Electricity – the new ‘low carbon’?

The new SAP 10 (the UK’s energy assessment method for dwellings) will come into force in 2019. With it we will likely see a rise in electric heating and hot water in new built and refurb due to the reduction of the carbon factor for electricity by more than half – as a result it will be close to gas. In 2017 emissions from fossil-based heating systems and stoves contributed 17% of the UK’s total carbon emissions, three quarters of this from homes. Promoting the electrification of the domestic heating sector and the decarbonisation of the grid has become one of the UK government’s key strategies to tackle carbon emissions. This is based on the expectation that in 2022 UK grid electricity will be lower in carbon emissions than gas.

But how ‘green’ is our electricity?

Of course, there are already suppliers on the market that offer 100% renewable electricity. But when it comes to the ‘general’ grid, renewable energy generation in the UK fluctuates with in fact the lowest proportion of ‘green’electricity being available during winter months.

In 2017 renewables on average contributed 19% to grid electricity with summer peaks of 25% (according to OFGEM). The rest still largely came from coal, gas or imports. However, during the winter months the proportion of renewable energy dropped to only 11% and was toped up mainly by gas (20% increase in winter months) and coal (400% increase).

Winter is also the time when heat pumps (especially air source heat pumps) are at their lowest efficiency and, if also providing hot water, are often no more efficient than a direct electric system. Once transmission losses from the power station are accounted for (typically 10-15%)the renewable energy contribution during this time is wiped out and carbon emissions will often be no lower than a gas central heating.

What about costs?

Households with direct electric heating or even heat pump technology will likely pay a premium. Electricity is already 4 times more expensive than gas and for the last ten years prices have increased annually by 10% on average. Today, households are often already paying more for their energy and water than interest rates on their mortgage or rent (according to OFGEM data).

No doubt, the UK government’s and SAP 10’s drive to electrify the domestic heating sector, increased demand and costs for renewable energy generation will put further pressure on prices.
At the same time the government announced today that the feed-in tariff for domestic PV will end in April 2019 making prominent renewable energy upgrades less attractive.

As a result the best option to reduce energy costs will be to highly insulate dwellings and upgrade to more energy efficient appliances. This is straight forward for new build dwellings and the technology to reduce energy consumption by more than 75% is all there. But what about the housing stock?

What about tenants who can’t afford to or don’t own a home to upgrade?

The UK housing stock is one of the oldest and worst insulated in Europe, with only around 15% of existing stock built since 1990. Most homes are expected to still be in place in 2050.

A 2015 ‘Consumer Vulnerability  Strategy’ published by OFGEM found non-gas households being more likely to be fuel poor – most of all non-gas households use electricity as their primary heating source. These households already struggle and often face the choice between heating or eating. With electricity prices to increase further the issue around fuel poverty, not being able to heat one’s home and related health issues will likely become worse.