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Decarbonisation of rural homes at risk due to high costs, says new research

Feb 10, 2021, 17:09 PM by OFTEC
New industry research has raised important questions over whether government’s current approach to decarbonising off gas grid homes is achievable unless rural households are offered a significant increase in funding to cover the high costs involved.

Existing policy plans propose switching most off-grid homes with fossil fuel heating to electric heat pumps and, in some cases, solid biomass or hybrid systems. However, there is considerable uncertainty over how the transition will be funded, and a survey of over 1,000 rural property owners suggests more than three quarters (78%) would be unlikely to install a heat pump in the future, even with the financial incentives available.

Malcolm Farrow, head of Public Affairs at OFTEC which commissioned the survey conducted by Opinium, said: "The research found over half (55%) of rural homeowners would not be prepared to pay more than £2,500 for a new low carbon heating system, and a third of those wouldn't be willing to pay anything at all.

"This is important because the average price to install an air source heat pump is £10,9001. The expense could be reduced by £5,000 if homeowners take up a Green Homes Grant, but this still leaves a minimum shortfall of almost £6,000 which, according to the study results, most rural households would be unwilling or unable to pay."

For the many who live in poorly insulated rural properties, this could be in addition to the cost of making energy efficiency improvements to their homes which are needed for effective heat pump use.

BEIS figures suggest 65% of oil heated homes currently fall into the lowest energy efficiency bands EPC E-G2, with the cost to upgrade a Band E home to an acceptable Band C estimated to be on average £12,300, and from Bands F and G, £18,9003.

The new research underlines the barrier to decarbonisation these costs present, with more than two thirds (68%) of rural homeowners stating that £2,500 was the maximum amount they would be willing to spend on energy efficiency upgrades, with over a third (35%) of those unwilling to spend anything.

Malcolm Farrow continues: "On this basis, it's hard to see how the seismic shift to electric heating promoted by government can be realised in rural areas without a major injection of extra funding to help homeowners make the transition. It also raises the question why other, more cost-effective low carbon heating solutions are not being supported."

The Citizen's Climate Assembly has already underlined the need for low carbon heating solutions to be fair and affordable if consumers are going to get on board with the changes needed.

OFTEC strongly agrees with this view and is working closely with industry to bring to market a renewable liquid fuel called Hydrotreated Vegetable Oil (HVO). UK wide trails are already underway using the sustainably certified fuel, which offers an almost drop-in replacement for heating oil that could deliver greater carbon savings than heat pumps in the short to medium term - and at a fraction of the upfront cost.

Malcolm Farrow concludes: "The Prime Minister's recent 10 point plan included a commitment to introduce a new Home Upgrade Grant targeted primarily at fuel poor households in hard to treat off-gas grid homes. Further details on the scheme are likely to be included in the Government's forthcoming Heat and Buildings Strategy.

"Any support is of course welcome, but our fear is that funding will far short of the amount needed which could reach almost £20 billion. Households deemed able to pay would benefit from greater choice and urgently need access to more cost-effective low carbon heating options, otherwise progress on emissions reduction will remain painfully slow.

"In the wake of Covid-19 which has hit the finances of many households hard, affordability is likely to become even more crucial. So, it's imperative that renewable liquid fuels are considered as part of decarbonisation policy for rural homes."

1MCS Average costs of certified installations data 2019.

2BEIS Minister Written Answer, 29/10/2018 based on Analysis of National Housing Model input data, drawing from English Housing Survey 2014, Scottish Housing Condition Survey 2014, Welsh Housing Conditions Survey 2014

3Kwasi Kwarteng MP, Parliamentary Questions w/c 28 September 2020.

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