Government urged to insulate homes before funding new heat technologies

With households facing a steep hike in energy prices, the best way to help people cut bills, to stay warm during winter, and to reduce carbon emissions, is to improve the efficiency of Britain's ageing housing stock first.

The report entitled: Warmth in a changing climate: How should the government encourage households to use renewable heat? which is published today (Friday 16^th Sept) shows that the public is lukewarm at best about the government's proposals to subsidise renewable heat technologies. In a series of focus groups - the first of their kind in the UK - participants asked about renewable heat said they were put off by the high upfront costs of installing new technologies, sceptical that they would deliver enough heat at an acceptable price and concerned about the aesthetic impact on their properties.

The assumption behind the government's Renewable Heat Incentive (RHI), which is being paid for out of general taxation and is expected to cost up to £860 million in the current spending review period, is that a tariff will be paid to householders who invest in renewable heat technology - such as ground or air source heat pumps and biomass boilers - to make the heat they produce more cost-effective. However, IPPR's research, including the focus groups with consumers, shows that these incentives are unlikely to prove either attractive to or cost-effective for householders.

The report concludes that, while cutting emissions from household heating is important, costs across the economy could be higher than anticipated and take-up may be low. In some cases, technologies may simply not provide enough heat to meet consumers' expectations or to heat homes to a safe level. Deploying the technology early in this way risks discrediting it in future, the report argues.

Renewable heat technologies are likely to work better in homes where good insulation is already in place. But too develop the market for renewable heat technologies - and especially heat pumps - beyond these types of housing and into Britain's older, thermally inefficient properties, the report argues that Government should:

• Restrict incentives for heat to properties with a recommended level of thermal efficiency and ensure other households are offered opportunities to improve insulation first
• Integrate renewable heating incentives with its forthcoming Green Deal for energy efficiency, enabling people to secure a package for warmth rather than produce heat inefficiently
• Assist householders to overcome the barrier of high upfront costs by enabling them to have access to low cost lending with government guarantees and by integrating heat and energy efficiency policy into one package
• Target a proportion of the RHI funding at research and development with the aim of lowering technology costs by improving efficiency, especially of heat pumps
• Learn more about the performance of heat pumps across the housing stock through much more extensive trials
• Push for innovation in solid-wall insulation as the non-cost barriers, as well as high costs, make current methods highly unattractive to homeowners

Andrew Pendleton, IPPR Associate Director for Climate Change, Energy and Transport, said

"Decarbonising household heat is essential if the UK is to meet its climate change targets. But the government's current approach is the wrong one. Providing a feed-in-style tariff for heat production rather than offering a package of measures aimed at providing warmth risks undermining consumer confidence in heat technology. A tariff-based incentive will also fail to address the high capital costs, identified as the key barrier in IPPR's consumer workshops."

Notes to Editors

Warmth in a changing climate: How should the government encourage households to use renewable heat? will be available at http://www.ippr.org/. Embargo copies are available to journalists on request.

• Phase one of the RHI will be introduced next month and is expected to use the lion's share of the £860 million budget to 2014/15 to encourage companies, local authorities and others commercial or industrial enterprises to install renewable heat.
• Phase two, about which decisions are expected to be taken soon, is due to be launched in October 2013 and will focus on Great Britain's housing stock.
• The government will also soon introduce its Green Deal into Parliament, in which it will seek to increase the rate of installation of household energy efficiency measures such as loft and cavity wall insulation and draught proofing. The Green Deal will offer householders the opportunity to borrow money to pay for insulation measures but to repay using the savings made on energy bills.
• IPPR argues that, for the majority of householders, it would be best to integrate energy efficiency and renewable heat to ensure that properties benefit from more cost effective insulation measures first and can then have access to help with the cost of installing renewable heat technologies.
• The table below shows the relative running costs of current and renewable heating technologies.

Sources: IPPR calculations based on KENSA Heat Pumps, Biomass energy centre, E4Tech, Centre for Alternative Technology

*Cop = Coefficient of performance, and so Cop is 4 units of heat for every one unit of electricity to run it.

Contact

Tim Finch, IPPR Director of Communications, t.finch@ippr.org 07595 920899