By February 9, 2016 Read More →

A degree of change

2016 is set to be a landmark year for energy efficiency. With consultations on key incentive programmes and a commitment to the fifth carbon budget on the cards, the events over the next 12 months will play an important part in shaping the future of electrical and low carbon technologies. Alan Clarke from Heatrae Sadia explores the options when it comes to the business opportunities presented by the Paris Agreement on climate change.

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Campaigners all over the world breathed a sigh of relief towards the end of last year, as 196 global leaders signed up to a historic pledge on climate change, agreeing to limit their emissions to ensure a relatively safe temperature cap of 2º C, with an aspiration of limiting increases to 1.5º C.

While captains of industry are in the process of analysing what that commitment means in real terms, the Government is now in the midst of calculating its fifth carbon budget, which will set out how much the UK must reduce carbon emissions by before 2032. Whatever the agreed target, it will once more emphasise the ongoing pressure on both commercial and domestic customers to cut energy use and carbon.

Given that 38 per cent of all carbon emissions in the UK result from heat, and 34 per cent of all UK greenhouse gas emissions can be attributed to heat through electricity use*, it’s a pressure that they will most likely need to alleviate through upgrading heating systems with energy efficient solutions. The Department for Energy and Climate Change (DECC) has stated that it is keen to tackle emissions related to heat use in buildings, further highlighting the area as a priority.

CCC recommendations

The Committee on Climate Change (CCC) has already published its recommendations for the fifth carbon budget, which also recognise that decarbonising the heating industry will be critical to hitting this 2032 carbon target. As a result, we’re likely to see a lot of policy work relevant to the heating industry in the first half of this year.

In December last year, the Government announced £295 million to improve the energy efficiency of schools, hospitals and other public sector buildings over five years, and £300 million for up to 200 heat networks, which will generate enough heat to support the equivalent of over 400,000 homes.

This signals a big opportunity for electrical wholesalers, whose customers can expect an increase in demand for the heat interface units (HIUs) which deliver heat to individual dwellings or offices. As heat networks can supply heat from a central source to several buildings (also known as district heating) or to a single block of residential flats or apartments (also known as community or communal heating), there will be opportunities for both domestic installers and commercial contractors.

While the CCC’s recommendations talk about the importance of electric boilers, heat pumps and LPG in off-grid areas, renewable heat will also have an important part to play in delivering mandated carbon emission reduction.

Green Deal – what’s next?

One area for scrutiny is the expected replacement of the Green Deal. While the scheme supported the installation of solar water heating products, funding for new applications has now ceased. The Government’s next move will be decided with the help of a review into standards and consumer protection when it comes to energy efficiency measures, led by chief executive of the BRE Group, Dr Peter Bonfield OBE FREng.

The review, which is expected to issue its findings in March, will draw from industry experience to understand the delivery of measures and gather evidence surrounding standards, monitoring and enforcement, which will no doubt feed into the wider policy review which is underway.

At the same time, Government has announced an increase in funding for the Renewable Heat Incentive (RHI) to £1.15billion and an extension to the scheme to 2021. DECC will shortly consult on extensive reform of the scheme to enable significant changes to come into force in 2017 – changes which will have a significant impact on the viability of solar water heating for both domestic and commercial customers.

Meanwhile, the UK’s referendum on whether or not to remain a member of the European Union will also be an important focus this year. It is tempting to think that by pulling out of the EU, its legislation would no longer affect us – the most obvious example being the recently adopted Energy-related Products Directive, commonly known as ErP.

However the legislation has already been incorporated into our legislative framework, so if, hypothetically, we wanted to scrap ErP, it would take a good few years. By that point all the hard work embedding the legislation would have been done, and so reversing it would deliver little gain. The EU is also the UK’s largest export market so products sold into Europe would still need to meet any legislation pertinent to that market.

In the midst of these changes, as a leading manufacturer of hot water storage and generation products in the UK, this year Heatrae Sadia will be working with a range of Government stakeholders to ensure that the water heating industry plays a more significant role in the carbon reduction debate.

We are committed to helping policymakers understand and take advantage of the carbon saving opportunities that hot water storage offers, and will work with stakeholders including DECC to explore how the water heating industry can take up a greater role in helping the UK to meet its carbon reduction emissions targets, while lowering energy bills.

For the industry, our mission is to make the transition to a low carbon future as easy as possible. As we seek a route to delivering the Paris Agreement, we have a responsibility to ensure the whole of our infrastructure and skills base is geared up for what’s to come.