Comment by Guy Newey, Chief Executive Officer at Energy Systems Catapult. 

How we decarbonise heating in our homes is perhaps the hardest problem the UK will tackle to get to Net Zero. The overwhelming majority of people, some 78%, currently heat their home with a natural gas boiler.

Unlike the switch to low carbon vehicles, where the average person in the UK tends to upgrade their motor every 3-5 years, most households in Britain only purchase a new heating system every 10-15 years when their boiler dies. Which means most UK households have just two opportunities between now and 2050 to make the switch to low carbon heating. And unlike electric vehicles, there are not yet the clear policy drivers marking the end of gas boiler sales like there are for new petrol and diesel cars (although there were more promising signs earlier this month). It is a technology challenge, an integration challenge, an energy system challenge, a consumer challenge, and a finance challenge; the kind of the thing that the team at Energy Systems Catapult and the innovators we work with get excited about.

Where are we now? If you woke up tomorrow and your boiler conked out (as many do at this time of year, particularly when it gets properly cold), and you wanted to switch to low carbon heating, who would you call and what would they offer?

I asked this question in a comment piece just three years ago and my slightly glib answer at the time was: “if they offered anything at all, it would likely be offsets either to biogas production, or planting trees in Mozambique or some such. They might offer a bit of a discount on a smart thermostat or see if I was eligible for a government-backed insulation grant”.

“But at the end of the call, my (very efficient) natural gas boiler would still be spewing out CO₂. So, I could call up someone to sell me a heat pump (backed by a generous public subsidy, at least for now). But is the heat pump suitable for my home? What changes to the fabric of the building do I need to make? Do I need bigger radiators? Will the heat pump heat my draughty home enough when it is the middle of winter? I am pretty knowledgeable about energy, but I would find it very hard to know what the best thing is to do. I would quickly have to become my own chartered surveyor/built environment engineer/heat pump expert/project manager (and shell out quite a lot of money) with no guarantee I will get the same warmish home. Frankly, I can’t be bothered. At the moment, as far as I can see, there are very few options.”

A lot has changed in those three years. On a personal level, I have just installed my own heat pump, helped along the journey by the brilliant innovators at Veritherm, who worked out the real heat loss of my home (so much better than the dreadful EPC system – still a key barrier for good low carbon heating solutions in the domestic and non-domestic space). And my system was installed by Wes at West Hampstead Plumbing and Heating, part of a growing band of #heatpunks who are harnessing core heating engineer skills and applying them to renewable heat (thanks to Nathan Gambling for the recommendation and all his work highlighting this crucial trade).

And we are seeing more and more innovation in the market; from the team at Evergreen with their Homely app; from heat technology pioneers like Caldera and Tepeo; from the creation of hydrogen-ready boilers deploying in real-world trials; from Kensa and their exciting work on heat network loops powered by large heat pumps; and from the entrance of Octopus Energy into the heat pump space with typical brio. Policy has also helped, with the Heat and Buildings Strategy creating some essential incentives for low carbon tech to scale.

Supporting all that activity, the Electrification of Heat demonstration project has just released the latest insights into the installation challenges and crucially the consumer barriers to scaling-up heat pump adoption across Britain to meet the government’s ambitious target of installing 600,000 heat pumps per year by 2028. The Scottish Government is targeting a peak of 250,000 renewable heat installations in the 2030s.

Make no mistake, these are ambitious goals. To put these targets into context, in 2019 when I wrote that previous blog, only 27,000 heat pumps were installed across the UK – accounting for less than 2% of the UK heating market. We have just six years to increase installations from the thousands we see today, to the hundreds of thousands required. That is going to require scale and consumer-friendly offers – we are not seeing enough of them today.

Building understanding

The Department for Business, Energy and Industrial Strategy (BEIS)-funded, Electrification of Heat project is providing crucial insights to help industry better understand how to achieve that scale-up in heat pump adoption across Britain.

At the end of last year, the Project released the first of its data-led reports which demonstrated that there is no property type or architectural era that is unsuitable for a heat pump, finally putting to bed the notion that heat pumps are only suitable for newbuild homes. The project saw 742 heat pumps – from hybrid to air source – installed in homes across the South East of Scotland, Newcastle, and the South East of England and generated interest from over 8,000 applicants.

Data released in the latest round of reporting on the project reveals that of those applicants the majority cited sustainability and low carbon heating (78%), and interest in new technology (63%) as the primary reasons for wanting to transition to a heat pump. This indicates that the public already understands the benefits of heat pumps, and this is beginning to translate into the energy choices that households are willing to make.

Barriers to installation

This is not to say that there are not hurdles to overcome. The data points to two key barriers to installation that could hinder progress: cost and disruption.

• 47% of participants who decided not to proceed with a heat pump installation cited disruption as the main reason for saying no.
• The average cost per property for the installation of a heat pump was £14,800. This included additional measures such as the installation of hot water tanks and radiator upgrades, and labour costs.

I don’t think this came as any great surprise to anyone working in the sector, and we are already seeing early signs of ideas and propositions to overcome the challenges. But it will require a turbocharging of the kind of innovation I mentioned above from industry.

Creating a seamless customer journey

The latest reports from the EoH project provide an initial blueprint for what we must do to scale-up the deployment of heat pumps and decarbonise heat in homes.

Firstly, we must innovate to make the customer journey as seamless as possible. From the initial design discussion through to the installation and operation phase, innovation needs to put the consumer first – without their buy-in, we cannot hope to install 600,000 heat pumps per year.

Taking a customer-centric approach – not always a strong point for the energy industry – will help to tackle the challenges facing the sector, including overcoming concerns about disruption caused by installation. This is a classic characteristic of a new market – people are not yet sure about something unfamiliar.

Data from the EoH project already points to the public having a general understanding of heat pumps as a sustainable option and a willingness to engage with new, low carbon technologies. We must now translate that willingness and engagement into consumer-friendly market propositions.

Innovation is not only about technology

Innovation is as much about creating the right business models and consumer services as it is about technology. Providing digestible, consumer-friendly offers – such as bundling net zero products like heat pumps into energy tariffs. We are already seeing this within the sector from companies both inside and outside of the Project. Outside of the trial, Octopus Energy have been testing and trialling how heat pumps can be integrated with innovative smart tariffs like Agile Octopus to get even cheaper running costs.

While energy retailers such as OVO Energy and E.ON have been driving the Electrification of Heat project on the ground. They have been installing heat pumps into a dizzying array of homes –  Victorian mid-terraces to pre-WWII semis and a 1960s block of flats.

For consumers, any low carbon heating solution needs to be as good, or better than, the alternatives if we are to go at the scale and pace we need to meet our net zero targets. That is partly about cost, particularly the cost to run it, but it is also about the consumer experience.

We can further help consumers navigate the transition to a heat pump by ensuring that we provide them with the most up-to-date information and guidance. Our recent guide, ‘Effective conversations between customers and installers throughout the heat pump installation journey’, aims to put the minds of customers at ease and do-away with misperceptions by demonstrating what a real-world installation journey looks like.

But you still need technology innovation

In addition to heat pumps, the Electrification of Heat project has also utilised the amazing heat battery technology developed by Scottish innovator Sunamp – which stores energy using a phase change material – that were used in properties, such as flats, where there were space constraints instead of hot water cylinders.

The government continues to encourage further innovation in the market. The Heat Pump Ready Programme, the next BEIS-funded programme, supports the development and demonstration of heat pump technologies and tools, and solutions for optimised deployment of heat pumps.

Of course, there is no substitute for policy changes – that is what really drives markets at scale. In particular, ensuring that low carbon heating technologies are not disadvantaged by policy costs is essential when we move out of the crisis.

It is happening, now it needs to happen faster

In the heating sector, genuine innovations are changing the face of heat in homes. Efforts to evolve the technology coupled with smart thinking on tariffs are beginning to provide competitive alternatives for households across Britain.

Of course, more needs to be done to drive down the cost of a heat pump and other low carbon technologies. Of course, we need to focus on making the consumer journey really easy. Of course, heating technologies need to be integrated with the wider system to deliver benefits for the wider energy economy. That is all part of building a new market and the energy system of the future. We have moved this far in three years and things are only speeding up…