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Delays, uncertainty and a general election burden the UK energy market

Rinnai’s Chris Goggin looks at the current state of play in the UK energy, heating and hot water provision marketplace.

 

Commercial heating and hot water provision sectors currently exist in a state of uncertainty in relation to customer costs, outside investment, future direction and the implementation of national legislation that encourages decarbonisation. Further turbulence will be exacerbated by the certainty of a looming UK general election and a possible change of government, which could signal a redrafting of national energy policy.

Big Ben in London from across the river

 

Over the past year the current UK government and opposition parties have reneged on several ecological pledges and appear to have lost momentum in implementing national decarbonisation. Shifts in policy have created confusion for investors inside the UK energy market and, in the meantime, life goes on as the population still requires heating and hot water provision, through both new and replacement systems. UK national energy acquisition, property regulations and UK gas boiler manufacture are all areas of the UK energy market that have experienced recent reversals in terms of active or incoming legislation.

 

Aviva, one of the UK’s biggest insurance company’s, was quoted in The Times as saying: “The government increasingly focuses on short-term energy security over long-term sustainability.”   

 

As European and American big business have embraced large renewable projects, UK political indecision, ever-rising global energy costs and the question of supply security has led to a lack of investment within large-scale UK renewable projects. In the same The Times article, Aviva has said that “the recent dilution in government net zero targets is an even bigger challenge and creates uncertainty”.

 

The Energy Transition Readiness Index 2023 is a measurement of a region’s ability to transition towards net zero. It is a report compiled for potential investors to evaluate a country’s viability towards profiteering from renewable electricity. The latest report   believes that investors will only be attracted towards UK projects if they can observe clear and succinct governance as well as regulatory stability. Presently, there is not considered to be enough evidence of either to entice outside capital investment.

 

The UK government has had to offer £800 million to support new offshore wind farms as the amount of capital incentives offered in the previous round of CfD offshore wind auctions failed to attract a single bid. 

 

Concurrent with this is situation regarding the Minimum Energy Efficiency Standard (MEES) regulations. These ensure that all buildings have an Energy Performance Certificate (EPC) with E as its lowest rating. Further amendments drafted in 2021 aimed for MEES to be raised to D in 2025 and C in 2030.

 

This would have meant that landlords who privately own and rent property across the UK would have had to legally meet energy efficiency standards to continue renting to customers.

 

However, the UK government has scrapped these plans as their implementation would have meant extra costs to both landlord and property rental customer. A redrafting of MEES regulations is expected and will likely impose clean energy standards on rented property.

 

Also, there is the ‘ban’ on gas boilers being installed at off-grid sites, which has been lengthened from 2026 to 2035. The ‘boiler tax’ has also been delayed.

 

A potential new government later this year could also introduce further changes to the UK energy market by way of a new direction in policy and cost.

 

Specifiers, contractors, installers and UK property owners should seek to work with manufacturers of hot water and heating products that can offer a wide range of appliances in the variety of energy vectors to produce low-carbon solutions for all residential, industrial and commercial properties. It is likely that the UK will hold on to natural gas for the moment while purposely manoeuvring different energies and production into play on a mass scale – be they wind, solar, DME or BioLPG.

 

 

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