As oil prices fall and electricity prices soar heat policy must be reviewed says OFTEC

As oil prices fall and electricity prices soar heat policy must be reviewed says OFTEC

Wednesday, August 02, 2017 By OFTEC

According to the latest quarterly data from the Sutherland Tables, a recognised independent source of comparative UK domestic heating prices, oil remains by far the cheapest of all major home heating fuels, with average annual costs in Great Britain falling 10% in the last quarter to just £840.
By comparison, the average annual heating cost for the same three bedroom home with electric storage heaters rose by 9% to £1910 – 127% more expensive than heating oil – with further electricity price rises on the horizon this September for many households.

Oil is also currently 13% cheaper than mains gas (£967 per annum), 44% less expensive than LPG (£1524 per annum), 34% cheaper than biomass (£1283 per annum) and 50% less expensive than air source heat pumps using radiators (£1681).

With these price comparisons in mind and cost remaining a key driver for most consumers, OFTEC says it makes no sense for government to continue ploughing money into incentivising technologies such as heat pumps to reduce carbon emissions from domestic heating as they run on increasingly expensive - and only partly decarbonised - electricity.

Even with financial assistance, heat pumps will remain prohibitively expensive to install and run for all except the wealthiest few, so take up will remain painfully slow - along with the UK’s progress towards its fast approaching carbon targets.

OFTEC chief executive Paul Rose comments: “Electrically powered heat pumps, along with biomass boilers, are two of the government’s preferred low carbon heating options promoted through schemes such as the domestic Renewable Heat Incentive (RHI). But it isn’t hard to see why enthusiasm for these technologies remains low given that both installation and running costs remain far higher than those for high efficiency oil boilers.

“With further increases in electricity costs expected from September and widely agreed predictions that oil prices will remain low for some time to come, it’s unlikely this position will change in the near future.

“For this reason we are urging government to be realistic and work with the situation we currently have rather than pursuing impractical ideals. Consumers need cost effective solutions to start reducing carbon emissions from heating now.”

OFTEC has put forward proposals to government to introduce a nationwide boiler replacement programme to help the 400,000 households in Great Britain still relying on standard efficiency oil boilers to upgrade to high efficiency condensing models. This would provide an affordable, practical and therefore palatable short-term solution to help consumers reduce carbon emissions and cut fuel bills, whilst OFTEC seeks to bring to market a low carbon liquid fuel to replace kerosene as a sustainable medium to long term solution.

The latest hike in electricity prices could also push more households into fuel poverty this winter, especially in rural areas where fuel poverty is already more prevalent (14% in rural areas vs 11% in urban locations) as homes tend to be older, poorly insulated and therefore more difficult to heat.

Paul Rose continues: “It is shocking that in 2017, there are still some 2.5 million households classified as fuel poor. On average, these families experience a shortfall of around £350 between the cost of their fuel bills and what they can actually afford to pay. And the effects of this poverty are far reaching with an estimated 27,150 excess deaths in the UK during the winter of 2015/6 caused by people living in cold homes.

“Government needs to step up to the issue and offer realistic solutions. Whilst we realise that boiler replacement for households already in fuel poverty would be difficult to afford, even with financial assistance, the short term roll out of such a scheme could prevent many others who are just about managing, from crossing that line.”

OFTEC’s proposals for the future of off-grid heating are outlined in its vision document  officially launched to government earlier this year.


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