Why decisions on heat could cut the cost of net zero

In the last few weeks we’ve seen some positive announcements for consumers on heat pumps. Grants will increase, up front costs are being slashed, and suppliers are offering cut-price electricity tariffs for heat pump customers.

However, there is a fierce ongoing debate about what role hydrogen can play in heating homes, and whether this potentially provides some consumers an alternative in the transition to net zero.

While it is necessary to explore options, this does not come without costs and risks to consumers.

Every day, households have to make real-life and complex decisions about broken heating appliances.

Mixed messaging and a lack of clarity about what the transition looks like for households in different parts of Great Britain affects these costly decisions. It also opens up risks of greenwashing, as identified in an investigation by the Competition and Markets Authority.

Consumers need answers and they need them as soon as possible. Between now and 2050 some consumers may only have to make decisions about heating appliances twice.

In our new research we have independently looked at what it would cost to upgrade the electricity and gas networks in different types of places to enable these technologies at a large scale. We found that:

• Upgrading both electricity and gas networks in the same place would more than double the network costs on average
• Heat pumps result in the lowest network costs in most types of places by an average of 44%
• Heat pumps lead to the lowest network costs in all rural locations (by 53%-84%) and industrial locations (by 27%-57%)
• If the costs of storing hydrogen are included, the network costs for heat pumps become considerably cheaper than hydrogen

Having the option of both heat pumps and hydrogen boilers available across the country could come with significant costs that are not in consumers interests.

To minimise this net zero cost it will be essential to identify the best solutions for different areas — known as heat zoning.

As a first step we recommend that hydrogen is ruled out in rural areas where the network costs are significantly lower for heat pumps than for hydrogen boilers.

It is in the interest of consumers to take low-risk evidence-based decisions early as it:

• Gives clarity to consumers about their options and minimises costs and risks
• Enables UK, devolved and local government to make more tailored policy decisions
• Provides a clearer signal to the energy industry of what is required to support consumers

If the Government is serious about minimising costs to consumers and meeting targets to decarbonise heating, it must provide as much early clarity about the options available to as many households as possible.

Keeping all options open GB-wide comes with a price tag paid by consumers.