Off grid consumers in the firing line

6th Jul 2020

 

Decarbonising heat will cost billions, actually hundreds of billions, possibly a trillion pounds. The sum matters but who pays and how, probably is the most taxing problem facing Government. And given what has been said, those off the gas grid will be first in the firing line – the guinea pigs.

Last week, BEIS announced a £14.6m package to fit innovative heat pumps to 750 homes. That’s nearly £20 grand a property. The question that follows is how would consumers pay for this, if the taxpayer didn’t? The simple answer is they can’t afford it. Now there may be cheaper options – bioLPG, bioOil, connections to a low carbon gas grid and heat pump costs might fall – but my point is what mechanism is going to be put in place to pay for the cost of decarbonisation?

Being on the gas grid, enables a low carbon solution such as hydrogen or biomethane injection, to have costs met by socialising them. Spreading the cost over the 23 million homes over say 25 or 40 years, making it more manageable for the hard-pressed consumer. This is the central thesis around the Leeds H21 paper.

Now the good fortune. The iron mains replacement policy, has enabled a hydrogen gas network solution to become a practical reality, given the network has become compatible with using this change of gas. But the added good fortune is that this cost has been socialised by the networks, and at roughly the same time as the network costs start to fall from completing the replacement policy, the costs for hydrogen conversion could start to be incurred. Yes, passed onto the consumer, but they won’t notice the difference.

With the gas networks being heavily regulated, it also provides a check on the costs to protect the consumer. The alternative, leaving consumers to simply get on with it, will fail. Just ask those off the gas grid how they plan to afford low carbon heating as socialising the cost is not an option.

Best wishes

Mike Foster, CEO