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UK government aims for clearer vision for heat decarbonisation

The UK energy minister says her department hopes to provide a clearer vision to its strategy for heat decarbonisation in 2017, as she announced changes to the main policy driving that agenda, the Renewable Heat Incentive.

Baroness Lucy Neville-Rolfe, Minister of State for Energy and Intellectual Property acknowledged that the country had yet to fully agree on the optimal mix of technologies required to decarbonise the heat sector in the most cost effective manner.
Baroness Lucy Neville Rolfe
She was speaking at the Heat Summit event which also heard from the authors of recent reports by hosts Policy Exchange, Imperial College, and KPMG/ Energy Networks Association.

The minister referred to the technologies currently available, without outright commitment to any one method.

“Heat is very difficult to decarbonise and no consensus is yet reached on the mix needed for the long term and you will have seen that from the various different reports on the subject.”

“We need to be clear on the challenges, clear on the things we start to make progress on now and we need to agree on a long term direction.”

“It is significant that over the last few decades there has been an accumulation of evidence on climate change and a growing momentum in the need to tackle it urgently, leading to the landmark of Paris and ratification by the UK. It is an important sign of our commitment to tackle climate change both here and the rest of the world.”

Earlier Richard Howard, head of energy and environment at Policy Exchange had said that à‚£30bn is spent on heat each year across domestic and industrial consumers ‘yet it has been overlooked’.

Baroness Rolfe said there was ‘enormous consequences’ in getting the heat strategy right, and many considerations to take into account.

“In terms of energy for domestic and industrial use, heat accounts for 45 per cent of UK energy consumption and over 40 per cent of climate emissions.”

Among the ‘fundamental points’ associated with heat, she said UK heat demand peaks at different times of the year and unlike oil or gas it can’t be moved long distances; it has to be generated where it is consumed.

“On cold winter days there can be 10 to 20 times as much demand. It’s so obvious but there are enormous consequences to designing an affordable, reliable heating system.”

She told the audience the government was taking measures to improve the overall scenario, strengthening regulation for the energy performance of buildings, and tackling the poorer performing properties in the private rental sector. In terms of furthering the cause of energy efficiency the government is also looking at how to encourage homeowners to improve their homes as well as introducing a minimum standard for boiler replacement.

Other measures introduced in what is a largely underdeveloped area for the government so far include the roll out of smart meters for all domestic consumers and businesses by 2020, ‘where the potential for energy savings are significant’, as well as the possibilities inherent in battery storage.

District heat networks are also to feature in a more coherent strategy to be announced in 2017.

“Heat networks, utilising waste heat or other low carbon sources will require good management- but we have made a start with à‚£323m allocated under our ‘central heating for cities’ project. The cost of heating flats can be 30 per cent lower than boilers when connected to district heating.”

There were few indications as to whether the government were instinctively favouring one technology over another ” the minister noted high satisfaction rates with heat pumps for example, but also the high upfront costs involved.

Earlier presentations pointed to the necessity of gas to affordably meeting peak heat demand and the potential offered by green gas in the UK’s low carbon energy future.

Asked from the floor if the government had a preference for green gas instead of heat pumps she said, “Over the next five years support schemes will drive uptake of some technologies like hydrogen. When we look at the gas network and we look at the consumer research they like gas ” but we have carbon targets to meet so thinking of how you adapt the network for hydrogen comes up a lot in these reports.”

The Department for Business, Energy and Industrial Strategy (BEIS) also published its response to its consultation on the Renewable Heat Incentive (RHI) on Wednesday. Subsidies for renewable technologies to heat homes, such as heat pumps and biomass boilers, are being increased in order to encourage the take-up of clean technologies for heating and hot water in homes and other buildings.

For biogas and biomethane, the reforms will vastly improve the carbon cost-effectiveness of further support while solar thermal will stay in the scheme and continue to receive the same level of payments.

Baroness Neville-Rolfe said the improvements to the renewable heat incentive would “do more to encourage households and businesses to install electric heat pumps and indeed biomass boilers, instead of conventional fossil fuel systems”.

“The reforms will also make sure we are improving the value for money of spend through the scheme and that consumers are protected.”

The minister expressed the urgency needed in overcoming barriers to greater decarbonisation.

“Questions we need to address are, how far can the gas system adapt to the decarbonisation challenge? How do we electrify heat on a bigger scale? How do we rise to the innovation challenge? How do we engage consumers and markets in all of this work and manage this transition most effectively?”

“There are no easy answers but we need to grasp these challenges. We haven’t addressed the issue strategically. We are determined to do more and provide a clear line of sight for the longer term, which will help you find the way forward and seize business opportunities.”

An indication of the task ahead in getting to grips with the challenge came earlier in proceedings from Howard who mentioned that there was no data on domestic heat emissions. Policy Exchange’s own research estimated that these emissions had reduced by a quarter since 1990.

Dr Keith McLean from Imperial College London told the gathering that more needed to be done in thinking holistically about the implications of various projects in the space, including impact and cost assessment, and a broader assessment of what is or isn’t practical.

He was struck by ‘how little concrete evidence there was about it (decarbonisation technologies)’ ” “most of it was cost optimisation models rather than practicalities.”

“For example we may need to get 20,000 properties retrofitted every week for 20-25 years- what about the cost and practicalities of that.”

“How many roads can we dig up at any point in time? The economic models don’t use traffic and access disruption which we know from gas grid work is a major issue ” there is a limit to what you can dig up.”

“District heating and gas electricity connections are easy but heat pumps are not easy with upfront costs for home owners that can go all the way to à‚£15000.”

“There is no silver bullet and each solution has a part to play.”

ENA Director of Policy and Gas Tony Glover set out the innovation which is being led by Gas Distribution Networks (GDNs) to facilitate the injection of green gas, such as hydrogen and biomethane, into the networks to meet demand for heat and transport.

Glover, said “While there are a range of options available to us in meeting the UK’s decarbonisation challenges, the continued role of the gas network will be crucial to delivering an affordable and secure low carbon transition which considers the impact of consumer choice.”

“If we incrementally evolve how we use our gas network we can actually deliver a far more cost-effective low-carbon solution than going down the electricity network which is three times the expense for customer s as well as the country itself.”

“Our gas network offers the most easy, frictionless, least disruptive way to get to the low carbon future we want.”

Not everyone believes the changes announced on Wednesday go far enough for their technologies. John Baldwin, Chair of the Renewable Energy Association’s biogas group and Managing Director of CNG Fuels said: “The biomethane tariff reset is most welcome.à‚  Government has acknowledged the strategic role biomethane can play across heat and transport and the resetting of the biomethane tariffs should enable continued deployment of the most competitive projects.à‚ 

“Unfortunately, the biogas combustion tariff isn’t likely to enable many new biogas CHP projects to come forward.à‚  With the closure of the renewables obligation, and rapidly falling tariffs for the Feed-In Tariff, this sector still faces many challenges.”