Andy Regan: Good afternoon and welcome to Nesta Talks to, the latest in our conversational event series with today's most interesting thinkers on the big topics related to Nesta's missions and our innovation methods. For those who don't know, Nesta is the UK's Innovation Agency for Social Good. We have an ambitious 10 year strategy working to promote innovation across three missions, a fair start for every child, a healthy life for all, and a sustainable future where we're working to speed up the carbonization of homes in the UK.

I'm Andy Regan. I'm mission manager for a Sustainable Future at Nesta Cymru, Nesta Wales focused on our partnership work in the devolved context. But I've got a background in energy policy from working at Citizen's Advice, Ofgem, and Welsh think tank, IWA, where we looked at how to grow renewables in Wales so I'm very excited about today's conversation. Little bit of housekeeping before we begin. Please do join in the conversation in the comments box on the right hand side of your screen, and ask any questions throughout the event. Closed captions for the event can be accessed via the LinkedIn live stream.

So we joined today, by Dr. Jan Rosenow, Principal and director of European Programs at the Regulatory Assistance Project. The RAP as we'll be calling it. RAP is an [00:01:30] independent global NGO advocating policy, innovation and thought leadership within the energy community. Jan has several board appointments, including the European Council for an Energy Efficient Economy and the Coalition for Energy Savings.

Jan also has a passion for energy research. He's an honorary research associate at Oxford University's Environmental Change Institute. And in recognition of his work within the field, Jan was named as one of the world's top 25 energy influencers and has been appointed a special advisor to the House of Commons as part of their inquiry into decarbonising heating.

And from my point of view, he's also a big name on heat pump Twitter, which is definitely a thing. Welcome Jan. Thanks for joining us today.

Jan Rosenow: Thanks for having me and I look forward, to the conversation and to the questions from the audience.

Andy Regan: Yeah. Yeah. I hope we, we get plenty coming through.

So we're hoping to cover, the energy crisis, the future of green homes, heat pumps and electrification, flexibility and smart homes, maybe even a little discussion about hydrogen for heating. We will keep plenty time for audience questions, so please do start submitting them via the chat whenever you wish.

So just before we launch into discussion Jan, could you just tell us a little more about the regulatory assistance project about RAP? What are your aims as an organisation and what sort of work do you do to achieve them?

Jan Rosenow: Yeah, sure. So the regulatory assistance project, or RAP, in the short form is a nonprofit.

We've been founded 30 years ago, around the [00:03:00] Rio Conference in 1992. With the aim to support policy makers and regulators to craft more effective policy and regulation to advance the transition to clean energy. So that's our main goal. We also work on power markets in addition to the topic that we're gonna discuss mainly today, which is heating and buildings.

We also work on transport, electrification, and the transition away from fossil gas, and we work in the US, China, India, and Europe. And I lead the European program.

Andy Regan: Yeah, so it's gonna be really interesting to hear about, hopefully lots of examples from across the world of, good ideas and the ones that we could hopefully be pushing for in the uk.

So great so we'll start, getting to the, with the discussion then. We're gonna talk about the energy crisis, not a huge amount, but it does feel, would feel slightly odd not to refer to it. We're speaking, for the benefit of anybody watching this later on the 8th of September, it's around midday.

Liz Truss has just become Prime Minister and she's, I think, still on her feet announcing the, package of support for the energy crisis in the house of commons. So lots of the details still to emerge, but it looks like essentially being an additional kind of, not a price cap of like we get from Ofgem, but it's being referred to as an any energy price guarantee I think on bills around two and a half thousand pounds per year. Which is going to be funded by government borrowing, seeing figures, estimating the cost of that up to 150 billion as a gross [00:04:30] figure. But the prime minister has been keen to stress, that there will be a treasury announcement on the cost of the plans later this month that it does appear now to be a commitment for a two year period.

There was some suggestion it might be reviewed after six months, but I think what I've seen is that it may now actually cover the period up until the 2024 election. There's also been references to increasing obviously oil extraction and ending the moratorium on fracking, as well as offering incentives to communities to support applications for fracking.

So very much looking at increasing the supply, of kind of domestic fossil fuels in the immediate term. So yeah, I appreciate it it's tricky to respond when, as I've said, the announcement's literally just being made and we'll all obviously want to look closely at the details, but what do you make of what you have seen?

What were you hoping to see in the government response and what's your take on what you understand about it so far?

Jan Rosenow: Yeah, it's understandable that the government is doing something about the current situation that this is clearly not a minor issue. It's probably the most important challenge right now.

Inflation in the UK and, in other places around the world is driven largely by rising energy prices. So this is a very important challenge to tackle. Is this the right package? I think the remains to be seen what is in the detail.

We still have to wait until the end of the month, I [00:06:00] think, Liz Truss has said until we see the full details of, how that borrowing will actually, take place and what extent it's needed. But it's clearly important that there's help, for people to pay their energy bills. What, I guess my main criticism of it is that there is nothing on the demand side this is purely subsidizing energy bills. But we do not see an expansion of energy efficiency programs. We do not see an expansion of programs that would actually get us off gas. There's actually talk now about, getting back to fracking and that I haven't seen any announcements on that yet. I expect they would come in the coming, minutes. But that's our main criticism really, of the package that we see so little on energy demand. Other countries in Europe have done a lot more than that they have made big announcements on bolstering their energy efficiency programs, providing extra support. Already, before, the summer, right after the invasion, of Ukraine by Russia, and the, in the uk there has been very little on the demand side, which is something that I think urgently needs to be addressed.

So that's my main criticism of what the government has put forward, so far, that we really need to change. I think the root cause of this crisis, which is that we depend so much on, burning fossil gas in this country.

Andy Regan: Yeah. Completely agree with that and I think we're perhaps getting to talking a little more about what some of those demand [00:07:30] side policies would look like when we get to talk about homes in, in, in a few moments.

But I'm interested in, in, in two things. One is a kind of a perhaps alternative proposal that RAP have made about what you call the, a price shock absorber, to help offset that problem with, with gas prices kind of setting the cost of the whole system. So I'd be interested if you could just tell us little about that proposal.

Jan Rosenow: Yeah, without going into lots of details around electricity market design this is a second, piece that the government is yet to address, that's not part of the announcement today, is how the electricity market, might get reformed or temporarily changed to ensure that electricity prices come down.

And you rightly said that gas, sets the price not just in the UK electricity market, but in most markets in Europe, gas is on the margin and it's the most expensive generation resource. And in a functioning market that sets the clearing price, and what we put forward is, is a proposal that we think could temporarily provide relief without fundamentally undermining the market.

There are huge risks in tinkering with the electricity market design. It's been designed over many years. And, making short term changes to it could also have unintended consequences, maybe even make things more expensive, could undermine investment in low carbon technologies. So we put forward something that could temporarily [00:09:00] provide relief by reducing, the profit that's being made by generators that should have the same production cost essentially as we had before the massive increasing in gas prices.

And use some of those, profits, those revenues to essentially, lower the, electricity bills, in a way that does not interfere with the fundamentals of electricity market design. This is also fairly similar to what the European Commission, have announced just yesterday there was a leaked document, that has been published this morning, which is very similar to what we put forward in our proposal. You can find it on the RAP website if you wanna read more about it. It's, if you Google shock absorber, RAP, you should find it quite easily and that has more detail on how that could work, and how we think, one could make changes temporarily to the electricity market in order to, cushions some of the price impacts.

Andy Regan: Yeah, I'm sure we can probably share some of the things that we'll refer to throughout on our, Nesta Twitter afterwards. For anybody who's interested, it'd be interesting to see whether, in terms of redesigning the market, the UK government is minded to follow the European Commissions lead.

That's, I'll leave that one hanging as a quite a speculation. I think just finally on the energy crisis and thinking about the, the messaging around demand rather than the mechanics of how to reduce it. It was quite striking to me I think before, the results of the conservative party leadership contest were announced that both [00:10:30] Liz Truss and Kwasi Kwarteng who's now her chancellor and who was previously the business and energy secretary, were very clear that they were against, rationing was the word that they used.

They felt it wouldn't be necessary, has slightly negative connotations and potentially quite unhelpful as a way to frame demand reduction. I'm interested in your take on how perhaps other governments across the EU have pitched the idea of reducing demand to the public and their countries.

Jan Rosenow: I think there's a big difference between rationing and giving good advice to people, how they can reduce energy consumption. We have to distinguish that I think quite clearly. And the current debate is rather than unhelpful I find, also some of the coverage that we've seen even before the crisis, when National Grid, for example, piloted, demand site response programs and were offering, your customers, payments, if they were voluntarily curtailing demand during peak hours and shifting some of their load. Some of the coverage was deeply unhelpful, I felt, because it was framed as if National Grid would cut you off and essentially ration your energy use and that was absolutely not the case. It was a voluntary scheme that rewarded people for providing flexibility to the energy system, which is very, sensible, thing to do because it lowers the cost for everybody else as well, who's not participating, in the program because it, doesn't require.

The most expensive generators to come on. So this debate, I think is [00:12:00] somewhat confused. And that's not very helpful. What we've seen in other countries is that they started putting together, a number of initiatives, around, giving better advice to customers as we go into this winter.

Campaigns, energy saving campaigns in a number of countries. But we've also seen, some regulatory measures, for example, In Spain and France, there have been some laws that, require, public buildings, commercial buildings to not exceed a certain, indoor temperature when it comes to heating or air conditioning that was capped too, or keeping the shop doors closed and things like that.

They are relatively small measures, but they're not necessarily, measures that, have, very significant impacts on people, but still save energy. So I think there, there is a, there's a balance to be struck between. Rationing, energy use, giving sensible advice and undertaking some steps to limit energy use where it really makes sense.

Changing the indoor temperature where one degree or two degrees in public buildings really has a relatively limited impact on occupants and can save fairly large amounts of energy, if you add it all up. So I, I would hope that, and I think there are science now, there was a piece in the, I think in the times that the government is now looking at providing advice, to households and businesses, how they can cut their energy use.

That would be super helpful I think in the current debate because people really need that. Not everybody, knows exactly how to do that well. And the risk is of course that people will just [00:13:30] turn down the heating and under heat, and maybe not do the things that they can do already, to save energy that does not have an impact on their.

Andy Regan: Yeah. And I think that's really important. I've noticed a comment in the chat, especially some concern that some of what you've just run through could risk be exclusionary to disabled people, which I think is quite an understandable point to make. And I think perhaps you've addressed it at the end of your comments there that there are things you can do that, shouldn't have any kind of net impact on negative impact on comfort and health.

And actually that, that will depend on personal circumstances. I think we are, I think we are in a position having worked on fuel poverty quite, quite a long time in the past. People for whom the price of gas has always been a really big consideration, are already rationing and already just need some advice about the most optimal way to do that.

And the group of people who will now have to think about those things has grown quite significantly. And there are, as you say, good and bad ways to do it. What we absolutely don't want is people turning their thermostats down who, whose health would suffer as a result and probably other things that those most people can do. But it's important point to make.

So let's take a step back, from the kind, the bad news of today and the crisis. What's your sort of most optimistic vision, either as a person or within RAP of what homes could look like in 2050? If we really succeed in all of our, decarbonisation goals [00:15:00] and our homes are playing the best possible role in, in a clean system, in a cheaper system, what will be different about those homes and what will be the same as today?

Jan Rosenow: I would say three things. One is there they have to be a lot more efficient. There's huge potential still, in the uk, and elsewhere to make our buildings a lot more energy efficient by installing insulation measures. Sometimes I hear, oh, we've done all that. It's all complete, but it's really not.

We've looked at this in a lot of detail in a paper, a few years back and we've found still millions of lofts that are either uninsulated or could do with top up insulation. Lots of cavity walls not filled, and of course many solid walls, that could be in insulated too. So that's one aspect that's very important.

We've gotta do much better with energy efficiency because that reduces the total size of the problem we're trying to tackle, significantly. And, depending on what modeling you believe, and how deep you wanna go with energy efficiency, you can easily see a 30% reduction with these measures, of energy use in buildings, could be achieved.

And the second step is that we will no longer burn fossil fuels for heating. That is completely incompatible with net zero goals. That has to stop. So we, we will see buildings, use a range of different heating systems, but they will not be based [00:16:30] on fossil fuels.

That will be in, in my view, a lot of buildings that will be heated by heat pumps, district heating, depending on where you are in the world. Solar thermal could also play a very significant role here and often coupled with port of our tag to provide some of the electricity used by heat pumps, on site. So that's the second pillar.

And the third pillar, is the interactivity of buildings with the grid. As we electrify more of the heat generation, it's very important that it doesn't happen in isolation, that these buildings can actually provide, support to managing the grid rather than just be, a burden.

So that, that's the third element I guess, is having buildings as grid interactive resources, that really can help integrate, renewables on the supply site in a more effective way. So those three elements together: more energy efficiency, not using fossil fuels anymore and having buildings as a resource to support the energy system, I think, is a vision for a decarbonised building stock, that can hold and, in fact, most, analysts, come to very similar conclusions that is agree about the precise share of each of the technologies, of course, but I think broadly that's a vision that many people share.

Andy Regan: Yeah, it's really helpful and fits very neatly into the sort of, structure we got planned for the rest of the discussion.

So perhaps we'll start with, with removing fossil fuels and electrification of heat in homes. As [00:18:00] you will know but, perhaps listeners joining us for the first time may not be aware. A lot of Nesta's work on innovation is focused on trying to increase the uptake of electric heat pumps in homes.

The reason we've chosen those as the option to go for is primarily because they are the kind of closest to market if you like. They are widely used outside the uk. They're highly efficient, you can get up to three times as much heat energy per unit in compared to other options, which that also then means that kind of pound for pound if you're trying to spend money on decarbonising a.

Heat pump is probably the best bang, bang for your buck. And that's why we're behind it. We're looking at trying to increase the appeal, reduce the upfront cost, which can be quite high, and looking at the kind of wider skills and workforce around it. You've also very, pro heat pump. You've done a kind of myth busting thread on Twitter, which is bookmarked and I'll probably reshare it after this discussion. What do you think is the most kind, the myth that you've identified, that you're most concerned about? People believing in terms of it being a barrier to the adoption of heat pump.

Jan Rosenow: Gosh, that's a hard question, Andy. There, there are so many, myths that are out there, but I think, one that's really standing in the way of more widespread deployment, I think is this belief that hip pumps cannot work in existing buildings for a variety of reasons.

Some people think, [00:19:30] they don't work because buildings need to be almost up passive health standard so that you can keep warm. They may not work because you have to rip out the entire, heating system that you currently have, because of excessive costs. But essentially this perception that heat pumps maybe find new buildings, but they don't work in existing buildings.

I think that's a key barrier. And, we need to do a lot better in, in providing the evidence, that they can work. We know they can from many different pilot projects, from field studies, from experience in other countries. But that evidence, needs to be shared more widely.

Needs to be. Prepared in a way that people can relate to it. It's a highly technical discussion still. And it's important I think to translate some of that into terms that, people understand who are not energy experts, who, may think about changing their heating system, may be interested in decarbonising their heating system, but don't know where to start.

And I think that's where it's important that we have, ways of addressing those kinds of myths, that, that are there and are still being, they're being repeated, again and again. So we, it's important to engage, with them in a constructive way. I don't think, yeah, people who have never thought much about heating.

Have the skills to navigate, the arguments being put to them from different, types of organisations in the public debate. So it's important that they get independent advice that's robust and based on, on, on best available evidence rather than particular business interests. That pushes certain technology.

That is very [00:21:00] important. So we need independent advice, and we need to have good evidence to make sure people get the information that they need to make those decisions.

Andy Regan: Is I suppose, a particular challenge for when we're thinking about owner occupiers who are perhaps hearing the message that not only do they need to spend potentially 10,000 pounds on heat pump and getting it installed, but even the same again on, on insulation before they even go ahead with it.

That's just almost increases the barrier, especially if that's presented as being like the default. That kind everybody's going to have to do that. So there's, there probably is a sweet spot in terms of enough insulation. It strikes me in some context we're a little too overcautious about it, but what sort of home arch in the, what sort of homes arch in the could get heat pumped tomorrow without really needing any kind of additional insulation at.

Jan Rosenow: This is a great question. Andy, I think the starting point for me is that, any heating system, is more efficient in a, in an efficient building that's well insulated and that includes your gas boiler or, an oil boiler. Yeah, district heating a heat pump, it doesn't really matter what the heating system is.

It operates more efficiently in an efficient building and. Primarily because it can then run at a lower temperature. It's called the flow temperature. That's the, essentially the temperature of the [00:22:30] water that gets pumped around your radiators. If you can lower that increases the efficiency of any heating system, including fossil fuel heating systems.

So the discussion, again, is somewhat disingenuous if we just focus on low carb heating technologies and say, Oh, buildings have to be very efficient. Otherwise the heating system's not gonna be efficient and that's not good. So we better stick with fossil fuels. I think. It's a much more useful way of framing this as any heating system will benefit from efficiency improvements.

And it's important to try to lower that flow temperature through efficiency measures, to a level, that makes the entire heating system more efficient. And you can do that with actually, essentially two ways. One is to just, invest in fabric efficiency. That, that is one way.

The other is to, enlarge the radiators in properties. You have the same effect essentially. What's the sweet spot? How much insulation is enough? We actually writing, a paper right now on this very question and it's terribly difficult. It really depends on what your objective is, is your objective to lower your heating costs, you to really minimize them.

In that case you would probably want quite a lot of energy efficiency. If your objective is to decarbonize as quickly as possible, then you may. Decide to, install a heat pump first and then maybe later on do more efficiency upgrades. So there isn't a right or wrong answer here, that can be given.

I think it really [00:24:00] depends on what your objective is as a homeowner, as an occupant. What I would say is that if you have no insulation at all, an uninsulated loft, no cavity wall insulation, single glazing, I would probably. Advice you to first, you install those very basic insulation measures before you get a heat pump.

That doesn't mean that a heat pump is not gonna keep you warm, you just need a much bigger heat pump. And it's gonna be much more expensive to run if you decide not to, install the insulation measures. So that, that's where I sit in the debate. But technically it's certainly.

To heat a completely uninsulated building. Is it desirable? Is that the right thing to do? I don't think it is. I think we should insulate all buildings that have no insulation to a decent, level of insulation to keep running costs under control and also the wider energy system. We think about, having lots of heat pumps, in an uninsulated buildings that creates significant peak load, that creates significant needs for more renewables to generate that electricity.

And we want to you minimize that problem as much as we can. So I think there's a strong case for insulation coupled with low carbon heating that needs to be made. I don't think it's right to just say, Let's just push heat pumps into all these buildings and forget about insulation. But equally it's not right to say, Oh, all these buildings need to be passive house standard before we can even think about changing the heat source.

I think there's a balance and that balance sits somewhere in between those two positions. [00:25:30] Yeah,

Andy Regan: I completely agree with that. And I think just on, on the flow of temperature point and the fact that it applies to existing kind of fossil fuel systems as well, that's something, you know, Nestao again has been doing a lot of work on, looking at how to raise awareness of it and make it simple for people to make that change.

And I think it, again, links back to this underlying problem that for many households in the uk, certainly not all, but for many households, and for a long time, gas has been cheap enough to waste. So we have been wasting it. And now that we're in the position where we can, the, the context is shifting.

So help helping people make these simple changes as well as saving the money and reducing emissions immediately will also help them Just understand how their heating system works better, which is perhaps something most people, will not thought about before. Certainly not something I would've thought about previously.

We have other question from Melanie ASCA in the chat, which I think relates to a new statement piece that you've written this week, where you've argued very strongly that government policy is essential for driving heat pump uptake. And Melanie's asking, what steps should the government take to in increase uptake of these systems?

And I was gonna ask you, what are the best examples of policy from other nations to, to achieve that and how transferable would they be to the uk?

Jan Rosenow: Yeah, that, that's clearly, an issue that we found. And yeah, just yesterday. We [00:27:00] published a paper in Nature Energy on the kind of global trends in heat pump markets around the world.

And also looking at what are the policy drivers, where do we see most growth and what's actually driving that? And what we find is that it's often a combination of different instruments. What's very important that a high level is to give clarity to the market. If there's no clarity as to what the direction of travel is, there's not gonna be investment.

There's not gonna be the kind of new business models we need to see the innovation that we need to see, and that in turn will then hold back, customer demand. So we need that clarity and that clarity can be given through a variety of means. Everybody on this, in this meeting who's listening probably is well aware of the government's boiler upgrade scheme, which is, a a grant scheme in the uk, but it's a very modest scheme.

It funds about 30,000, homes, over a period of three year every year, three years, every year. So 90,000 in total to install a heat pump. You compare that to the annual installation, of gas boilers, which is about 1.7 million per year. You can see immediately that's a relatively modest program to drive uptake.

So funding is one of the pillars and other governments. Have been much more generous. The extreme end of this is probably Italy's super bonus. If you've never heard of it, it's worth Googling. You essentially get paid 110% of the investment costs, of a heat pump in Italy. Which, my personal view is probably too much, is a bit [00:28:30] excessive.

And there have been some problems with this scheme because it's been overly generous. But that's the other extreme end, of the spectrum. Governments have put in significant funds to drive the heat pump market, or energy efficiency measures more generally in this case. I think the second pillar, is regulation.

And it's not something that, is widely debated right now in the uk. But the government has committed in its hidden building strategy to phase out the installation of fossil gas boilers by the mid 2030s. But there is no, no regulation yet, that actually backs that up and it's unclear as to whether there will be, other countries have moved a lot faster on that.

Two examples. One is Germany and 2024. All newly installed heating systems in Germany need to run on 65% renewables or more. And in the Netherlands, by 2026 installers, we'll no longer be able to install what they call standalone fossil fuel heating systems. Hybrids are still allowable, but you can't just have a new gas boiler with, no secondary heat source.

Alongside, So regulation clearly could play an important role too, And we see already in, in Germany and the Netherlands, massive uptick in, in the deployment rate, Significant investment happening, more manufacturing capacity. The workforce is expanding, customer demand is going up because there's this direction of travel that is very clear now in those two countries.

But that's politically difficult. There's no [00:30:00] question about it. It's not easy to do that. And there are lots of bumps, along the way. I'm not saying this is easy, but it's a serious. Question I think to ask how do we get to the rates that we need to meet the climate goals?

I don't think we get there by just providing, a little bit more subsidies. Essentially, we need to really fix, regulat regulator signals in the market to make sure that, there is this investment that we need to see. And then finally, the imbalance between, gas and electricity prices in the uk, have been a serious barrier.

There hasn't been an economic case for heat pumps that is starting to change, and we've done some analysis around that, and that's mainly because gas prices have risen, faster than electricity prices have. That changes the economic benefits of heat pumps versus gas boilers in the uk.

But other countries have done more, they've actually shifted some of the taxes and levies away from electricity, maybe onto gas or maybe into general taxation. You may think of Denmark or the Netherlands, Germany have all done that. And they have managed to actually get the business case for heat pumps in a much better place where you can now see, the total costs of owning a heat pump, including investing in the installation and running it, are now lower in some cases than installing fossil fuel heating systems.

So those three pillars, having decent. Funding programs available, regulatory signals, and changing the structural incentives through the, the taxation of the heating fuel carriers. That makes a big difference, to heat [00:31:30] pump markets, that we found, are successful around the world.

This,

Andy Regan: The question from, John Tabish against come through the chat, which somewhat relates to what you've just been saying in terms of regulation and standards for what you can install, but John, is asking how can policy makers in cities with large private rented sectors incentivize or mandate private landlords to insulate and decarbonize their properties?

So I suppose the obvious answer would be to do something around building regulations or minimum standards in, in private rented sector. But is there anything a bit more on the incentive side or the innovation side that you're aware of that's worked well with from a landlords?

Jan Rosenow: So I think there's two parts in this question.

One is, is cities. And, that's an interesting topic in and of itself. To what extent do cities have the means to drive decarbonization of the building stock in the city? In the uk, cities have very limited powers to do that. They really find it hard to impose, outright bands or strict regulation.

That's different in other countries. You may, for example, look at Vienna. Vienna have imposed fairly significant requirements for new heating systems, because they have the powers to do that. That's a bit different in the uk. Their legal limitations as to how much cities can do to drive that.

And the second part of the question about landlords in particular, your landlords not having a big incentive [00:33:00] necessarily to invest in, in a new heating system because the cost, the running costs. Are born by the tenant. I think, we have a precedent for regulating private landlords, of course, in the UK through the minimum energy efficiency standards that apply to, privately rented properties and that could be expanded, and could be tightened over time.

And that's something we are seeing again in different countries. You may think about the Netherlands, in the non-domestic sector having pretty ambitious, minimum energy efficiency standards, that include heating systems. So there, there are ways of doing that. But I think it has to be part of a broader, package of measures to really, cover all of the different segments of, of the building sector.

And, private landlords are just, you, that's just one of the pieces I think in.

Andy Regan: Yeah, that's interesting. Another question from Nathan Gambling, who's a friend of Nesta, and host of the, beta talks, heating podcast, is asking whether there's anything installation engineers can do to help drive forward the policy needed.

So the folks are actually out there doing these changes to homes. What more could they perhaps do? What might they have done in other nations?

Jan Rosenow: Thanks Nathan for the question. And I know Nathan well from social media in his podcast where it was a guest a while back, couple of times actually, I think.

And, no, huge job for engineers I think in this, and Nathan always makes the point that the engineers [00:34:30] are critical in all of this. And indeed they are actually just, earlier this week, a friend of mine told me that, oh, I asked my plumber whether I could have a heat pump installed and I was told I shouldn't have one because they're ccrap.

They don't work in the uk. And you know that, that is a story that many people experience because their plumber is used to installing. Gas boilers, and they're used to installing gas boilers, in a way that leads to gas boilers, that should be condensing, not condensing. And again, Nathan has made this point many times, but the way most gas boilers, are being set, when they're installed is not to condense because they're set to a much to high temperature in terms of the floor temperature, so they can't condense.

Clearly there's a huge role for, heating engineers to give, the right advice, to homeowners, to also be part of the solution. I think, there's a huge opportunity if we make this shift away. From installing fossil fuel heating systems to, to clean heating systems, there's a huge opportunities for installers, to get ahead of the curve, to really become leaders in this area.

And rather than seeing this as a threat that will undermine their business model, you to embrace it. And that they are installers out there, who are doing the already, who are retraining and who are, now, embracing the opportunity that they see with clean heating. So installers can play a role, I think, in giving better advice and also in actually, we need good qualified people to, to put, high, highly, high quality heat [00:36:00] pumps in that's so important.

What can they do to drive policy? I think explaining. The, that the current situation that we are in with gas boilers and the need for low flow temperature heating is so important. And I see that happening now slowly and other people take that on in, in their arguments. But I think there's still a lot more that installers can do, to communicate this to policy makers and communicate, how currently, outcomes are happening that are not desirable because of that.

Andy Regan: Yeah. Thanks. So that we've covered a lot on, insulation and, heat electric ation. So the third kind pillar of your original answer to how holds or changes around flexibility and smart homes and obviously just before. Get onto that just to, not short of questions coming through, but I really would encourage others to submit some questions, cause we can get some good ones.

So far. So you've mentioned like the roles that, that the homes could play in the wider energy system in terms of reducing demand, providing flexibility directly. Could you just, for anybody who's perhaps not familiar with that as a concept, can you just at a slightly higher level outline what's from a home householder's perspective, not necessarily a homeowner's perspective, but from somebody living in a home, what would that look like to them?

What are the opportunities and positives from their perspective of their home playing a role in flexibility?

Jan Rosenow: Yeah, sure. And I might use [00:37:30] my own home as an example here, because we've been doing this since the beginning when we had our own pump installed in 2019. So there, yeah. And of course the current situation with electricity prices is completely different now because, we are in crisis mode and electricity prices are no longer what they used to be.

But back then, there were a time of use tariffs. You could benefit from lower rates if you consumed electricity outside of peak hours, peak hours in the uk, four, 4:00 PM to 7:00 PM and if you consumed electricity outside of those hours, you essentially get a discount and you pay more if you consume electricity during four to seven.

So what that means then is if you can run your heating system in a way that prevents usage, or minimizes usage between. Four to seven, then you see a reduction in your bills, compared to a situation where you just ignore that and you basically run your heating system, in, in a way that, that doesn't take that into account.

And that can de you know, deliver huge sign financial benefits. We saw our, energy bill dropped by 60%. And that's total energy consumed by just participating in, providing flexibility services and benefiting from a time of used tariff. What, why is that, an opportunity?

Buildings can actually store energy for fairly long periods of time. And again, that's not widely known. Most people think about batteries, when they think about, so storing energy. But, you may think [00:39:00] of a home as a thermal battery and the more efficient the home is. The more energy you can store in it, for and for longer.

So a highly efficient home, that you may think about a passive house. And, you heat it to 20 degrees and you switch off the heating entirely and it's, zero degrees outside. It will take, many hours for that building to cool down even by one degree. There are studies out there that have actually tried this and looked at this.

So if you have an efficient house, switching off the heating. For a couple of hours, three hours is not gonna do much to your comfort levels. Yeah. It's not gonna lower the indoor temperature by that much. And if you preheat a little bit before you, then you allow the heating system to ram down.

You, you can actually not, feel any difference at all. So in our case, I think we allowed the heating system to turn down by about one degree, and preheating maybe half a degree. And that's not something that you would even notice. So that, that's the kind of very, that's one example of how you can provide flexibility, to, to the grid.

It has been trialed in different countries, around the world. Denmark has done this already 10 years ago, but it's also been elsewhere, been done elsewhere. So there's huge opportunity for that once we have more heat pumps to then also follow, what happens, with electricity generation and to really mi try to minimize usage during periods where there isn't enough renewables on the system and where there's more fossil generation.

Andy Regan: What sort of other devices, perhaps thinking beyond just heating systems could be playing a role in that flexibility provision. [00:40:30] Cause I, off example, I would often use, when I'm trying to explain this to people would be that an aggregate level, thinking quite some time in the future, if we have smart homes, internet of things, enabled devices that can, can talk to your smart meter.

Your smart meter can talk to the grid via the system operator. If the system operator needs to act quickly to curtail or increase demand in response to, something going wrong on the system or just to smooth out demand. The example always give is they could switch off everyone's fridge for half an hour in the middle of the night and no one's milk would go off.

But Say quite a chunk of energy, a kind of aggregate level. Does that sort of example feel realistic to you? Is there any examples from elsewhere of that kind of level of automation happening to provide flexibility?

Jan Rosenow: I think it's important to look where the biggest loads are gonna be in the future.

And, the two main, loads that we will see from buildings, one, or we already talked about, heat pumps if they're gonna become a widespread in the uk. Very significant addition, additional load. The other one is electric vehicles. That, that is, another big opportunity.

And that's actually easier than flexibility with heating systems because electric vehicles in most cases, the, if you have your own charger, not everybody has that and I appreciate that. But if you have a charger, installed at your home and you park your car after coming back from work [00:42:00] and you don't need it, throughout the night, it doesn't really matter when your car's getting charged, right?

It, you only want it to. At the level that you need it in the next morning, maybe at eight o'clock when you leave. So if you, basically, give away, con the control over when the vehicle's getting charged, to a third party perhaps, or you couple it to a time of use tariff, that's the sort of thing that could really make a big difference.

I think switching off in, like your mobile phone charger, will make almost no difference at all. Fridge a little bit more, but it's not the, I think a fridge consumes what, 150 kilowatt hours per year or something like that. And compare that to, what a heat pump might use in a typical UK home, that will be closer to 4,000 kilowatt hours.

You immediately see that in terms of scale. Really the main opportunity is electrification of heat and transport, when it comes to domestic buildings, where you can use flexibility, and that's where we should focus. I don't think it's particularly, helpful to focus on very small appliances.

Ultimately I think it comes down to having a system that allows homeowners to do this easily without much interference, and get a financial benefit in the end. And that will then, I think lead to people want wanting to do this. It's not difficult. If it's all optimized, this can happen in the background and you ne you never actually have to think about it.

Yeah,

Andy Regan: You'd need quite a lot of fridges. I suppose for that example, I guess I'm thinking kinda an aggregate level. [00:43:30] I think I'm interested in what you think then this kind of barriers might be to, to unlocking these benefits and practice. So some of them might be behavioral. I think you, we are again looking at some work to try and understand how willing people are to surrender that sort of control over the heating system in particular, which probably, my hunch is that feels much riskier than the car charging example.

Regulatory. Is there any change within the UK regulatory system that we need, that you are pushing for to unlock this? Or is there any kind of technical barriers, any things that, we need to invent to make this happen? What are the main things that we need to overcome to unlock this potential?

Jan Rosenow: I think technically this is already possible, but the main challenge I see is the integration of all the different devices. If you have, solar pv, maybe a heat pump, maybe electric vehicle, maybe a battery. And you want to optimize all of that. And then also provide grid benefits.

Somebody needs to pull all that together and make that easy for you. And I don't see that happening enough yet. There are some companies out there in the market trying to do that, but there's a lot more potential for those kinds of solutions. Very often you will find that, you don't have that integrated solution.

You might have somebody who says, Yes, I can install you a cart, charger that can provide that flexibility for you. Or I can optimize your heat pump. But actually having, one package that [00:45:00] integrates all these things together in a very straightforward way, we need to see more innovation there.

I think in terms of business models and more offerings, for consumers. Some people will have concerns about, giving away control, and, allowing someone to essentially run. Your heating system or charge up your car or run any other devices, Maybe you discharge your battery and things like that.

I, and that's, those concerns are important. I think we need to take them seriously and I think it need, there need to be ways of offset, of essentially pushing a button and say, Now I don't, I wanna override whatever happens right now in the background. Again, this has been trialed in different places and the evidence so far, I've seen this, that most people do not override.

If, your demand is being met, let's say you want a certain temperature indoor, or you want your car to be charged in a certain way, and if that is, guaranteed service, you are not gonna override that. There needs to be an option for that. So people feel that they can be in control if they want to.

The regulatory barriers, there are many, one is, who actually can. Sell the flexibility services to the, electricity markets. Aggregators, could play a role here in the French, market. We see a lot more of that. We see aggregators already doing that. They are barriers to participating in some of the, the different markets that we have in the uk.

That prevent, entrance from providing, demands, set response [00:46:30] services and Salem. So there's this, and I could go into more detail, but I think that will probably be, too much detail for this discussion. Is it has to do with, for example, limitations as to, how large your offering has to be when you put a bit into the electricity market, then that can prevent, smaller aggregators from participating and there are others too.

But there clearly is a role I think, for this and national grids in all of their studies point out again and again, that we need that flexibility. It's gonna become a critical component in the power system that we will have in, in, in 10, 15 years time. It needs to be unlocked.

The technology is there, but I think what's still missing is, you actually pushing that through the right incentives and then seeing the right business models and offerings for customers.

Andy Regan: Yeah, I think you're right, I could probably quite happily talk about those examples for another half an hour, but we are entering the last, last 10 minutes of our discussion.

Perhaps to move on with, I think one, one final question for me on the flexibility side, you mentioned earlier some of the coverage around, national grids, proposals around and, time of use, and I'm seeing something of a narrative emerge around smart meters or smart grids, which are clearly, fundamental to unlocking all of this is having a grid that can talk to the network.

Two things that seem to be coming out recently. Concerns that smart meters can be used to [00:48:00] cut people off remotely. Where previously a warrant would've been required to enter the home and physically cut somebody off. And also a bit of a narrative that essentially that the time of use and charging people more at different times is just another new way for suppliers to rip people off, effectively.

And certainly we know from looking at some of the kind of legacy time of use tariff like economy seven, that people were not always seeing the benefits of those tariffs cause they didn't understand how to make their home heating system in interact with them in the right way. So again, like how can we counter that, that sort of narrative in the UK where our, our smart meter roll out has been quite delayed and quite fraught with problems already.

And perhaps get people feeling more positively about that sort of control.

Jan Rosenow: You don't even need a smart meter, to benefit from a time of use tariff. That's important to understand too. Yeah. Yeah, it's, it, there are other ways, around this, that would still enable you to, to benefit from a time of use tariff.

But, I think the skepticism around some of this is to do with, A fear that, it gets ever more complicated and suppliers, might make offerings to customers that they don't understand. The, and this discussion is not new. It's, it's one that, that, has emerged, many years ago in the US context where there was [00:49:30] a discussion about, real time, energy pricing, where your tariff kind of is coupled to the whole what happens in the wholesale market.

And, I guess the argument that's often be made is that what about vulnerable customers? So don't understand, how these prices affect them and what they can do about them. How can they, where they modulate the energy use. And if you are exposed to a, a real time, Tariff that is coupled to the, whole price of, electricity in the wholesale market.

Yeah. And you don't know how, what to actually do about it, then you might suddenly see your bill's rise quite significantly. We've seen that in, in some cases. And there, there are examples of that. What I would say is that, it's important to have a range of offerings. There will be people who don't wanna participate in any of this, and that's fine.

They can have a flat tariff. There will be people like, like me, who are very willing to have a highly volatile energy tariff and, give away control to someone else who can modulate my heat pump in my ev. And I'm willing to take that risk. And there would be people in between who want maybe, like a simple time of use tariff, and that's it.

But they don't want to have something that's more complicated. So I think we need to have a range of different offerings out there, and making time of use tariffs mandatory, for final customers. I think that's, yeah, that's a, that's not a step I would advocate for. I think, it needs to be voluntary for sure.

We can have time of use signals, also further upstream. You may think about network tariffs and things like that, which would then encourage third parties to [00:51:00] come up with offerings, to encourage people, to participate in flexibility. So I think there's different ways around this.

It doesn't have, the risk doesn't have to sit with a final customer, I guess is what I'm saying. And different people are willing to accept different levels of risks and the market should provide offerings to accommodate that.

Andy Regan: Yeah, think, yeah, the key thing is the right kind of service offering for the right kind of customer.

I'm gonna try and maybe cram in two more questions to our last five minutes. I will ask a perhaps shorter question on hydrogen than we, we discussed beforehand. So we've. Quite conspicuously not talked about this. We've just been talking about electric heating. But the big competitor to electric heating and heat pumps in many people's minds is to have a hydrogen boiler, or at least to have a hydrogen boiler alongside a heat pump in a hybrid system.

We are quite skeptical of that Nesta as a good, solution. Sandy are also somewhat skeptical, so I wonder if you could just fairly briefly outline why you don't think that's a good option for hydrogen in homes.

Jan Rosenow: Yeah, sure. I think, yeah, one, one reason is that I'm skeptical about hydrogen for heating is not that I don't like hydrogen.

I think, you, there are lots of applications where. Hydrogen, is absolutely critical, green hydrogen to replace, you what we currently use. Where we currently use hydrogen that is, generated [00:52:30] from gas, or coal with no abatement, is a no-brainer. That makes absolute sense.

There will be a need in industrial processes. There will be a need, in shipping potentially. And there are lots of applications where we need a lot of hydrogen also in the power sector. I believe there is a role for long-term energy storage, to make sure we can balance.

The power system. The question then is, what about heating? My fundamental skepticism about hydrogen for heating is to do with the efficiency of hydrogen. So if you compare, hydrogen with a heat pump, you need about five times, maybe six times more electricity. To make the same amount of heat via a hydrogen boiler compared to a heat pump.

So that, that requires in turn then five to six times more renewables that need to be built to make that electricity. Or you need to import the hydrogen. But that's highly problematic too. It's not straightforward. It's not so easy to transport hydrogen across long distances.

There are huge challenges around this. So my, my, my fear is that if we get stuck in a hydrogen discussion for heating, because it's not available, we actually don't have any significant quantities of green hydrogen right now available, that we just delay, rolling out energy efficiency district.

He, heat pumps solar, thermal, all the things we already have and we know work. They're, they're proven technologies. They can work today. We need a awful lot of them. If we find [00:54:00] that in 10, 15 years time, the costs of green hydrogen have fallen so dramatically and we have an oversupply of green hydrogen.

I'm not the one gonna say, Oh, we should never use it for heating. I'm just saying, I think there's a lot of other things we should worry about first, where hydrogen is gonna be essential. And until we fix that, I don't think we should be, too optimistic that there's gonna be a lot of green hydrogen that's left to be used for heating.

So I have concerns about that, because of the inefficiency essentially, and then in turn drives the costs. There's lots of cost studies out there. In later this month or maybe early next month, I'm gonna get a paper out in a another energy journal. Jewel, which is looking at, the evidence base for hydrogen for heating.

And I look at 31 independent studies on hydrogen, for heating. And none of them, and none of the 31 studies I looked at comes to the conclusion that hydrogen for heating is, a viable option, at least not at scale. There might be some complimentary roles. You may think in a district heating grid, maybe there's some combined heat and power plant that feeds and, heat into the district heating network.

Maybe there will be some hybrid systems in some places. I'm not saying there's no role at all, but I think at large scale it's very difficult to see, how hydrogen could play a significant role in the UK in heating homes, at least for the next 10 to 15.

Andy Regan: Thanks Jan. I think that takes us to time, but yeah, a really useful interest answer on hydrogen.

I'm sure. Again, we could have probably [00:55:30] talked about that for slightly longer, but the hour has flown by from my point of view and hopefully from our audience's point of view as well. Apologies to the people who submit some, quite good questions and the chat that we haven't managed to get to.

Thank you all for, for attending today and thank you to, to Jan for joining us and sharing your insights. Really enjoyed the discussion. Couple of things before we wrap up. I'd like to invite people who've attended to fill in a short survey, which is, gonna be shared in the chat shortly.

And, give us some insight into how you found the event today. As a thank you for filling out that survey, you can also choose to enter a prize draw, to win a 50 pound bookshop voucher, which would be nice. And finally, the next couple of events in the Nesta Torch two series will be on the 21st of September where we'll be talking to June o Sullivan, who will be discussing challenges in the earlier sector.

And for those who are interested in the sustainable future mission, the next Nesta talks to on that topic will be on the 18th of October with Sarah Merick. So thank you very much again for joining us today, and thanks again to our audience and see you next time.

Jan Rosenow: Thanks for having me.