WBS EUA REPORT - “THE UPFRONT COST OF DE-CARBONISING YOUR HOME”

HEAT PUMPS ARE TYPICALLY 5 TIMES MORE EXPENSIVE THAN A HYDROGEN-READY BOILER

A new report titled “THE UPFRONT COST OF DE-CARBONISING YOUR HOME”, was published 15th November 2021, by the not-for-profit body Energy and Utilities Alliance (EUA) and concludes that customers are typically facing a five-fold cost increase to install a heat pump, compared to a hydrogen-ready boiler.

EUA REPORT - https://eua.org.uk/uploads/61941B07BA17D.pdf

The UK Government’s Heat and Buildings Strategy set out plans to significantly cut carbon emissions from the existing housing stock and new homes using technologies such as heat pumps, hydrogen, and heat networks. The impact of the Government’s strategy will depend on whether the cost of installing heat pumps can be reduced by up to 50% by 2025, with the aim being for heat pump costs to be the same as a gas boiler by 2030.

The EUA report analysed the upfront capital costs as well as the cost of any associated upgrades to homes that consumers need to budget for when considering installing low carbon heating technology solutions.

The EUA will track the upfront costs of each technology with further reports over time, to establish whether the cost reduction targets of both the government and heat pump stakeholders are being delivered, and the implications that this has on consumers and builders to be able to decarbonise the current and future UK housing stock.

CONCLUSIONS OF THE EUA REPORT

The EUA report acknowledges that the UK’s Net Zero target is ambitious and that decarbonisation of our homes will be challenging. The report also acknowledges that whilst stakeholders will all debate that their technology is best suited to solve this problem, the challenge is too big, and the issue too important, for this to be left to a single technology alone. 

The UK will need to deploy various technologies to decarbonise the 28 million homes across the UK, 23 million of which are currently connected to the gas grid i.e. 

• Large scale investment in replacing methane with hydrogen in the existing gas grid

• the roll-out of heat pumps at scale

• investment into clean district heat networks.

The EUA report demonstrates that certain constraints and consumer preferences, together with variable upfront capital costs across property types and heating technologies, mean there is currently no single optimal solution for every property type, but hydrogen-ready boilers and gas boilers are currently the cheapest overall solution.

Whilst Heat pumps will be the right technological solution for new homes, most ‘off- gas grid’ homes and homes where high levels of energy efficiency exist, the upfront capital costs required to install a heat pump are higher in comparison to a hydrogen- ready boiler, not only due to the equipment costs but also due to the cost of energy efficiency and heating distribution measures that will be required in many homes, although some homes will be able to take advantage of the grants being offered for heat pump installations, which will reduce their upfront capital costs. 

The report also acknowledges that the replacement of existing heating systems usually occurs when consumers are left with no heating, and that replacement with a heat pump will be more disruptive for consumers than with hydrogen-ready boilers, as the installation can take up to 2.5 days. 

From the report, the level of deployment required to deliver the UK’s carbon budgets will be difficult, without further cost reductions, technological improvement, and innovation which the Government’s Heat and Buildings Strategy outlined.

Whilst the UK Government have based their strategy on the capital cost of heat pumps being significant reduced over the next 5-10 years, the EUA will track the Government’s strategy, along with the ambitious cost reductions timeline being put forward by the private sector, over time against low carbon alternatives.

Whilst the report acknowledges that there are several barriers to overcome, including upfront capital costs, before heat pumps can be considered as the appropriate solution for some consumers, the EUA advise that we cannot wait for these reductions and that it is important we continue to progress a diverse range of heating solutions such as clean hydrogen and heat networks, including making a positive strategic decision on hydrogen’s role in residential heat by 2026 and mandating hydrogen-ready boilers as soon as possible, in order to introduce low carbon options in to the current boiler replacement cycle at no additional cost to consumers.

HYDROGEN READY BOILERS 

• Hydrogen-ready boiler technology exists today

• Boiler manufacturers stand ready to introduce them as a standard product in the boiler replacement cycle at no additional cost to current natural gas boilers. 

• The installation of Hydrogen-Ready boilers is expected to be notably faster and less disruptive than heat pumps and will not require immediate capital outlays in terms of home upgrade measures as a pre-requisite, making them a preferable option for many consumers.

For the full EUA report visit https://eua.org.uk/uploads/61941B07BA17D

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