– Karen Boswell, Managing Director, Baxi
This week’s cuts in VAT on heat pumps and energy efficiency measures will make a welcome contribution to the energy transition.
With Russia’s war in Ukraine focusing minds on how do we become less dependent on gas, we need to make low carbon alternatives more affordable.
While not game changing, the cut in VAT will help.
The traditional gas boiler has up to now been the cheapest way to keep our homes warm in the winter and are used in 85% of homes. Gas has rightly been seen the best source of heat to reduce fuel poverty.
That argument no longer stands. We were already being warned about increasing prices for gas well before this war and now we are looking at big increases in household bills soon.
So while the UK was already on its journey to net zero and planned to get rid of new gas boiler installations by 2035, the war in the Ukraine is concentrating minds.
Today, we propose some steps that could make a big difference relatively quickly.
We’re pleased to see tax cuts to incentivise energy efficiency measures in customers homes. This is to some extent a missed opportunity in the recent Heat & Buildings Strategy. Irrespective of the energy source used to heat a building the cleanest and cheapest kWh of heat is the one we don’t need. By increasing investment in existing efficiency schemes and providing incentives to homeowners to take up insulation measures we can, at a stroke, reduce demand for heating.
Electrification of heat, where practical, will immediately mean we are less dependent on gas as only a proportion of electricity is generated from natural gas and this is decreasing quickly.
Electrically driven heat pumps a low-carbon technology that uses the refrigeration process to take the warmth from the air outside (even when it’s freezing) will become the main source of heating in new build homes from 2025.
However, they can be difficult to fit in the UK’s existing housing stock which often requires substantial modifications to work well with a heat pump.
The UK government should therefore be looking at hybrids where a specially adapted heat pump works alongside the homes existing or new gas boiler. It could reduce gas usage by up to 70% but this relatively simple easy-to-install option is almost non-existent in the UK. This is unlikely to change soon because hybrid heat pump systems will not be eligible for the new Boiler Upgrade Scheme which incentivises ‘heat pump only’ installations. The government is taking a very purist approach by not incentivising hybrids but it could be missing a trick as these are popular in Europe.
The biggest block to moving away from gas is that installers businesses are built around gas boilers. Who will install different appliances? We’ll need to train an army of low carbon energy installers with a very different skillset to our current heating engineers. Baxi is already providing heat pump training for hundreds of engineers but what we really need us an ambitious industry wide retraining plan for the 130,000 Gas Safe engineers that are currently helping people stay warm throughout the UK. The government, companies, and training colleges need to rethink the job profile and skillset of an installer. The installer of the future will install a wider variety of devices and will be the consultant for customers on their options to decarbonise their homes and buildings.
The heating sector needed to change well before the appalling events in the Ukraine. We have options for replacing natural gas; but making these alternatives affordable and ensuring there are skilled businesses who can install them represents a complex puzzle. We all need to take responsibility and play our role. Energy security has never been more important. It’s time to act to make the energy transition a reality.