Strategy sets out an aim to phase out the use of fossil fuel heating in off-gas grid properties in the 2020s. The SEA recently published a study looking at how carbon intensity standards may be employed to facilitate this and indicate that regulation on carbon intensity has the benefit of being “technology agnostic”. The SEA advocate that Government need to make decisions regarding the future of the gas grid prior to 2030 and ideally in the next few years, in line with the CCC recommendation. This standard is set out graphically below xxix. It is hoped that commitments to investigate the safety and feasibility of Hydrogen as outlined within the Prime Minister’s 10 Point Plan and re-affirmed within the National Infrastructure Strategy, will enable decisions to be made prior to 2030x;xii. However it is essential that heat pumps are encouraged and deployed at scale before this time to ensure that we can meet our net zero targets. Figure 1: Carbon Intensity Standards Proposed by the Sustainable Energy Association (SEA) xx The Heat Pump Association also advocate for an emission standard, as outlined previously within this document and displayed below iii. a. Less than 220 gCO2e per kWh of delivered energy by 1st January 2025. b. Less than 170 gCO2e per kWh of delivered energy by 1st January 2030. c. Less than 110 gCO2e per kWh of delivered energy by 1st January 2035. It is important that standards are communicated and introduced now to develop industry confidence, investment and provide a framework for future retrofit plans. | |
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? | |
Education and advice The recent Public Attitudes to Heat survey found that whilst there is significant support for emissions reduction, including specifically from heating systems, there is a poor understanding of why decarbonising heat is particularly important as well as a poor awareness of low carbon technologies. Less than half of respondents correctly identified heating/cooling of buildings as one of the top three contributors to carbon emissions, with 61% of survey respondents having never heard of Ground Source Heat Pumps and 75% having never heard of Air Source Heat Pumps xxii.
Whilst awareness can be improved through knowledge provision, this must be provided in the correct way. The Public Attitudes Tracker (Wave 28), found that 53% respondents utilised information from their heating engineer or installer, to select the type of heating system they installed xix. This indicates that heating engineers and installers have an important role to play in ensuring that consumers are well informed and engaged in the transition to low carbon heat.
However, currently there are not enough installers trained in low carbon heat. Industry are primed to take action to improve training programmes and train the additional installers required. However, this cannot be done without increased certainty surrounding how the market will develop. The Government’s target to install 600,000 heat pumps by 2028 is welcomed and it is hoped that the extension of the Green Homes Grant (GHG) to March 2022x, will provide industry with some level of certainty in order to invest in workforce upskilling. However, as noted in Q2, the introduction of targets, without a clear roadmap of how to achieve them is inadequate; Government needs to implement a wide ranging long-term policy strategy, consisting of several different policy levers in order to create stability. The initial growth in heat pump installers will need to predominantly come from those already installing traditional heating systems. There are over 100,000 registered gas engineers in the UK who are well capable of retraining to deliver low carbon heating, given sufficient demand. With a clear commitment from both industry and government this transition will be kickstarted iv.
The provision of reliable advice from independent sources is also required to ensure consumer choice is maintained xv. Welcome the launch of the simple energy advice service to provide this guidance for consumers. However, installers are likely to remain the key point of contact for homeowners. It is therefore essential that gas and oil engineers are able to provide reliable advice to consumers regarding low carbon solutions and support them on their journey to net zero.
Minimising disruption To ensure that homes are future proofed, minimising disruption and cost for consumers, we recommend that a low temperature heating standard for new heating systems is introduced. To ensure that the heating systems installed are future proofed, we would recommend the setting of a maximum flow temperature of 55oC which will provide benefits to the consumer today by ensuring that the heating systems, whether they be gas boilers or heat pumps, run more efficiently, reducing energy bills and increasing thermal comfort. In addition, during construction of a new property, space should be provided for a hot water cylinder to enable a heat pump or thermal store to be installed.
The use of more efficient, lower temperature radiators with conventional fossil fuel heating systems provide consumers with more comfortable homes and lower energy bills. This is because the boiler does not have to work as hard to reach the desired temperature and has a lower modulation level. As homes are becoming increasingly more energy efficient with lower heat losses and therefore reduced heat demand, it is no longer necessary to heat water to the traditional level of 80oC to warm rooms to a comfortable temperature. The point at which water condenses is 55oC which means that in order for a boiler to condense, the water returning to the boiler must be below this level. By lowering the flow temperature, the boiler works at maximum efficiency therefore remains in condensing mode for longer. This has a direct impact on gas consumption and thus household fuel bills.
In a retrofit scenario, there is a need to replace radiators in the majority of cases. On average the replacement of heat emitters represents 20% of the installation cost. If it was a requirement to reduce the flow temperatures when new heating system is installed or when a home is built, regardless of fuel type or location, this cost barrier be greatly reduced. Appropriately sizing heat emitters for lower flow temperatures could reduce the cost differential between an air source heat pump and a combi gas boiler to around £2,500 in a retrofit situation. Given the possibility of additional cost down through economies of scale and reduced administrative costs for heat pumps, this cost differential is likely to fall even further.
Conducting improvements as part of other refurbishment works or implementing these measures as part of the design of new-build homes is the optimal way to minimise consumer disruption xv. As a result, we recommend that more stringent regulation is introduced, in line with our response to Q2 and in particular, A and D. Implementing these measures will not limit consumer choice regarding the heating system they select, as these measures are important prerequisites for all forms of low carbon heating and also improve the efficiency of conventional systems. As a result, regulatory frameworks to support the introduction of these measures and future-proof existing homes, provides a no regret step that can be implemented now.
| |
7. | 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? |
Local and national government as well as industry and consumers all have a responsibility to decarbonise our buildings. Whilst industry has a responsibility to innovate and deliver solutions to enable homes and buildings to switch to low carbon solutions, the government has a responsibility to develop the policy framework to provide the certainty for investment and encourage uptake from consumers through the introduction of incentives and regulatory drivers.
National Government National Government should set a clear long-term target with minimum standards to ensure all households are able to benefit from warm, energy efficient and low carbon homes. A clear trajectory for industry and homeowners to work towards is needed. For example, the minimum energy efficiency standards for the private rented sector is welcome, but other property sectors need similar standards to drive change. National government also has a role in ensuring a stable policy framework with appropriate incentive mechanisms and financial support available to enable the transition.
There is a clear role for government to lay the foundations and set the direction of travel. The publication of the Heat and Buildings Strategy will provide a crucial platform for change over the 2020s.
In addition to setting out the policy framework, the government also needs to ensure that ambitious and enforced regulation exists. For example, ensuring that homes are future proofed for the installation of low carbon heating. Government must also work with key stakeholders such as National Grid ESO to ensure that the grid can withstand the increased electricity demand that will result from large scale heating electrification, in order to limit the requirement on consumers to adapt their behaviour to reduce stress on the grid. In doing so they should support the introduction of time of use tariffs to enable consumers to benefit from load shifting and demand side response. The infrastructural developments required may be completed in tandem with reinforcement required as part of the Government’s commitment to Electric Vehicles i. Finally, the government should work with the finance community to enable new products to come to market e.g. green mortgages and introduce mechanisms to reflect the value of energy efficiency and low carbon heat (e.g. variable stamp duty and council tax).
Local government National government should set the framework, while enforcement and delivery should be at a local level. Local government has a role to play in zoning areas and co-ordinating local low carbon heating activity. A local-based approach is preferable as local authorities are often best placed to deliver schemes, knowing the demographics and housing stock that is present in their region and thus understanding the suitability of technology to those properties. Targeted approaches like this were successful for energy efficiency (ECO) upgrades in Scotland and it is likely that a similar policy will have similar successes for heat decarbonisation. Local level enforcement ensures targeted and effective implementation. Local government can also implement changes quicker than central government. However, central government must recognise the resourcing limitations at local level. Some local authorities may need to join up and pool resources to ensure that they are able to adequately enforce standards.
Information provision delivered to homes off the gas grid in the form of leaflets as well as free and impartial advice available online and via telephone is probably a good approach, and zoning of areas based on their needs is also likely to be effective. Making sure that local authorities are able to meet the demands placed upon them by appropriate funding and resourcing from national government will be key to successful policy implementation.
Industry It is important to highlight the role played by installers in the decision making process and supporting the transition to net zero. Given this role, we would like to see a greater focus to enhance the capacity of installers to influence consumers to opt for lower carbon systems. Heating systems are often distress purchases, so the installer plays a key role in advising the customer on their heating options at this time. However, currently there is little incentive for an installer to offer renewables given the additional administrative burden and low consumer awareness. Government will need to play a role in addressing some of these barriers.
Currently, the route to becoming a renewable heat installer is costly and complex and as a result, there exists a lack of qualified heat pump installers i. There is sufficient industry training capacity to deliver the required growth in demand for heat pump installers between now and 2027. However, investment is required prior to 2027, in order to ensure the industry is prepared with sufficient capacity beyond this date. Industry cannot do this without increased certainty surrounding the pace of market developmentii. Government need to take decisive action to secure future demand and provide industry with the confidence to invest in developing the installer base i.
With a target to deliver an average of 300,000 new build homes a year by the mid-2020s, house builders will be an important part of the transition to net zero. It is essential that homes built today do not need retrofitting in the future and that they deliver the performance expected. Proposals within the recent consultation on Future Homes Standard begin to provide the foundations for this. However, there is also a responsibility for housebuilders to innovate and go above and beyond minimum standards to deliver low carbon, futureproofed homes. However, robust enforcement by government is needed, and incentives should be introduced (i.e. the value of low carbon heat and high energy efficiency levels should be recognised in property prices) to encourage better performing homes to be built as without these enablers, the major housebuilders are unlikely to exceed the minimum standards.
Industry will play an important role in ensuring that consumer acceptability of heat pumps increases. Sharing case studies and testimonials will be key to increasing acceptability. Consumers themselves will also be advocates for the technology and should be encouraged to share their stories. | |
15