Recommendation 11

HM Government · verbatim extract Accepted

The Government agrees that it is critical to accelerate the rollout of clean and flexible energy technologies like heat pumps, electric vehicles, battery storage and demand side response. Meeting increased demand from the electrification of heat, alongside other sectors such as transport, will require increased electricity generation and reinforcement to the electricity network. Energy flexibility systems and technologies have an important role to play in minimising the scale of generation and network capacity required and so keep system costs as low as possible. Heat Pumps To support the deployment of Heat Pumps, the Government is taking steps to address a range of barriers to mass deployment which include improving affordability, simplifying the consumer journey, building resilient supply chains and ensuring future requirements for electricity generation and network reinforcement can be met cost effectively and practicably. Heat pumps will have a major role to play in all net zero pathways and government expects most properties will ultimately switch to heat pumps as these are a proven technology and have been installed in high numbers in other countries. The Government is investing up to £42 million in the Heat Pump Ready innovation programme2, with the aim of overcoming barriers to heat pump deployment and supporting innovation in product design, including improving performance. The Heat Pump Ready programme is part of the £1 billion Net Zero Innovation Portfolio3 and builds on the previous £16.5 million Electrification of Heat Demonstration Project4. Heat Pump Ready projects are currently underway and will conclude in 2025. For those consumers making the transition to low-carbon heating, the Government has increased the budget for the Boiler Upgrade Scheme by £30 million for this financial year responding to the increase demand for the scheme. In addition, Ofgem have been given permission to over allocate scheme vouchers by up to £250 million, while the Government has almost doubled the budget to £295 million for the next financial year 2025/26. In addition to the Boiler Upgrade Scheme, schemes aimed at low-income consumers including Energy Company Obligation scheme and Social Housing Decarbonisation Fund delivered over 27,000 heat pump installations in 2023. This scheme funding is in addition to the 0% rate of VAT on the installation of heat pumps and biomass boilers, which will last until March 2027. The Government will also introduce the Clean Heat Market Mechanism from 1 April 2025, incentivising manufacturers to invest over time towards the aims of boosting sales and making heat pumps an even more attractive choice. In addition, Ideal Heating have been announced as winners of the first of two rounds of the Heat Pump Investment Accelerator Competition, stimulating a homegrown heat pump industry to strengthen the UK’s energy security and support hundreds of jobs in low-carbon heating. The Government is reforming permitted development rights in England for the installation of air source heat pumps – including removing the “1-metre rule” – so that many more households can install a heat pump without needing to submit a planning application. Industry estimates suggest that 27% of customers were being prevented from installing a heat pump under current planning permission rules. The Government is also introducing a smart mandate which will require electric heating appliances with the greatest flexibility potential to have smart functionality, from the mid-2020s (2026–27). This will apply to heat pumps and can help reduce consumer bills. The ‘Delivering a smart and secure electricity system’ consultation was published 16 April 2024 and ran until 21 June 2024. The Government is reviewing the proposals and feedback to the consultation and will publish the Government Response in due course. Further, the Government has deployed a range of tools to make it easier for consumers to switch to low carbon heating. The Government provides advice and support in several areas, including the “Heat Pump Home Suitability Tool’’5 and “Find Ways to Save Energy in your home” tool6 which provide bespoke advice to consumers on appropriate clean heat and energy efficiency upgrades they can make to their homes, and signpost to grant support and further information. Recognising the importance of providing impartial trusted energy advice, the Government is going further to simplify the user journey for consumers on GOV.UK, by creating a single access point for all consumers homeowners, landlords and tenants at varying points in their retrofit journey. It will simplify and expand the current government advice and information offer by bringing into one space the available sources of funding, links to trusted installers and other relevant information. Future funding arrangements will be determined at the Spring Spending Review. Full details of the Government’s plan to significantly increase heat pump deployment will be set out in the Warm Homes Plan, which will be published in due course. Electric Vehicles The transition to zero emissions vehicles (ZEVs) will drive economic growth and help make Britain a clean energy superpower, helping the UK to meet its climate change obligations and improve air quality. To drive this transition, the Government is committed to phasing out new cars that rely solely on internal combustion engines by 2030. The ZEV Mandate already requires 80% of all new cars to be ZEV by 2030. There will be no sales of new pure combustion engine cars from 2030 under our plans, and we will set out more details on specific 2030–35 requirements for both cars and vans shortly. We will also work closely with stakeholders to support demand for ZEVs, accelerate the rollout of chargepoints, and ensure the benefits of the transition are felt across all of society. This includes working with industry to address concerns and misconceptions about electric vehicle (EV) batteries and promote consumer confidence in EVs. As the number of EVs is expected to rise from 10 million in 20302 to over 30 million in 20503, road transport could represent approximately 15% of total electricity demand in 20502. Flexible charging of EVs (smart charging) currently enables 0.5 GW of peak power demand to be shifted. NESO Future Energy Scenario 2024 forecasts that with the right policy support this could increase to 2.0-4.5 GW by 2030. Smart charging enables this demand to be shifted and reduces costs by around £330 per annum for an average EV driver4. The Electric Vehicle (Smart Charge Points) Regulations 2021 were introduced to mandate smart functionality in private EV chargepoints. ‘Vehicle to grid’ charging (i.e., V2X or bidirectional smart charging) provides future potential for short duration energy storage, through consumers exporting energy back to the grid from their EV batteries or using it to power their own homes. The Government has also funded a V2X innovation programme where phase 1 (complete) sought to accelerate the commercial deployment of V2X via funding of hardware, software and business models and phase 2 (in progress) aims for real-world trials to test V2X and business models.