Challenges and interventions for transitioning to renewable heat in rural homes

Economic

The high capital cost of many renewable heat systems is an important barrier to their installation. In general it is cheaper to replace a traditional oil[2] boiler with another oil boiler, even though this is also an expensive purchase. The capital cost of purchasing and installing a heat pump is greater than installing a replacement oil boiler and increases as heating demand increases (as larger units are required). Indeed, as energy efficiency upgrades are likely to be required to ensure the heat pump can be run efficiently, capital costs will probably be even greater. Similarly the capital cost of a biomass boiler (using logs, chips or pellets) is greater than that for an oil boiler. Finding the money to invest in any boiler is difficult for most people, so the barriers to purchasing more expensive renewable energy options are significant.

Of course, capital costs are only one element of the decision, running costs are the other factor. Running costs include both fuel costs and maintenance costs.   Heat pumps in well insulated homes are cheaper to run than oil boilers, and the savings over time are a key incentive to installation and shortening the payback period[3]. Similarly, biomass is usually a cheaper fuel than oil depending on the type being used and the current oil price.

Given the higher cost of installation, incentives are needed to promote the use of renewable energy heat systems but even with current grants there are very substantial upfront costs. Often the potential reduction in running costs is not sufficient to encourage most consumers to make the initial move to low carbon heat. Furthermore, some rural homes which require substantial energy efficiency improvements may never find it economically feasible to install heat pumps as the larger capital expenditure is unlikely to be compensated by lower running costs. This particularly likely to be the case in older homes with ‘hard to treat’ features such as solid wall construction, stone built, solid floors, no loft space, or sash and case windows.

Nonetheless, there needs to be a clear policy for decarbonising such homes as the carbon tax increases. If there is a ban on installation of fossil fuel boilers in existing homes people could be left with no realistic alternative. Even where homes are suitable for retrofit, a subsidy will be required to achieve a positive ‘whole life’ economic benefit.

Technological

Not all renewable heating technologies will be suitable for every home. It is important that information on the advantages and limitations of each technology is available for different home types and that people can easily access that information in a format relevant to them. Installation of the wrong types of heating system in the wrong places can give unfamiliar technologies a bad reputation. There are a variety of technologies which may be used in the transition to renewable heat and it is important that information is available about them all, highlighting the types of homes where they may be suitable or not suitable.

The Climate Action Plan focuses on heat pumps as the key domestic renewable heat technology, but the move from high temperature fossil fuel heating systems to lower temperature systems requires deep energy efficiency retrofit or the heat pumps will not be able to keep the home at a comfortable temperature and will be expensive to operate. Biomass boilers (using logs or pellets) are an alternative high temperature heating system which may be suitable in some rural housing but sourcing quality fuel, keeping it dry and maintaining the boiler appropriately (including emptying ash) can be barriers to this technology. Smart storage heaters or other electrical heating are also alternatives, but may be expensive to run and might not be suitable where all day heat is required.

Location

Location can act as a barrier to certain technologies in rural areas. Low housing density and a dispersed population mean options such as heat networks are not viable in most rural areas. Nonetheless some towns and villages in the rural Western Region may be suitable for small heat networks. Work in Scotland[4] has noted the potential for heat networks at small scale where alternative solutions are technically or financially prohibitive, or where there are co-benefits from implementation, such as providing high-temperature heat for industry. It may be, however, that when compared with the cost of deep retrofit of individual dwellings the installation of heat networks becomes more financially favourable.

Aside from the issue of density, rural locations can increase costs of installation and make it more difficult to achieve economies of scale in the provision of low carbon heating systems It can also be more difficult to find appropriately skilled installers in an area while lack of competition as well as increased transport and servicing costs also act as barriers. Being part of an Sustainable Energy Community (SEC) would help with this.

Information

Most people do not think very much about their home heating system as long as it is working. While there may be increased consciousness among some about their carbon footprint, understanding how home heating impacts on carbon emissions is not a priority for many. People are unlikely to change a system that is working for them. Nonetheless it is important that there is easily accessible information about low carbon home heating options so that people may gain a background knowledge, even if they do not immediately make any change. This helps to normalise the concept of low carbon heat and means that when consumers are at key trigger points such as house moves, refurbishment or failure of an existing boiler or system they will consider low carbon heat options, or at least will be aware that they should consider them. The disruption caused by changing heating systems is sometimes considerable and this is an important barrier to change and so changes are most likely at these trigger points.

At these times consumers need access to high quality, detailed, impartial information and advice. They will have more focused questions and a more urgent need to understand their choices. Provision of robust, impartial information at these points can make a significant difference. Heating installers can have a particularly important role here as a large proportion of replacements made through ‘distress decisions’ following failure of the existing system. People who trust their boiler repair agent will rely on them for information and advice. Thus, training for installers on low carbon heating options is key, but as many will have a strong preference for one technology type or a connection to a particular manufacturer it is important that the consumer knows where to get other advice on renewable heat options.

Some of the possible barriers to the transition to low carbon heating systems have been discussed briefly here. It is important to keep them in mind when considering how to drive the transition. The SEAI Behavioural Economics Unit has been studying barriers and ways to encourage change in some depth, read more about it here.

Government intervention

Given the barriers outlined above, government action is required to drive the transition to low carbon heating and significant government targets and actions are included in the Climate Action Plan. The types of actions which can be used may be categorised under the following headings:

• Regulation
• Finance: Taxes and Incentives
• Advice and information

Regulation

Regulation can drive change, in areas such as fuel type and specification, boiler installation and building regulations. It can also address fuel quality standards (e.g. for biomass fuels) or liquid biofuel blends as well as setting standards for building quality, energy efficiency and energy use. For example, building regulations introduced in November 2019, require all buildings to be Near Zero Energy Building (NZEB) and existing buildings which are being renovated across more than 25% of their ‘building envelope’ must improve energy efficiency performance to an equivalent of BER B2 (or cost optimal equivalent). Likewise, regulation of the allowable moisture content in firewood for sale and in the standard of wood boilers and stoves which can be installed, would reduce emissions improve air quality.

Under the Climate Action Plan the installation of oil boilers in new dwellings will be effectively be banned from 2022 and gas boilers from 2026 through the introduction of new regulatory standards for home heating systems. A review is also being undertaken to consider how and when the replacement of oil and gas boilers with renewable energy in existing dwellings can be commenced so that new oil and gas boilers will not continue to be installed.

Alongside this type of regulation, it will be important to ensure that there are effective alternatives available to rural homeowners and landlords at reasonable cost, and that there is a planned programme of change to avoid either requiring early replacement of boilers or encouraging a spike in sales of fossil fuel boilers in advance of any ban being introduced.

In addition, as with all regulation, effective enforcement will be essential to ensure they work and are fairly applied.

Taxes and Incentives

There is a commitment to increase the carbon tax to at least €80 per tonne by 2030; this is likely to involve increases at a rate of €6 per tonne per year to 2030. This should incentivise the take up of low carbon heating alternatives and energy efficiency improvements and will improve the payback periods for such investments. However, it is important that there are appropriate, affordable alternatives to carbon intensive systems, otherwise people will be facing the higher cost of fossil fuel without an option to change. Furthermore, it should be recognised that while a high carbon tax will drive a move to lower carbon systems. It most affects those on low incomes who can least afford to change and at the same time it also increases the incentives to operate outside the formal economy.

Grants, low interest loans and repayment of loans through energy bills are all possible support methods to increase investment in retrofit and low carbon heating solutions. The Climate Action Plan outlines the steps to be taken to develop a new delivery model for energy efficiency upgrades. (Actions 47-49). This is welcome but much of the focus seems to be on energy efficiency rather than on low carbon heating systems. While energy efficiency is, of course, important there is little in the Plan on potential supports or incentives for older buildings or ‘hard to treat’ buildings, many of which are in rural areas. This may mean that changes in these buildings will be slow or will not take place despite regulation and increased taxation.

Delivery structures and funding options for an area based residential retrofit programme will be identified this year (2020). When these are known it may then be clearer how rural dwellers will be supported in the move to low carbon systems.

Advice and information

The final key element of government intervention involves objective and reliable advice and information for people about lowering their carbon emissions and moving to low carbon systems. This is largely the responsibility of SEAI and there is significant information available from them (https://www.seai.ie/ ). The information available has been developed over the past few years, and is of course very welcome but it could be further expanded.

There is a need to provide clearer guidance on the options for older buildings, listed buildings and conservation areas, and remoter rural dwellings based on research on best practice and real-world experience.

There is also a need for clearer information about the full costs associated with deep retrofit and information about cost savings which takes account of actual heat use in a poorly rated home before retrofit and the costs following retrofit when the home should be warmer. It is important that the economic benefits are not over stated.

The development of a Sustainable Energy Community approach with local energy Master Plans has been very successful and can make good use of local knowledge in tailoring the use of different heat technologies to local circumstances as well as informing communities about their options and giving them the chance to particulate in the transition. There is potential to have further cooperation between local government and industry and consumers in this approach.

In terms of government intervention to drive a move to renewable heat in rural dwellings the following is required:

• A consistent long term policy for renewable heat in the home would provide the stability and certainty required to encourage investment.
• A clear statement on the role of a different heat technologies for different dwelling types in Ireland in future.
• Targets for deployment should be made in a number of different areas, for example at local and regional level, as well as national.
• Targets should also be segmented by different housing types (age, build etc.) and location (rural, small town, urban) and current fuel use.
• There should be consideration of the use of local or regional resources alongside improvement in supply chains and skills, and local knowledge and capacity to support uptake of low carbon heat.

While it is important to pick ‘low hanging fruit’, in terms of focusing on those dwellings which are easiest to change, it is also essential that the issues for ‘hard to treat’ homes are addressed early rather than being left till the 2030 deadline approaches. A planned programme will provide more certainty and allow for more effective responses.

Conclusions – Enabling Uptake

In its recent report for Ireland the International Energy Agency (IEA) recommended that Ireland should develop a time bound roadmap for decarbonising the heat sector through energy efficiency and fuel switching. The roadmap should establish clear scenarios and milestones for phasing out fossil fuels.

It is important that the focus from the start is not just on the easiest wins (though of course these are important) but it is also necessary, early in the process of moving to a low carbon system, to also tackle some of the more ‘hard to treat’ or difficult to incentivise places, or at least develop guidance and a plan for the best options. It would be useful to have a phased approach across housing types, and locations with interim targets alongside the longer term strategic aims

Such a phased approach[5] would provide clear strategic direction and confidence for industry and consumers allowing planned investment and avoiding a concentration of activity near the target date. It would also avoid a requirement for consumers to prematurely replace current heating systems.

Helen McHenry

[1] A very useful, more detailed discussion of heating off gas grid homes is available in this Scottish consultation document.

[2] While the term ‘oil boiler’ is commonly used, the fuel is usually kerosene.

[3] The Sustainable Energy Authority of Ireland (SEAI) work in this area shows various payback periods depending on house size and type for heat pumps over oil fired central heating. See more here: https://www.seai.ie/publications/Replacing-oil-boilers-with-heat-pump-household-economics-and-system-wide-impacts-Summary-document-.pdf

[4] https://www.gov.scot/publications/energy-efficient-scotland-future-low-carbon-heat-gas-buildings-call-evidence/pages/6/

[5] This was also advocated in the responses to the Scottish consultation on low carbon heat https://www.gov.scot/publications/future-low-carbon-heat-gas-buildings-analysis-responses-call-evidence/