Recommendations & Conclusions
11 items
11
Recommendation
Thirty-Seventh Report - Decarbonising h…
Deferred
DESNZ plans to work on rebalancing the costs of electricity and gas, but it said that doing so is difficult because of large structural issues in the sector. It had aimed to rebalance costs to some extent by moving levies from electricity to gas bills, but its plans to do …
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DESNZ plans to work on rebalancing the costs of electricity and gas, but it said that doing so is difficult because of large structural issues in the sector. It had aimed to rebalance costs to some extent by moving levies from electricity to gas bills, but its plans to do so have been delayed by nearly two years. It explained that it was looking at options that are fair and affordable for consumers and taxpayers, and will set out its approach during 2024.22 In the meantime, one energy company, Centrica, noted that it had created tariffs 14 DHH0014, Written evidence submitted by The MCS Foundation, 29 April 2024 15 DHH0033, Written evidence submitted by Energy UK, 29 April 2024 16 Qq 9, 43; C&AG’s Report, para 17 17 Qq 3, 30 18 DHH0033; DHH0045, Written evidence submitted by Fuel Poverty Action, 29 April 2024; DHH0046; DHH0050, Written evidence submitted by Octopus Energy, 29 April 2024 19 DHH0008, Written evidence submitted by The Heat Pump Association and The Heat Pump Federation, 29 April 2024; DHH0014, Written evidence submitted by The MCS Foundation, 29 April 2024 20 DHH0011, Written evidence submitted by EDF Energy, 29 April 2024; DHH0014, Written evidence submitted by The MCS Foundation, 29 April 2024 21 Q 30 22 Qq 30; C&AG’s Report, paras 16, 3.10 12 Decarbonising home heating that encourage households to move their electricity use away from peak times. Centrica added that the wider issue, however, must be tackled without penalising those households with gas boilers who are unable to move to low-carbon heating.23 Complexity and confusion
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Government response AI summary
The government agrees with the recommendation to rebalance electricity and gas costs but defers the implementation date, stating it is dependent on further ministerial steers. It confirms it is considering ways to lower running costs for low-carbon technologies and highlights existing innovation programs.
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HM Treasury
12
Recommendation
Thirty-Seventh Report - Decarbonising h…
Deferred
Households can face a range of decisions when looking to install a heat pump. One such decision is whether to improve insulation to reduce energy usage and emissions. At the time of our evidence session, households were required to meet recommendations relating to cavity wall and loft insultation, identified in …
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Households can face a range of decisions when looking to install a heat pump. One such decision is whether to improve insulation to reduce energy usage and emissions. At the time of our evidence session, households were required to meet recommendations relating to cavity wall and loft insultation, identified in the Energy Performance Certificate (EPC), in order to qualify for a grant as part of the Boiler Upgrade Scheme. DESNZ told us that it would be removing this requirement in May 2024, which duly happened on 8 May. It told us that this was to address the issue of people being put off from applying to the Scheme by having to make improvements to their insulation and having to sequence the work, and to make the customer journey as simple as possible.24 We received written evidence from Octopus Energy, which explained that it welcomed the removal of the requirement for outstanding cavity wall and loft insulations in the EPC. It urged DESNZ to simplify the process further and remove the requirement for an EPC, which it told us were not required before installing gas boilers and added extra costs and delays to customers looking to replace their boiler with a heat pump.25
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Government response AI summary
The government agrees with the implied recommendation to simplify the heat pump installation process but defers the implementation date, stating it is subject to ministerial steers. It references existing consumer advice tools and commits to further improving the heat pump landscape in a future Warm …
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HM Treasury
13
Recommendation
Thirty-Seventh Report - Decarbonising h…
Deferred
We asked DESNZ why it had decided to change the minimum insulation standards required for heat pumps, and what impact it expected this decision to have. DESNZ told us that government had decided to leave insulation improvements as a choice for householders. It explained that it was still recommending that …
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We asked DESNZ why it had decided to change the minimum insulation standards required for heat pumps, and what impact it expected this decision to have. DESNZ told us that government had decided to leave insulation improvements as a choice for householders. It explained that it was still recommending that they make such upgrades in response to their EPC, but that it was leaving it to householders to choose when, or if, to undertake this work. We therefore asked DESNZ about the evidence it had used to reach this decision. DESNZ told us that it made its decision based on evidence that showed that 80% to 90% of UK homes do not need additional insulation for a heat pump to work effectively. DESNZ accepted, however, that it still needed to do some myth-busting about the quality of the consumer experience when living with a heat pump.26
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Government response AI summary
The government agrees with the implied recommendation to address consumer experience challenges for heat pumps but defers a comprehensive approach, stating the implementation date is subject to ministerial steers. It highlights existing advice tools and a phoneline service and plans to set out further improvements …
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HM Treasury
15
Conclusion
Thirty-Seventh Report - Decarbonising h…
Deferred
We noted that the installation of heat pumps could be a very complicated picture for consumers, and asked how an individual was expected to understand the running costs of a heat pump and the potential impact of installing insulation before or after a heat pump, or for their type of …
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We noted that the installation of heat pumps could be a very complicated picture for consumers, and asked how an individual was expected to understand the running costs of a heat pump and the potential impact of installing insulation before or after a heat pump, or for their type of property. Written evidence from The Building Societies Association, for example, outlined that 36% of respondents to its research about the barriers to making home heating upgrades were “unsure of the cost savings on energy bills”. DESNZ recognised that calculating the running costs and working through the process were “issues of complication and complexity for consumers at the moment”.29
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Government response AI summary
The government agrees but defers the implementation date pending new ministerial steers. It highlights ongoing activities to simplify switching to low carbon heating for consumers and will detail further improvements in the Warm Homes Plan.
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HM Treasury
17
Conclusion
Thirty-Seventh Report - Decarbonising h…
Deferred
DESNZ clarified that it was “working on making the Government digital offering in this space much better”. It added that it signposted to digital companies that helped households to calculate running costs and lifetime costs via gov.uk. It recognised, however, that there was a role for it to do more. …
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DESNZ clarified that it was “working on making the Government digital offering in this space much better”. It added that it signposted to digital companies that helped households to calculate running costs and lifetime costs via gov.uk. It recognised, however, that there was a role for it to do more. It also explained that it mitigated the risk of poor installations by requiring Microgeneration Certification Scheme-certification for all heat pump installations funded through the Boiler Upgrade Scheme.31 29 Q 31; DHH0015 30 Q 33; DHH0026; C&AG’s Report, para 2.16 31 Qq 31–32, 34, 37, C&AG’s Report, para 3.14 14 Decarbonising home heating 2 Increasing heat pump installations Training installers
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Government response AI summary
The government agrees but defers the implementation date pending new ministerial steers. It outlines ongoing activities to improve consumer support for low carbon heating and states it will further detail improvements in the Warm Homes Plan.
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HM Treasury
18
Conclusion
Thirty-Seventh Report - Decarbonising h…
Deferred
We received written evidence from the Retrofit Academy, Schneider Electric, Energy UK and MCS Service Company which highlighted that meeting the target to install 600,000 heat pumps per year by 2028 will require a large increase in the number of trained installers. The Heat Pump Association and the Heat Pump …
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We received written evidence from the Retrofit Academy, Schneider Electric, Energy UK and MCS Service Company which highlighted that meeting the target to install 600,000 heat pumps per year by 2028 will require a large increase in the number of trained installers. The Heat Pump Association and the Heat Pump Federation estimated that there will need to be at least 33,700 trained installers by 2028 to meet the overall installations target, and a minimum of 50,200 installers by 2030.32
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Government response AI summary
The government agrees with the recommendation to increase the number of trained heat pump installers and describes existing initiatives like the Heat Training Grant and new apprenticeships. However, decisions on future training support beyond April 2025 are deferred to Spending Review 2025.
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HM Treasury
19
Conclusion
Thirty-Seventh Report - Decarbonising h…
Deferred
DESNZ said that training new installers was a “growing industry”. It stated that it was investing £29 million from 2021–22 to 2024–25 to train installers in the heat sector. Part of this spend includes a £5 million Heat Training Grant to support up to 10,000 heat pump and heat network …
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DESNZ said that training new installers was a “growing industry”. It stated that it was investing £29 million from 2021–22 to 2024–25 to train installers in the heat sector. Part of this spend includes a £5 million Heat Training Grant to support up to 10,000 heat pump and heat network training opportunities from 2023–24 to 2024–25. DESNZ reported that it was on track towards meeting its target to reach 12,000 trained heat pump installers by 2025, and that it had trained 7,000 installers so far, including 3,000 as part of the Heat Training Grant. DESNZ recognised that it will need to continue to invest in heat pump training and expand training opportunities to reach the number of installers needed in later years. It told us that decisions for future training grants would form part of the next spending review.33 The MCS Foundation, which supports education in the heat sector, told us that it was key that the government continue to support the development of the heat pump supply chain, which included training installers by providing long-term clarity and certainty.34
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Government response AI summary
The government agrees but defers decisions on future training support beyond April 2025 to Spending Review 2025. It acknowledges the need for more installers, highlights ongoing work like apprenticeship updates and establishing the Office for Clean Energy Jobs, and will work with industry.
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HM Treasury
24
Conclusion
Thirty-Seventh Report - Decarbonising h…
Deferred
In September 2023, the government announced that some homes may be exempt from the planned phase-out of new fossil fuel boilers in 2035. The government estimated that around a fifth of households might be exempt. Examples of such homes could cover those requiring energy efficiency or electrical connection upgrades, those …
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In September 2023, the government announced that some homes may be exempt from the planned phase-out of new fossil fuel boilers in 2035. The government estimated that around a fifth of households might be exempt. Examples of such homes could cover those requiring energy efficiency or electrical connection upgrades, those not connected to the gas grid, or those that lack space for a heat pump. We asked DESNZ which were the types of properties or regions where installing a heat pump might be harder. DESNZ explained that it would be most challenging to install heat pumps in densely populated urban areas and those without outside space, such as blocks of flats.42 We received written evidence from Fuel Poverty Action, which suggested that there were 2 million households with electric storage heating, often flats, that are unsuitable for heat pumps but suffer from high energy prices and therefore require more flexibility.43 Calor Gas, which supplies Liquid Petroleum Gas (LPG) to off-gas grid properties, said in its written evidence that many of its customers live in harder to treat, remote properties—some of which have period features, planning restrictions, or constrained local electricity grid constraints— all of which prevent retrofit works from being carried out.44
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Government response AI summary
The government accepts the committee's observations and commits to providing further information on properties unsuitable for traditional heat pumps and appropriate alternative technologies, aligning with the publication of its commissioned research report from Summer 2025.
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HM Treasury
25
Recommendation
Thirty-Seventh Report - Decarbonising h…
Deferred
In response to our question about how it would identify which homes are unsuitable for a heat pump and therefore exempt from the 2035 phase out, DESNZ said that it was some way from determining this, given the deadline was not until 2035. It outlined that it intended to consult …
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In response to our question about how it would identify which homes are unsuitable for a heat pump and therefore exempt from the 2035 phase out, DESNZ said that it was some way from determining this, given the deadline was not until 2035. It outlined that it intended to consult in 2024 on alternative, predominantly electric, low-carbon technologies for people to decarbonise their homes where a heat pump might not be an appropriate solution. DESNZ recognised that it had “more work to do” including “additional trials” of alternative technologies.45 We received written submissions from some manufacturing companies which said they were developing alternative technologies that might be placed anywhere in the home. Both Tepeo and Thermal Storage UK, for example, explained that they were developing heat batteries that can operate in homes where there is lack of outdoor space.46 NexGen Heating described that it was developing an infrared heating technology, which would be agnostic to housing type and require minimal disruption.47
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Government response AI summary
The government accepts the implied recommendation to identify homes unsuitable for heat pumps and to provide alternative low-carbon solutions, but defers the action to publish relevant research until Summer 2025. This research will detail properties not suitable for traditional heat pumps and appropriate alternative technologies.
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HM Treasury
26
Conclusion
Thirty-Seventh Report - Decarbonising h…
Deferred
The NAO reported that DESNZ was yet to determine its approach for homes that are complex to decarbonise. DESNZ told us that it considered that heat networks would be the next major alternative low-carbon technology for people living in properties that are unsuitable for a heat pump. DESNZ outlined that …
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The NAO reported that DESNZ was yet to determine its approach for homes that are complex to decarbonise. DESNZ told us that it considered that heat networks would be the next major alternative low-carbon technology for people living in properties that are unsuitable for a heat pump. DESNZ outlined that it was identifying areas suitable for heat networks through heat network zoning in partnership with local authorities. It explained that it had a strong pipeline of projects for heat networks and was investing some £868 million in heat networks up to 2028. This included £338 million to 2025 and £530 million between 2025 and 2028. It explained that the main source of funding was 42 Q 66; C&AG’s Report, para 2.21 43 DHH0045 44 DHH0043 45 Qq 114–116; C&AG’s Report, para 2.22 46 DHH0024, Written evidence submitted by Mr Tom Lowe, 29 April 2024; DHH0044, Written evidence submitted by Tepeo, 29 April 2024 47 DHH0041, Written evidence submitted by NexGen Heating, 29 April 2024 Decarbonising home heating 17 its Green Heat Network Fund, which it said had so far provided grants of £268 million to support 20 projects. DESNZ stated that most applications to this fund were for large heat pumps, some of which use energy from waste, mine water or geothermal sources. DESNZ estimated that around 3% of total heat demand is supplied to buildings through heat networks, but it believed that there was potential for that to expand to around 20% by 2050.48
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Government response AI summary
The government accepts the implied recommendation to determine an approach for homes complex to decarbonise, committing to publish a research report by Summer 2025. This report will provide further information on properties unsuitable for traditional heat pumps and appropriate alternative technologies.
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HM Treasury
38
Recommendation
Thirty-Seventh Report - Decarbonising h…
Deferred
We examined, in a separate inquiry, DESNZ’s ambitions for decarbonising the power sector and concluded that it lacked an overarching delivery plan that would provide confidence to the private sector to invest in new and upgraded infrastructure. We also warned that this made it difficult for DESNZ to understand the …
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We examined, in a separate inquiry, DESNZ’s ambitions for decarbonising the power sector and concluded that it lacked an overarching delivery plan that would provide confidence to the private sector to invest in new and upgraded infrastructure. We also warned that this made it difficult for DESNZ to understand the decisions and timings it must take to achieve its ambition to decarbonise the power sector by 2035.75 Yet we observed at the time of our evidence session that DESNZ still did not have a delivery plan, despite us calling for it to produce one by autumn 2023 at the latest. DESNZ told us that it now expected it to be available in “the next couple of months”. Originally, DESNZ had planned to prepare a first draft of its delivery plan by October 2022.76
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Government response AI summary
The government agrees with the recommendation but defers the implementation date pending new ministerial steers. It has appointed a 2030 Mission Control to accelerate critical clean energy infrastructure delivery, with further information to be announced.
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HM Treasury