The future of heat is all to play for

Energy for heating generates more than a third of the UK’s carbon emissions. Yet the sector trails behind electricity when it comes to the development of renewable alternatives to fossil fuels.

With Electricity Market Reform taking up a lot of policy bandwidth, support for green heat has been repeatedly delayed and pushed down the agenda.

It was with relief, then, that heating and renewables industries welcomed Wednesday’s launch of the domestic Renewable Heat Incentive. The scheme aims to do for heat pumps, solar thermal panels and biomass boilers what the feed-in tariff did for solar PV. It allows households to get paid for generating their own green heat. But what does it mean for utilities?

In the short term, the answer is: not much. The target customers are the 3 million households not connected to the gas grid, which mainly rely on expensive heating oil. On-grid customers are eligible, but unlikely to save money by switching from a gas boiler. So gas suppliers and networks have little to fear from the competition.

Air source, ground source and water source heat pumps use electricity, which increases demand and load on the distribution networks. Roger Webb, director at the Heating and Hotwater Industry Council, says the effect “is not anticipated to be significant” in the short term, but will “pose a potential pressure on the network” as the RHI accelerates uptake.

Biomass is likely to be the “big winner”, according to Richard Hiblen of renewable energy supplier Green Square. “It is an easy retrofit,” he says, that works with high temperature systems. In the non-domestic RHI, launched in November 2011, biomass boilers made up 92 per cent of installations by number, or 98 per cent by MW capacity.

By contrast, heat pumps supply low-level heat of around 40 degrees. That works fine with under-floor heating in a well-insulated home, but not so well with standard central heating systems. As such, they are more viable for new developments than existing homes.

Solar thermal does work with standard heating systems, but only part time. It is estimated to supply 80 per cent of hot water needs in summer and less in winter. Stuart Elmes, solar thermal expert at the Solar Trade Association, says it offers a similar return to solar PV “when you take into account the high price inflation for gas and heating oil”.

Even if the direct impact on utilities is negligible in the short term, the development of the RHI will affect the direction of wider heat policy.

While gas is a relatively efficient and low carbon option today, the gas networks cannot last forever as the UK seeks ever deeper emissions cuts. They will be replaced by some mix of electric heating, renewable technologies and district heating, the balance of which is an open question.