Heat pumps, electricity, and the UK’s decarbonisation agenda

That electricity is so expensive (while gas remains cheap) is a profoundly dysfunctional feature of the UK’s social system and one that undermines our efforts at decarbonising the built environment and reaching net zero. Policymakers should adopt the view that investment in production and supply of cheap, abundant and green electricity is good and in the public interest, writes Nicholas T. Harrington, research associate at the UK Collaborative Centre for Housing Evidence.

The Collaborative Centre for Housing Evidence (CaCHE) recently finalised six months of research into the decarbonisation of the UK’s housing stock and the adoption of heat pumps. The report explains why heat pump uptake across the UK has fallen short of government expectations despite the £5,000 Boiler Upgrade Scheme (BUS) grant (now £7,500). If heat pumps reduce your heating bills while lowering your home’s carbon emissions, why do so few people install them compared to places like Norway, Sweden, France, and Estonia?

CaCHE adopted a ‘systems thinking’ approach to its investigation; considering the regulatory and built environment factors, the economic, labour and material conditions, as well as the interests, preferences, and constraints of a variety of stakeholders. It turns out these different parts of our social system all interact with and influence each other causing a variety of knock-on effects, unintended consequences, and negative and positive feedback loops.

Broadly, the research describes an island characterised by a large proportion of older, leakier properties connected to an extremely efficient and extensive gas network providing relatively cheap heating on demand. Structurally, the quality of the housing stock and the fact that electricity is around three times more expensive than gas present serious challenges to the UK’s efforts at decarbonisation.

So, where do heat pumps fit in?

Heat pumps and the high price of electricity are a double-edged sword. On the one hand, if your home is airtight and has low U-values (low transfer of heat from inside out), a heat pump is an incredible piece of technology that saves the planet while saving your wallet. On the other hand, lots of people live in homes that are not airtight and have high U-values. These homeowners will need to undertake pre-installation fabric and heating system upgrades if they want to keep their bills where they are. Not to mention that, in some cases, heat pumps installed in leaky, older properties may not even provide good thermal comfort.

This dilemma is all the more relevant for private and social landlords. There’s hardly a business case for private landlords to install heat pumps if they have to spend thousands of pounds on pre-installation improvements – especially when the primary beneficiary of the heat pump’s cost saving is the tenant. For social landlords, the situation is perhaps more constrained. Social landlords by and large prefer to take a fabric-first approach since their tenants – who are likely on fixed or low incomes, some in fuel poverty, and generally enduring a cost of living crisis – can least afford a heat pump adding to their heating bills.

So, what’s the solution?

In the final analysis, there are two ways to strategically address the decarbonisation of domestic heating. The first is to mandate heat pumps get installed into every property where their performance is assured, e.g. all newbuilds and most homes with an ‘A’ or ‘B’ EPC rating. In almost all these cases, heating bills will go down and the occupants won’t compromise on thermal comfort.

A second approach is one which emerged directly from the systems thinking perspective of CaCHE’s recent research. Attack the problem at its source: electricity. Consider the following:

(A) If electricity was cheap, abundant, and green it would matter less that heat pump performance is greatly influenced by the quality of the UK’s existing housing stock -> (B) If the issue of the UK’s housing stock was set aside, the awesome burden of retrofitting millions of homes might be avoided -> (C) If retrofitting millions of homes was no longer required, billions of pounds could be saved -> (D) The billions of pounds being saved might be directed towards making electricity cheap, abundant, and green -> (return to A).

At the end of the day, that electricity is so expensive (while gas remains cheap) is a profoundly dysfunctional feature of the UK’s social system and one that undermines our efforts at decarbonising the built environment and reaching net zero. No matter which way you approach the problem, decarbonising is going to be extremely costly for government (local and national).

Either: (i) authorities means-test and subsidise the installation of heat pumps as well as fabric and heating system upgrades as required (as they do in Germany); (ii) authorities means-test and subsidise the installation of heat pumps as well as the cost of electricity (as they do in Norway); or (iii) policymakers take the revolutionary view that investment in production and supply of cheap, abundant and green electricity is good, in the public interest, and, therefore something public authorities should embrace (as they do in Sweden).