Clean Heat Grant: further policy design proposals

Following the Future support for low carbon heat consultation, we would like further views on certain areas of Clean Heat Grant scheme design. We will confirm the final scheme design later this year in the government response to the original consultation. The proposals covered are:

• minimum insulation requirements
• biomass eligibility and ‘hard to treat’ buildings
• voucher application process
• clarification on our approach to new-build eligibility

Minimum insulation requirements

Taking a fabric first approach to building retrofit is likely to improve the efficiency of low carbon heating systems, resulting in lower heating bills. The Energy White Paper, published on 14 December 2020, reiterated the need to take a whole house retrofit approach to improving the energy performance of the UK’s domestic buildings.

A number of respondents to the Future Support for Low Carbon Heat consultation also highlighted the importance of low carbon heat installations being installed in properties with appropriate levels of insulation. As a result, we propose to introduce minimum insulation requirements as part of the eligibility criteria for the Clean Heat Grant scheme, across all technologies. Building on the existing requirements on the domestic Renewable Heat Scheme (RHI), which utilise Energy Performance Certificates (EPCs) as the basis for the check, we propose that:

• all applicants must hold a valid EPC. This typically means that the EPC should be one which has been issued in the last 10 years
• customers will be able to use the Energy Performance of Buildings Register in England and Wales, and the Scottish EPC Register in Scotland, to identify whether they have a valid EPC for their property
• to be eligible for the Clean Heat Grant there must be no recommendations on the valid EPC for loft and/or cavity wall insulation
• there will be exemptions to this requirement, for example in the case of listed buildings or those located in a conservation area. We propose that the insulation exemptions will follow those currently in place on the domestic RHI

Biomass eligibility and ‘hard to treat’ buildings

In the Future Support for Low Carbon Heat consultation we set out how government wants to ensure that biomass is only installed in buildings where a heat pump may not be appropriate, due to reasons such as poor building fabric efficiency that cannot be treated by reasonable energy efficiency measures. We proposed that a heat loss calculation would be needed to demonstrate that a minimum heat loss value has been exceeded and that the installation of biomass over a heat pump is justified.

Heat demand is one metric that can inform the suitability of different low carbon heating systems. Peak heat demand is measured in watts (W) and is the maximum heat demand of a building, typically on the coldest winter day. It measures the heat required to maintain thermal comfort. Peak specific heat demand is measured in W/m2 and is defined as peak heat demand divided by the total floor area of habitable rooms. It is required by MCS installation standards to correctly size heat pumps and solid biomass boilers.

We recognise some buildings have a high peak specific heat demand and may therefore be unsuitable for a heat pump due to the risk of thermal comfort not being achieved at an appropriate Seasonal Coefficient of Performance (SCOP). There is a need to support these ‘hard-to-treat’ buildings in transitioning to low carbon heating systems. Solid biomass boilers and high temperature heat pumps are two of the technology choices that can provide adequate thermal comfort in ‘hard-to-treat’ buildings.

Following further consideration, we propose that in order to be eligible to install a biomass boiler under the Clean Heat Grant, an applicant will need to demonstrate that the peak specific heat demand of the building exceeds a certain threshold and may therefore be considered ‘hard to treat’. We propose this threshold should be between 100-150 W/m2 and be calculated in accordance with BS EN 12831.

We welcome further evidence on the most appropriate peak specific heat demand value (in W/m2) that should be used to determine if a building meets this definition of being considered ‘hard-to-treat’.

We recognise that there will be other considerations that will inform the suitability of a building for a specific low carbon heating technology. However, we believe that this approach will provide a suitable approach to ensuring that biomass boilers are only installed in buildings that may be considered ‘hard-to-treat’.

Voucher application process

Our previous consultation described, in outline, a voucher application and redemption process for claiming support. Following that consultation, we are minded that consumers (owners, leaseholders etc.) should be responsible for applying for the vouchers and that installers should have the lead role in redeeming the vouchers. We believe that this balance of roles is conducive to the best overall outcomes, in terms of ensuring a competitive market that is open to a wide range of participants, while being mindful of consumer protection and fraud.

We would also like to seek further views on 2 aspects of the process.

1. In light of consultation responses, we are proposing an additional requirement within the first stage of the process: that consumers will be required to have their needs assessed by at least one installer and submit a quotation when applying for a voucher. This will help ensure consumers understand the viable system choices for their property and the associated benefits and costs before applying. It will also enable more scheme administration to be done at this first stage. It is hoped this will simplify the second stage, support prompt payment following installation and reduce the number of speculative applications.

As funding will be allocated to each voucher, maximising the ‘conversion rate’ of vouchers issued to installations that go on to be delivered and receive grant funding, will support smooth budget management and minimise the risk of funding being tied up in speculative voucher applications that will ultimately go unused.

2. We also wish to seek views on the voucher validity period, to ensure that these are redeemed in an appropriate timescale and any unused vouchers can be made available for other applicants.

We believe that, for most installations, 3 months is a reasonable period to allow between issuing the voucher and redeeming it. We are proposing that 3 months is the default validity period for vouchers for air-source heat pump and biomass boilers.

We recognise that 3 months may not be enough for more complex installations. That is why:

i. We propose a 6-month validity period as the default for vouchers for ground or water-source heat pumps. With such systems, the installer, or a subcontractor, has to plan and carryout excavations to install the array in addition to the work of installing the heat pump unit itself.

ii. We are prepared to consider compiling a list of specific circumstances in which consumers should be entitled to apply for an extension to their voucher validity period.

To clarify, the validity period to which we refer, above, would be the timeframe between initial voucher allocation and submitting all required information to evidence eligibility and confirm the installation has been commissioned, such as the MCS installation certificate.

Please provide evidence if you believe that any of the default validity periods proposed, above, should be reconsidered. Similarly, we would welcome views on whether there are any specific circumstances in which consumers should be entitled to apply for an extension.

Clarification on our approach to new-build eligibility

The key aim of the Clean Heat Grant, as set out in our previous consultation, is to support the segments of the low-carbon heat supply chain that will be needed to enable the introduction of regulations to phase out fossil fuel heating in existing buildings off the gas grid. The intention of the grant is to target public support on those technologies that are likely to be most involved in retrofitting individual small buildings off the gas grid. We highlighted that existing buildings face a specific set of challenges, with installing low carbon heating tending to be more difficult and expensive than it is in new build.

While both the Domestic and Non-Domestic RHI regulations provide established rules for eligibility, a key difference between the 2 schemes is that new-build installations are generally eligible under the non-domestic scheme whereas only existing buildings and ‘custom-built’ (see footnote) homes are eligible for the domestic scheme.

It is our intention that only existing buildings and custom-built homes will be eligible for the Clean Heat Grant. As in the Domestic RHI, we do not intend to support new-build as developers and purchasers are more able to absorb the costs of low-carbon heat installation. We have seen significant new-build deployment already without subsidy and we will also soon be in a position where we can use Building Regulations to drive change in heating system choice across the entirety of new-build stock, without recourse to the taxpayer. Accordingly, since our previous consultation, we have published our 10-point plan for a green industrial revolution, which commits to implementing the Future Home Standard in the shortest possible timeline, as well as consulting shortly on increased standards for non-domestic buildings so that new buildings have high levels of energy efficiency and low-carbon heating.

We intend to continue support for custom-build as we recognise that individual self-builders do not benefit from the same economies of scale as housing developers and their installations correlate with building the supply chain that will be relied upon for retrofitting individual small buildings.

Footnote

Defined as when an individual funds the construction, either commissioning a builder or architect to create a custom-built property for them or building it themselves as a DIY self-build project.