Electricity network constraints and the 2024 New Build Heat Standard: research

6 Key considerations in relation to the 2024 standards

A number of stakeholders were interviewed as part of the stakeholder engagement work package to explore the processes, decisions and costs that are involved in establishing energy infrastructure and connections for new domestic development, and the impact switching to zero emissions heating has on this process. Key considerations for each stakeholder in relation to the 2024 New Build Heat Standards are provided below. Detailed findings from each stakeholder can be found in Appendix A1.

6.1 Key considerations for developers

The major concern for developers in relation to the 2024 standards is the choice of zero emissions heating technologies that meet the new requirements. Gas heating from individual gas boilers remains the preference due its lower installation cost, significant prior experience and the customer familiarity. Some developers are installing a combination of solar panels plus gas or hybrid heat pumps to improve their environmental performance and to meet building regulations.

It is recognised that in order to meet carbon reduction targets, the developers will need to move towards installing electric heating technologies that generate zero emissions at the point of use. The major barriers to this are a lack of experience and confidence in the technology, capital costs, access to supply chain, operational cost and user experience. These barriers will need to be overcome as adoption of these technologies grows.

While stakeholders confirmed that energy infrastructure costs are only a small part of the overall development costs, and so are rarely a significant decision factor for the selection of land or design of a development, they also identified examples where the local DNO network is highly congested and the costs of required reinforcement works are prohibitively expensive. The move to electric heating technologies will make this more likely and more frequent. Developers could consider innovative approaches, such as demand response, and collaboration with other developers to share or reduce the cost of reinforcement.

There is also a concern around the transition to the new 2024 standards. A single development project might encompass several years from identifying and purchasing land to the development being built. This means that a project that was in design and planning in 2019 might be being built in 2024. Changing the assumptions of these existing projects to meet the requirements of the 2024 standards may undermine the business case of these developments. This may have serious implications for the developers and should be considered while planning the implementation of this standard.

6.2 Key considerations for IDNOs and ICPs

Different low carbon technologies present challenges which need to be considered in order to design and manage the electricity network. Clarity over the technology type and energy consumption at the site is required for the IDNOs and ICPs to design their networks to meet the demand.

The inclusion of electric heating cannot be considered on its own. The inclusion of other technologies such as EVs, solar panels, energy efficient appliances as well as the building fabric will impact the energy consumption of new homes. This need be understood and considered going forward.

There may be increased incentives to include energy management on the local network of a development, in order to avoid expensive infrastructure costs and meet the DNO connection requirements. This needs to be considered by IDNOs, in collaboration with developers, DNOs and technology providers.

One impact of electrical heating technologies is that gas networks may no longer be needed at new developments. The impact of not needing gas is that the work contracted to the ICP is reduced, which would lead to reduced revenue. Similarly, it will reduce the infrastructure that can be adopted by an IDNO, reducing the potential revenue from their involvement in the development. However, if district heating technologies are adopted ICPs and IDNOs may benefit through their development and adoption.

6.3 Key considerations for DNOs

The transition towards the full electrification of heating in new homes will increase domestic electricity demand. Investment in new innovative approaches to address this challenge is needed in order to better understand the impact that low carbon technologies have on peak demands, whilst minimising the costs apportioned to consumers. It is acknowledged that DNOs cannot be a blocker to innovation and the transition towards net zero.

A proportion of the costs associated with the adoption of zero emissions heating will be socialised to electricity customers, with societal and energy system benefits. This needs to be considered carefully to ensure it is fair and valuable for society.

Some DNOs have not been considering the impact that low carbon technologies in the future has on their existing connections, except when they receive applications requesting new capacity. Consideration as we approach the next price control will be to identify strategic investment in areas on the network that are likely to be constrained in the future and replace the assets.

Zero emissions heating systems, like other low carbon technologies, have the potential of impacting power quality. While on an individual level, appliances and technologies should be compliant with power quality requirements, adding high volumes to the network could result in more significant impacts which will require management by the DNO.

6.4 Key considerations for technology manufacturers

Manufacturers of zero emissions heating technology should be aware of the requirements of the New Build Heat Standard, to ensure that their products comply. Developers of innovative heating or energy management technologies should to understand the requirements of the New Build Heat Standard and how their technology might support in meeting and exceeding the requirements, or in reducing energy infrastructure costs.

The design of solutions should consider energy infrastructure requirements, installation and operating costs, ease of maintenance and the required technical skills to install and maintain the equipment. There is a need to develop solutions that are effective and usable, and there may need to be user education to ensure the residents of the home understand how to operate their heating system effectively and efficiently.

There is a need for zero emissions heating technology manufacturers and developers to collaborate with other stakeholders. In order for these technologies to be adopted widely, experience and confidence needs to be built up by the developers around their installation, use and maintenance, and by the network operators around the impact that they have on the wider energy infrastructure. Inclusion of innovations such as energy management is likely to be easier and more effective if it is considered early in a development project, and where there is close collaboration between stakeholders.

6.5 Key considerations for homeowner / occupier

Project stakeholder contributors cited the key considerations for the occupiers of properties with zero emission heating as including ease of use, resulting comfort levels and energy bills.

Occupiers of new build homes after 2024 will be amongst the first in the country to experience zero emissions heating technologies first-hand. The majority of the GB public are most familiar with central heating systems fuelled by gas or other fossil fuels, where the occupier turns the heating system on when they want to be warm. Heat pump heating systems, for example, must be operated in a different way, allowing the system to maintain the temperature on an ongoing basis.

User education and ease of use of new appliances is essential as the industry moves towards zero emissions at the point of use in new homes going forward.

In addition, the operational costs of the system should be considered when installing the heating technology. There is a danger that resistive heating technologies will be selected as a low capital cost option, but the operational costs of this technology are comparatively high. The low energy efficiency also means that the environmental credentials of this technology is worse than other electrical alternatives.

Another consideration may be the desire to have control over the heating supply decisions within the property. This issue was raised by project stakeholders in respect of district heating technologies; developers and IDNOs perceive that potential homeowners would be put off by district heating systems as they would be locked into a supplier, and would not be able to make changes to the heating appliances in the home.