This week the government published its Heat and Buildings Strategy (Strategy). This contained vital innovations and essential step changes in terms of how heating is provided, writes Steve Gummer.
The scale of the challenge in terms of heating is considerable. According to the Heat and Buildings Strategy:
- There are about 30 million buildings in the UK.
- In total, these buildings are responsible for around 30% of our national emissions.
- The vast majority of these emissions result from heating: 79% of buildings emissions and about 23% of all UK emissions.
In summary the Strategy included (amongst other things) the following:
- A proposal to ban the installation of gas boilers post 2025. This is not a requirement to remove any pre-existing gas boiler.
- The introduction of the Boiler Upgrade Scheme – This will provide households with £5,000 grants when they switch to an air source heat pump or £6,000 when they switch to a ground source one.
- Support for heat networks including a proposal to bring forward heat network zoning which could make sign up to heat networks mandatory for large public sector buildings, large non-domestic buildings, all new-builds and residential buildings which are already heated via communal systems (such as tower blocks)
- Ensuring new buildings are ready for heat networks/heat pumps by 2025.
- Proposals to assess the feasibility of hydrogen in the heating sector. Including blending hydrogen in to the gas network
There is a huge amount of good news here. The scale of investment and the shifting of priority are welcome. This lends significant support to much of the good work being done by local authorities across the UK already. Local authorities are taking significant steps to roll out heat networks.
It is a common criticism that whenever the government introduces a net zero policy that it does not go far enough. However in this case the Strategy does contain some good and some bad news in respect of heat networks.
In terms of the Boiler Upgrade Scheme – a number of commentators have pointed out that an air-source heat pump costs between £6,000 and £18,000, depending on the type installed and the size of a property. In this respect a grant of c. £5,000 or £6,000 could still leave people significantly out of pocket. It is certainly the case that the cost of a relevant heat pump depends on the building. It is also the case that the more aged the property is (and the less energy efficient it is) the greater the likely cost of the heat pump. This is therefore an issue as costs for heat pumps will be greatest for the properties where it would be most useful for a heat pump to be installed (by way of example a majority of homes built pre-1990 remain less energy efficient than homes built thereafter).
There has been some criticism in the popular press on the above basis. However, this analysis overlooks that support for the supply chain and subsidies and the wider roll out of heat pumps should (of itself) reduce cost. There has been a point in the history of every affordable technology where it was unaffordable. It is often mass roll out and demand that has reduced cost.
There is perhaps a more legitimate concern about this approach as to whether individual grants are appropriate or whether support to manufacturers might have been a better way to reduce costs to end consumers. This approach could also have stimulated roll out and reduced end cost.
However perhaps the biggest concern about the Strategy is the focus on individual heat pumps. While this country has a history of individually based heat solutions – namely individual gas boilers – it is not necessarily the case that the future requires individualised solutions. A particular concern is that an expansion of individual heat pumps might undermine the growing trend and work undertaken to date on community heat networks (the zoning proposal will expressly allow for carve outs).
The Strategy includes support for heat networks. There is continuity of existing funding support. There is also a proposal for zoning. This is a big and welcome step provided it is rolled out fully. Zoning is comparable to forms of Danish Heat Laws and could make sign up to the heat network mandatory for certain persons. At present HMG envisage that sign up may be mandatory for large public sector buildings, large non-domestic buildings, all new-builds and residential buildings which are already heated via communal systems (such as tower blocks).
This step is critical as it will allow greater certainty of demand which will allow greater investment and roll out of heat networks. Perhaps the biggest challenge to heat networks is a lack of certain demand and scale. Perhaps a concern is that zoning may not go far enough. Heat networks and communal heating is already becoming more commonplace in new builds but a challenge remains in respect of retrofit in domestic housing. Local authorities may need to go beyond zoning to consider other alternatives to encourage greater domestic retrofit demand and we have considered those at https://www.sharpepritchard.co.uk/latest-news/data-privacy-and-information-law/freedom-of-information-and-environmental-information-regulation-requests/big-problems-need-radical-solutions-time-to-play-monopoly-with-district-heating/
Communal solutions and heat networks offer a significant and meaningful option for the future. The Heat and Building Strategy will assist in roll out but also supports competition. More can be done and local authorities should consider the full range of approaches to bolster demand for their heat networks going forwards.
Steve Gummer is a Partner at Sharpe Pritchard.
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