Over the last decade, Scotland has made great strides in decarbonising its electricity supply, replacing coal and gas power stations with renewables like wind energy. But across the country 90% of us still rely on fossil fuel boilers to heat our homes, generating nearly a fifth of Scotland’s annual climate emissions. This, and the poor energy efficiency of our housing stock, left many households cruelly exposed as energy prices rose dramatically following Russia’s invasion of Ukraine in 2022. Fortunately, we have solutions that can cut carbon and get us off expensive fossil fuels – better energy efficiency, and low carbon heating like electric heat pumps.
Unfortunately, we’re not rolling these solutions out fast enough and as a result, emissions from Scotland’s homes have stayed flat over the past five years, when they need to be falling to meet our climate targets. The problem isn’t unique to Scotland, however. To accelerate the move to cleaner heating, Governments across Europe have been passing new laws to phase out the use of fossil fuel boilers. The Scottish Government made its own proposals to regulate fossil fuel boilers and energy efficiency in its 2021 Heat in Buildings Strategy. With support from the Pebble Trust, WWF Scotland explored the costs and practicalities of these proposals and how they could be improved.
What did we do?
We worked with experts to explore the decarbonisation of Scotland’s homes, first developing a set of ‘typical homes’ that represent the vast majority of our housing stock. Hourly energy modelling was then applied to these homes, to determine the performance and costs of different combinations of energy efficiency and low carbon heating. Then, costs over fifteen years (the expected lifespan of a heat pump) were calculated to find the lowest cost combination of these measures. The full details of this work can be found in the experts’ report here. In the final step, we used the results to assess the Scottish Government’s proposals and consider how they could be improved to meet our climate targets and ensure a just transition. You can read our full report of the project here (and a four page summary here).
What did we find?
The modelling confirms that low temperature, air source heat pumps are the best solution for most homes thanks to their versatility and low costs. Individual heat pumps are most suitable for houses, with shared systems like district or communal heating systems likely to be more suitable and lower cost for flats and tenements. Where homes already have electric storage heaters or have limited internal space for air source heat pump equipment, air to air heat pumps came out top. These are the same as air conditioning units with an external box connected to indoor air-blowers; overall they take up less space than their radiator-connected cousins.
A typical older home found in rural Scotland © iStock
A householder stands beside his new heat pump, camouflaged to suit his stone-built rural property. © MCS Charitable Foundation
How much energy efficiency?
People often ask what level of energy efficiency is required for a home to be suitable for a heat pump. Our results suggest that it’s economic for a household to bring their home up to an equivalent of a ‘C’ rating on an Energy Performance Certificate (EPC) – the upfront cost of fitting measures like loft or cavity wall insulation is paid off within fifteen years by reductions in energy bills and heat pump costs. Better energy efficiency can make heat pumps cheaper by enabling operation at lower and more efficient flow temperatures (the hot water flowing to radiators) and by reducing the size of unit required.
As well as loft/cavity wall insulation and double-glazing improvements, our study suggests untapped potential to eliminate draughts in homes and recommends insulating solid walls in houses. This is particularly relevant to rural areas, where solid wall homes are more prevalent. Older homes (pre-1900) are reliant on ventilation to eliminate damp, and so extra care should be taken when installing these measures. Around half of such homes are ‘heritage’ where planning restrictions or period features may limit the use of internal or external wall insulation. Our results suggest that in these cases, it may be possible to install a heat pump economically, provided all the other insulation measures are present. Energy bills would be slightly higher without the wall insulation, but some owners may prefer to pay this premium in return for a lower upfront cost and less disruption or visual impact. However, it should be remembered that well installed solid-wall insulation brings wider benefits too – reduced demand on electricity networks and protection against fuel poverty.
What about hydrogen?
Our project also looked at a potential alternative to electric heat pumps. The energy sector has fiercely debated the potential to use low-carbon hydrogen to heat homes, using existing gas networks to deliver this alternative energy to homes where it can be burnt in a modified gas boiler. It’s an idea heavily promoted by the gas networks and boiler manufacturers, but the technology is at a very early stage of development and most available evidence indicates that it is likely to be costly, inefficient and resource intensive in comparison to the established technologies described above.
We weren’t able to include hydrogen in our modelling since mass produced ‘hydrogen boilers’ don’t exist and estimates of the costs to produce, store and transport low-carbon hydrogen are also very speculative. Instead, we commissioned a literature review of the available evidence on likely timescales, costs and geographic availability in Scotland.
The review found that, if available at all, the earliest that hydrogen heating for homes could start to be rolled out on a mass-scale is the middle of the next decade, meaning it could only make a limited contribution to Scotland’s target of reaching net-zero emissions by 2045. As a sector with low-carbon solutions available today, it’s important that progress is made as soon as possible. And for households, energy bills are likely to be much higher with hydrogen than with natural gas, given the additional costs of converting gas or electricity into hydrogen.
How much will it cost?
Unlike hydrogen heating, electric heat pumps are available today and already in widespread use around the world. A key question we’re often asked is how much they cost to install and run – using real-world data for Scotland we estimate the average cost to fit an air source heat pump to a house to be £13,500. There is scope for this to fall as supply chains expand and mature, and Government regulations are a key step to making that happen. However, households will continue to need financial support from Government in the first years of regulation, until installation costs fall.
We estimate that around half of all homes will require energy efficiency improvements at an average cost of £2,200. The cost of fitting wall insulation in older houses with solid walls (about 12% of the stock) is higher, at around £10,000 per home. Again, Government grant and loan support will be vital to help households meet these costs.
On running costs, we estimate that today, about 30% of houses in Scotland can make energy bill savings by moving to a heat pump (alongside energy efficiency improvements). These are homes more suited to heat pumps – able to achieve a good level of energy efficiency and low flow temperatures (e.g. with larger radiators). Around half of homes with oil boilers also make savings (using average heating oil prices between January and June 2023). The proportion of houses making savings could rise to 60% by 2024, once the UK Government delivers its commitment to remove levies that artificially increase the price of electricity.
What about fuel poverty?
Our research showed that it could be possible to achieve lower energy bills in the vast majority of homes. This was achieved by installing extra energy efficiency measures or larger radiators. These extra measures weren’t fitted in the modelling (hence our 60% figure above) because upfront costs weren’t repaid by bill savings within the fifteen-year assessment. But where it’s possible to take a longer-term view, for example social housing or Government fuel poverty alleviation schemes, homes should be upgraded to a higher standard of energy or heat pump efficiency. This supports existing Government ambitions to bring these homes to an equivalent to EPC ‘B’ and gives us confidence to say that in the long-run, individual heat pumps are the solution to cut both fuel poverty and carbon in Scotland’s houses.
What does this all mean for Scottish Government?
The Scottish Government’s Heat in Buildings Strategy, published in 2021 just ahead of the COP26 UN climate summit in Glasgow, sets the welcome ambition of converting over one million homes to low carbon heat by 2030. This is what’s required as part of Scotland’s contribution to limiting global warming to 1.5 C, the threshold for retaining a safe and liveable climate. Meeting this target will be challenging, and to accelerate the transition the strategy proposes new regulations that would require households to fit low carbon heating systems and energy efficiency measures.
Phase out dates for new installations of fossil fuel boilers were proposed, which would mean that from 2025 for oil and 2030 for gas, anyone replacing a boiler in a house would need to fit a low carbon alternative. It’s also proposed that anyone buying or selling a home be required to make energy efficiency improvements. Our research shows that individual electric heat pumps are most cost-effective way to meet these vital requirements. They’re already ultra-low carbon and can provide cost-effective heating – which will improve as the UK’s electricity markets are reformed over the coming years. A variety of heat pump types will be needed to match our varied housing stock, and it’s important that Government schemes are extended to support models such as air-to-air units. It will also be important to bring homes up to a good standard of energy efficiency, to ensure efficient heat pump design and operation.
The Heat in Buildings Strategy proposes different rules for flats and tenements, linked to the development of shared low-carbon heating systems (like district heat networks). Our research supports this approach, finding additional challenges and costs to fitting individual heat pumps in such dwellings that shared systems could solve.
Upfront costs will remain a challenge until costs reduce and so Government financial support should continue alongside regulation, for example through grant and fuel poverty schemes. Regulation will be crucial to reduce those costs, by allowing supply chains to invest, expand and mature.
And finally, we recommend that hydrogen not be relied upon as the main solution for homes, given the risk that it could delay investment in more established solutions. Using it for heating could also divert low-carbon hydrogen from sectors like heavy industry and transport, that have fewer alternatives.
Will we achieve the million homes by 2030?
We used our results to assess whether the Scottish Government proposals will be enough to meet climate targets, finding that unfortunately housing emissions in 2030 are likely to be double the Government’s target. Fixing this will require earlier dates for action, for example phasing gas boilers, where it makes most sense to do so, in houses from 2025 and ending all new installations from 2027.
Moving that quickly will require installation costs to fall and a bigger supply chain, particularly in rural areas where cover is patchy. Industry has been clear that long-term certainty of demand is one of the most important ways to achieve this, by giving firms the confidence to invest and expand. This is why it’s essential that this year, the Scottish Government consults on the final form of these rules and brings legislation forward in 2024.
Reaching that million homes target may seem daunting, but it’s also an opportunity. To wean ourselves off fossil fuels and their volatile prices, invest to create warm and healthy homes for everyone and to reduce fuel poverty. It’s also an opportunity to build on Scotland’s solid foundations for a green economy: abundant resource of green electricity, the manufacture of heat pumps and insulation and successful fuel poverty schemes that have helped transform communities all over Scotland.
There’s no time to waste – we can capitalise on our abundant renewable resources to create warmer and healthier homes for everyone living in Scotland. But we need stronger Government policies to accelerate the shift, to scale up industries, improve quality and enable and support households to make informed decisions on the changes that need to be made.
