Domestic heat – light the fuse of consumer demand

Our CleanTech expert, Neil Davidson, follows his recent C2C Energy Transition Report with a quick look at how to decarbonise our homes more quickly to help reach Net Zero.

To reach Net Zero we must decarbonise our homes – and fast.

The trouble is we are addicted to gas. It is cheap, it’s effective and it’s piped up every city street. Most UK homes use mains gas – generating 15 percent of our greenhouse emissions[i]. In Scotland, heat accounts for over 50 percent of energy consumption[ii].

“Let’s switch to hydrogen!” I hear you say. Well maybe, but we need to park that idea for a decade at least. The Scottish Government predict only a 20% mix into the gas grid by 2030[iii], and we will need a phenomenal amount of additional new wind beyond then to make any kind of contribution to domestic demand. And green H2 will be pricey – at least three times the cost of natural gas[iv].

No, if we are going to get on the road to zero, we need to start now and – in the words of Scottish Power CEO Keith Anderson – we  need to ‘electrify the hell out of everything’[v].

This means:

  • Adopting heat pumps, solar panels, heat batteries, energy storage, heat networks – you name it – in a  major programme starting today.
  • All new builds must be net zero. It is far more cost-efective to build homes properly at the start than retrofit new tech later. Let’s look at the world’s best standards – and mandate that for Scotland.
  • At the same time – too many people live in badly built, poorly insulated homes. In Scotland, 55 percent of homes are EPC D or worse[vi]. To upgrade these to Band C will cost between £12,300 and £18,900³.

It can all be done but what incentive is there for consumers to bother?

Gas is cheap (c.3p unit), whereas electricity is expensive (c.16p). What homeowner will fork out hard cash to insulate their home in order to electrify?[vii]

Well, the good news is, consumers will act – but only if it’s worth their while. Witness the massive rollout of solar panels a decade ago, which tapered off dramatically when the tariff was cut[viii]. If government is serious – and I mean really serious – about net zero, they need to make low carbon domestic heat a ‘no brainer’ for every home. This will require:

  1. World-class net zero new build standards. Cheap to heat cosy homes that everyone wants to have.
  2. 100% grants to insulate existing hard to heat homes, plus grants for the full costof low carbon kit – all at zero VAT. Not piecemeal loans plus a heat incentive that only works for the wealthy.
  3. A decade-long Treasury-sponsored scheme to make green heat pay. With no stop-start. If successful it will light the fire under a nationwide army of domestic installers.
  4. Support for domestic energy storage to bank cheap off-peak electricity and take the pressure off the grid.
  5. A long term and visible carbon price ratchet on gas.

Decarbonising the UK’s electricity supply is the easy bit. Decarbonising our homes is tough.

The only way it can happen – and happen at pace – is to make it pay. If government can make it worthwhile for homeowners to ‘go green’ we have some chance of a net zero Britain in the decades ahead.

 

Sources:

[i] https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/957687/2019_Final_emissions_statistics_one_page_summary.pdf
[ii] 1 million homes to be heated by zero and low carbon systems by 2030
[iii] https://www.gov.scot/publications/heat-buildings-strategy-achieving-net-zero-emissions-scotlands-buildings-consultation/
[iv] Offshore wind to green hydrogen: opportunity assessment – gov.scot (www.gov.scot)
[v] ‘Electrify the hell out of everything’ for coronavirus green recovery | Business | The Times
[vi] https://www.gov.scot/publications/heat-buildings-strategy-achieving-net-zero-emissions-scotlands-buildings-consultation/
[vii] https://www.politicshome.com/members/article/decarbonisation-of-rural-homes-at-risk-due-to-high-costs-says-new-research
[viii] https://www.theguardian.com/environment/2019/jun/05/home-solar-panel-installations-fall-by-94-as-subsidies-cut

HOT TAKE: Domestic heat – here’s how to get to Net Zero.

Neil Davidson

Senior Strategist

Connect

Discuss your challenge in confidence with one of our strategy directors