Plumber Army Training to Cut Emissions From U.K. Home Heating

(Bloomberg) -- On an industrial estate west of London, an army of plumbers is training to advance the British government’s plan to wean households off their dependence on climate-warming natural gas.

Octopus Energy Ltd., backed by Al Gore’s sustainability fund, is helping teach the plumbers to install heat pumps that will play a pivotal role in the U.K.’s strategy to have net-zero emissions by 2050. The government’s heat and buildings plan, which includes subsidies for households, is expected to be unveiled in coming days with the backdrop of an energy crisis that’s adding urgency to the transition away from fossil fuels.

With soaring gas prices set to push up bills for millions of British households, utility Octopus is forging ahead by testing the pumps, which draw heat from the surrounding air, in two mock-up houses.

“We’re taking a tech company approach,” Chief Executive Officer Greg Jackson said in an interview. “We don’t want to wait around for the government like everyone else. We want to raise money and get started.”

The biggest challenge is that heat pumps are expensive -- costing about 10,000 pounds ($14,000) to install -- and work best in the kind of well-insulated homes the U.K. lacks. Finding ways to lower the cost for households has been a stumbling block for the government.

The U.K. is poised to announce grants of at least 5,000 pounds ($7,000) for people who install the pumps starting in April 2022. Octopus says it can get the cost of the technology below 6,000 pounds within the next nine months. Beyond that, Jackson says he can get lower it to 3,500 pounds, about the same as a gas boiler.
 
The government plans to shift the green levies currently applied to power bills over to gas, arguing that surging prices underscore the need for the U.K. to end its dependency on fossil fuels. The finer details of how that would work have yet to be nailed down.

Making the switch now would increase average bills by 50%, even as it cuts household emissions by 73%. Transferring the existing charges will be crucial, Jackson said.
 
“The most important thing that government can do is shift the levies,” he said. “If you move the levies from green electricity to dirty gas, we’re close to cost-comparable already.” 
 
The government is targeting the installation of 600,000 heat pumps a year by 2028, still only about a third of the gas boilers fitted annually. That’s the minimum needed to have any hope of reaching net zero, said Mike Hawkins, deputy director of clean heat at the department of business, energy and industrial strategy. 

While heat pumps will face competition from alternative fuels such as hydrogen -- which potentially could use existing gas infrastructure -- Octopus is convinced about its technology and is doing more research to ensure it can be adapted to a changing climate. 

The “magic” of the pump, which is about the size of an air-conditioning unit, is that it produces three units of heat for every unit of electricity that goes in, Jackson said. Octopus, which already supplies energy to more than 2 million homes, plans to supply, install and maintain the pumps.

At the current installation rate, the 600,000 target won’t be met until 2057 -- and just 38,000 devices were installed last year, according to the Onward think tank. That’s where Octopus plans to step in.
 
“Within 10 years or so, we expect to be installing hundreds of thousands per year,” Jackson said. “We’ll train engineers seven days a week if we have to.”

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