After a highly impactful 2024, the Electrify Heat coalition has turned its attention to a revised set of policy challenges. Read on to learn more about the key interventions we’re hoping to progress this year, and how they’re central to our shared mission of electrifying heat.
- Publish the Warm Homes Plan
- Implement a high ambition Future Homes Standard without delay
- Lower the price of electricity
- Introduce government backed green retrofit loans
- Ensure the success of the Clean Heat Market Mechanism
- Scale up support for training and education
- Make a decision on the role of hydrogen for domestic heating by the end of 2025
- Reform Energy Performance Certificates
- Improving incentives for Consumer-Led Flexibility
- Ensure consumers get the performance they deserve
1. Publish the Warm Homes Plan
The Department for Energy, Security and Net Zero (DESNZ) must set out a comprehensive, coherent and adequately funded long-term strategy for electrifying heat in the Warm Homes Plan. The previous government’s Heat and Building Strategy was a positive start but has somewhat died a death of a thousand cuts. Both government and industry urgently need a refreshed strategy with stretching targets and well-resourced delivery mechanisms if they are to scale up at pace.
2. Implement a high ambition Future Homes Standard (FHS) without delay
The Ministry for Housing, Communities, and Local Government (MHCLG) must first publish their response to the 2023 consultation on the FHS, committing to Option 1 (higher ambition/higher payback). They must then lay the regulations as soon as possible. Delays are projected due to additional modelling work, and major housebuilders are reportedly misinforming ministers that Labour’s ambitious 1.5 million new homes target will not be possible under the FHS, that supply chains won’t be able to cope, and that SME housebuilders cannot deliver to these new standards.
3. Lower the price of electricity
To see heat pump running costs come down, the Government must resolve the existing UK energy market distortion between electricity prices (amongst the highest in Europe) and gas. This ‘spark gap’ is due to necessary environmental levies being placed disproportionally on electricity, and acts as a barrier to heat pump uptake by eliminating their efficiency advantage over gas boilers. Government must remove these levy costs from electric heating, ensuring that low carbon heating is also reliably lower cost for consumers.
4. Introduce government backed green retrofit loans
DESNZ must introduce a government-backed loan scheme for domestic retrofit to help consumers cover the excess cost of heat pump installation (as well as insulation, solar, batteries etc.). Government must also facilitate a wider range of green financial products and services to find routes to market (e.g. heat as a service, property-linked finance, group buying), which will involve longer term reform of regulations like the Consumer Credit Act.
5. Ensure the success of the Clean Heat Market Mechanism (CHMM
For the first year of the CHMM, government must be transparent about the progress obligated parties are making and set out ways the scheme can be made more robust if it not performing as intended (for example, raising of fines for the following year if obligation is not being attempted). Government must be prepared to raise the obligation level to a higher percentage in year two, considering the many concessional amendments made to the CHMM – including its 12-month delayed introduction and the carbon impact that had.
6. Scale up support for training and education
Encourage more entrants into the sector through apprenticeships, school leavers and other educational opportunities. While heat pump installer training figures are currently ahead of schedule, the industry will need to continue to train more qualified installers to achieve deployment targets.
7. Make a decision on the role of hydrogen for domestic heating by the end of 2025
To protect consumers from potential cost increases. Network planners need clarity to ensure billpayers’ money is spent efficiently. Unless government acts now to provide a clearer vision and rule out wasteful spending, consumer energy bills are likely to rise, and ongoing uncertainty will continue to undermine investment in electric heating. UK Government should make a decision on strategic approach by the end of 2025, and commit to developing a long-term transition plan for gas networks and workers, working with both industry and trade unions.
8. Reform Energy Performance Certificates (EPCs)
With the consultation on EPC reform now closed, we will be looking to government to turn publish an ambitious and robust response in a timely manner.
9. Improving incentives for consumer-led flexibility
Shifting energy usage away from peak demand and making better use of abundant renewable energy help reduce the cost of the energy system for all consumers. Unfortunately, many of the costs felt by consumers are static and fail to reward flexible usage. Government should strengthen price signals for flexibility by ensuring all per-unit electricity costs vary with time, and ensure new electric heating systems.
10. Ensure consumers get the performance they deserve
Average installed heat pump performance currently sits at a seasonal coefficient of performance (SCOP) of around 2.8. But modern heat pumps are capable of achieving much higher efficiencies if installed correctly. Government should set a target of increasing average heat pump performance to a SCOP of 3.5, and work with the sector to develop a roadmap for achieving this target by 2030.
Please reach out to leo.vincent@e3g.org if you’d like to learn more about Electrify Heat’s campaign for cleaner, more efficient heat.
