Report: 10 Maps Which Will Shape the UK’s Green Heat Revolution
By: Centre For Net Zero
Tags: Maps, Research, Heating

Introduction

Centre for Net Zero is building an agent-based model (ABM) for the energy transition to identify faster, fairer and more affordable paths to net zero. The first release of our simulation will inform a consolidated research paper to be published in Autumn 2021. Ahead of this paper’s release, we are publishing a series of interim research findings to share our learnings as we leverage our access to Octopus Energy data, and other public datasets and research, to develop the simulation in full.

These research findings provide a unique insight into current domestic energy behaviours and help improve understandings of expected future behaviours. In creating our ABM, we want to discover how a diversity of actors within the energy landscape make autonomous decisions that affect one another and influence the behaviour of the overall system. These insights will enable decision makers to take faster, bolder and more equitable climate action.

The need for local solutions

As the IPCC recently made clear, climate change is no longer a problem of the future. And while it is a global challenge, it will require thousands or millions of local solutions. How we heat our homes is a critical part of the problem, as explored in our previous reports on domestic heating patterns and heat pump costs.

Below we explore some of the most important interactions between location and the green heat revolution that we urgently require. In doing so, we consider the influence of our homes, people, network infrastructure and jobs on the types of solutions that may work in one place but not in another. With the future uncertain, we have focused on what makes places so different today. These differences are key inputs to our ABM.

Key findings

1. The influence of place on clean heating solutions is complex and granular, often defying neat urban/rural or North/South classifications. Against that backdrop, it will be a major challenge for nationally-derived policy to deliver a fair transition. We will need to harness local insight, data and capacity to make good decisions at the required pace. 2. In general, rural and suburban areas lag behind urban areas in terms of energy efficiency — an area that will need to be addressed if heat pumps are to reach the mass market. 3. Focusing on new builds offers a simpler ‘way in’ to the clean heat revolution, but its scale is ultimately limited and it is regionally skewed toward more affluent areas of the UK. 4. The ultimate influence of networks — both hydrogen and heat — is unclear, but there are regions where they are more likely to be suited — in areas of dense population and/or connection points to offshore wind resources. 5. There are substantial job creation opportunities across the UK, including in highly deprived areas. We are at a critical time for industry — with a nascent heat pump manufacture supply chain in the UK and heat pump engineers outnumbered by boiler engineers 500:1 in some parts of the country.

Homes and people: 30 million different needs

Map 1 — The building stock

We start with our homes themselves. There are almost 30 million across the UK, each distinct. Different heating technologies have pros and cons in different types of home. Heat pumps are particularly well-suited to well-insulated properties with some outdoor space and room for a hot water tank. Heat networks, where multiple properties share a heat source, are well suited to dense environments, such as blocks of flats.

From the map on the left, we can see that in every region of Great Britain*, more than half of properties are poorly insulated (EPC of D or less). Comparing the two maps, we can see areas with higher concentrations of flats, such as London and Scotland, are more likely to have well-insulated dwellings. In highly built up areas with good insulation, heat networks might be a viable alternative to individual heat pumps, boilers or electric heaters.

With the need for energy efficiency upgrades more prevalent in houses than flats, this therefore occurs disproportionately in rural or suburban areas. Wales and Yorkshire and the Humber stand out as the areas with the lowest proportion of well-insulated properties.

* apart from Northern Ireland, where Octopus Energy doesn’t currently operate

Map 2 — Owners and renters

Owner-occupiers, private landlords and social landlords are likely to perceive heating options differently, particularly where those options present trade-offs between up-front costs now and savings in the future. Landlords might be reluctant to buy expensive technologies for their properties since they only face the upfront costs but do not enjoy lower bills, which are normally paid by the tenants. Conventional wisdom suggests that tenants will not pay higher rents in return for lower energy bills (although there are some studies which challenge this assumption). Indeed the National Residential Landlord Association recently labelled the government’s plans for improving energy efficiency in rented homes a ‘pipedream’.

The maps below illustrate the proportion of owner-occupied properties and tenant-occupied properties across the UK. These show that the vast majority of the UK presents a high proportion of owner-occupied households whilst only London (70%+ renters) and cities such as Edinburgh, Manchester, Nottingham and Norwich (each with more than 50% renters) had more tenants than owner-occupied dwellings.

Overall, the high levels of owner-occupied properties presents an opportunity to galvanise the move to low carbon technologies and improve energy efficiency through broad interventions including upfront subsidies like the Clean Heat Grant. Developing policies, such as green mortgages, stamp duty or changes to permitted development rights, around key trigger points for owner-occupiers (such as moving house, re-mortgaging and refurbishment) may reduce the perception of hassle associated with new heating technologies.

However, particularly within urban areas, there is also a strong case for the availability of incentives targeted specifically at the social and private rented sectors. These include the Social Housing Decarbonisation scheme, the proposed Social Housing Minimum Efficiency Standard and the ambitions within the Clean Growth Strategy to raise all private rental homes to at least EPC Grade C by 2030.

While not visible in this data, multi-tenure buildings clearly present additional complexity in driving efficient and coordinated action.

There is some evidence that government policy has been successful at raising energy efficiency standards of private-rented properties, targeting EPCs of E and above (EPC F or G). Moreover, the Clean Growth Strategy reflects the intentions of the Government to raise private rental homes to at least grade C by 2030.

Map 3 — Deprivation

In its Energy White Paper released in 2020, the Government was clear that the energy transition must be fair and affordable.

The multiple deprivation indices (MDIs) are widely used to measure poverty in different areas. While methodologies are similar across England, Scotland and Wales, these indices are calculated slightly differently and cannot be directly compared. The main components that build up the overall score for deprivation are income, employment, education, health, crime, barriers to housing and services and living environment. The index is lower with a higher deprivation score, i.e. areas with MDI 1 are the most deprived while areas with MDI 10 are the least deprived. The map below shows how the MDIs vary across different regions in Great Britain.

As the map shows, the most deprived areas are South West England, coastal areas in the East Midlands, rural areas in Wales around Brecon Beacons National Park and the Highlands and Islands regions in Scotland.

In the previous section, we saw that the properties in these areas are mostly occupied by their owners, and are also particularly poorly insulated. One of the most important factors used to calculate MDIs is the income of the household, which may influence the amount households can invest and the discount rate they place on any future savings.

The map demonstrates that to deliver a fair and affordable transition for all, it will be critical for national and local authorities to consider bespoke measures for those on low incomes to ensure that they are adequately supported in the transition to greener and more efficient heating systems and that no-one is left behind.

Map 4 — New builds

Most energy efficiency measures and heating systems can be planned into new properties at lower cost and disruption than retrofitting into an existing building and new builds are often touted as promising early adopters for low carbon technologies. Indeed, the Future Homes Standard recently consulted on by the Government will require new build homes from 2025 to have low carbon heating and high levels of energy efficiency.

In the period 2014–19, around 175,000 new homes were built per year across England, Scotland and Wales representing housing growth of around 0.6% per year. Even if current house-building were to accelerate, the UK Green Building Council estimates that 80% of the buildings that will exist in 2050 are already standing.

Over the past few years, South East England has consistently delivered more new homes than any other region. Perhaps unsurprisingly, it is also one of the areas with the lowest deprivation and highest proportion of well-insulated buildings.

While new housing developments will have an ‘affordable’ element, there is clearly a risk that over-relying on new builds within the transition will deliver too little and exclude many parts of society.

Infrastructure: how might networks influence individual choice?

Map 5 — Gas network connections

Great Britain’s gas network consists of more than 280,000 km of pipelines and supplies natural gas (predominantly methane) to 23 million homes. These 85% of UK homes enjoy relatively cheap heating. A unit of gas is 3–4 times cheaper than electricity, in part due to the different taxes levied on each.

The map below (drawn from work by Affordable Warmth Solutions) shows the proportion of homes without access to the gas grid. While the trunk of England has good coverage, this is far lower in East Anglia, South West England, Wales and Scotland — with the exception of some major cities.

The areas with least access to the gas grid are also the most deprived areas. These households predominantly use oil, liquified petroleum gas or electric resistive heating to heat their homes — incurring higher costs than those with access to gas. Our transition to low carbon heating offers an opportunity to correct this ‘poverty premium’ by encouraging these households towards heat pumps run on cheaper, greener electricity.

Map 6 — Heat networks

According to data released by BEIS in 2018, there are around 14,000 heat networks in the UK, supplying businesses and homes with heating from a shared fuel source. At the time, more than 400,000 homes were supplied with heat in this way. While 90% of these networks were supplied by natural gas, many of these networks could be refuelled with a low carbon alternative (e.g. electricity) without significant infrastructure change.

BEIS monitors new heat networks on a quarterly basis, with nearly 300 projects currently in development. While this level of heat network adoption is low compared to countries in Europe, the map below (maintained by BEIS from the data above) shows that major cities are developing new heat networks. This reflects the premium on space in urban environments and areas of housing development.

While there are challenges in developing new heat networks and in repowering existing ones, they will likely be the most cost effective and least disruptive low-carbon heating solution for people in high-density urban environments. Over the past year, Scottish Government has signalled its aim to encourage a supportive market for their expansion and the UK government has also committed to additional investment through the Green Heat Network Fund.

Map 7 — Off-shore wind and hydrogen

Low carbon hydrogen (green, yellow, pink or blue hydrogen) has been touted as one solution to decarbonise heat in buildings. Hydrogen proponents point to the advantages of building on existing boiler technology and natural gas networks — reducing the changes that households need to make. While the UK’s Hydrogen Strategy suggests its contribution will be limited to 0.2% homes this decade, the extent to which hydrogen will provide low carbon heating beyond 2030 is still very uncertain.

There are a number of projects aiming to generate evidence on the feasibility, costs, benefits and safety of the uses of hydrogen for heating UK buildings. While hydrogen may not be the mass solution for home heating, it may be more viable in areas close to hydrogen production. This map, produced by Regen, shows the location of current and planned hydrogen production sites.

Over the next decade, as UK off-shore wind capacity increases to 40GW, there is likely to be a symbiotic relationship between green hydrogen production and off-shore wind. Electrolysers will take excess renewable energy and turn it into hydrogen — using electricity that would otherwise be discarded. This map, produced by Wind Energy Networks and 4C Offshore, illustrates the current status of different offshore wind projects all over the UK.

Jobs: what and where will the impact be?

Map 8 — Boiler and heat pump installers

There are more than 84,000 registered gas boiler installation companies, compared to around 1,000 for heat pumps. This not only affects the advice, waiting times and prices that households receive when considering heat pumps, but also represents a potentially significant requirement for training. Along with installers of energy efficiency measures, heat pump engineers represent one of the major job creation opportunities from the clean heat transition.

Based on data provided MCS and Gas Safe Register we plotted the number of accredited installation companies for heat pumps and gas boilers by region.

From the maps we can see that the majority of installers of both technologies are concentrated in the southern regions of the country. As expected, the prevalence of gas engineers is lower in areas with fewer gas grid connections. In these areas, such as Scotland and Wales, the ratio of gas boiler engineers to heat pump engineers is around 40:1. By contrast, Northern Ireland (500:1), London (140:1) and the South East (100:1) exhibit much higher ratios. There appears to be some correlation between the location of heat pump companies and levels of new housing development.

Map 9 — Training centres for heat pump installers

The Heat Pump Association estimates that to deliver 600,000 heat pump installations per year by 2028 in line with the Government’s stated ambition, the installer base will need to grow to nearly 40,000. While formal training represents only one part of this growth (MCS recognises heat pump competence after three years of experience without a qualification), it can serve as an important gateway into the industry.

We have plotted the locations for heat pump training centres, based on data from the Heat Pump Association, which recently announced an expansion of training centres to 38. Each will offer a three day course with one day focused on heat pumps.

As can be seen on the below map, while some areas enjoy good coverage, others including Northern Ireland, northern Scotland, Wales and East Anglia are reliant on engineers travelling a significant distance.

Map 10 — Manufacturing hotspots

While the UK manufactures hundreds of thousands of gas boilers each year, 68% of the heat pumps installed in the UK are currently imported. As demand for heat pumps grows in the UK and internationally, there is opportunity to grow existing UK heat pump manufacture and possibly to repurpose elements of the existing boiler manufacture industry too.

The size of the bubbles represents the share of the UK manufacturing markets for heat pumps and gas boilers. Livingston in Scotland currently manufactures the majority of heat pumps in the UK, followed by Cornwall. Both of these areas have relatively high levels of deprivation and are good candidates for additional job creation.

Conclusions

We have presented several of the most important factors shaping the UK’s transition from carbon intensive gas boilers to low carbon heating. There are many more factors that we could have considered — adding to what is a complex picture of individual and system level trade-offs. While there are certainly insights to be gleaned from considering these elements individually, a fast, fair and affordable transition depends on our ability to consider these elements together. This will require two things:

Powerful and transparent software tools that can combine and resolve these perspectives, at an individual or area level A clear framework of responsibility, which brings to bear local insight, data and capacity to support timely, fair and coherent decisions. While some of the data in this paper has been presented at local authority level, the reality is that within many local authorities there exist even more striking differences, which are hard to account for without local knowledge.

On the former, we hope the first release of our agent-based model in November will establish a foundation that we and others can refine to support our energy transition, both at country and local levels. On the latter, we expect the UK government’s Heat and Buildings Strategy will establish clear roles for local authorities and others in coordinating and delivering a fast, fair and affordable transition to low-carbon heating.