Annual Heat Conference

Speech by Amber Rudd to the 3rd Annual Heat Conference the heat challenge and global climate change picture.

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

The Rt Hon Amber Rudd MP

I am delighted to join you at your 3rd Annual Heat Conference – but my first one!

Thank you to the CHPA and the Energy Institute for their invitation to speak and for establishing this important event…

One thing that really struck me when I joined DECC was the scale of the heat challenge… and how fundamental it is that we get this right –

Fundamental for consumers, for a secure energy system, and for the climate.

We are not going to meet our long-term climate change target without changing the way we produce and consume heat.

It is a massive challenge – but I am reassured by the huge impetus already underway, led by many of those attending here today…

I want to emphasise three key themes and I think all three sit neatly under the heading for this conference – “Lean Heat”:

  • First, how we are reducing the carbon emissions from heating. We see this conference as our annual audit so I will give a brief update on what we have achieved. I also have some new announcements.
  • Second, joining up demand and supply: We must join up reducing the demand for heat as we promote lower carbon forms of heating …
  • And running through both of these is ensuring a better deal for consumers. Another winter approaches. We must never lose sight of what this heating and energy efficiency revolution means for individual consumer bills.

Last year we published The Future of Heating: Meeting the Challenge this listed a number of actions. Actions we are now delivering.

A starting point for heat must be to use heat more efficiently and to cut consumer bills.

We’re aiming - and we are on track…to make 1 million homes warmer and more energy efficient by March 2015.

At the end of August, 800,000 households had benefitted through ECO or the Green Deal

More than 350, 000 homes have been Green Deal assessed.

Now we are bolstering the hugely successful Green Deal Home Improvement Fund with an extra £100 million

And we have listened to you on changes to ECO….we have made heat networks a primary measure… and over 3,000 heat network connections have already been approved for ECO support..

In 2013 alone, our investment reduced household and business energy and fuel bills by four billion pounds.

And we estimate they will reduce energy and fuel bills by twenty billion pounds in 2020.

And the energy efficiency supply chain employs over 100,000 people in the UK

But consumers also need clear, accessible information

So that is why every domestic and small non-domestic customer will be offered a Smart Meter by 2020….

bringing an end to estimated billing and providing clear information on energy consumption in pounds and pence …

and giving consumers greater control over their energy usage.

Providing trusted, objective, expert advice can also empower consumers to make informed choices. .

That is why the Energy Saving Advice Service has such an important role to play with over 120,000 calls received since April, on subjects including the Green Deal, ECO, the RHI, and affordable warmth.

Which brings me to the single biggest improvement to the heating market that we have made this year: the introduction of the domestic RHI.

This is the first scheme of its kind in the world.

Alongside the non-domestic RHI - it means any building in Great Britain today can receive support from this Government to make the switch to renewable heating.

We want people to have permanently warmer homes, lower fuel bills and to be reducing their emissions.

Renewable heat technologies can deliver all three.

At the end of September, just six months since the scheme opened, Ofgem made the ten thousandth accreditation .

We have already paid for almost 10,000 megawatt hours of renewable heat in people’s homes.

And I was really pleased to see that there are installations right across the country.

This includes people like Roy Powell, who installed an air source heat pump at his barn conversion in Sussex, to replace an old and inefficient LPG system.

Since then the house has been warmer and cheaper to heat.

He is saving around £1,800 a year in fuel costs and expects his RHI payments to be £7,700 over seven years … making a significant contribution towards the £11,000 cost of installing the system,

And the latest figures show that at the end of October there were another 4,700 air source heat pumps on the scheme just like Roy’s…

…as well as around 3,000 each for biomass boilers and solar thermal systems and nearly 2,000 ground source heat pumps.

We want to see more homes benefiting from this opportunity.

We’ve started the process to allow third party ownership in the scheme, which will open the door for those people who can’t afford the upfront costs of a new heating system.

However, I believe the biggest barrier is awareness – so I ask you all as heat champions to use your networks to spread the word.

Just as we are supporting the ‘pull factor’ of the world’s first renewable heat incentive… we also need to support those who will deliver the push.

This means building the capacity of the supply chain; making sure that installers have the training and skills they need.

So that is why the Government is delivering the ‘Renewable Heating Skills and Apprenticeship Voucher Scheme.’

A £650,000 fund to expand the capacity of domestic heating engineers and deliver apprenticeships to support the next generation of installers .

Since it was launched by the Secretary of State last October over 1,600 training vouchers have been awarded,

Meeting the heat challenge means meeting it at all scales.

Too often industrial heat has been something of an after thought. No longer.

We have brought BIS, industry and academia together to develop long term decarbonisation ‘roadmaps’ for the eight most heat intensive sectors for the period from 2020 to 2050.

Engagement across each of the sectors has been impressive, with strong relationships being built and a problem-solving approach being taken by companies, trade associations, academics, financiers and government.

Individual sector reports will be published next spring. These will inform the next generation of industrial policies.

We are building an enduring, sustainable foundation for UK industry in a low carbon future.

Meanwhile, the Renewable Heat Incentive for non-domestic priorities continues to drive deployment.

Uptake has been increasing year on year – almost 2,200 systems were accredited in 2013

And there have been some inspirational examples

Okehampton College in Devon opted for a biomass heating system and reduced their energy from £100,000 to £10,000 a year.

Biomass has been a resounding success in the RHI so far, with over 5,700 systems accredited onto the scheme.

But we also have hundreds of heat pumps and solar thermal systems on the scheme…

…and more biogas and biomethane plants are coming online to give us a real renewable energy mix for the future.

And so far in 2014, figures show that accreditations have almost doubled compared to the same period last year.

We remain committed to supporting as wide a range of technologies as possible.

That’s why in May 2014 we introduced a range of improvements to the non-domestic RHI, including higher tariffs for heat pumps.

Moving to Heat Networks, a type of ‘lean heat.’

Heat networks have the potential to decarbonise and diversify our sources of heating

… from exploiting waste industrial heat to unlocking the potential of indigenous sources, such as deep geothermal.

They are an opportunity to develop our towns and cities for a low carbon, energy efficient and secure future.

Increasing the deployment levels requires that some fundamental barriers are addressed…

Chief amongst these is providing the expertise and support to Local Authorities who are best placed to facilitate and to drive change

This time last year you heard from Greg Barker about the establishment of the Heat Network Delivery Unit and he announced the first funding round.

We are now into the fourth round, and each has been more successful than the last.

This Unit combines grant funding with guidance from experts in technical, commercial and legal aspects of heat networks

One year on what has the impact been…

  • We are supporting 118 projects across 88 local authorities in England and Wales.
  • Almost £7 million of grant funding has been awarded.

The portfolio of projects being supported includes:

  • heat pumps utilising heat from waste, from mine water, and rivers;
  • gas, biomass and energy from waste CHP;
  • and deep geothermal .

Through support for heat mapping, master planning, feasibility studies and detailed project development, Local Authorities are able to develop commercially investable schemes.

Round 4 of funding closes on 27 November.

The Unit was initially set up with funding to allow it to run for two years, until April 2015, but I am very pleased to announce today, the extension of Unit for a further year to March 2016.

I can also confirm that:

  • DECC will support the Chartered Institution of Building Service Engineers and CHPA-led work on technical standards of Heat Networks.
  • We are implementing the heat metering and billing requirements from the Energy Efficiency Directive
  • We have launched a Heat Networks Demonstrator competition – worth £7 million - to stimulate innovation and help address the cost and performance efficiencies of heat networks in the UK.

Innovative ideas might include, but are not limited to, integration of low carbon heat sources to heat networks such as recovering waste heat from industry… to those technologies that may have lower installation or operating costs.

The closing date for the competition is the 28th November. So I would strongly urge those of you with good ideas to consider applying.

Heat networks consumers

And just as we are supporting the development of new Heat Networks on the ‘supply side’ - we need to ensure a level of consumer protection consistent with that for electricity and gas customers.

I recognise the considerable efforts of the CHPA in leading the development of an Independent Heat Consumer Protection Scheme initiative.

I want to confirm the importance that the Government places on the success of this scheme, which is due to be launched early next year.

Getting this right is vital for the growth of the heat network sector and vital for heat customers.

We are also working to remove barriers for industry to bring forward more, diverse low carbon technologies…

One of these is the geothermal industry.

We are changing the law on underground access rights to help unlock the huge potential of deep geothermal exploration.

Moving from heat buried deep underground, to the latent heat available in the rivers, canals, lakes and seas that surround us;

I’m pleased to announce today a package of new actions to drive the deployment of large scale, water source heat pumps.

Last year, Ed Davey flicked the switch at Kingston Heights, a pioneering new development using heat from the River Thames to keep 136 residential units and a hotel warm.

And earlier this year, the National Trust in Wales began using the Menai straits to power a marine source heat pump keeping a historic mansion warm.

These are great examples, but we need more:

That is why we are introducing a number of actions – which represent a collaborative effort, designed to tackle the barriers which you have told us are holding the sector back.

  • we are working with the Environment Agency to streamline processes so it is easier to apply for the relevant permissions;
  • we will work with industry to drive up technical standards through a Code of Practice, and to help those looking to install water source heat pumps navigate the planning and consenting processes;
  • and we will be running roadshows and other events to raise awareness of this technology among potential developers;

Working together, we believe we can make a real difference.

Ultimately, heat is a local issue. So matching demand to potential supply must be the starting point in devising local solutions.

We need the right tools to achieve this.

So we are updating and developing our existing National Heat Map and integrating new mapping layers.

In the summer we published a high level water source heat map ….a detailed map is under development.

And heat mapping shows that the majority of homes are connected to the gas grid

But there are of course many communities off the gas grid, who have to rely instead on more expensive fuels.

4 million UK households are off the gas grid – of these over 1.5 million use heating oil or LPG.

These communities are a priority for Government, given the number of fuel poor in those homes. To address this

  • We have changed the focus of ECO Affordable Warmth in rural areas.
  • We have widened the eligibility criteria for the Carbon Saving Community Obligation.
  • We are supporting a number of community heat projects in England from the £15m Rural Community Energy Fund.
  • And these are the households that are likely to benefit the most from the RHI.

I have spoken at length because there is a lot to say. It is important. And much has been achieved but there is still more to be done. Much more. More efficiences to be achieved.

Efficiency in achieving the right solution – getting the right ‘fit’ by area, by technology,

Efficiency so that consumers have easy access to the right information and support,

And efficiency in the ways Government works and engages with others.

We will continue working to drive low carbon heating, to innovate and to support consumers in a way that builds a green future.

A cost effective, clean and energy secure future.

A future of ‘Lean Heat’…Thank you.

Published 5 November 2014