How much to disconnect your gas supply?

 

When you decarbonise your home by going electric, you can save more money by going off gas completely so as to avoid the standing charge (the fixed annual charge). In my region, this can save up to £115/year but in some places you can save twice as much [1].

To avoid the standing charge you have to get your meter removed. The meter is owned by the supplier and you have to get them to do this – DIY or Fred Bloggs the engineer are not allowed. The supplier charges are highly variable, from £0 to £100s or even more. For example, this story Why does gas supplier charge £486 to remove meter when others do it free? (Guardian) details a charge of £486 to disconnect a Quaker Meeting House.

These charges are a disincentive to changing to a heat pump. Paying the annual fixed charge can tip the balance between paying more for low carbon heating or less. However, paying the meter removal charge adds to the upfront cost which is already steep.

Some recommendations based on actual experience.

I asked my friends (in Transition Cambridge Energy Group) about their experiences of disconnecting. These are all anecdotes and I have omitted names. 

Shifting policy costs on energy bills - revisited

As I said in a previous blog post, the current price ratio between electricity and gas means that switching to heat pumps often means bills increase - a major deterrent to many households considering taking on low carbon heating. Part of the problem is because of the way 'policy costs' are loaded mainly onto electricity bills instead of gas so when you switch to a heat pump you end up paying far more policy costs. However, if we were to change this so that policy costs were evenly distributed between gas and electricity, then heat pumps become cheaper. I have updated my previous calculation with a slightly revised method and based on the current price cap as shown in the following chart.

Chart shows the annual bill split into components: policy costs and other for each fuel. Current uses components as computed by OGGEM, 50% split means the variable policy costs are split between gas and electricity. HP costs are with the gas boiler replaced with a heat pump. Assumptions are explained below. Click on this for a larger image

Should we shift energy taxes to make heat pumps cheaper to run?

Tariffs vary but averaged across the country, under the current OFGEM price caps, electricity costs four times gas per kWh. This means that by my estimate [1] unless you go off gas completely (hence avoiding the fixed daily charge) you need a heat pump efficiency (SCOP) of 360% to get similar costs. This is not unknown but considerably better than average. If you do go off gas completely, you need 320% which is still better than average. If you only got 300% you would be paying 6% more with the heat pump than gas. This is discouraging for people wanting to switch to low carbon heating.

However, a significant part of the electricity bill is due to environmental and social policies or 'taxes'. If these were removed or shifted, the ratio of electricity to gas price would be smaller, making heat pumps relatively cheaper. Hitherto, policy has been to keep gas cheap because so many of us rely on it for heating which is essential for health. However, doing so penalises households that make the transition to low carbon heating. What are these taxes and how much difference would this make? Here is a graph showing policy costs on gas and electricity as of September. There are more policy costs on the electricity bill than the gas bill and the home with a heat pump uses more electricity, so pays even more policy costs.

 

Policy costs for a typical bill of 12000 kWh gas, 3100 kWh electricity or, with a heat pump, 6650 kWh annually. The policy costs are from OFGEM [3] and the heat pump kWh used is from [1] Costs are taken from the period July/Sep 2023, the latest available. These costs vary little by region. The acronyms are explained below. 

How long can we rely on cheap rate electricity?

A number of my friends are considering or have already installed a Tepeo zero emissions boiler (ZEB) with storage as a low carbon heating solution for their home. This is less disruptive than installing a heat pump but it is only 100% efficient compared to 300% or so for a heat pump. It relies on cheap electricity to keep energy bills at a sensible level – either economy 7 overnight, or similar, or relying on prices fluctuating during the day with a tariff based on wholesale prices, such as Octopus Agile. I shall call all of these tariffs ‘cheap time’, for brevity. 

Cheap time tariffs could become cheaper – or more expensive

Historically, overnight demand is lower than during the day, and hence prices are lower because there is no need to run the expensive peaking plant. This has enabled tariffs such as Economy 7 to work well for homes with storage heating. Hitherto this has been only a small fraction of heating demand: I estimate just 2.2% of domestic heating demand in England [1]. However, there is going to be lots more demand for cheap time power due to switching to low carbon transport and the need for electricity storage to take account of intermittent renewables. Cheap-time tariffs could become cheaper, because renewable power is cheap, or more expensive, because there is more demand for it. On balance I fear the latter is more likely.

Scaling up heat pump installation – counting the benefits

It is generally recognised that reducing carbon emissions is going to mean lots of heat pumps (or other electric heating systems) installed in homes to replace gas and oil boilers. However, heat pumps are (currently) more expensive to run and to install and not many households have been persuaded so far. The government is running a public consultation now on a market mechanism to increase the install rate [1]. By their own assessment this policy has a net social cost of £0.6 billion over 4 years. So how can this be sensible? Or is there a fundamental problem with the cost benefit analysis? - I think there is.

This chart illustrates the balance in costs and benefits – it is quite finely balanced.

Data from the consultation 'A market based mechanism for low carbon heat' cost benefit analysis [4]

A case for energy services - spreading the risk.

Recently I have completed some research into how cost-effectiveness of energy efficiency is measured and was struck by the huge differences we see, depending on context. For a householder or a small business, cost effectiveness is normally considered around financial costs and savings, with a time horizon of up to five years. In a context of evaluating national housing stock upgrades, the UKERC, for example [1], consider additional wider benefits including air quality, thermal comfort and carbon emissions, and a much longer timescale, at least 20 years. This is by no means exceptional - I found evaluations based on up to 60 years.

Risk gets too little attention.
However, it is not just the addition of non-monetary benefits and long timescales that worries me, the issue of risk gets too little attention, in my view. It is very hard to predict actual energy savings from retrofits due to a variety of factors, from inadequate understanding of the structure already present to variable installation quality. The recommendations we get on energy certificates have an allowance called the 'in-use' factor that partly covers these uncertainties - but these factors are based on averages. Also the in-use factor excludes comfort taking, which may or may not be due to actual changes in control settings by the occupants (see also my review of 'The Rebound effect in Home Heating' by Ray Galvin). This means that estimates of financial savings have a large element of uncertainty.

EnergieSprong's performance guarantee is a promising strategy.
While I would not wish to discourage anyone from installing energy efficiency improvements in their home, I would hesitate to recommend this purely on a cost saving basis, at least without an assessment of uncertainty or some kind of performance guarantee. This is why I find the EnergieSprong initiative interesting. The concept has apparently been working well in the Netherlands and is now coming to the UK, with an initial pilot in Nottingham [2].

Should we (and companies) offset our emissions?

Last year I took an airline flight and considered offsetting the carbon emissions. Several of my friends have done so too. Recently I was reminded that companies such as Marks and Spencer offset their emissions so that they are carbon neutral. I would be the first to agree that we all need to reduce our own emissions, not just pay someone else to do it for us. (And M&S have reduced their emissions substantially already [1]). However it seems to me it ought to be better to offset than not. How many people do this? Not many, it seems, as the total voluntary carbon offsetting market is tiny. In 2016, the equivalent of 43 million tonnes of CO2 was offset globally [2]; that is only 0.1% of global GHG emissions [3]. The projects supported by offsetting are clearly worthwhile, but could they be funded another way? How much would it cost to offset our own emissions?

Why is Cambridge University dragging its feet on divestment?

How much time does it take to change investment policy at a university? Why do Cambridge university students need to go on hunger strike and occupy university office buildings to pressure the university to action? Back in January last year, after a vociferous campaign by students and academics the soverign body of the university ruled that ‘none of the University’s Endowment Funds should be invested directly or indirectly in companies whose business is wholly or substantially concerned with the extraction of fossil fuels.’ They also required the university council to publish a report within twelve months to set out how this should be done. It actually took a bit longer than that but earlier this month a report was produced (5 Mb pdf) and the recommendations in it, while not earth shattering, are a step in the right direction. However, even this is apparently a step too fast because the council are unable to agree to adopt even those recommendations. These include:

1. No investment in tar sands or thermal coal (? What other kind of coal is there?)
2. Commitment to the principles of the UNPRI (United Nations Principles of Responsible Investment)
3. 10% of the fund to be invested in dedicated environmental, social and governance (ESG) funds

Would Green Mortgages make energy efficient homes more affordable?

Do you think lenders ought to take into account the energy efficiency of a house (and hence your energy bills) when deciding how much you can afford to borrow? In some parts of the country there appears to be a price premium for a good EPC rating - the overall average for England is an extra £16,000 for 2 levels of EPC grade (D to B or G to E) [1]. This is good news for owners and further encouragement to people thinking of upgrading their homes, but not necessarily good news for buyers. If lenders did take into account your energy bills, how much difference would that make?

How to ramp up energy efficiency without subsidies

There are many things we can do to save energy at home but some of them take so long to pay back we can't afford to think that far ahead. If you factor in other benefits such as reduced carbon emissions and improved air quality that benefit society as a whole, then the finances look much better. But those costs (often called social costs) are not included in our energy bills and we would be very unhappy if they were, at least without some other compensation. Adding in the carbon cost to my gas bill would mean an increase of 25%! [1] We need a way of adding these costs to our bills without leaving us out of pocket. Maybe we need something like the Carbon Fee and Dividend. This would make a great deal more energy efficiency savings financially viable for households and businesses without subsidy.

Cost of carbon savings

I have been criticised in the past for describing energy saving measures in terms of payback time so in this post I present costs of a range of different measures in terms of £/carbon saved. The measures include: a community wind turbine, PV on your roof (with or without battery), cavity wall insulation, solid wall insulation, new condensing boiler, more efficient freezer. Also I have included a one-off saving: travel to Berlin by train instead of plane.

From despair to determination - Trump will be president of the USA, not the world.

My first reaction to Trump becoming president of the USA was utter despair. But then I remembered - the USA is only accountable for 15% of global climate emissions. So even though they will doubtless wobble for a few years that need not be the end of the world, provided the rest of us act responsibly.

Emissions by country 1959 to 2014 according to the UNFCCC. Data from
UNFCCC (May 2015) and Boden, TA, Marland, G and Andres, RJ 2015. Global, Regional, and National Fossil-Fuel CO2 Emissions, Carbon Dioxide Information Analysis Center, Oak Ridge National Laboratory, U.S. Department of Energy, Oak Ridge, Tenn., USA doi 10.3334/CDIAC/00001_V2015, via http://www.globalcarbonproject.org

How can we ramp up conversion to heat pumps?

The CCC recommends we need 2.3 million domestic heat pump
installations by 2030. At the current rate of 450/month by 2030
we will have 108,600 - just 5% of that target.

The Committee on Climate Change (CCC) recommends that to achieve our 2050 carbon targets we need the vast majority of homes to use heat pumps fuelled by low carbon electricity - and to get there in time we need to start ramping up the supply chain now. CCC says we need at least 2.3 million heat pump installations by 2030 [1]. Based on RHI statistics we currently have about 33,000, and there are 450 new installations a month [2]. At this rate, by 2030 we will have 110,000 - only a small fraction of the number we need. Of course heat pumps are only one technology that we need to ramp up - there are lots of others and they all need some kind of price support. The Renewable Heat Incentive was supposed to provide this for heat pumps but it isn't working. It seems to me that we need a carbon tax.

You can switch energy suppliers - why not water suppliers?

Currently we can choose and switch between energy suppliers but not water companies. Until now water companies have been allowed to enjoy a natural monopoly in each area, with regulation from OFWAT to ensure that prices are fair and services are good. However, as from April next year business customers will be able to switch supplier and OFWAT has produced an evaluation of costs and benefits from extending this to residential customers. They report a number of potential benefits [1]. But given our experience of energy suppliers, do we really expect competition between water companies to realise those benefits?

Counting the benefits of electric cars

I have been looking at options for low carbon transport recently and electricity seems to be the best solution for cars and vans, though not yet HGVs. Two of my friends in Transition Cambridge Energy Group have been driving electric now for the last 6 months and they are very happy with their choice. (What is it like to drive an electric car? - our experiences) Neither of them went electric to save money, though cost is always a consideration. Many of the benefits of electric cars, such as reduced pollution and noise are hard to describe in economic terms. Also there are benefits to society as well as to the individual. How we value these depends partly on our expectations - and these could change.

Energy Market criticisms for everyone - even customers

The competition and markets authority review of the energy and gas markets, two years in consideration, is out today. They don't think the Big Six have been systematically gouging their customers but they have some serious criticisms none the less. Domestic customers as a whole have been paying £1.4bn a year more than necessary and customers on prepayment meters have been hit worst of all - they end up paying 12% more than they should. The report has criticisms for OFGEM, DECC, the energy companies and also customers.

If renewables have low energy return on energy investment – so what?

Energy return on energy investment (ERoEI) is a measure of how much energy we get out from a generating system compared to how much energy we put in. Self evidently (you might think) ERoIE has to be greater than one to be worthwhile. After all, if you only get 0.5 units out for every 1.0 unit in, what would be the point? Furthermore, some commentators insist that in a modern society, using energy at the rate we do, we need ERoEI to be at least 5 - and that means most forms of renewable energy, especially solar PV panels, are pointless [1].

"The greatest risk to human society today is the notion that we can somehow replace high ERoEI fossil fuels with new renewable energies like solar PV and biofuels. These exist within the energy web because they are subsidised by the co-existing high ERoEI fossil fuels." [1]

Wrong.

The Fall and Rise of Nuclear Power in Britain – review

The Fall and Rise of Nuclear Power in Britain - a history by Simon Taylor.
UIT Cambridge. 2016

As an engineer or scientist it is easy to focus on the technical merits of different low carbon technologies, but financial, economic and political considerations are vital too – especially when it comes to nuclear power. In fact it seems that commercial considerations trump technical ones very often. If you want to know why we started rolling out the Advanced Gas-cooled Reactor back in the 1960s, even though it was more expensive, unproven and turned out to be far less reliable than the US Pressurised Water Reactor – read this book. If you want to know how it is that the design we plan to build (if it ever happens) at Hinkley Point C is also unproven - the first four installations are all vastly delayed and running over budget due to construction problems - then read this book. If you want to know how government policy evolved from reliance on the free market with ‘no public subsidy’, to controversial price and loan guarantees, read this book.

Increasing subsidies don't always mean higher bills.

Many of our government's U-turns on energy policy have been triggered, we are told, by a predicted overspend on the Levy Control Framework - the mechanism that limits the maximum cost of renewable energy subsidies we pay through our energy bills. In October 2014 the government estimated the energy subsidy cost in 2020/2021 would be £6.25 billion. Nine months later their prediction had mysteriously increased to £9.8 billion. One of the reasons given for this was that wholesale energy prices have decreased - but under the mysterious workings behind energy subsidies, decreasing wholesale prices brings total bills down even though the subsidy part of our bill increases. The purpose of the Levy Control Framework is supposedly to keep consumer bills down, so why limit the subsidy if bills come down anyway?

We should expand Flood Re to pay for flood defences (opinion)

What we spend on flood defences saves us 5 times the amount in avoided damage on average [1]. But the budget for flood defences is set and paid for by central government while the damage is suffered and paid for by affected homes and insurance companies. It is an uncomfortable triangle. Why should other taxpayers (like me, living well above the level of the nearest river on flat land safe from flash floods) pay for defences to protect your property and reduce your insurance costs? It would be more logical for the government to step out of the way and leave the insurance companies to pay for managing the risk.