At Nesta, we’ve been working hard on an alternative way for people to switch to low-carbon heating. We call it clean heat neighbourhoods. Instead of relying on everyone having to switch to low-carbon heating on their own, we could run local schemes that let people upgrade their homes alongside their neighbours. Rather than doing your own research, deciding on the best option for your home, and finding your own installer, imagine if you could simply sign up to a scheme in your local area which does most of that for you?

There are a lot of reasons why we think this would be a good way for many people to switch to clean heating. It could make switching a much simpler process for people. It could reduce costs, by bulk buying or through sharing infrastructure costs. Crucially it should make switching easier to finance, so people don’t have to pay upfront. It could tap into social contagion effects, where people are influenced by their neighbours. It could help us manage changes to the electricity and gas grids in an orderly fashion. And just providing people with a prompt (“we think your home is suitable for an air source heat pump, would you be interested?”), along with some information they can trust, might help more people to make the switch.

It would also give us more options for meeting our climate commitments. To stay on track with the Climate Change Committee’s latest advice, we will need to scale up low-carbon heating very rapidly from 2029 onwards. Clean heat neighbourhoods could help drive a faster shift to low-carbon heating and complement the individual-led approach we already use. Having this approach ready to go for the 2030s should be a key part of the UK’s heating transition.

In principle, it all sounds great. But the question we’re trying to answer is: can this approach really work in Britain? And if it does, how can we scale it up quickly enough to help meet the UK’s pressing climate targets and end our dependence on expensive gas?

This coordinated approach is not really new. It already happens for heat networks – big, shared heating systems that are most common in city centres. And there are plenty of organisations already trying to do this, often with great success. From Swaffham Prior in East Anglia to Heat the Streets in Cornwall, it’s happening.

However, there aren’t many organisations with the capabilities to pursue these approaches.  Those that do tend to have very limited funding. And the coordinated schemes that have gone ahead often require extra financial support, or special circumstances to go ahead – they aren’t always competitive in an open market yet. Clean heat neighbourhoods are still largely a specialist pursuit. We want to see if we can change that, and help this approach go mainstream.

The first place we are looking to do that is with government policy. We think governments in the UK should provide a small amount of funding to every local area to begin preparing for clean heat neighbourhoods. There are many benefits to starting planning work early, from identifying the neighbourhoods that will move most quickly, to coordinating heating upgrades with things like electricity grid upgrades and community energy. Having a small amount of ongoing funding – “revenue funding” in government finance speak – is crucial, because it means each area can employ permanent staff, gradually build up their skills and capacity, and avoid the chopping and changing that comes with time-limited programme funding.

In England, we think that funding should go towards new local heat and energy bodies at the combined (city region) or strategic authority (county) scale. Their role would be to make detailed plans for switching to clean heat, while delivering government retrofit schemes and providing energy advice to people in their areas In Scotland and Wales, where we’ve seen more progress on local energy and heat planning, it makes sense to continue at local authority scale, while ensuring there is some ongoing funding available to ensure plans are turned into local project delivery. 

We also think that governments should fund ambitious pilots to test the clean heat neighbourhoods approach at a significantly bigger scale than current projects are working at. Rather than doing the usual thing – running a competition and setting strict criteria – we think governments should aim to form strategic partnerships with three or four places, ideally a mix of rural and urban areas. That means working on several different projects in each area – perhaps trying both individual and shared heating systems in different neighbourhoods. This approach should focus on trying different things out and iterating to find out what works. We think the government should work alongside the places, providing support and helping to unblock any barriers encountered.

The logic of this approach is that you let some places move early on clean heat neighbourhoods, but every place has at least made a start. If by the end of the decade the results of the pilots are positive and viable, it’s important that every place has the capacity to move towards this approach. Capacity building takes a long time, and if we were to just do the pilots without funding for every area, there’s a strong chance that clean heat neighbourhoods would never make it beyond the pilot phase. If we want to scale this approach in the future, we need to start preparing for that now.

The second thing we are doing is trying to figure out where and why clean heat neighbourhoods work in some areas and not others. This helps us design them in ways that increase the likelihood of success. And when the approach fails, we want to know quickly so we can learn and keep going.

There are many things that have to be true for a clean heat neighbourhood scheme to work, and there are many assumptions we need to test. 

For example, take the planning stage. We think it will probably be helpful for each area to make a plan for clean heating that identifies which technologies are likely to suit which homes and works out which areas they should run schemes in first. We also think it might be helpful to tell households their potential options for clean heat, to raise their awareness and help them plan ahead.

But is this a good idea? Is it even possible to identify options for different homes? Will people react well, badly, or indifferently to being told about clean heating? Does the messenger make any difference? There are many questions we need to work through, and the only way to do that is to try it, see what happens, ask people what they think and then keep experimenting.

One of the clearest findings we have from our early work is that the cost of clean heating remains vital. People are not going to sign up for clean heat neighbourhoods just because it sounds wholesome (in fact a minority of people don’t want to talk to their neighbours at all). But people are more interested if it reduces costs or helps them spread the costs over time. 

This throws up a series of challenges. Can clean heat neighbourhoods schemes take advantage of economies of scale to offer cost discounts? Or will the costs of local engagement and planning mean it is more expensive? How can we make these schemes low risk so that they can attract low-cost finance to make them more affordable?

We want to try and answer as many of these questions as possible. And of course, because all neighbourhoods are a bit different, we need to understand the things that are universal, and the things that only work in certain contexts. We expect there will be different models for clean heat neighbourhoods that work in different areas. Finding those models and using them in the right places will be crucial.

The third thing we want to do is help this approach scale. We want to work with as many different organisations as possible, sharing intelligence about what works, how it works and how it can be replicated. Of course, almost all of that intelligence will be generated by others, so we want to play our role in connecting as many people who do this as possible.

If we or others find things that work, we want to share them and help other people and organisations do the same thing. This is particularly difficult for an approach like this, which relies heavily on tacit knowledge which is pretty context-specific and hard to write down. At the same time, we also want to make clean heat neighbourhoods affordable to do as they scale up. If it is hugely time-consuming to set up every scheme, and the transaction costs of running a coordinated approach are too high, clean heat neighbourhoods will not be a worthwhile approach. We have to make it quick and cheap to replicate this approach as it grows.

Our innovation and scaling work will contribute to building tools, resources and playbooks that make it quicker and cheaper to replicate clean heat neighbourhoods approaches. For example, we think our heat pump suitability data could make it possible to quickly form a rough local heat delivery plan in different areas. One of the things we want to test is: would an online tool help, and how much could you get done in two days? This is very much a work in progress, but as we learn more about what works we also want to try and build tools that make it replicable.

These tools, resources and playbooks should be open source where possible. If you want something to be replicable and cheap, making it available and adaptable increases its application and means the next users don’t have to pay again. In incrementally building or adapting tools, we can increase confidence in their applicability, de-risk their use and ensure different users are able to customise them for their context.

This is an ambitious agenda, but decarbonising homes in the UK needs a lot of ambition. If we can make progress in all three of these areas – getting the right policies, finding out what works, and scaling up the approaches that do – we hope that in a few years from now, a lot of people could be switching to clean heating with their neighbours.