Guest blog: why Nesta sees heat pumps as the "best alternative" to replace traditional gas boilers

How is Nesta working with housing associations in Wales?

In Wales, our collaborations with housing associations are only just beginning.

We are just about to kick off a project working with social tenants to understand their perspective on changes made to their homes under the Optimised Retrofit Programme (ORP) - particularly people who have received a heat pump.

We want to understand what the support needs might be, and then we want to continue working with tenants to try and design and test things that could meet those support needs. Crucially, we want those things to be replicable and scalable, something that could replace the sort of intensive support housing associations have told us some tenants need.

If we identify something that works, it could be adopted across housing associations in Wales and beyond, and may even be useful in supporting owner-occupiers and private tenants in the much longer term.

We’re really keen to hear from housing associations in Wales who might be interested in collaborating on this project.

What do you think are the biggest challenges housing associations are facing in terms of decarbonising their homes?

Undoubtedly it’s finance, and how to make sure net zero is prioritised alongside other things, which are perhaps a more immediate concern for both social landlords and tenants.

At the next level down, I’d assume social landlords are grappling with the same question as private landlords and owner-occupiers: what is the ‘right’ package of measures? At Nesta we’ve been one of many voices arguing that heat pumps are the best option for replacing gas boilers. This is mainly because of how much more efficient they are than other electric heat sources, with three or more units of heat out for every unit of electricity that goes in. This is basically because they’re compressing and moving heat which is already there, rather than generating it. This means that - with reform to energy pricing - they can compete with gas boilers in terms of long-term running costs.

The lower demand also means energy system costs, which all consumers pay, can be lower. Most importantly, they are a viable and mature technology today, widely used in lots of other countries in Europe, including Germany, with similar or colder climates than Wales.

The really important caveat here is ‘as long as they’re installed correctly’. That doesn’t need to mean extensive fabric upgrades in every single home, but it does mean proper system design, thinking about sizing of radiators or other heat emitters, and proper controls that the occupants are confident in using. These things are tricky to get right, but the payoff in energy efficiency, cost saving, and carbon reductions is what makes heat pumps the best option in Nesta’s view.

Welsh Government has become much more aligned with this view with its recent draft heat strategy.

How are you encouraging UK Government to lower electricity prices to encourage heat pump take up?

Our recent policy paper argues that UK Government could lower electricity prices by permanently removing renewables levies from electricity bills, and setting a cap on the ratio of gas to electricity prices, then lowering it over time.

The UKCCC projects that only 5% of domestic heating will come from hydrogen and that will be predominantly as a secondary supply for hybrid heat pumps - what role does Nesta think hydrogen heating will play in the social housing sector, if at all, going forward?

We don’t believe hydrogen is the best technology for homes, for a number of reasons. It’s inefficient and expensive, and may not even be that green depending on how it's made.

We think householders may be being given an over optimistic impression of how easily and quickly the transition to hydrogen could happen. Boilers marketed as ‘hydrogen ready’ would actually require an engineer to upgrade them to safely burn hydrogen, and given 100% hydrogen in the grid would be well over a decade away at best, plenty of those boilers will be replaced long before that happens - and it’s not certain that it will.

Hydrogen will play a really important role in decarbonising other sectors of the economy which can’t electrify - high temperature manufacturing, and long distance freight, for example. Homes can be heated more efficiently and at lower cost by using electric heat pumps, without taking away from these other sectors where there is no alternative to hydrogen.

What else is Nesta doing to support the social housing sector to decarbonise?

Nesta is working on a number of projects that could support the social housing sector on its low carbon journey - from looking at ways to speed up heat pumps through planning, to launching a service to enable people to visit a heat pump near them and see one in real life.

Clearly social norming low-carbon heating will help to engage people in adopting and living with the technology. In our view, a high proportion of media coverage has focused on misapprehensions about heat pumps to date, and reporting has focused disproportionately on homeowners who are critical of the technology. That’s why Nesta commissioned the first major survey of heat pump users - more than 2,500 domestic heat pump owners and more than 1,000 domestic gas boiler owners in England, Scotland and Wales, and published the results earlier this year.

Of the more than 2,500 people surveyed, 81% who had a heat pump installed were as satisfied or more satisfied with heat pumps compared to their previous heating system, with 8 out of 10 saying they’d recommend it to friends and family.

Interestingly, people’s levels of satisfaction were roughly the same even in poorly-insulated homes with low-EPC ratings. In fact, we discovered that almost 1 in every 6 heat pump owners live in properties built before 1900. Most of the people surveyed installed their heat pump as part of a retrofit of their existing system. These findings dispel the notion that heat pumps only work in new, highly-efficient homes.

In particular, there was high satisfaction with safety (93%), reliability (86%), and hot water heating (93%). Meanwhile, the majority of users felt that heat pumps were unobtrusive, with 85% being satisfied with noise levels.

Find out more about Nesta, here, and contact Andy Regan for more information.