EUA Report - The upfront cost of de-carbonising your home

HEAT PUMPS ARE TYPICALLY 5 TIMES MORE EXPENSIVE THAN A HYDROGEN-READY BOILER.

A new report titled “THE UPFRONT COST OF DE-CARBONISING YOUR HOME”, was published 15th November 2021, by the not-for-profit body Energy and Utilities Alliance (EUA) and concludes that customers are typically facing a five-fold cost increase to install a heat pump, compared to a hydrogen-ready boiler.

The EUA report acknowledges that the UK’s Net Zero target is ambitious and that decarbonisation of our homes will be challenging. The report also acknowledges that whilst stakeholders will all debate that their technology is best suited to solve this problem, the challenge is too big, and the issue too important, for this to be left to a single technology alone. 

The UK will need to deploy various technologies to decarbonise the 28 million homes across the UK, 23 million of which are currently connected to the gas grid i.e. 

• Large scale investment in replacing methane with hydrogen in the existing gas grid

• the roll-out of heat pumps at scale

• investment into clean district heat networks.

The EUA report demonstrates that certain constraints and consumer preferences, together with variable upfront capital costs across property types and heating technologies, mean there is currently no single optimal solution for every property type, but hydrogen-ready boilers and gas boilers are currently the cheapest overall solution.

Whilst Heat pumps will be the right technological solution for new homes, most ‘off- gas grid’ homes and homes where high levels of energy efficiency exist, the upfront capital costs required to install a heat pump are higher in comparison to a hydrogen- ready boiler, not only due to the equipment costs but also due to the cost of energy efficiency and heating distribution measures that will be required in many homes, although some homes will be able to take advantage of the grants being offered for heat pump installations, which will reduce their upfront capital costs. 

The report also acknowledges that the replacement of existing heating systems usually occurs when consumers are left with no heating, and that replacement with a heat pump will be more disruptive for consumers than with hydrogen-ready boilers, as the installation can take up to 2.5 days. 

From the report, the level of deployment required to deliver the UK’s carbon budgets will be difficult, without further cost reductions, technological improvement, and innovation which the Government’s Heat and Buildings Strategy outlined.

Whilst the UK Government have based their strategy on the capital cost of heat pumps being significant reduced over the next 5-10 years, the EUA will track the Government’s strategy, along with the ambitious cost reductions timeline being put forward by the private sector, over time against low carbon alternatives.

Whilst the report acknowledges that there are several barriers to overcome, including upfront capital costs, before heat pumps can be considered as the appropriate solution for some consumers, the EUA advise that we cannot wait for these reductions and that it is important we continue to progress a diverse range of heating solutions such as clean hydrogen and heat networks, including making a positive strategic decision on hydrogen’s role in residential heat by 2026 and mandating hydrogen-ready boilers as soon as possible, in order to introduce low carbon options in to the current boiler replacement cycle at no additional cost to consumers.

Businesses usually have their work cut out. But by switching, they can explore new opportunities by decarbonisation of heat to help create economies of scale. Read our article to know more!