Decarbonising heat in buildings during the 2024 - 2029 parliament
The UK is holding a general election on 4 July 2024. This is likely to see hundreds of new Members of Parliament (MPs) elected as (a) existing MPs step down and (b) seats change between parties. Based on current polling, the UK might see the return of a Labour government for the first time since 2010. Thermal Storage UK will work with whichever party or parties form the next government to decarbonise heat in buildings.
There has been progress on heat decarbonisation during the 2019 to 2024 parliament.
The UK government published a Heat and Buildings strategy with a clear (but not exclusive) focus on electrifying heat. The Boiler Upgrade Scheme (BUS) in England and Wales offers up to £7,500, covering some of the capex for heat pumps and biomass boilers. The same grant is available from Home Energy Scotland, with interest-free loans also available and covering heat batteries. The government has consulted on the Future Homes Standard, started work to replace SAP with the Home Energy Model and is mandating that electric heating appliances are flexible.
Aspects of the energy policy landscape remain unfavourable to electric heating.
Electricity unit rates are around 3.5x more than gas. This is partly because gas in home heating avoids carbon taxes and partly because electricity wholesale prices are often set by gas. Some electric heating systems, such as heat batteries, are charged 20% VAT rather than being zero-rated as an energy-saving material. A decision on the role of hydrogen in heating is not due until 2026 despite most of the hydrogen trials being cancelled. Government support schemes for energy efficiency (such as ECO) and heating (the BUS) have short-term (5-year) horizons. All of this increases uncertainty for manufacturers, the supply chain and installers. The issue is compounded by the limited impartial advice available to people in England or Wales on how to decarbonise their homes.
Decarbonising home heating requires electrification through a combination of highly efficient heat pumps, super-flexible heat batteries and heat networks.
Heat batteries - whether using phase change, dry cores or recycled aluminium - can work with or instead of heat pumps. Heat batteries can provide low carbon space heating in homes where heat pumps are more expensive or more difficult to install. Heat batteries for hot water help heat pumps to operate flexibly and take up less space than hot water tanks.
It is important to get the various components of heat decarbonisation and flexibility right.
Electrifying home heating - even with flexibility - will see peak electricity double by 2050 according to National Grid ESO. Heat electrification involves coordination between installing heating systems, upgrading energy efficiency, upgrading electricity networks (including the distribution grid) and enabling grid and appliance flexibility.
The UK government can use energy policy during the 2024 to 2029 parliament to deliver homes and buildings fit for a net zero future.
We are optimistic that the next parliament will see significant decarbonisation of home heating as the electricity grid continues to decarbonise and electric heating replaces fossil fuels.
So how can parliamentarians support heat decarbonisation and flexibility during the next 5 years?
Recommendation 1. Make homes comfortable through enhanced building fabric and new heating systems
This involves:
Consolidating energy efficiency and heating support schemes to make it easier for people to navigate and receive support
Adopting a more local approach for an area-by-area roll-out, working with networks, manufacturers and retailers
Upgrading the building fabric and the heating system at the same time to minimise disruption
Committing to extending support schemes such as the BUS and ECO to at least 2035 to grow and maintain supply chains
Funding an energy advice service so people can choose how to best decarbonise their homes (this could follow the Home Energy Scotland model)
Recommendation 2. Increase planning and coordination so that the UK decarbonises the grid and home heating efficiently and flexibly
This involves:
Developing a spatial plan that covers electricity and gas from the largest to the smallest pipes and wires
Using the spatial plan to decide by spring 2025 on any areas where hydrogen might (or might not) have a role in heating
Setting out how to safely and efficiently decommission any parts of the gas grid that are surplus to requirements in the future
Developing a mechanism to recompense communities for hosting new or upgraded network infrastructure at both transmission and distribution level
Allocating research funding to UKRI / NESO to determine the balance between grid upgrades and flexibility
Updating the Smart Secure Electricity System framework so that DNOs are informed whether heat appliances operate in smart or non-smart mode
Recommendation 3. Support a range of low carbon heating technologies that work with various UK housing types to achieve net zero
This involves:
Expanding the Clean Heat Market Mechanism and BUS to cover a range of flexible low carbon technologies, including heat batteries
Adding heat batteries to the list of energy-saving materials that qualify for zero-rated VAT until 2028
Introducing the Future Homes Standard in 2025 and including heat batteries for central heating and hot water
Reforming Energy Performance Certificates to better reflect new technologies and incorporate flexibility
Consulting on which alternative low carbon electric heating technologies can support the 20% of homes where heat pumps or heat networks are more difficult or costly to install
Adding heat batteries, both existing and new installations, to the Homes for Net Zero trial run by the Energy Systems Catapult during winter 2024 / 25
To continue to achieve our carbon budgets and net zero by 2050, we have 25 million homes to decarbonise in 25 years. This is achievable. MPs can take inspiration from the switch from town gas to natural gas in the 1960s and 1970s. Britain coordinated this change over 10 years with a long-term plan, careful planning and coordination and clear roles and responsibilities. We can repeat that feat with low carbon electric heating.