Future of low carbon heat for off gas buildings - call for evidence: analysis of responses

Low carbon heat and fuel poverty

The call for evidence paper noted that households in off-gas buildings are more likely to be in fuel poverty, with rates of fuel poverty amongst those using electric heating systems more than twice that of households connected to the gas network. The prevalence of fuel poverty amongst off-gas households is likely to reflect a mix of higher fuel costs (for electricity) and the characteristics of the rural housing stock.

Decarbonising off-gas heat supply could increase the rate of fuel poverty for these households. This is a particular risk given that capital costs of low carbon heating systems are often higher than high carbon systems, although running costs can be lower for some low carbon systems. Question 40 sought examples of low carbon heating systems contributing to lifting households out of fuel poverty.

Readers should note that respondents’ focus on specific aspects of the role of low carbon heat for fuel poverty appeared to reflect their experience and expertise. For example, those active in a particular energy sector were generally more likely to refer to associated technologies. As such, views expressed cannot necessarily be read as representative of the full range of opinion. References are provided for specific claims where possible, and we note where evidence was not provided. Statements of opinion provided without evidence may not have been included.

A total of 26 respondents (48%) addressed Question 40.

Most evidence cited at Question 40 related to potential for low carbon technologies to reduce heating costs generally, rather than specifically on the potential role of low carbon heat for fuel poor households. This included examples of savings achieved by heat pumps, low carbon heat networks, biomass (including in combination with LPG), bioliquids, and use of solar PV. The potential benefits of self-sourced biomass fuel were also suggested in relation to cost savings. Specific comments on potential cost savings are summarised below.

• Most suggested savings relative to off-gas fuel sources such as coal, oil, LPG and electric heating, although a private (renewables/low carbon) respondent cited an example of large scale heat pumps in multi storey buildings reducing costs relative to mains gas heating. Other examples of potential savings included low carbon heat networks in higher density housing such as high rise flats and sheltered housing.
• Some referred to examples of energy efficiency improvements being installed alongside low carbon heat, including suggestions that this was required to secure sufficient cost savings.
• Potential for energy service contracting to achieve savings in combination with low carbon heat was also suggested.

The few respondents referring specifically to low carbon heat for fuel poor households included some noting the importance of advice and support in enabling households to choose the correct technology. Some suggested that careful design and household behavioural change is required to lift households out of fuel poverty. Others felt that potential savings associated with low carbon heat are unlikely to be sufficient to address the high prevalence of extreme fuel poverty.

However, some examples were provided of low carbon technologies helping to lift households out of fuel poverty. These included:

• A retro-fitted heat network in Glasgow contributed to a reduction in fuel poverty indicators such as tenants that had previously been paying more than 10% of their income on heating, and those who were borrowing money or putting off payment of other bills to pay for heating.
• Retrofit of GSHP to a number of tower blocks in Enfield had included a large number of tenants previously classed as fuel poor.
• Proposals for housing development in Orkney with low carbon heat and insulation levels to be ‘fuel poverty proof’.
• A private (heat pump) respondent suggested that the potential of GSHP is indicated by this being the only low carbon technology eligible for Energy Company Obligation focused on fuel poverty alleviation.

Reference was also made to potential developments that could help to alleviate fuel poverty. An ‘other organisation’ respondent suggested there is potential to reduce heating costs in rural and island locations via upgrade of local grids and energy storage to allow households to use locally produced renewable energy. A private (energy supply) respondent suggested injection of low carbon gasses into the gas grid had potential to use low carbon heat to lift more households out of fuel poverty.

Some private and third sector respondents suggested there is a tension between decarbonisation of heat and addressing fuel poverty. This included concerns that low carbon heating is more likely to increase than alleviate fuel poverty.

Decarbonising the household energy system also comes with justice tensions…potential new inequalities would need to be considered as innovation in the sector grows.

Private sector (renewables/low carbon) respondent

High capital costs of low carbon technologies were seen as a particular risk, although it was suggested that those in fuel poverty should be able to benefit from the full range of available financial support to enable a move to lower cost low carbon heating. Some also questioned the likelihood of low carbon technologies delivering reduced running costs, including suggestions that on-grid gas is a lower cost option for most households. It was suggested that current methodologies to estimate in-situ performance are likely to overestimate likely fuel savings, such that consumers could encounter fuel costs substantially higher than expected. A private (other) respondent suggested that tackling fuel poverty had to prioritise reduction in fuel bills, such that reduction in emissions was a secondary consideration.