Energy Efficiency Measures

Charles Hendry Excerpts

Wednesday 17th November 2010 Westminster Hall

[The Minister of State, Department of Energy and Climate Change (Charles Hendry)]

It is a pleasure to serve under your chairmanship this afternoon, Mr Sheridan.

I thank the hon. Member for Blackley and Broughton (Graham Stringer) for securing the debate and for the constructive way he introduced it. We believe this is an area where it is entirely proper there should be constant scrutiny. We are determined to try to do things in the way that is most efficient and effective and to ensure that we always have in mind the needs of consumers and the people paying for the technologies and installations, That must be at the heart of our efforts. I thank him for his contribution today and for ensuring that we saw in advance the article he wrote ahead of the debate.

The hon. Gentleman has raised some important issues to which I hope to respond fully. We will certainly base our decisions on evidence. Consumers expect us to do that and to use public funding wisely, and we are determined to do so. Of the issues he has raised, a number come through most clearly.

We recognise that poor insulation and design would have a significant impact on the performance of heat pumps, to the degree that it might jeopardise whether they could count as renewable under European legislation. That is why we have a microgeneration certification scheme, to ensure minimum quality standards for both microgeneration products and installers; and why we have consulted on whether the renewable heat incentive should, where practicable, be conditional on energy efficiency measures being carried out.

In response to the hon. Gentleman’s question about whether we will continuously assess and monitor the installations, we should recognise that we can set the renewable heat incentive at a level that would essentially require that to be done. We can set it at a level that would assume that the home is properly insulated and that the COP, the coefficient of performance, would be at a level to give us the assurance of efficiency. Otherwise, the consumer would not get sufficient income to justify the investment. There are ways in which the work we are doing to define and refine the renewable heat incentive can be used as a driver of efficiency. Our findings on that will be published over the course of the next few weeks. That will be an important part of the process.

We need to recognise that many different types of technology are included in the concept of heat pumps. There are fundamentally different types, including those that use water, ground-source heat pumps or air-source heat pumps. We are looking at a policy that will drive investment towards them, because we believe, as the hon. Gentleman does, that they can make an important contribution in the battle against climate change. We can help individual consumers to understand the contribution they can make in their own homes towards tackling some of the problems we are facing.

There is a well established market for heat pumps, predominantly in the commercial sector so far. More than 90% of the 217,000 heat pumps installed in 2009 were in the commercial sector. There is also a growing number of domestic heat pumps—a technology to which we are paying close attention. Our view is that they are one of the most energy-efficient ways to provide heating and cooling in many applications, as they can use renewable heat sources in their surroundings. Even at lower temperatures, the air, ground and water around us contain useful heat that is continuously replenished. By applying a little more energy, normally from electricity, a heat pump can raise the temperature of that heat energy to the level required. Heat pumps can also use waste heat sources, such as from industrial processes, cooling equipment or ventilation air extracted from buildings.

We have been increasingly interested in heat pumps because the analysis of pathways to 2050 suggests that in almost all scenarios there is a high degree of electrification of heating in order to reduce greenhouse gas emissions by 80%. By that stage, the grid is projected to be mainly decarbonised, so electric heating offers a low-carbon alternative to gas. In that context, domestic heat pumps could provide an efficient way to raise the performance of electric heating. The International Energy Agency has estimated that heat pumps might contribute 6% of global CO₂ emissions reductions over the time scale.

By 2020, we also have to increase dramatically, for reasons of security of supply as well as climate change, the proportion of energy that comes from renewable resources such as solar or wind. Our level of ambition is suggested by our proposed contribution to the meeting of renewable energy targets. Those targets cover not just electricity, but heat and transport fuel. Heat pumps in that context, as long as they are efficient enough, count as renewable—or rather, the fraction of heat provided by the geothermal or aerothermal source, minus what the electricity produces directly, counts as renewable.

We aim to ensure that renewable heat plays a robust role in meeting our renewable energy targets for 2020. To help to achieve that ambition, we have announced that from June 2011, we will be launching a renewable heat incentive. Current scenarios suggest it will encourage up to 800,000 domestic or commercial heat pumps by 2020, but we are already supporting the installation of heat pumps to improve household energy efficiency and reduce fuel poverty. An estimated 2,245 ground-source heat pumps have been installed through the carbon emissions reduction target. Energy suppliers, who have to meet carbon emissions reduction goals, have increasingly chosen to meet their goal by the promotion of heat pumps in the domestic sector.

Nevertheless, we recognise that the technology is not yet mature. Much work still needs to be done to answer the sort of questions that the hon. Gentleman has raised. We need to challenge the industry to improve efficiency standards for their products, because we recognise that issues with heat pumps remain. My officials have already met heat pump industry representatives to consider how they can tighten standards.

Turning to the specific issues raised by the hon. Gentleman, some heat pumps use hydrofluorocarbons—a type of fluorinated gas—as refrigerant. Such gases are greenhouse gases that come under the Kyoto protocol. Like stationary air conditioning and refrigeration equipment that also uses those gases—supermarket refrigeration, for example—heat pumps are subject to the provisions of a comprehensive EU regulatory framework, fully underpinned in the UK by domestic legislation. The framework aims to minimise gas emissions by ensuring that equipment is properly installed, serviced and disposed of. We are satisfied that the risk of HFC leakage is very small, but both the Department of Energy and Climate Change and the Department for Environment, Food and Rural Affairs are aware of the issue.

It is also our understanding that because most small heat pumps are hermetically sealed, the risk of leakage arises not during use but during disposal. The gas is securely contained within the units. However, I will give way if the hon. Gentleman wishes to make any further point on the matter.

[Graham Stringer]

I am grateful for that answer, which is in line with the answers that I have received, but is the Minister not concerned that studies have found leakage rates of 8% and that there is no mandated level of allowable leakage? Some units clearly leak, and there is no standard or maximum.

[Charles Hendry]

I will clarify that in writing to the hon. Gentleman, if I may, as I think he wants a very specific response, but I can reassure him that the levels are similar to those in refrigeration. The same emissions issues that apply to standards for refrigeration apply to other devices, including heat pumps.

The hon. Gentleman rightly mentioned efficiency and whether heat pumps are truly renewable. Like electric cars, they rely on electricity, but we are considering how we can be sure that they are renewable. We will work within European guidelines. He pointed out the problems identified in some of the models examined for compliance with European standards. We will continue the work being carried out to gain clarity in the evidence available to us.

As the hon. Gentleman said, the Energy Saving Trust has published results for the first year that were certainly mixed. In some cases, heat pumps performed as expected; in others, they ran so inefficiently that they produced more carbon emissions than a gas boiler. There is a gap, for a number of complex reasons, between design and actual performance. We have therefore decided to hold a second round of field trials to examine those questions in more detail. The project will continue for a further year, and we will then compare this winter’s performance with last winter’s. Given that manufacturers and installers have identified several areas where improvements can be made, we can expect to see significant improvements in most of the very poor-performing sites.

My hon. Friend the Member for Hove (Mike Weatherley) mentioned installations on chalk in his constituency. That will clearly be a significant issue for large parts of the south coast. We understand that the technology is more challenging in that area; the chalk base is particularly poor for conductivity purposes, so how ground-source pumps are installed in such areas must be considered carefully. We have therefore requested that people in all parts of the country consider the local geology in order to be certain that the technologies are appropriate for those locations. However, as his is a coastal area, we hope to see development of water-based heat pumps. In addition, the sunny climes of the south coast would ensure that air-source heat pumps have a significant contribution to make.

One thing is becoming clear: no technology can be considered in isolation. There are issues involving control systems, the integration of different technologies in a home or business and how best to co-ordinate a properly managed installation. All those considerations point to the need for better procurement, quality assurance and project management. Consumer behaviour is also an issue: it is most efficient to keep a heat pump running for a long time at a low temperature, but consumers might not realize that. However, the hon. Gentleman clarified it effectively.

We know from experience in other countries that improving standards for product design and installation and building consumer confidence are important to creating a sustainable industry. To support quality and drive standards, we will require installations receiving public money to be certified under the microgeneration certification scheme which is now administered as an independent, not-for-profit accredited certification scheme. The MCS approves products and installer companies against industry-agreed standards and requires that installer companies belong to a consumer code of practice that meets requirements similar to those of the Office of Fair Trading. It is therefore likely that the MCS will be linked to the renewable heat incentive, as it has been to electricity feed-in tariffs, to give consumers assurances about the safety, durability and performance of heat pumps and other on-site heat technologies.

To conclude, I welcome this debate and hope that I have been able to reassure the hon. Gentleman on some of the issues that he raised. What strikes us the most clearly at the moment is the range of new technologies that are emerging at an extraordinary pace to deal with some of the challenges that we face on both the energy and the climate change fronts. We have to be sure, though, that those technologies work well. We believe that heat pumps offer the prospect of an exceptional contribution to meeting the challenges and the goals that we have set, but we must ensure that consumers understand what they are buying, that they get a good deal and an efficient product, and that it makes the contribution that we all hope for.