Delayed publication of national heat plan expected this week should give clarity around financing for low carbon systems, but industry may yet have to act on skills concerns

The predicted release this week of the Government’s delayed Heat and Buildings Strategy is expected to provide clearer signals on the likely costs of a national switch to cleaner heat.  Plans on how best to finance and incentivise lower carbon heat across the entire UK building stock are anticipated to be one of the main aims of the new strategy.

The 2021 H&V News Low Carbon Heating Summit 2021 heard this month how finance is believed to have been a major point of contention behind the significant and consistent delays in publishing the plans.  The summit, which was sponsored by Gemserv, Honeywell and Panasonic, was held online on 14 October with the aim of considering the technology and energy aspects of providing cleaner heat.

Charles Wood, deputy director of policy for utilities trade body Energy UK, told the summit that the industry would have arguably benefited from an earlier release of the strategy, but we be glad to have the plans if released as expected this week.

He said, “We would have loved to have seen it a few years ago I think, when the Renewable Heat Incentive (RHI) was starting to struggle, the number of trade installers was falling, and the installations were decreasing in regards to the RHI.”

Mr Wood said that there would have been a benefit in this period to having more urgent action, yet he understood also why there has been numerous delays to having the strategy released.

The strategy is expected to be followed shortly by the publication of the government’s own net zero review and a comprehensive spending plan that will also set out the scale of finance that may be available.

Mr Wood said, “Those are two things that really were holding the strategy back.   There is this feeling that the expenditure and funding and subsidy were the real sticking point, particularly when it comes to fuel poor consumers. And making sure this is a just and fair transition.”

“So who pays? That is the big question that has been sticking this heat and building strategy on the desk of ministers.”

Next steps

The publication of the strategy would not alone resolve all of the challenges in moving away from fossil fuel heat, Mr Wood argued. The HVAC and energy industries will therefore be required to respond and collaborate on providing systems and solutions for heat that can be understood and accepted by consumers in the way natural gas boilers currently are.

He said, “We need this market to be viable and for it to be viable we need demand. The best way to build demand is to make these propositions attractive and make it something that customers want.”

“You can see from the success of electric vehicles that this is something we need to do in heat. We need to give customers an understanding of what these technologies are to be attractive propositions.”

Any effort to improve the attractiveness of current low carbon heat solutions would likely involve changing the existing financial case for heat systems, Mr Wood said.

This could involve looking at solutions such as longer-term customer contracts, where the purchase of a heat pump is paid back over a long-term period via energy bills.

He added, “That is an option currently being trialled by some of our members on the retail side.”

“There are also options in terms of how do you encourage consumers to shift over to heat networks and give them accurate information and advice to ensure they understand what these different heating options and what is likely to change for them.”

One major area not expected to be covered in the Heat and Buildings Strategy would be methods for ensuring a sufficiently trained and diverse workforce to deliver cleaner heat, according to Energy UK.

Mr Wood said, “There are hundreds of thousands of jobs potentially just in energy efficiency and heat over the next ten years. So we need to effectively find that supply chain of workers and retrain existing individuals.”

“This is very difficult to do when there are so many SMEs working in heat and energy efficiency who often don’t have the finance to spend on training.”

A future gas grid?

With the significant scale of change expected to the energy and heat sector from decarbonisation, the summit also considered what exactly a future gas grid may look like across the UK amidst a shift to alternative gas and a planned expansion of renewable electricity.

The Climate Change Committee (CCC) has predicted in its proposals for the Sixth Carbon Budget that hydrogen heat would account for about five per cent of domestic heat demand by 2050.

Malcolm Arthur, net zero policy manager for the National Grid, said that he personally viewed this prediction as being on the ‘low side’ compared to the eventual proportion of homes still likely to be using gas heat – most likely via hydrogen – in 30 years.

He argued that the consumer experience would be a vital factor in how the public look to move towards low carbon heat and the likely consumer interest in staying connected to a gas network.

Mr Arthur said, “If you can switch with limited impact on the consumer in terms of the disruption aspect then I think that is a big selling point to a consumer itself.”

“Now whether that five per cent becomes seven per cent, or ten per cent, whatever that number will be, that is a question that we really need to look at in more detail. But I think five per cent is on the low side because of that consumer experience.”

With the release earlier of this year of the UK Hydrogen Strategy, Mr Arthur said the National Grid had chosen hydrogen as the preferred low carbon gas with potential for industrial use, energy generation and transport fuel.  The exact potential of the gas for domestic heat was also the subject of cross-industry testing and research looking at a range of technical and safety impacts.

He added, “We will need hydrogen for a significant portion of demand in the country and I think, if I remember right, that the Hydrogen Strategy said that between 20 and 40 per cent of the overall energy use will be hydrogen.”

“So I guess the question then is, do we need a network for that level of demand?”

Mr Arthur said that, given the nature of his role in the National Grid, that he believed a hydrogen network in some form would be necessary in the UK.

He said, “The reason I think we do is that, even with a 20 per cent proportion of the UK energy market, we will probably still want a liquid, transparent, competitive hydrogen market for the future. What networks can do is facilitate that particular market by providing connection to all the production and all demand, providing that resilience and also connecting points where you have gas balancing.”

The size of the network itself would still be open to consideration, according to Mr Arthur.

Domestic hydrogen heat trials

In terms of work to directly build the case for how or if hydrogen should support domestic heat, Heidi Genoni, programme and project manager for Arup, said that trials were well underway to create both the safety and technical for domestic use of the gas.

The Health and Safety Executive (HSE) had so far reviewed and approved a qualitive review of evidence for hydrogen use. This had seen the HSE recommend to the government that trails of how the gas can be used in real life domestic settings should move forward.

She said, “The main conclusion of this work is that hydrogen can be made as safe as natural gas when used for heating. The work is bound to certain types of properties at this moment in time, so your typical homes you can think of, such as terraced, semi-detached or detached properties.”

Within that home environment, Ms Genoni said that it is necessary to have hydrogen appliances and hydrogen metres as well as specific valves used in properties in line with guidance.

The Hydrogen Strategy saw the government commit to decide by 2026 on what role hydrogen may have in domestic heating.  In the build up to this decision, Ms Genoni said there would be a focus on looking to gradually build up the scale of domestic heating trials depending on feedback from testing.

She said, “The first hydrogen neighbourhood trails will happen early on, this will be a few hundred houses moving to the mid-2020s when we will look at village trials and see whether that is feasible or not, before moving to the future of potential town trials and any wider rollout after that.”

You can find a live recording of the summit later this week on hvnplus.co.uk. To receive weekly news and updates from the magazine direct to your inbox, please click here.


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