#nomoregas
Our first peace and climate campaign.
During our recent reflection on ecological design and architects/urbanists’ role in society, we concluded that we should expand our agency by getting involved in issues we care about.
We also anticipated we would start with natural gas. Why gas? We care about the climate crisis and we care about peace. For several weeks now, we have been glued to the news cycle, hoping that the war would end. We have decided to at least try to do something: but what should we do?
Fossil fuels are at the intersection between climate crisis and geo-politics, therefore contributing to the transition to renewable energy will serve two purposes. After long reflection we decided to adopt a literal approach and accelerate the phasing out of natural gas from UK homes [1]. Gas boilers and hobs, gas meters and bills, risks related to carbon monoxide, gas safe certificates: the whole thing. If we manage to help one thousand homes transition away from gas, we will save thousands of tons of CO2 and at least symbolically work against the aggressor in Europe.
How?
We think the best way of getting rid of gas in homes is to provide unbiased, precise information on viable alternatives, especially for cases that are usually overlooked. A balanced investigation will not only help people who are already interested but could also help shape government policy towards embracing new opportunities. We call our research and campaign nomoregas (#nomoregas).
Now that we have a goal, we need a plan. First, we want to narrow the subject by examining the current energy technology landscape. We are looking for cases with the potential to transition that have been ignored so far for lack of technological solutions or creativity. Second, we will create an alliance with think tanks, experts and manufacturers to tap into the best knowledge and ensure accurate analysis. Third, we will test transition scenarios by checking costs and performances for the most promising technologies compared to business as usual. Finally, we will collect the data and produce a guide [2].
I. Weak points
Typically, the financial case for getting rid of gas boilers is more compelling in energy efficient buildings. For example, new-build homes will have to be gas-free from 2025. Those cases are so straightforward that we will not investigate further. The case is more difficult for existing buildings, which are complex, expensive and sometimes risky to insulate beyond a certain degree. The 7 million solid wall homes (any home built before the 1920’s) in the UK are very leaky on average [3], and there is little incentive to drive the almost revolutionary scale of retrofitting that would be necessary to significantly upgrade these buildings. Without incentives, retrofit projects are very expensive upfront and make financial sense only in the long run [4]. Pair that with a pretty much global tradition of subsidising fossil fuels, which make the advantages of retrofitting even less visible, and the outlook is grim. In conclusion, retrofitting a (solid wall) home is expensive, and existing homes are also where most of the poorest people live.
Of all the existing homes, we decided to focus on the single-family homes because they are usually overlooked compared social housing and higher-yield interventions. It's quite clear that, unless there is a miraculous shift in policy, existing, uninsulated homes will be the last to transition to electric energy engines – as in fact it is confirmed by the current policy, which expects to phase out gas boilers in existing homes from 2035 [5]. So, the aim of the study will be to find solutions to bring forward this date with only minimal intervention on the fabric (while we lobby for more incentives, of course). In other words, our working base case will be an existing home where a boiler needs replacing. The only incentive we will rely on is the broken gas boiler.
2. Finding case studies
We are now looking for easily comparable case studies to test new solutions and assumptions in the boiler needs replacing scenario. After extensive research, we selected a report compiled by The Carbon Trust for the GLA in 2020 (The Carbon Trust, 2020) that looks precisely at the financial and environmental implications of replacing a gas boiler with electric alternatives. The report is extremely well thought and thorough, but focuses almost exclusively on heat pumps, because it was published in 2020, and its authors could not see it in the future. Therefore, it does not factor in the increased costs of gas, the moral imperative some people feel, and all the new solutions that have come to the market in the UK and Europe in the last two years.
Hence, the study finds only heat pumps as viable substitutes for boilers. Aside from this, the document is a little masterpiece in proactivity, thoroughness and clear communication. The study analyses fifteen London properties of varying sizes and energy insulation, from the tiny ground council flat to the large detached Victorian house. For each property, the report analyses the financial and environmental implications of replacing the gas boiler with a heat pump. Two reasons why it's a masterpiece (in my view). First, the approach is very pragmatic: it avoids as much as possible factoring inexpensive fabric upgrades and focuses exclusively on the heat source. This is contrary to environmental and retrofit orthodoxy: our credo is always fabric first; or the cheapest energy is the one you don't need in the first place (I could go on). But in this case, we are focusing on the heat source only because the situation we want to tackle is a boiler that needs replacing. We cannot realistically hope that everyone replacing their boiler will have £20-50k available to do some essential retrofitting, and we don’t want to wait for the government.
The second reason why we appreciate the report is the clarity of communication. The Carbon Trust does a great job at boiling down the comparisons to very few, easily comparable graphs, and to one final parameter: the cost per tonne or removed CO2. This parameter tells us not only whether the heat pump alternative is viable for the single user, but also for society at large. In some cases, the financial case seems not to be there: at a cost of £700 per ton of CO2, for example, it may be better to invest in a wind farm than to replace the boiler. At the same cost, even the government should probably avoid incentivising change while focusing on other solutions. Finally, the same parameter is handy because it shows exactly where we should focus our attention: cases where the cost per ton of CO2 reduction exceeds £300 need our help.
Our aim now is even clearer: to find design and technological solutions to expand the pool of cases that can viably transition away from gas when their boiler reaches end of life. The report’s conclusions confirm our intuition on single-family homes, which do not figure in the list of viable building types (page 5 of the main document and page 31 of the Options Appraisal):
The up-front cost of heat pumps is higher than traditional alternatives and many building types will require additional up-front financial support. However, the lifetime financial case for heat pump retrofit is already strong in some building types, such as electrically heated buildings, buildings with a high cooling demand and buildings that already require major renovations. These building types should be prioritised for heat pump retrofit.
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There is already a compelling financial case for deploying heat pumps in some London building types.
· Homes, blocks of flats and non-domestic buildings heated by electricity.
· Buildings with a high demand for cooling such as large office buildings.
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Blocks of flats where upgrades are required to the heating systems and heat distribution systems in any case.
To better understand these conclusions we have plotted in the diagram below, showing all the cases that didn’t make the list and two that have.
The coloured cells highlight the cost per ton of CO2 removed by switching away from gas boilers.
Reds are higher costs, green are lower costs.
Trends.
The coloured column reflects the cost of switching from a gas boiler to heat pump, divided by the tons of CO2 reduced. This reflects the absolute cost to the world at large, not yet a business case, but it’s very useful to understand how to tailor the new investigation. Roughly speaking, the size of the property increases from top to bottom, from flat to block of flats. There seems to be a direct relationship between size and viability. Case no.5 is the only exception because it is already heated with an electric boiler, which (in 2020) is or was very expensive to run. By replacing the inefficient boiler with a very efficient heat pump the savings are so high to offset the extra cost for the heat pump in no time. In all other cases, the comparison is with a gas boiler and the relatively inexpensive gas prices in 2020.
The only other factor to account for is the current EPC rating of each property. But we can say that within a relatively wide range of EPC ratings, from B to E, the size of the property holds the strongest correlation. This is because heat pumps are expensive and need at least a 150 square metres playing field to make their efficiency count.
It is clear that in the current energy market, smaller properties that do not require extensive refurbishment do not benefit from heat pumps. We need alternatives to both gas boilers and heat pumps, and this is what we are going to focus on first.
Actions
Finally, we have a plan of action.
First of all, we will ask The Carbon Trust to update the figures considering the latest gas prices and the recently introduced £5000 tax break from the government. Secondly, we will suggest to analyse a 20-year life span which is what we expect of an energy engine today and therefore use 2040 as the real ultimate deadline. (This will make comparisons easier – the 2030 and 2050 dates are more aligned to the carbon targets but less to the matter at hand. The 2030 deadline is also biased in favour of gas boiler which have a shorter lifespan compared to heat pumps (at least according to the report); 2050 is in my opinion too far a horizon for a single-family home; no one makes investments with 30 years return!)
Third, we will offer to help with alternative test designs and mechanical solutions.
Finally, we will reach out to consultants, experts and manufacturers to compile a list of all possible alternatives and combinations of alternatives to gas boilers in existing single-family homes.
Call to action
Collaborating with the right people and organisations will be crucial to delivering an effective tool. So if you know anyone we should speak to in the energy, insulation, government and non-government policy experts, and consultants, please contact us or simply share this post.
Update June 21st, 2022
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We have been introduced to three world-experts on the topic of residential energy. We have discussed with one, who has warned us against the risk of transitioning too quickly to electricity, given its price.
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Carbon trust does not have the resources at the moment to either discuss or update their report's data.
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Things are more complicated than we thought..
[1] The energy transition from fossil fuels should transform all sectors, but we think that agriculture and existing homes will be the trickiest, followed by the energy generation. Agriculture is outside our field of expertise (for now..), so we will look into existing homes.
[2] (As you might imagine, the process is messier and more iterative: steps 1-4 happen simultaneously and are repeated several times, slowly learning and adjusting.)
[3] In the late 90's and early 2000's several incentives allowed to upgrade millions of homes, but since 2013 a shift in policy has caused a complete stall in retrofit projects. (TBI has a good report on this aspect, here). The lack of incentives continues to date. The regulations on energy efficiency have been greatly scaled down.
[4] And the financial incentives are often upside down: for example, today new-build homes are VAT exempt, while expenses tied to retrofitting an existing home - no matter how well designed for efficiency- pay 20%! The only discount is on the insulation material itself, but there are so many exceptions to make it almost useless.
[5] (https://www.energylivenews.com/2021/10/18/boris-johnson-confirms-ban-on-all-new-gas-boilers-by-2035/).
The not-for-too-long problem
Historically, directly supplied natural gas has been a lot cheaper than electricity: this is why gas boilers are still the standard energy engine in most homes. And this is why simply switching to electric boilers was considered wasteful. Instead we need something as miraculous as a heat pump or as effective and expensive as insulation to make electricity competitive.
But one of the founding principles of our campaign is that the price of gas is skyrocketing while renewables are getting cheaper every second. We thought that the cheaper renewables combined with the much more expensive gas price due to the war in Ukraine would level the playing field. When electricity and gas reach a similar price (hopefully because electricity becomes cheaper), several electrical products that today are considered too wasteful or expensive suddenly become competitive.
So we were amazed to see that electricity prices had increased together with gas prices and more, compared to when the Carbon Trust’s report was drafted!
The report stated:
For domestic customers, we assumed a standard gas tariff of £0.032 per kWh and a standard electricity tariff of £0.152 per kWh, in line with the Treasury Green Book Central Domestic rates. I.e. our electricity standard tariff is assumed to be 4.75 times the cost of gas per kWh
The prices have more than doubled, with a gas kWh now costing about £0.075 and electricity increasing from £0.152 kWh to 0.29 kWh. The result is an even more dramatic difference between the two sources[1]
Gas and electricity prices are in effect tied in a coupling mechanism, by which the price of gas determines the cost of electricity, also the electricity produced by renewables! The reason for the coupling made sense some time ago, but the mechanism is now causing distortions and undermining the growth of renewables (as well as part of the foundations of our research).
Europe has a similar energy pricing system, but also a more diverse legal landscape. For example, Being less integrated into the continental energy network and much more reliant on renewables,
The UK is in a similar condition: it is not integrated into the European energy networks, doesn’t import gas from Russia, and has a solid renewable supply. Hence, we think we should expect the gap between electricity and gas prices to drop and eventually disappear in the coming few years.
The current price increases have put so many people under fuel stress that the government is considering reforming the market as soon as this year (2022); other institutionas are pushing for more complex and localised models for energy pricing. If we take advantage of the renewable energy we generate, perhaps by adjusting to a less consistent supply, the #nomoregas campaign will have a much easier life.
So this is something to hope for and perhaps lobby for: a reform of the energy market that reduces energy bills by decoupling gas and electricity prices while maintaining incentives for installing and consuming renewables.
Of course, we cannot rely on government legislation to start a revolution . But we can assume that at some point, the cost of grid-scale renewables will be so low and their use so predominant that electricity will cost less than gas. In fact, as of last year, the cost of installing renewables and energy storage combined has become way less than building new gas plants. TransitionZero, among our heroes, have mapped the cost tracked and all the prices in hypnotising animated graphs (the screenshot below does no justice to their beauty in movement).
Finally, using data from the electric grid's forecast, the Carbon Trust’s report calculates that by 2025 direct electric heating will be more carbon-efficient than gas boilers, thanks to the accelerating decarbonisation of the grid. We can only hope that TransitionZero’s data and the current energy crisis will accelerate the trends described in this post. For the moment, we are satisfied with the conclusion that within three-four years, direct electricity will be more carbon-efficient and may be cheaper than natural gas. Does this mean that direct electricity energy engines will be competitive with gas in the near future?
Carbon intensity of gas boilers [,direct heating,] and heat pumps at different efficiencies: 2010-2050 (The Carbon Trust, 2020)
[1] Electricity prices still follow closely the fluctuations of gas prices. https://www.economicsobservatory.com/why-are-uk-energy-prices-rising
[2] https://www.sciencefocus.com/news/why-cant-renewable-energy-sources-keep-uk-energy-prices-down/