Government has published three CAR reports on retrofitting homes

How to convert UK homes to electric heating cost effectively

The Government and the Committee on Climate Change both view electric heating as a major opportunity for cutting the UK’s carbon emissions. High coefficients of performance (i.e. getting more heating out than energy put in) from heat pumps, and the continuing reductions in carbon emissions per unit of electricity, bring the tantalising prospect of being able to cut emissions from heating by 80% or more, with no loss of comfort.

However, electric heating gets a bad press in the UK. Most people’s experience of electric storage heaters (the dominant form of electric heating currently installed in homes) is negative, and many installed storage heaters offer poor control, and insufficient heat available on cold evenings. They can also be expensive to run.

Heat pumps are relatively new to the UK, and unfamiliar to most people. This unfamiliarity is a barrier to uptake, and even more off-putting are high installation and running costs. Indeed, the Government’s Department of Business and Energy, BEIS, views high costs as one of the biggest barriers to converting homes to heat pumps.

This is why they commissioned us to develop a new model, ‘Cost-Optimal Domestic Electrification’ (CODE). We carried out optimisation work using the model to identify the most cost-effective ways to install electric heating, and to examine the impact of using electricity in place of gas and oil to heat homes.

Based on detailed analysis of the British housing stock, we defined 12 house types, which collectively represent 88% of Britain’s 28 million dwellings. The house types matched the most common combinations of dwelling (flats, terraces, bungalows, semi-detached houses and detached houses) with the most common forms of construction (cavity or solid walls, and solid or suspended timber floors). The house types also matched the proportions of homes currently installed with combi- and system-boilers (where the latter have hot-water cylinders).

The model performed full dynamic simulation of these 12 house types using each of 14 different electric heating systems, calculating energy consumption and internal temperatures in different zones, hour by hour through the day, for a full calendar year.

The modelling included capital costs of installing electric heating and other energy-efficiency upgrades, energy costs, maintenance and replacement costs. We concentrated mainly on a 15-year time horizon, but part of the work considered longer and shorter time horizons. Future costs and benefits were discounted by 3.5% a year to bring them back to 2020 costs. There is considerable uncertainty about how capital costs might change in the future, and much depends how the market for electric heating evolves. For this reason, we assumed simplistically that the costs of electric heating and other upgrade measures do not change over time.

The models were used in simulations examining energy use, costs and internal temperature for tens of thousands of different combinations of heating systems and energy-efficiency measures. Our optimisation selected the most cost-effective set of combinations for each house type. Any combinations that did not achieve thermal comfort settings were rejected, because moving to electric heating should not come at the expense of being comfortable at home, or threaten the health of people living in cold homes.

In all cases, we used the best available evidence about costs, heating regimes, heating system efficiencies, controls and upgrade measures that could be installed alongside new electric heating systems.

Overall, the work showed that British homes could be converted to electric heating with total costs over 15 years only 48% more than current heating costs. This can be achieved with no threat to comfort – in fact certain house types will become more comfortable than they are now. Greenhouse gas emissions will fall by more than half as a result – with even greater falls to follow, as carbon emissions from electricity continue to fall.

We also answered a series of interlinked questions about the best way to introduce electric heating:

• What are the most cost-effective combinations of measures for electric heating?
• What are the capital costs and operating costs of different types of electric heating, for different house types?
• How do costs change over different timespans, or if you avoid disruptive measures?
• How sensitive are cost-effective measures to changes in energy prices and discount rates?
• How much electrical capacity will be required from the grid if many homes are converted to electric heating?
• How much flexibility could homes provide (i.e. how much could they reduce electricity demand at peak times, when necessary), at what cost?
• How would adopting cost-effective electric heating in different ways affect emissions?

Our full 150-page report will be available from GOV.UK soon.