OFTEC outlines how the future of heat policy and regulation could potentially affect off-grid installers.
Policy planning by government can often seem remote from the daily job of installing and servicing heating equipment. Customers want something and the trade installs it – what has government got to do with it? Well, it turns out, quite a lot! Government already regulates to a considerable extent how the heating industry operates and this may be about to move to a whole new level.
The Derpartment for Business, Energy & Industrial Strategy (BEIS), the government department responsible for tackling climate change, is about to publish a heat in buildings strategy, potentially paving the way for many significant changes. To achieve the UK’s net-zero emission target by 2050, we must decarbonise virtually all the emissions from heating, so we can’t simply carry on as we are now. However, research to determine whether homes that currently use mains gas – currently around 84% – should convert to heat pumps or switch to hydrogen is still incomplete. This means the government will be looking to make progress more quickly in other areas and off-grid homes may be targeted. This could provide significant opportunities for heating businesses.
Heat pumps are widely seen in policy circles as the low carbon solution for off-grid homes; the discussion now mainly centres on how many homes may not be suitable for them, and what is the next best alternative heating solution.
Research commissioned by BEIS suggests that as few as 20% of oil-heated homes may be unsuitable for heat pumps. However, housing survey data also shows that over 750,000 (65%) of oil heated homes in GB are in the worst EPC bands, E-G. It is reasonable to assume that many of these will require substantial insulation investment to make a heat pump system viable and BEIS has data on this too. The average renovation cost for an EPC band E oil-heated home to reach band C is £12,000, while for F and G band homes, it rises to over £18,000.
This is likely to be unaffordable for many households, even if they are willing to put up with the inevitable disruption. It’s also questionable whether consumers will want to take this action. The government has already tried to encourage oil-heated households to convert to heat pumps through schemes such as the Renewable Heat Incentive but, so far, fewer than 1% have opted to switch. So, when weighing up the business opportunities, installers will need to look carefully at the funding support government will offer and target easy wins, promoting heat pumps to homes that can be converted relatively easily.
Because households have so far been reluctant to act, the government may consider forcing them to adopt low carbon heating if their existing fossil fuel appliance needs replacing. This would be a controversial option unless high levels of funding support are in place.
A fairer solution would be to use regulations to tighten emission standards and allow the use of any technology that can achieve the required carbon emissions reduction. This could open the way to a range of solutions and drive more effective competition in the heating market. For example, it would encourage the deployment of renewable liquid fuels such as HVO, which can be used in oil boilers and tanks with only minor modifications, dramatically reducing the need for capital outlay. It also accelerates decarbonisation because the supply chains and installer expertise are already in place or can easily be repurposed.
Crucially, it also fits well with what consumers want to see happen. This year, the UK citizen Climate Assembly examined these challenges. In its report, assembly members emphasised their support for tailored solutions for local areas and individual households. They also wanted more choice, including through promoting competition, and they stressed that any changes need to work for all income groups and housing types. On home retrofits, the need to minimise disruption, put in place support around costs, and offer flexibility and choice to homeowners were highlighted. There was very strong support (94%) for smaller organisations to offer energy services.
The future of heat policy and regulation may be unpredictable, but one thing is certain, government will insist on high standards of installation and demand good outcomes for consumers. OFTEC is ready to assist with this as we offer outstanding technical support and a full range of renewable registration options, including MCS and the option to add TrustMark to your registration too. So, whatever direction heat policy takes, we are ready to support you.
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