Insights

Continuing the narrative.

In October 2021, the government released its Heat and Buildings Strategy, setting out the vision for a greener future and aiming to create hundreds of thousands of green, skilled jobs, drive the levelling up agenda and generate opportunities for the growth of British businesses. It notes that the transition to high-efficiency low-carbon buildings can and must take account of individual, local and regional circumstances (see part one).

Here, we look at what’s planned for hydrogen, heat pumps, heat networks and biomethane.

Hello, hydrogen: the next potential major player.

Hydrogen is touted as potentially playing a significant role in the net zero pathway for the UK and there is expected to be a strategic government decision by 2026 based on trials and wider research.

There are plans to establish large-scale trials for heating – including a neighbourhood trial by 2023 and village trial by 2025 – with BEIS and Ofgem writing to the gas distribution network operators to invite them to develop the latter earlier this year.

The government plans to enable the blending of hydrogen onto the gas grid, up to a maximum of 20%, and believes that this has potential to reduce up to emissions from the gas grid by up to 7%. A review of this is due by autumn 2022 with a final policy in place in 2023.

It also indicates it will consult on requiring all new natural gas boilers to be hydrogen-ready from 2026.

Hydrogen has an important role to play in reducing carbon but the key is using green hydrogen, formed from renewable sources, rather than blue hydrogen which still requires an element of natural gas. There is an argument over deployment – that it will take another four or five years to make a strategic decision on hydrogen and there are no guarantees that it will be taken forward – and there’s been a softening of the language around hydrogen, which is now referred to only as a “potential” way of heating buildings.

Pump it up.

The government intends to have a heat pump market with capacity to deploy at least 600,000 heat pumps per year by 2028, which is up from 35,000 heat pumps per year today. By the mid-2030s, the government aim is for the heat pump market to have the potential to replace 1.7 million fossil fuel boilers per year.

The government has also announced the £60 million Net Zero Innovation Portfolio (NZIP) Heat Pump Ready Programme that will support the development of heat pumps across the sector. There are plans for a boiler upgrade scheme, with a £5,000 grant for air source heat pumps and £6,000 for ground source heat pumps.

The government plans to consult on options to push down electricity wholesale prices by looking at options to shift or rebalance energy levies (i.e. FITS and ROCS) away from electricity to gas, this decade. It will announce a ‘fairness and affordability call’ for evidence on these options with a final decision on this to be expected by 2022.

The verdict?

The funding announced so far would only amount to 12,000 installations of air source heat pumps which is a very small percentage of the number the government is targeted to install by 2028. Considerable and much more ambitious funding is required if heat pumps are going to play a key role in decarbonising heat from our building stock. Actual funding commitments are low and nowhere near what is needed.

The Climate Change Committee recommends 900,000 heat pump installations per year by 2028 and 1.1 million installations per year by 2030. One of the key points from the Paris Agreement, to keep temperature rise below 1.5℃” is that we should be aiming for major carbon reductions this decade – that is, by 2030.

Community heating.

The strategy announces the Green Heat Network Fund and Heat Networks Investment Project as part of wider Heat Network Transformation Programme, providing £338 million over 2023/23 and 2024/25. This is planned to enable local areas to deploy heat network zoning, which aims to create a step-change in low-carbon heat network market growth. There is a commitment to provide 5% of heat from heat networks by 2050.

Many current heat networks are based on gas CHP and so are, in many instances, offering higher CO₂ emissions than a gas fired boiler due to decarbonisation of the electric grid.

Another vein: biomethane.

The strategy mentions the Deliver Green Gas Support Scheme (GGSS) to support the injection of biomethane from anaerobic digestion, which is aimed to deliver 2.8 TWh of renewable heat per year in 2030/2031.

Based on the UK Energy Brief 2021, this would amount to a fairly small increase in the 2020 biomethane generation of 35.8 TWh, which is a circa 7-8% increase on 2020 levels of biomethane generation or 2% increase on the total renewable energy generation in 2020. The FES scenarios for heating for residential homes in 2050 range from 172-318 TWh so this biomethane increase would only cover 1-2% of any future energy required for heating homes.