The Warm Home Plan might not come close to net zero, warns Simon Bones.
Full details of the Warm Homes Plan (WHP) were due to be published in October, but that has now been delayed. While we don’t know exactly how the Plan will be implemented, there are some things we can be reasonably sure of.
There is likely to be a desire to do the same or more with less public money.
Given the broader economic background, it seems unlikely that the £13.2billion originally promised to upgrade 5 million homes will be delivered. Typically, governments like to keep the target but reduce the funding, so we don’t expect a reduction in the number of properties, but we expect slightly different goal-posts in terms of outcomes.
We also expect more money to come from non-public sources. We haven’t yet had feedback on whether more consumer finance can be brought into heat pumps, but given constraints, we can’t see this won’t be allowed.
Technology (especially solar) is likely to be bigger than structural insulation.
As we go into the next Carbon Budget Delivery Plan, and with residential heating representing 19% of all of UK emissions associated with domestically produced and consumed goods and services, we expect more focus on carbon reduction through retrofit than before.
The Government has, in common with much of the retrofit sector, historically obsessed about insulation, and not just good payback strategies like loft and cavity insulation but also slow payback approaches such as external wall and solid floor insulation.
Since these approaches are expensive and pay back slowly, financial pressures are likely to reduce the focus here. But technology can look better in this context; for most properties, nothing reduces emissions like a heat pump, and there is a strong financial payback (and EPC benefit) associated with solar.
The role of local authorities and public schemes as commissioners looks untenable.
The Historic WHP narrative suggests a primary role for local authorities as commissioners and financial gatekeepers, using approaches like PAS2035 as enforced delivery routes.
All historic evidence suggests this is a flawed approach, but if we need to do more with less, it is even less likely to work – if funds are to come from third-party sources and that funding is constrained, such wasteful approaches should be deprioritised.
Heat pump volume uplift remains critical but practical challenges remain.
Heat pumps will be key to delivering on carbon benefits, but Boiler Upgrade subsidies are, we think, unlikely to go up. That creates the twin challenges of stimulating demand (for most people with modern boilers, a cheap heat pump isn’t going to reliably and sustainably reduce bills) and how to deliver.
While there are various models being proposed we don’t see a silver bullet for demand, but companies like Genous have a role to play in articulating the benefits and then stimulating demand for those for whom a heat pump works.
On the delivery side, there are clear challenges to attracting resources in the sector, red tape and compliance (which goes up rather than down). It would be helpful to the sector if there were more commitments across the political spectrum towards renewable technology and better public awareness of the financial and environmental benefits of a good home retrofit.
But with risks around WHP funding, a lack of clarity on permitted (and attractive) technologies, and a widening of the price gap between units of electricity and gas, there is much to do to give installers the confidence to staff up and attack what remains a massive, untapped opportunity.
Simon Bones is the founder and CEO of Genous.
