E3G reports a £2.1 billion underspend on greener heat systems and energy-efficient buildings
The UK government has failed to spend a third (£2.1 billion) of the funds promised during this Parliament to make buildings energy efficient and decarbonise heat, according to new analysis published ahead of the Spring Budget by climate and energy think tank E3G. £6.6 billion of the £9.2 billion amount pledged in the 2019 Manifesto was due between 2020 and 25.[i]
The commitments made to invest in home heating and efficiency upgrades were and are welcomed. Its benefits for tackling not just the UK’s carbon reduction targets but also its targets on fuel poverty make it a multifaceted opportunity for betterment. Yet, more must be done if carbon budgets established by the Climate Change Committee are to be met. According to a study by the Energy Efficiency Infrastructure Group (EEIG), this parliament will need public investments totalling £12.7 billion for energy efficiency and £5.1 billion for heat pumps.[ii] According to E3G calculations, if the UK were to meet its climate goals, its obligations would need to increase by £8.58 billion.[iii] With such an increase in spending necessary to keep carbon targets on track in the UK and already underutilised resources to address energy efficiency and greener heating systems, it is clear that a change in approach to ensure uptake may be on the cards.
Do heat pumps merit a £5.1 billion public investment by 2025?
Gas boilers account for 74% of home heating in the UK today, with electric heaters and oil making up the majority of the remaining 26%. As a result, the UK's heating industry produces as much greenhouse gas emissions as all of the country's petrol and diesel vehicles combined. Comparable figures are observed in the US, where gas accounts for about half of all heating. One suggestion for reducing these high emissions is to use heat pumps.[iv] Over the course of the next 20 years, a heat pump is expected to save consumers an average of £6,700 more than a gas boiler while reducing your carbon footprint by an average of 44%. Heat pumps will likely gain popularity in the UK and other countries due to the 2035 prohibition on the sale of new gas boilers. According to the International Energy Agency, 22% of households in North America, Asia, and Europe will have air source heat pumps by 2030.[v] The decarbonisation potential of heat pumps does suggest that they would merit the heightened investment called for by E3G and the EEIG. However, scepticism does remain part of the conversation, as the property Ombudsman reports that their casework suggests the following issues:
- Poor information prior to letting
- Inability for residents to switch providers or disconnect from the network
- Unclear billing and a lack of information around pricing and standing charges
- Poor communication, record-keeping and customer service
- Weak and long-term contractual arrangements and ineffective contract management – leaving landlords unable to effectively resolve problems with providers
- A lack of clarity over who regulates the provider and who deals with complaints.[vi]
Swaffham Prior’s success may lead to growth in heat pumps in the UK
Swaffham Prior set the standard in the UK as the first village to establish a rural heat network. A combination of ground- and air-source heat pumps can deliver 1.7 Megawatt of heat to 300 households in the area. Swaffham Prior Community Land Trust launched the Swaffham Prior Heat Network initiative to alleviate fuel poverty and regional environmental problems brought on by the village's dependency on oil heating. The Community Land Trust was able to get funds for a feasibility study through the Cambridgeshire and Peterborough Combined Authority after obtaining local councillor support for the idea. The proposal was successfully applied to BEIS's Heat Network Development Unit (HNDU) and Heat Network Investment Programme (HNIP) once the feasibility study was finished. The project has received a considerable investment from Cambridgeshire County Council in addition to grants from HNIP and HNDU. The assets of the energy firm and heat network are owned by Cambridgeshire County Council. The council is in charge of running and managing the heat network, as well as providing customer support and billing for services.[vii] A major stumbling block in the development of Swaffham Prior was the lack of precedent in the UK. The prospect of consumers voluntarily connecting to the heat network was untested at the time, but with 300 homes engaging with the scheme, it may give policymakers and investors faith that such schemes could be effective. The centralisation of the scheme around Cambridge County Council could also be seen as a positive for consumers in terms of accountability and tackling upfront costs. In terms of cost, the consumer pays a standing charge of between £289 to £511 (excluding VAT) depending on the size of their home and is considered to reflect the price of maintaining a boiler outside of the heat network. This is in addition to the charge per unit of heat, but this cost per unit is calculated to be equal to the cost of oil heating per kWh of the kind those now connected to the heat network were using previously. The position of councillors within their communities makes them accessible, were any shortcomings to be identified. Whilst there is still a way to go to realise the potential of heat pumps, the example of Swaffham Prior may well pave the way for advancement by removing some uncertainty and proving possibility.
[i] E3G- UK Government continues to underspend on home retrofits
[ii] EEIG- Better buildings investment plan
[iii] E3G- The UK spring budget and the retrofit revolution
[iv] BBC- The enormous heat pumps warming cities
[vi] Housing Ombudsman- Spotlight on complaints about heating, hot water and energy in social housing
[vii] Cambridgeshire County Council- About Swaffham Prior's Heat Network
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