Renewables
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Time to push for wider roll-out of HVO in rural off-grid properties?
Malcolm Farrow, head of public affairs at OFTEC explains why the government has a rural heating problem and time is running out to resolve it
W
hen the government prioritised the off-grid sector for decarbonisation in its Heat and Buildings Strategy it was suggested by some
it was picking the low hanging fruit. Ten months on it’s becoming increasingly clear this quick win will actually be a problematic slog. The consultation proposed an end to the installation
of new fossil-fuel oil boilers from 2026. Instead, most properties would be expected to install a heat pump. Those on mains gas, however, would be able to replace their boilers for a further nine years up until 2035. This contrast of policy between urban and rural parts of the UK undermines
the strategy’s definition of ‘a fair transition’. But even setting this ethical issue aside, there are fundamental flaws in the approach which risks creating a perfect storm of problems for consumers, the industry and the government, with little time left to change course. The biggest challenge is the policy stems from a misunderstanding of the off-grid sector. There’s no denying that heat pumps have a central role to play in achieving Net Zero. OFTEC fully supports their inclusion in the energy mix and recently launched new training courses to provide technicians with the skills they need to install the technology. The problem is not the technology itself, but its application. The reality is off-grid homes and businesses are typically very energy inefficient. It makes no sense installing heat pumps unless improvements are made to the fabric of the building. This is a disruptive, time consuming and costly process which, combined with the £11,000 cost of a heat pump, could leave consumers facing a bill of over £20,000. In the current economic landscape, households simply do not have this level of disposable income. There’s also a growing reluctance for the Government to spend large sums of taxpayers’ money on schemes to make the technology more affordable. This means it’s likely we won’t see the high levels of uptake in the coming years the Government expects, stalling decarbonisation.
Over 100 oil-heated properties have
successfully converted to HVO as part of an industry demonstration project
Around 98% of oil households surveyed wanted the choice of switching to HVO
It also leads to the second problem which is the market itself. BEIS has set an ambition for the price of heat pumps to fall between 25% and 50% by 2025. This will be hard to achieve without a mass deployment which could help drive down costs. This issue is compounded by the current high levels of inflation. Even if there is a sudden turnaround in fortunes, the off-grid housing stock is very diverse with detached properties varying from one to the next. Each will require a bespoke solution so it will be difficult to achieve the economies of scale you might see in more modern suburban housing estates. With a deadline of 2026, prices will have to come down significantly and very
quickly or off-grid households are going to face a real dilemma. This creates a third challenge for the government which is politics. There’s evidence from the recent by-elections that the cost of green policies had an impact on the doorstep. With voters set to go to the polls in a national election in the next year or two, Conservative MPs, who make up the vast majority of constituencies with high levels of heating oil, may face some difficult questions. Fortunately, there is a way to address these challenges. We must accept the
new reality and adopt a pragmatic, technology neutral approach where we offer multiple solutions to deliver the best outcomes for homeowners. Heat pumps are an important part of the mix but, for harder to treat homes, renewable liquid fuels such as HVO have to be included as well. Over 100 oil-heated properties have converted to HVO as part of an industry demonstration. The fossil-free fuel reduces emissions by 88% following a £500 conversion which can be completed during a service. A new report has also found that the supply of HVO over the coming years far outweighs the demand, which means there will be more than enough sustainable sourced fuel for the UK’s 1.7 million oil homes. This is an affordable solution which gives consumers a fair choice. Time is running out so the government must recognise the challenges and support HVO by putting in place the policy mechanisms to facilitate a wider rollout. If it does, the desire for the off-grid sector to be the low hanging fruit could become a reality.
18 August 2022
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