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Louise Shooter, Policy Manager at Energy UK, reflects on how taking a holistic approach to policy development within the energy sector is the most effective way to help consumers become more energy efficient.
Describe Energy UK and your role there
I am a policy manager and lead specifically on our energy efficiency and low carbon heating policy areas. Energy UK is a broad church in terms of its membership, as we are a trade association that represents companies both in the generation and retail sector, as well as service providers and software companies that are interested in changes within the energy industry. Our perspective is a system-wide view on different issues, including heating and energy efficiency. We think about the decarbonisation of buildings through the lens of better consumer outcomes, better consumer protection and achieving net zero, alongside other wider aims.
What is your key objective for the next five years?
Generally, Energy UK’s objectives revolve around two areas: ensuring affordable and fair outcomes for customers and achieving net zero power system by 2035. As such, within the systems team, we cover a vast range of issues. Firstly, we look at the networks and governance of institutions within the energy industry. We monitor flexibility and storage capabilities of current technologies, to understand what assets will be needed in the future to manage challenges such as intermittent renewable generation and peak demand.
On the other side of things, we also look at technologies that enable the demand side. So EVs and low-carbon technologies, heat pumps and electric heating, heat networks and the decarbonisation of buildings.
What are the recent successes or innovations Energy UK is particularly proud of?
For our organisation, a huge win has been gaining government approval for an amendment of the Energy Bill around a Net Zero Duty for Ofgem and for the Secretary of State. This means that in all decision making and policy design, they will have to consider how their policies and activities interact with Net Zero. This is something we have been campaigning for a long time, so we’re really pleased to see that this will now be a statutory duty.
In terms of my area of work, some of the policies announced in the Powering Up Britain report were welcome. Specifically, the extension to the Boiler Upgrade Scheme to 2028 was brilliant to see, as well as reconfirmation of the commitment to rebalancing policy costs on energy bills, which will be vital for people switching away from natural gas heating.
What future trends or policies do you think are going to have the biggest effect on the energy market?
We have seen positive signals from government around heat decarbonisation policy.
We of course know that heat pumps will be playing a key role moving forward, based on a range of different forecasts from the likes of the National Grid ESO and the Climate Change Committee. So it’s great to see the government bringing forward policies that support growth in this sector. Similarly, the targets set for heat networks are incredibly positive for the market, highlighting the huge amount of growth potential in this sector from 2% to 20%. The legislation in the Energy Bill to support the heat networks sector will be a vital framework to support this growth.
At the same time, this approach is still allowing space for flexibility and innovation, which is important to allow new technologies to come forward. Energy suppliers are investing significantly in innovating new customer products and propositions to help them access the benefits of a net zero home. We need a retail market that supports innovation in order to maximise the impact of these investments.
On the generation side, we will need to see a significant increase in capacity to meet future electricity demand. Investing in the grid and networks to facilitate this is a long-term challenge.
What will be the greatest challenges in convincing consumers to use greener heating technology?
I believe there is a huge amount of willingness and desire from customers to participate in the energy transition.
A lot of it comes down to finances. If we can use the supply and demand-side policies that are in place, such as the forthcoming clean heat market mechanism and the Boiler Upgrade Scheme, this will help to achieve the government’s objectives of heat pumps achieving cost parity with gas boilers by 2030.
We also need to really focus on rebalancing policy costs on bills, so that people who are on electric heating aren’t paying more than those on gas. This is a sensitive issue, as we don’t want to exacerbate issues for those already in fuel poverty. Nevertheless, we must consider these sorts of economic conditions around the transition to heat pumps. There are already advantages in place for people to switch, such as the demand flexibility service over the winter, where people were rewarded for turning down their energy demand, and the increasing prevalence of time of use tariffs.
From your perspective, how important is the heat pump moving forward? Are there any other technologies that you would highlight as well?
Based on the forecasts that we see from National Grid ESO and the Climate Change Committee, electric heating will be essential in for reaching net zero. As seen in other countries, heat pumps are incredibly efficient. Approximately 50% of homes in Sweden have a heat pump, and in France they sold around 300,000 units last year. While there is a lack of familiarity with them in the UK, they do have a long history in other European countries, which I think reflects our path moving forward.
However, the government has a range of policy support for different technologies.
Is there a particular consumer profile for heat pumps?
The profile for a suitable buyer is broad. The Energy Systems Catapult recently released analysis showing that heat pumps were suitable for almost all homes. With those houses that are hard to retrofit, high temperature systems are potentially better solutions for them.
However, there are factors beyond just matching the house and the system, such as how the household interacts with the system, and the impact on the customer of the installation. While it can be suitable for the home, the bigger piece is about making sure that people understand how a heat pump operates differently to a boiler. It is not the kind of system that you regularly turn on and off manually, so helping people to manage their new systems, and ensuring they can access the right tariffs, and perhaps a home energy management system that optimises their smart assets, is a key part of suitability too.
How can the government collaborate with industry to overcome barriers in upscaling usage of new heat technology?
There are a few pieces of the framework that we need to look at. For example, EPCs are a blunt instrument when it comes to helping people understand the efficiency of their home and what the potential scope for improvement is.
The Climate Change Committee has put forward some interesting recommendations about how we could change the metrics, so that someone can like look at the certificate of their home and use it to compare metrics such as likely energy bills to another house. Currently, EPCs and other resources such as the government’s online energy advice service are not sufficiently detailed to empower households to make decisions about reducing their energy bills. more clarity is one area where government can collaborate with industry.
What is the role of installers in this process?
It’s not just about customers’ perceptions, but also installers. Local heating companies and engineers are incredibly influential in the decisions you make around your home. Working with these professionals can make a dramatic difference.
People also need consistent communication about things like regular servicing and maintenance of their heating system or turning down their flow temperature. Many installers already do this, and they are a very influential and important group. We must make sure we support them as part of the transition too, through offering all the necessary upskilling and training needed to accommodate new market trends.
Are there any particular concerns you have about the ability to reach net zero by 2050?
I think one of the most important projects that will accelerate the push for net zero will be the improving the smart meter rollout. Smart meters are indicative of how the relationship between customers and the energy industry is changing, and that people will soon be afforded more control over their own consumption. Smart meters embody this principle, and help people make informed decisions about their energy consumption.
Do you envision any future challenges for the energy sector, and if so, how do you feel they can be overcome?
It goes back to our systems approach to decarbonising heat at Energy UK. You need to get the balance right between thinking from a very technocratic approach of where heat networks and hydrogen boilers might be based placed, while also valuing and protecting customer choice over different technologies. At the end of the day, people just want a warm and comfortable home with affordable energy bills. And we have to approach the challenge from that point of view, as policy makers and influencers.
