The plan for a 'Green Industrial Revolution' makes it likely that rural households will no longer be able to replace their existing oil boilers and will be forced instead to switch to expensive electric heat pumps - the government's preferred low carbon solution for rural homes. Latest figures suggest air source heat pumps cost on average £10,900 to install¹.
The move means many will also have to make costly home insulation improvements to ensure these systems work effectively.
Oil heated homes are some of the least energy efficient in the UK, with almost two thirds (65%) in EPC bands E-G, equating to 765,000 properties².
Homes that use heat pumps need to be well insulated to ensure comfort and to avoid high running costs. The government has estimated that bringing EPC Band E homes heated by oil up to an acceptable Band C, would cost on average £12,300. For properties in EPC Bands F or G, the cost would be £18,900³.
This means the total bill to decarbonise all 765,000 properties will be around £19.85 billion – equivalent to nearly £26,000 per home on average and for some, the figure will be considerably higher.
It's unlikely that rural households will have the capacity to make this level of investment, particularly in the current climate. Disposable incomes are already lower in rural areas and fuel poverty levels deeper due to the poor energy efficiency of many off-grid properties. And because of the very high costs involved, the government is unlikely to be able to fully support the proposed changes through grants or other support mechanisms.
Even those that can afford to act may face weeks without heating due to the length of time heat pump installations and the accompanying retrofit work can take to complete.
By contrast, a cheaper, easier solution has been proposed by the oil heating industry but so far, government has shown no appetite to support this option.
Converting existing oil heated systems to run on a renewable liquid biofuel would cost no more than £500 for a working boiler, or £3,000 if the boiler is broken and needs replacing. There would also be no pressing need to upgrade insulation, although this is considered desirable to reduce running costs and improve comfort.
The oil heating industry recently wrote to the government minister responsible for energy, stating its readiness to introduce a renewable liquid fuel to replace heating oil. This option could deliver rapid progress towards decarbonisation if supported though appropriate policies, potentially saving rural households and the government millions of pounds.
Paul Rose, the chief executive of OFTEC, said: "Heat pumps are an excellent heating technology, but they are very expensive. Consumers need to be offered more choice over which solution they use to decarbonise their home heating otherwise they will face enormous costs.
"With consumers also expected to pay higher costs to switch to electric vehicles, the government's heating plans are just too expensive, particularly for rural households. Biofuels offer a near drop-in, low carbon solution for existing oil heated homes and for most, this will be a much more affordable way to forward."
¹ MCS Average costs of certified installations data 2019.
² BEIS Minister Written Answer, 29/10/2018 based on Analysis of National Housing Model input data, drawing from English Housing Survey 2014, Scottish Housing Condition Survey 2014, Welsh Housing Conditions Survey 2014
² BEIS data stated by Minister of State for BEIS during Parliamentary Questions September 2020