Decarbonising UK’s heating system could cost £450 billion

The cumulative additional cost of decarbonising the UK’s heating system by 2050 could be as high as £450 billion, research for the government’s infrastructure advisory body has concluded.

According to a new study carried out by consultancy Element Energy & E4techfor the National Infrastructure Commission, all options for heat decarbonisation are “significantly more costly” than continuing with the status quo.

The report estimates that under the worst case assumption in the study, the additional cost could be as high as £450 billion.

But its central cost assumption is that central assumption is that additional costs of heat decarbonisation will work out at £120 to £300 billion.

The study estimates that the average annual cost of heating per household will be £100 to 300 higher in 2050 than in the status quo.

However the study says that these figures for increased costs have to be placed in the context of the wider growth of the economy, which it expects to triple in size by the middle of this century based on anticipated average GDP growth of 2.3 per cent per annum between now and then.

Based on these figures, it estimates that the total cost of heating will represent a ‘substantially smaller share’ of GDP than in 2015.

Another factor to be weighed in the balance is the increased energy security resulting from reduced reliance on imported gas.

The researchers estimate that a combination of energy efficiency measures could deliver savings of nearly 130 TWh per annum, equating to more than a quarter of total electricity demand.

These include insulating 10 million lofts, nearly 4 million remaining cavity walls, more than 1 million solid walls and 6 million floors.

The study finds that re-purposing the gas grid to deliver low carbon hydrogen, if delivered safely and at scale, is the lowest cost option for decarbonising the heat.

However it says it is “unproven” whether hydrogen can be safely delivered to the millions of buildings that will need to be retrofitted.

And it says that cost-effective conversion to hydrogen heating is highly likely to rely on another unproven technology – carbon capture and storage.

And the study estimates that retrofitting the gas pipe network for hydrogen is likely to cost about £100 billion less than electrifying the heating system by mass deployment of heat pumps, which would also require much better energy efficiency to work effectively.

The report also finds that cost savings and carbon emissions reductions of up to 10 MtCO2 could be achieved by the wider roll out of heat networks, which could supply as much as a quarter of the UK’s heat demand.

Responding to the report’s findings, David Smith, chief executive of Energy Networks Association, said: “Britain’s energy network operators are committed to creating an efficient, smarter, cleaner energy system fit for our homes and businesses.

“Decarbonising heat is one of the greatest challenges facing our energy system, and ENA welcomes the independent National Infrastructure Commission’s contribution to the evidence base on future options. Our power, heat, transport and waste sectors are all interdependent, and so must be the solutions for their decarbonisation.

“The NIC figures suggest that a whole-system approach to decarbonisation, which involves planning how to use our energy network infrastructure in a more integrated way by using low carbon gasses like hydrogen, could save £55 billion to 2050 compared to an electricity only solution.”