Ofgem boss ‘nervous’ about decarbonisation of heat

The head of Ofgem has expressed concerns over the decarbonisation of heat, warning there could be a backlash from consumers if they are forced to adopt new technologies such as hydrogen boilers.

Speaking at the annual spring forum of Aurora Energy Research, chief executive of the energy regulator Dermot Nolan said he is relatively “sanguine” about the decarbonisation of power and transport but admitted he is “far more nervous about the issue of heat”.

Nolan noted there are two main options for decarbonising heat – either electrification or converting gas networks to run on low-carbon hydrogen. He said a hydrogen grid “would be great” but has not been demonstrated at scale and would require “huge” regulatory changes.

He was recently shown a hydrogen boiler and was “quite impressed”. But given the “reluctance” some people have shown to welcome smart meters into their homes, Nolan worried that consumers would “react” badly if they are compelled to install a new type of heating system.

At the same time, the electrification of heat would mean abandoning £40 billion of existing gas infrastructure.

“They are big challenges,” he added. “I don’t see an obvious answer. I’m relatively positive about human ingenuity and ability to evolve. But I think significant and difficult decisions will need to be made and then transmitted to the public in a way that will also be intensely challenging”.

His comments come a week after the chancellor of the exchequer, Philip Hammond, announced plans in his spring statement to ban the installation of fossil-fuel heating systems in new homes from 2025 onwards.

As new homes will make up a relatively small share of the overall housing stock, Nolan said the ban, by itself, is “not going to have a huge effect”. Nevertheless, he said it provides an “important signal”.