Andrew Warren, who chairs the British Energy Efficiency Federation, warns in an articel on the Business Green website the already considerable challenge of reducing the cost of heat pumps is being complicated by the inability of Energy Performance Certificate surveyors to recommend a switch to greener heating systems
EPCs don’t like heat pumps – and that’s a problem
Just before the Glasgow COP26 Climate Summit, Boris Johnson announced his “confirmed ambition” to eliminate all new fossil fuel boilers from the marketplace within 14 years. This is in order to ensure buildings play their key role in achieving net zero emissions by 2050.
So, what will replace the gas and oil boilers that now heat the vast majority of UK homes? A year before, on November 18, 2020, Johnson launched his 10-point plan for a Green Industrial Revolution. It began with a target to increase 20-fold the number of heat pumps put into homes to deliver at least 600,000 a year by 2028. Right now, in contrast there are still around 60,000 new oil boilers and approaching two million high efficiency gas condensing boilers installed annually.
Delivering on the heat pump target represents a huge technical challenge even before you consider the potential for political headwinds. Just this week the Daily Telegraph splashed across its front page the statement that UK homes “risk an energy rating downgrade if they install a heat pump”. It quoted prominently the Tory MP Craig McKinlay claiming that “heat pumps can actually increase energy use”. McKinlay chairs the 19 strong climate-sceptic “net zero scrutiny” group of Conservative MPs.
Whilst that is a demonstrably untrue statement, it is absolutely true that the established energy rating scheme, recognised in law, offers a distinctly cold shoulder to the installation of heat pumps.
With fuel bills mounting, there should logically be a determined rush by government to establish how energy costs might be reduced beyond the short term and partial offer provided by the Chancellor’s loan package. Other than by freezing in the dark, that is.
There are free services in Scotland and in Wales, offered by the Energy Saving Trust, providing individuals with objective advice upon behavioural changes plus measures that can be installed, to help reduce bills. Sadly, this service is no longer available to all English households. Which may be one reason why – unlike on all past occasions when energy bills have suddenly increased – government ministers have been conspicuously, and astonishingly, silent about how best to save fuel.
So, how can anybody easily find out what they could be doing to make their building more energy efficient and bring down their bills? Simple. Before you buy or rent any building (residential or commercial), you must by law be given an Energy Performance Certificate. Each quarter, around 400,000 of these are issued. The majority of buildings in Britain now have an EPC, valid for a decade .
As well as providing a rating from A (great) to G (dreadful), the energy surveyor also has to provide useful proposals on how to improve the building, such as upgrade the windows and lighting, insulate roofs and walls, change the boiler, etc.
Indefatigable Green MP for Brighton, Caroline Lucas, wondered recently just how often over the past two years this advice included installing a heat pump? She raised the matter in Parliament. Buildings Minister Eddie Hughes had to confess that, er, no EPC surveyor had ever recommended installing a heat pump.
Why is that? It will be because right now installing a heat pump is typically at least four times more expensive than putting in a highly efficient condensing boiler. And the advice provided under an EPC must, by law, stress cost-effectiveness. EPCs were introduced quite deliberately in order to provide specific information for occupants, regarding what would be the most cost-effective items that might be installed to reduce energy bills.
Last November, again just before COP26, the government finally published – after a two-year delay – a new strategy that should strictly have been called a “Heat IN Buildings”, rather than the “Heat AND Buildings” strategy it was officially named. The emphasis came down firmly against gas and oil boilers, and firmly in favour of electric heat pumps.
But only the plan to accelerate heat pump deployment was only subject to “expected “cost declines. The press release led with “Government sets out plan to drive down the cost of low carbon heating technologies like heat pumps, working with industry to ensure that in future they are no more expensive to buy and run for consumers as (sic) fossil fuel boilers.” This is not an easy task.
And the task is made all the harder by the way the strategy’s centrepiece grant scheme is pretty half hearted. Consider this. There were 30,000 heat pumps installed during 2019. The fund announced in the new strategy to support an accelerated roll out of heat pumps can only provide a part payment for, yes, 30,000 heat pumps to be installed each year during the next three financial years.
Another way of expressing this “largesse” is that the £5,000 per home grants that will be on offer from April 2022 to install heat pumps is identical to the money available for installing heat pumps that was available from October 2020 to March 2021 under the late lamented Green Homes Grant (GHG) scheme.
The difference is that the total budget available for the GHG scheme was due to be £1.8bn over 18 months. In contrast, just £450m over three years is now being offered. And there has been no grants to install any heat pumps available between April 2021 and March 31 2022.
Can EPCs drop prices by 75 per cent?
At present, the capital cost difference between condensing gas boilers – the only kind now installed rather than the “beloved combi” boilers cited by Johnson – and heat pumps is at least 4:1. The official line of reassurance offered by government is that all technologies reduce in price as their marketplace grows in size. Just look at offshore wind farms.
But there is one big difference. The UK was amongst the first countries in the world to adopt offshore wind power stations. It obtained a significant First Mover advantage. In contrast, the worldwide market for heat pumps is already almost 20 million p.a. of which just 30,000 are installed in the UK.
Even if Johnson’s official target of a 20-fold increase in the size of the British marketplace is achieved, the cost of each installation will only marginally decrease. Certainly nothing to approach removing that 4:1 differential.
Since the overnight demise of the Green Homes Grant scheme last March, with 80 per cent of its initial budget left unspent, I have lost count – as will have most BusinessGreen readers – of the number of independent studies that have set out blueprints detailing how important it is to improve the fabric energy performance of the nation’s buildings. These studies all point to ever widening policy and funding gaps. They also detail how, despite having a far more energy efficient building stock than the UK, many other European nations are injecting billions into building upgrade schemes designed to “build back better” after Covid 19.
Tucked away in November’s Heat and Building Strategy, there is a detailed and colourful chart explaining the breakdown of potential emissions savings from the heating of UK buildings during this coming decade. It makes plain that “measures to improve thermal performance” should be delivering well over twice as much cost saving as heat pumps.
But most damaging of all to the prospects for heat pumps becoming major players in existing buildings is the undeniable fact that with EPCs the government has created an evaluation scheme which effectively discards the technology as being of little or no value. Replacing a conventional boiler with a heat pump will not be recommended as a method of improving a building’s EPC rating.
Already nobody can legally let out any of the worst energy performing buildings in Bands F or G. Ministers are already planning to ensure that only Band A or B ratings will become permissible in non-residential lettings. So, it is difficult to see how heat pumps can surmount this barrier, unless there is a root and branch revision of how and what an EPC measures. From past experience, agreeing such major alterations could take many years.
Until such change is made, government ministers will continue to have to admit that no EPC surveyor has yet, or ever will, recommend installing a heat pump. And, absent 75 per cent installation grants, it will be very difficult to make mass market heat pump installation value-for-money.