Industry Insights: February 2024

Welcome to the very first edition of ‘Industry Insights’, your go-to source for the latest updates, policies and breakthroughs in the heating industry, specifically relating to sustainability and net zero. On the first of every month, you can expect a round up of the key updates that’s changing our industry and the globe. 

At Trust Electric Heating, we’re not just observers but active participants in shaping a sustainable future. Our mission aligns with the very essence of these updates – driving innovation and sustainability in every home. Why? 

Because we are committed to providing heating solutions that not only keep our customers warm at a lower cost but also support the UK’s journey towards net zero. And we believe a huge part of that journey is education. That’s why we’ve launched Industry Insights - to keep you informed about all things sustainable energy and net zero. Our goal is to empower everyone to make choices that are good for our planet. So with that, let’s take a look at what happened in February, rounding up the key events that have influenced our journey towards sustainability.

In this month’s roundup, we’ll dive into a variety of updates that have made the headlines. From the Labour Party’s adjustments to their green investment plans and Scotland’s ambitious New Build Heat Standard (NBHS), to the long-awaited reduction in energy bills for UK homeowners. We’ll also discuss the phase-out of the RTS service affecting Economy 7 and 10 tariff users and the push for a Clean Heat Discount aiming to make electric heating more affordable for everyone. As you can see, February brought us a mix of positive pushes and setbacks, from policy changes to industry adjustments. Let’s dive into what these headlines actually mean for our journey towards a more sustainable future.

Labour Party Scales Back on Green Investment Plans 

In a significant shift, the Labour Party announced a revision to their ambitious green investment strategy. Keri Stamer, the Labour Party leader, explained that “We announced the £28bn two and a half years or so ago, when interest rates were very, very low. Since then, Liz Truss crashed the economy and other damage has been done”. Initially, they were all in for a £28 billion a year investment to push the UK towards a greener future, but now they’ve adjusted the number to £15 billion. Despite the cutback, the plan still focuses on making homes more energy-efficient, boosting public transport, and growing the UK’s renewable energy sources despite the economic hurdles. But the concern is, with the reduced budget, how will these changes be affected?

Scotland Sets a New Standard with NBHS

On the other hand, Scotland is leading the way with its New Build Heat Strategy (NBHS), setting a bold new rule that, starting April 2024, new homes and certain building conversions (buildings with a polluting heating system) will no longer be allowed to install direct emission heating systems such as oil or gas boilers. This move is part of Scotland’s broader strategy to combat climate change, aiming for a net zero future by 2045, with interim targets to achieve a 75% reduction in emissions by 2030, and a 90% reduction by 2040. The NBHS encourages the use of zero direct emissions heating solutions, such as heat pumps and electric heating, marking a significant step towards cleaner, more sustainable living. This approach not only advances Scotland’s environmental goals but also serves as a call to action for the rest of the UK, highlighting the urgency for nationwide adoption of similar measures to accelerate the collective move towards sustainability. 

Energy Bills Set to Decrease by £238 a Year from April 2024

Households across the UK can anticipate a welcomed reduction in energy bills starting April 2024, with the typical annual energy bill dropping from £1920 to £1690. While this marks the lowest energy bills in 2 years, this is still way above pre pandemic prices. Despite this reduction, there still remains a notable disproportion in the pricing of gas and electricity. Gas prices are expected to drop to 6p per kWh, while electricity prices drop to 24p per kWh. This significant gap underscores the ongoing challenge of homeowners making the switch to electric heating from gas, as the disparity in pricing continues to make electric heating less attractive to homeowners. 

Call for Clean Heat Discount 

In other news, a coalition of energy companies, environmental groups, and heat pump manufacturers have called for the government to introduce a  ‘Clean Heat Discount’ for households using electric heating. In a letter to the Chancellor, they highlight the disproportionate financial burden faced by customers using clean electric heating systems due to high levies on electricity. The proposed discount aims to accelerate heat pump adoption and alleviate pressure on fuel poor homes. In response to this a spokesperson for the government has said that “our plans to power up Britain include rebalancing gas and electricity costs”. This initiative does hold promise in correcting the gas to electricity prices ratio, but we are yet to see any movement towards this from the government. 

Phase out of some Economy 7 meters

Those on off-peak Economy 7 and 10 tariffs, which rely on meters using the RTS service, will now have until the 31st of March 2025 to switch to smart meters, as the BBC radio service supporting radio transmission services (RTS) is being phased out. This service, often referred to as the Radio Teleswitch (RTS) service, enables these meters to switch between peak and off-peak electricity rates based on signals received from the BBC radio service. However, as technology evolves and smart meters become more prevalent, the need for this specific radio service is diminishing. Therefore, the decision has been made to phase out this service, allowing customers using meters reliant on it to transition to smart meters instead. Energy suppliers are proactively engaging with customers who will be affected by this change.

In closing, February has been a whirlwind of changes, both positive and negative, for both electric heating and net zero. At Trust, we remain cautiously hopeful to see how these proposals and changes hold for pushing us towards a more sustainable future. We’ll be watching closely to see how these proposals play out over the next month and look forward to updating you in the next edition of ‘Industry Insights’.

Tags: Industry insights.