Heat and buildings strategy: Key points

On 19 October, the government released the Heat and Buildings strategy outlining how the government will tackle the decarbonisation of the built environment to help meet the UK net zero ambition. Our experts have taken a quick look at the strategy and highlighted the key points.

Heating

The strategy makes commitments to phase out the installation of new natural gas boilers beyond 2035 “once costs of low carbon alternatives have come down”. They have set a “clear” ambition for the industry to reduce the costs of installing a heat pump by at least 25-50% by 2025 and to ensure heat pumps are no more expensive to buy and run than gas boilers by 2030.

To encourage consumers to switch to a heat pump, the government will provide a clean heat grant called the Boiler Upgrade Scheme. This will give households a £5,000 grant when they switch to an air source heat pump or £6,000 when they switch to a ground source one.

A £60mn Net Zero Innovation Portfolio (NZIP) ‘Heat Pump Ready’ Programme will support the development of innovation across the heat pump sector, including improving customer experience.

Energy bills

In response to reducing electricity costs, the government has said it is considering rebalancing energy levies (such as the Renewables Obligation and Feed-in-Tariffs) and obligations (such as the Energy Company Obligation) away from electricity to gas over this decade. This will include looking at options to expand carbon pricing and remove costs from electricity bills. We explore this in our insight paper – Who pays for supporting the net zero transition.

The electricity network

The strategy acknowledges that the electricity system will need to accommodate increased electricity demand. The government has said that they will work with Ofgem, distribution network operators, and others to plan the network. They will also consider the role of flexibility.

We looked at the electricity network and the net zero transition in this insight paper.

Hydrogen

A decision on the potential role of hydrogen in domestic heating buildings will be made in 2026, following the completion of a Hydrogen Village trial in 2025, supported by the government and gas network operators.

For more information on hydrogen please see Understanding the backdrop of the UK hydrogen economy and Industrial decarbonisation key for UK low carbon hydrogen.

Energy efficiency

The strategy mentions continued drives to improve poorer performing homes throughout the 2020s so as many homes as possible can achieve an EPC band C by 2035.

The strategy announced boosting funding for the Social Housing Decarbonisation Fund – investing a further £800mn over 2022/23 to 2024/25 – and Home Upgrade Grant investing a further £950mn over 2022/23 to 2024/25, both aim to improve the energy performance of households.

A full analysis and commentary on the Net Zero Strategy will feature in next week’s Energy Spectrum. To request a free trial or discuss a subscription, please contact Robert Buckley on r.buckley@cornwall-insight.com.

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