Nesta’s Andy Marsden on why we need a coordinated approach to clean heat.
The UK currently follows an individual-led approach to low-carbon heating. Households decide on their own whether to switch to low-carbon heating, while governments focus mainly on developing incentives and regulations to encourage people to switch.
At Nesta, we believe the UK should develop a more systematic approach to the clean heat transition. This approach – which we call coordinated switching – presents the option for households to switch together with their neighbours. This would mean identifying areas where many homes could switch together, developing schemes covering many homes, and then letting households in that area join the scheme. These schemes might involve shared heating infrastructure – such as heat networks or ground source heat pumps which draw heat from under streets – or they might involve group purchasing of heat pumps.
The potential benefits of coordinated switching are:
- clarity for industry and households: developing a clear and tangible view of the heat transition
- ease for households: households are provided with their options and can opt in to a scheme alongside their neighbours
- economies of scale: lower costs through bulk purchasing
- coordinating with electricity and gas grids: enabling better planning of electricity grid upgrades and changes to gas grids as heating changes
- accelerating the clean heating rollout: Government could more directly influence the pace of low-carbon heating uptake
- building the supply chain: more confidence and local opportunities for local suppliers
- access to more finance at lower cost: larger schemes are more attractive to institutional finance.
How this could happen
Build local heat planning capacity
The UK Government should support each area to form local heat delivery expertise, overseen by local government but operating as a distinct, independent organisation. These local delivery bodies should lead on creating local heat plans and engaging communities in developing these. They could also take on roles in delivering retrofit schemes in fuel-poor homes and offering consumer advice about retrofits in their local area.
Granular local heat plans will identify the likely best solutions for low-carbon heating in each neighbourhood, including potential locations for communal schemes such as heat networks and networked ground source heat pumps. The process is highly likely to require partnership working with the national energy system operator (likely via the new regional electricity strategic planners) and gas and electricity network operators, alongside proactive community engagement.
Trial a range of approaches to zoning, scheme design and delivery
Setting up a series of pilots will enable the Government to rigorously test different approaches to coordinated switching, learn quickly and scale up schemes that work. Examples of approaches to pilot include:
- communal shared infrastructure schemes;
- a local energy group or cooperative offering a street by street upgrade to an already engaged local community;
- a group purchasing offer for air source heat pumps over a larger geographic area, with companies bidding for the pilot in a reverse auction which finds the lowest possible subsidy;
- a local authority-led retrofit and regeneration programme that involves innovative finance offers, such as the 3ci model;
- a DNO-run model, where a distribution network operator or independent distribution network operator offers a clean heat upgrade with zero upfront cost to a few thousand properties within an area, using a mix of subsidies and financing from its balance sheet.
Capturing learnings from these would mean that information and best practices can be easily replicated in similar contexts.
Develop national capacity to support the work at a local level
Building capacity at a national level will be important to capture learnings from areas already working on elements of the coordinated planning and delivery of low-carbon heat. Building on these learnings, and the processes already in place in teams such as the heat network delivery unit, will provide resources to local government.
How we built this view
Our view of coordinated switching has been designed over the last six months – you can read our online summary and blueprint here, with a more detailed report here – bringing stakeholders from around the UK together to critique our thinking, build on aspects and highlight areas in which elements of a coordinated switch are already underway. We spoke to both the public and private sectors, from hyper-local community groups to national and UK governments. These contributions were brought together into a policy blueprint – a map of the stakeholders that would need to be involved, including potential new organisations, and what these individual groups would have to do to deliver at each stage.
As our blueprint communicates a speculative approach we realise there is a lot of work to do in testing some of the elements that we are proposing. Elements of the proposal may support the uptake of heat pumps and the current individual approach – our future work will look at testing these.
Get involved
We are working in the open to understand how elements of the proposal such as clean heat zoning, scheme definition and a coordinated delivery may work in practice.
We’re building a community of stakeholders around this project, and actively looking for partners to further this work. If you’re interested in trialling any aspects of our work please check out the Nesta website and reach out to sustainablefuture-team@nesta.org.uk.
