UK Energy Security Strategy fails to set out fresh energy efficiency support

The UK will expand hydrogen production and invest £30m in heat pump manufacture as part of a new Energy Security Strategy that omits any fresh funding for domestic energy efficiency improvements.

Plans to ramp up homegrown production of nuclear, solar, onshore and offshore wind energy, as well as oil and gas power, are among the broad provisions of the strategy.  The commitments are intended to address a global surge in energy prices and wider supply chain concerns linked to Russia’s invasion of Ukraine. This is seen as a vital means of curbing national dependence on foreign countries for fuel to heat and power homes and buildings in the UK.

A government press release announcing parts of the strategy said that a ‘Heat Pump Investment Accelerator Competition’ would be launched this year with a value of up to £30m to encourage heat pump manufacture. This is intended to reduce domestic demand for natural gas for the purposes of heat.

The new energy strategy has also committed to rebalance the cost of energy bills to encourage a consumer shift towards electricity for the purposes of powering heat.  A major aim of the rebalancing will be to ensure that heat pumps become comparatively cheap to run compared to boilers that run predominantly on natural gas.

Proposals for how the government will aim to improve the costs of running heat pumps, particularly for lower income homes, are expected at some point later this year.

These measures will be implemented alongside the previously announced launch of the Boiler Upgrade Scheme that launches this year with the aim to incentivise low carbon heat adoption.

Insulation omission

However, the full strategy has not announced any additional funding or incentives to actively improve the overall energy efficiency of the UK’s building stock to reduce heating demand. The issue of energy costs is particularly important for lower income households that are expected to be most severely hit by energy increases.

The government has committed to produce 10GW of hydrogen production in the UK by 2030 – this would double existing commitments. At least half of this production capacity is intended to be green hydrogen that is produced via renewable energy such as excess offshore wind power, the government claimed.

It stated, “This will not only provide cleaner energy for vital British industries to move away from expensive fossil fuels, but could also be used for cleaner power, transport and potentially heat.”

A decision on whether the government expects hydrogen to have a role in directly heating UK homes is expected to be made in 2026.

Other provisions in the strategy include a commitment to increase UK solar power generation capabilities by 2035 by as much as five times the existing national capacity of 14GW.

Reforms to the existing planning requirements will be introduced with the aim to cut the average length of the approval process to build offshore wind farms to one year from around four years.  The strategy also sets out ambitions for 50GW of wind power to be generated in the UK by 2030. An estimated 5GW of this power is expected to come from floating wind farms situated in deeper seas.

Alongside the commitments to renewable power production, the government said it would also provide new licences for oil and natural gas extraction projects in the North Sea that will be launched later this year. The government’s argument for including an ongoing focus on extracting these fossil fuels is to reduce demand for foreign energy imports. Domestic production of fossil fuels is expected to have some cost and carbon reduction benefits over imported supplies.

A government statement announcing the Energy Security Strategy also reiterated a commitment to stop charging VAT for a range of energy saving building solutions such as heat pumps and insulation materials that was announced in last month’s Spring Statement. The VAT relief will be provided for a five-year period up until 2027.

Industry reaction

A group of trade bodies representing heat pump manufacturers and suppliers have given a mixed response to the initial energy security proposals set out by the government.

Laura Bishop, Chair of the Ground Source Heat Pump Association, said the proposals were a missed opportunity to offer more immediate support to protect households from the increased cost of heat and power.

She said, “Instead of focusing on immediate measures to reduce dependence on expensive imported gas, including accelerating the rollout of heat pumps, the strategy focuses on the government’s favoured electricity generating technologies, including those with long lead in times. This will do nothing to address the immediate cost of living and energy crises facing UK consumers.”

“We welcome the announcement of a new grant completion for UK heat pump manufacturing and a government information website for heat pumps, but again, this will do little in the short-term to boost heat pump demand, or put the UK on course to delivering the Prime Minister’s target of 600,000 heat pumps per year by 2028. “

Ms Bishop said that there was no additional funding to support a switch over to heat pumps or any details on when the government may act on previously stated plans to address the higher cost of electricity compared to natural gas.

Another industry response from the Heat Pump Association (HPA) argued that there has never been a more important time to encourage heat pump adoption in UK homes as a result of the current costs of gas.

HPA Chair Phil Hurley said, “The electrification of heat enables energy security by giving choice to how electrical power is generated or migrated to renewable energy over time, and it’s welcome to see this reflected in the Energy Security Strategy published today. Not only can heat pumps reduce carbon now but their benefits will increase over time as the grid continues to decarbonise.”

Worcester Bosch, a manufacturer of boilers and heat pump systems, expressed a particular interest in commitments in the Energy Security Strategy.

Carl Arntzen, the company’s chief executive, said it particularly welcomed the announcement to double targets for hydrogen production by 2030.

He said, “So it is great to see that upon its release today, the government have doubled on their target for hydrogen production by 2030 from 5GW to 10GW. This is something that we at Worcester Bosch have been pushing for some time, given hydrogen’s viable position as an alternative fuel for domestic heating. This increased production could result in thousands of homes being heated by either 100 per cent hydrogen gas or within a blend with natural gas.”

“We see hydrogen playing an essential role on the road to net zero, working alongside other low carbon technologies such as heat pumps. The Energy Strategy release today highlights that policy makers may also agree.”

Efficiency calls

The Federation of Master Builders (FMB) has meanwhile expressed criticism of a lack of any new measures to improve the efficiency of 29 million existing homes across the country.

It said that efficiency improvement measures would serve to cut energy bills for heating and also lower carbon emissions from buildings.

Brian Berry, FMB chief executive, said the strategy had ‘missed the mark’ in regards to reducing domestic energy consumption.

He said, “After the disappointment of the Heat and Buildings Strategy this was an opportunity for government to implement a National Retrofit Strategy, focussing on improving the energy efficiency of the UK’s draughty and leaky homes. While the strategy does deliver 0 per cent VAT on energy efficiency improvements to properties, a welcome move that the FMB has long been campaigning for, this only helps those with the money to pay in the first place.”

“A broader, insulation led, retrofit strategy would have been an immediate solution to reduce energy consumption, boost the economy and importantly, help save homeowners money on their bills during a cost-of-living crises.”