OFTEC consultation response says driving down renewable heating costs must be priority

OFTEC consultation response says driving down renewable heating costs must be priority

Friday, July 10, 2020 By OFTEC

In its submission to the Department for Business, Energy and Industrial Strategy (BEIS), OFTEC warns that subsidising expensive green heating technologies will continue to distort the market and that the only way to achieve the level and speed of decarbonisation required is via policy that is fair and inclusive for all.

The consultation proposals include the introduction of £4,000 'Clean Heat Grants' to help households cover the expense of installing heat pumps, which cost on average £10,300¹, and in limited cases, biomass systems.

OFTEC says that whilst generous, the grants still leave consumers with at least £6,000 to pay which many already stretched households will struggle to do, particularly those living in off gas grid homes.

Commenting, OFTEC chief executive Paul Rose says: The Clean Heat Grants are primarily aimed at rural households, so it is essential that BEIS considers the social and economic realities for many of these consumers, along with the nature of rural housing stock, which is amongst the least energy efficient in Europe.

Rural homeowners are already more likely to be in fuel poverty and face the largest fuel poverty gap². Many also fall into the low to middle income bracket with little or no savings³. Even with the proposed grants, most still won't be able to afford the high capital outlay, or the home energy efficiency improvements needed for successful heat pump retrofits in existing homes.

The result of pursuing this unrealistic, regressive policy route will likely be that many people are unable to do anything about reducing emissions from their homes and crucial targets will not be met.

Government must instead focus on policy that creates a competitive market to encourage innovation, reduce costs and provide choice for consumers so they can select low carbon heating systems to best suit their needs and budgets.

BEIS' narrow policy support for heat pumps and biomass systems excludes other potentially more cost-effective solutions such as renewable liquid fuels. Some of these fuels have lower carbon emission factors than biomass⁴ and many European countries are already carrying out trials with encouraging results.

Paul Rose continues: Continuing to throw money at a small range of expensive renewable technologies is wasteful and regressive. These technologies have been subsidised through the Renewable Heat Incentive for over six years but take up remains inadequately low, while prices remain high. Less than 1% of oil heated households have made the switch, a similar proportion of LPG households and even fewer of those on electric heating⁵.

Common sense must now be applied before any more time is wasted due to ineffective policy. There is no getting away from the fact that cost remains a crucial factor for consumers and to be successful, decarbonisation strategy must reflect this.

The only way households will be able to afford to make the changes required is if renewable heating costs are significantly reduced. This should be government's priority before it's too late.

¹BEIS 'Future support for low carbon heat consultation' April 2020

²BEIS Annual Fuel Poverty Statistics Report April 2020

³Savings and investments (nominal) of adults in low to middle income households (UK). Resolution Foundation 2020

⁴Building Research Establishment carbon emission factors

⁵ BEIS Domestic Renewable Heat Incentive monthly deployment data January 2020/ OFGEM

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