1 Cost of low-carbon heating technologies
The cost of each considered low-carbon heating technology was calculated considering both capex and opex costs for the year 2020. Following cost components were included:
Capex:
- Heating system base cost (£)
- Additional costs (£)
Opex:
- Maintenance cost (£/year)
- Fuel cost (£/year)
The final cost of a technology was calculated as the sum of the capex components and the discounted opex components. The opex cost were levelised over the lifetime of the technology with a discount rate of 3.5%. Our assumptions and cost sources for all cost components are reported in sections 1.1 to 1.4.
1.1 Heating system base cost and maintenance cost
The heating system base cost includes both the cost of the main appliance and the cost of its installation, but it does not include the costs of additional components, such as hot water cylinders or radiators.
The values of heating system base cost utilised in this study are shown in Figure 1 to Figure 4, reporting costs for a range of installed heating capacities.
Technologies that are currently not largely widespread are expected to experience a reduction in cost of the main unit between 2020 and 2040, due to economies of scale. Costs for 2020 are represented with a solid line, while costs for 2040 are represented by a dashed line.
Note that the heating system base cost for all technologies depends on the heating capacity of the device. Costs are reported as a list of total costs in £ for discrete values of installed capacity within a range for the following technologies: gas boiler, oil boiler, solid biomass boiler, BioLPG boiler, bioliquid boiler, hydrogen boiler and biomethane grid injection. For all other technologies, costs are reported as a combination of a “fixed cost” (in £ per unit) with a marginal component of “variable cost” (in £ per kWth of heating capacity of the unit). These cost components are also reported in Table 1.
Annual maintenance costs considered in this study are reported in Figure 5. These are expected to be constant for devices of all capacities, with the exception of solid biomass boilers, for which the annual maintenance cost is assumed to be 14.5 £/kW.
All data sources for heating system base costs and maintenance costs are summarised in Table 2.
| Fixed CAPEX (£) | Marginal CAPEX (£/kWth) | |||
|---|---|---|---|---|
| 2020 | 2040 | 2020 | 2040 | |
| ASHP | 4,804 | 3,843 | 300 | 231 |
| GSHP | 8,804 | 7,843 | 300 | 231 |
| High-T ASHP | 4,000 | 3,600 | 500 | 450 |
| High-T GSHP | 5,000 | 4,500 | 1,083 | 975 |
| Communal ASHP | 801 | 641 | 300 | 231 |
| Electric storage heating | - | - | 750 | 750 |
| Direct electric heating | 227 | 227 | 113 | 113 |
| Electric boiler | 700 | 700 | 45 | 45 |
| Hybrid ASHP + gas boiler or hydrogen boiler | 6,042 | 5,093 | 288 | 231 |
| Hybrid ASHP + bioliquid boiler | 6,546 | 5,597 | 288 | 231 |
| Hybrid ASHP + direct electric heating | 5,319 | 4,370 | 452 | 395 |
| ASHP + solar | 7,229 | 6,268 | 541 | 472 |
| Electric storage + solar | 2,425 | 2,425 | 992 | 992 |
| Electric resistive + solar | 2,652 | 2,652 | 279 | 279 |
| Electric boiler + solar | 3,121 | 3,121 | 209 | 209 |
Annual maintenance costs for solid biomass boilers were assumed to depend on the capacity of the appliance and to amount to 14.5 £/kWth.
Table 2: Sources and assumptions on low-carbon heating technology costs
(Technology, Sources, Assumptions)
Technology: Gas boiler
Source: As Fifth Carbon Budget, converted to 2020 prices.
No Assumption:
Technology: Oil boiler
Source: As Fifth Carbon Budget, converted to 2020 prices.
No Assumption:
Technology: ASHP
Source: 2020 values from Hybrid Heat Pumps (2017), Element Energy for BEIS
Assumption: Reduction in cost of unit and installation of 20% between 2020 and 2040.
Technology: GSHP
Source: 2020 values from Hybrid Heat Pumps (2017), Element Energy for BEIS
Assumption: Reduction in cost of unit and installation of 20% between 2020 and 2040. Assuming ground loop shared between two properties.
Technology: High-T ASHP
Source: 2020 values from Evidence gathering - Domestic High Temperature Heat Pumps (2016), BEIS
Assumption: Reduction in cost of unit and installation of 10% between 2020 and 2040.
Technology: High-T GSHP
Source: 2020 values from Evidence gathering - Domestic High Temperature Heat Pumps (2016), BEIS
Assumption: Reduction in cost of unit and installation of 10% between 2020 and 2040. Assuming ground loop shared between two properties.
Technology: Communal ASHP
Source: 6 homes used as the size of the communal heating system based on the average terrace length from HCLG English Housing Survey 2017-2018
Assumption: Assumes a communal HP serving 6 homes. Fixed and marginal capex and same as for individual ASHP and shared across the 6 homes.
Technology: Electric storage
Source: From Evidence gathering for electric heating options in off gas grid homes (2019), Element Energy for BEIS
Assumption: Capex constant for all years, as established technology.
Technology: Electric resistive
Source: From Evidence gathering for electric heating options in off gas grid homes (2019), Element Energy for BEIS
Assumption: Capex constant for all years, as established technology. Opex same as for electric storage.
Technology: Electric boiler
Source: From Evidence gathering for electric heating options in off gas grid homes (2019), Element Energy for BEIS
Assumption: Capex constant for all years, as established technology. Opex same as for gas boilers and electric storage
Technology: Solid biomass boiler
Source: Capex from Fifth Carbon Budget dataset converted to 2020 prices. Opex from NERA 2009: The UK Supply Curve for Renewable Heat
No Assumption:
Technology: BioLPG boiler
Source: Capex of unit and installation from ClimateXChange 2019, The potential contribution of bioenergy to Scotland’s energy system.
Additional opex for the delivery and storage of gas based on LPG Gas Central Heating Costs, Household Quotes 2018.
Assumption: Opex same as for gas boiler with additional cost for the delivery and storage of BioLPG
Technology: Bioliquid boiler B100
Source: ClimateXChange 2019, The potential contribution of bioenergy to Scotland’s energy system.
NNFCC 2019, Heating Options for Off-Gas Grid Consumers.
BoilerGuide New Oil Boiler Replacement – Installation Costs (accessed 04/10/2019).
Assumption: Dedicated bioliquid installation.
Fixed opex assumed to be the same as for general boilers, plus oil tank costs. Oil tank can be rented or owned. Cost of tank rental or cost of own tank assumed to be equivalent and included in opex. Oil tank cost with installation £1,900 (over 15 yr)
Technology: Hydrogen boiler
Source: Hydrogen supply chain evidence base (2018), Element Energy for BEIS
Assumption: £153 added to cost of gas boiler to account for increased cost of Hydrogen boiler (Hydrogen-only boiler and Hyready boiler).
Uplift of 50% in the opex compared to gas boiler due to the need to replace catalyst used to reduce NOx emissions (for both Hydrogen-only boiler and Hyready boiler).
Technology: Biomethane grid injection
No Source:
Assumption: Same appliance as gas boiler
Technology: Hybrid HP + gas
Source: 2020 values from Hybrid Heat Pumps (2017), Element Energy for BEIS.
Increase in capex for Hyready boiler and uplift in opex for catalyst replacement in line with Hydrogen supply chain evidence base (2018), Element Energy for BEIS
Assumption: Hyready boiler in gas mode.
Reduction in cost of heat pump unit of 20% between 2020 and 2040.
Opex assumed to be £50 lower than the sum of the opex for the two components of the hybrid system (£100 each) due to economies of scale.
Technology: Hybrid HP + bioliquid
Source: 2020 values from Hybrid Heat Pumps (2017), Element Energy for BEIS. NNFCC 2019, Heating Options for Off-Gas Grid Consumers.
BoilerGuide New Oil Boiler Replacement – Installation Costs (accessed 04/10/2019).
Assumption: Reduction in cost of heat pump unit of 20% between 2020 and 2040.
Opex assumed to be £50 lower than the sum of the opex for the two components of the hybrid system due to economies of scale. Additional OPEX £50 for small oil tank (£750 over 15 yr).
Technology: Hybrid HP + H2
Source: 2020 values from Hybrid Heat Pumps (2017), Element Energy for BEIS
Increase in capex for Hyready boiler and uplift in opex for catalyst replacement in line with Hydrogen supply chain evidence base (2018), Element Energy for BEIS
Assumption: Hyready boiler in hydrogen mode.
Reduction in cost of heat pump unit of 20% between 2020 and 2040. Opex assumed to be £50 lower than the sum of the opex for the two components of the hybrid system due to economies of scale; uplift of 50% in the component of the opex associated with the hydrogen boiler due to replacement of the catalyst used to reduce NOx emissions when operating in hydrogen mode.
Technology: Hybrid HP + resistive
No Source:
Assumption: Capex derived by removing boiler component of hybrid heat pump and adding cost of resistive heating based on modelled kW.
Opex assumed to be £50 lower than the sum of the opex for the two components of the hybrid system due to economies of scale.
Technology: Combinations with solar thermal
Source: Costs as Fifth Carbon Budget, converted to 2020 prices. Heat delivered assumption based on NERA 2009: The UK Supply Curve for Renewable Heat, table B.13
Assumption: Heat delivered by solar collectors calculated assuming that solar thermal delivers no more than 60% of hot water demand or 643 kWh/kW, whichever is lower. Opex assumed to be £50 lower than the sum of the opex for the two components of the hybrid system due to economies of scale.
1.2 Technology efficiency and fuel use
All assumptions around lifetime, load factor, fuel type, heating efficiency and the portion of supplied space heating and hot water are reported in Table 3. The load factor was utilised to calculate peak heating demand from the annual heating demand. Heating efficiency refers to the higher heating value for combustion-based technologies.
Heating efficiency of heat pump technologies varies depending on the flow temperature at which space heating and hot water are delivered and is reported in Table 4. The efficiency of a heat pump is expressed as the seasonal performance factor (SPF), defined as the ratio of the supplied heat to the total electrical energy demand over one year. The combined SPF, utilised to calculate electricity consumption, includes the delivery of heat for both space heating and for hot water production, assuming the ratio between space heating and hot water production is 3.5:1. The hot water SPF is assumed to be the same as the space heating SPF when operating with flow temperature of 60°C.
| Technology | Lifetime | Load factor | Fuel | Heating efficiency | % space heating demand | % hot water demand |
|---|---|---|---|---|---|---|
| ASHP | 18 | 16% | Electricity - Peak | Table 4 | 100% | 100% |
| GSHP | 22.5 | 16% | Electricity - Peak | Table 4 | 100% | 100% |
| High-T ASHP | 18 | 16% | Electricity - Peak | Table 4 | 100% | 100% |
| High-T GSHP | 22.5 | 16% | Electricity - Peak | Table 4 | 100% | 100% |
| Communal ASHP | 18 | 16% | Electricity - Peak | Table 4 | 100% | 100% |
| Electric storage | 15 | 16% | Electricity - Off peak | 100% | 100% | 100% |
| Electric resistive | 15 | 11% | Electricity - Peak | 100% | 100% | 100% |
| Electric boiler | 15 | 7% | Electricity - Peak | 100% | 100% | 100% |
| Solid biomass boiler | 15 | 16% | Biomass | 74% | 100% | 100% |
| BioLPG boiler | 15 | 7% | BioLPG | 87% | 100% | 100% |
| Bioliquid boiler B100 | 15 | 7% | Bioliquid | 84% | 100% | 100% |
| Hydrogen boiler | 15 | 7% | Hydrogen | 87% | 100% | 100% |
| Biomethane grid injection | 15 | 7% | Biomethane | 87% | 100% | 100% |
| Hybrid HP + gas boiler | 15 | 25% | Electricity - Peak | Table 4 | 80% | 0% |
| Gas | 87% | 20% | 100% | |||
| Hybrid HP + gas boiler, with hot water cylinder | 15 | 25% | Electricity - Peak | Table 4 | 80% | 80% |
| Gas | 87% | 20% | 20% | |||
| Hybrid HP + bioliquid boiler | 15 | 25% | Electricity - Peak | Table 4 | 80% | 0% |
| Bioliquid | 84% | 20% | 100% | |||
| Hybrid HP + bioliquid boiler, with hot water cylinder | 15 | 25% | Electricity - Peak | Table 4 | 80% | 80% |
| Bioliquid | 84% | 20% | 20% | |||
| Hybrid HP + hydrogen boiler | 15 | 25% | Electricity - Peak | Table 4 | 80% | 0% |
| Hydrogen | 87% | 20% | 100% | |||
| Hybrid HP + hydrogen boiler, with hot water cylinder | 15 | 25% | Electricity - Peak | Table 4 | 80% | 80% |
| Hydrogen | 87% | 20% | 20% | |||
| Hybrid HP + direct electric heating | 15 | 25% | Electricity - Peak | Table 4 | 80% | 0% |
| Electricity - Peak | 100% | 20% | 100% | |||
| Hybrid HP + direct electric heating, with hot water cylinder | 15 | 25% | Electricity - Peak | Table 4 | 80% | 80% |
| Electricity - Peak | 100% | 20% | 20% | |||
| DH | 15 | 7% | Heat from DH | 100% | 100% | 100% |
| Combinations with solar | 18 | N/A | Solar | N/A | 0% | 60% |
| Gas boiler | 15 | 7% | Gas | 87% | 100% | 100% |
| Oil boiler | 15 | 7% | Oil | 84% | 100% | 100% |
| Technology | Flow Temperature (°C) | Space heating SPF | Combined SPF | ||
|---|---|---|---|---|---|
| 2020 | 2040 | 2020 | 2040 | ||
| ASHP | 35 | 3.60 | 4.06 | 3.12 | 3.62 |
| 40 | 3.40 | 3.87 | 3.00 | 3.50 | |
| 45 | 3.00 | 3.48 | 2.75 | 3.25 | |
| 50 | 2.70 | 3.19 | 2.54 | 3.04 | |
| 55 | 2.40 | 2.90 | 2.33 | 2.83 | |
| 60 | 2.10 | 2.60 | 2.10 | 2.60 | |
| GSHP | 35 | 3.77 | 4.31 | 3.51 | 3.96 |
| 40 | 3.59 | 4.07 | 3.38 | 3.8 | |
| 45 | 3.40 | 3.84 | 3.25 | 3.64 | |
| 50 | 3.21 | 3.60 | 3.11 | 3.47 | |
| 55 | 3.02 | 3.35 | 2.97 | 3.29 | |
| 60 | 2.83 | 3.09 | 2.83 | 3.09 | |
| Communal ASHP | 35 | 3.60 | 4.06 | 3.12 | 3.62 |
| 40 | 3.40 | 3.87 | 3.00 | 3.50 | |
| 45 | 3.00 | 3.48 | 2.75 | 3.25 | |
| 50 | 2.70 | 3.19 | 2.54 | 3.04 | |
| 55 | 2.40 | 2.90 | 2.33 | 2.83 | |
| 60 | 2.10 | 2.60 | 2.10 | 2.60 | |
| High-T ASHP and GSHP | 75 | 2.95 | 3.00 | 2.95 | 3.00 |
An improvement of 0.5 in the combined SPF at flow temperature of 60°C is assumed between 2020 and 2030, in line with assumption of the 5th Carbon Budget Advice analysis by the CCC[1].
The flow temperature of the system was assigned to each archetype by choosing the lowest flow temperature suitable to meet the specific heat demand, as reported in Table 5.
| Specific heat demand (W/m[2]) | Flow Temperature (°C) |
|---|---|
| < 80 | 35 |
| 80 - 100 | 40 |
| 100 - 120 | 45 |
| 120 - 150 | 50 |
| > 150 | unsuitable |
1.3 Additional costs
Additional costs considered in this study include costs for the installation of additional components required by the new low-carbon heating system (e.g. hot water cylinder or low-temperature radiators) but also costs for the removal of components of the old heating system that are no longer required (e.g. boiler decommissioning) and costs for equipment not linked to the heating system (e.g. replacement of cooker/hob when moving to a non-gas based heating technology).
A list of the additional costs related to equipment and measures is reported in Table 6. The applicability of these costs will depend both on the new heating technology that is being installed and on the counterfactual heating technology which is being decommissioned. In fact, some of the additional components of the counterfactual heating system may be utilised for the new heating system. Table 7 and Table 8 show an overview of how these costs were applied.
| Equipment / measure | Fixed capex (£) | Marginal capex | Source | Assumptions |
|---|---|---|---|---|
| Hot water cylinder | 1,059 | - | Evidence gathering for electric heating options in off gas grid homes (2019), Element Energy for BEIS | 180L storage volume |
| Additional thermal store to allow some use of Off-peak electricity | 1,711 | - | Evidence gathering for electric heating options in off gas grid homes (2019), Element Energy for BEIS | Two 180L hot water cylinders with shared installation cost |
| Point-of-use hot water systems | 2,060 | - | Evidence gathering for electric heating options in off gas grid homes (2019), Element Energy for BEIS | Typical installation of 3 electric taps and 1 electric shower per dwelling |
| Conversion to low T radiators | 1,100 to 2,567 | - | Hybrid Heat Pumps (2017), Element Energy for BEIS | Applied in dwellings with existing wet heating system. Depending on building size. |
| Replacement of cooker/hob | 315 | - | Analysis of Alternative UK Heat Decarbonisation Pathways (2018), Imperial College for CCC | Weighted average across gas households, based on cost of £500 (2017 prices), 23.9m gas households, with 14.8m gas hobs and 8.4m gas ovens. |
| Installation of wet distribution system | 1,273 | 5 £/m[2] | Evidence gathering for electric heating options in off gas grid homes (2019), Element Energy for BEIS | Only applied in dwellings with electric system |
| Removal of wet heating system | 204 | Evidence gathering for electric heating options in off gas grid homes (2019), Element Energy for BEIS | Only applied in dwellings with non-electric system | |
| Decommissioning of boiler | 509 | Analysis of Alternative UK Heat Decarbonisation Pathways (2018), Imperial College for CCC | Includes decommissioning of other non-cooking gas appliances | |
| H2 conversion costs - hydrogen boiler, hydrogen hybrid HP | 560 | Hydrogen supply chain evidence base (2018), Element Energy for BEIS | £509 for pipework and £51 added as labour cost for the switchover of the Hyready boiler from gas to H2. | |
| Additional pipework for communal ASHP in flat | 3,364 | - | Element Energy modelling for private sector client (2018) | Excluding internal emitter replacement. Includes heat exchange unit and meter. 2.5m service pipe per flat, 10m lateral pipe and 3.1m heat riser per floor, pump, installation and labour. |
| Additional pipework for communal HP in terrace house | 6,157 | - | Element Energy modelling for private sector client (2018) | Excluding internal emitter replacement. Includes heat exchange unit and meter. 30m external pipeline per communal heating system and 2.5m service pipe per house. |
| Wiring for direct electric heating | 89 | 135 £/kW | Evidence gathering for electric heating options in off gas grid homes (2019), Element Energy for BEIS | Only applied in dwellings with non-electric heating when switching to electric heating |
| Wiring for storage heating | 509 | 178 £/kW | Evidence gathering for electric heating options in off gas grid homes (2019), Element Energy for BEIS | Applied in dwellings with non-storage heating when switching to storage heating |
| New system | Existing system | Removal of wet system | Installation of wet system | Communal heating pipework and meter | Storage heating electrical wiring | Resistive heating electrical wiring | Hot water tank |
|---|---|---|---|---|---|---|---|
| ASHP GSHP ASHP + solar thermal |
Gas | N | N | N | N | N | Y |
| Oil | N | N | N | N | N | Y | |
| Electric | N | Y | N | N | N | N | |
| High-T ASHP High-T GSHP |
Gas | N | N | N | N | N | N |
| Oil | N | N | N | N | N | N | |
| Electric | N | Y | N | N | N | N | |
| Communal ASHP | Gas | N | N | Y | N | N | Y |
| Oil | N | N | Y | N | N | Y | |
| Electric | N | Y | Y | N | N | N | |
| Electric storage Electric storage + solar |
Gas | Y | N | N | Y | N | Y |
| Oil | Y | N | N | Y | N | Y | |
| Electric | N | N | N | [1] | N | N | |
| Electric resistive Electric resistive + solar |
Gas | Y | N | N | N | Y | Y |
| Oil | Y | N | N | N | Y | Y | |
| Electric | N | N | N | N | N | N | |
| Electric boiler Electric boiler + solar |
Gas | N | N | N | N | N | N |
| Oil | N | N | N | N | N | N | |
| Electric | N | Y | N | N | N | N | |
| Solid biomass boiler | Gas | N | N | N | N | N | N |
| Oil | N | N | N | N | N | N | |
| Electric | N | Y | N | N | N | N | |
| BioLPG boiler | Gas | N | N | N | N | N | N |
| Oil | N | N | N | N | N | N | |
| Electric | N | Y | N | N | N | N | |
| Bioliquid boiler B100 | Gas | N | N | N | N | N | N |
| Oil | N | N | N | N | N | N | |
| Electric | N | Y | N | N | N | N | |
| Hydrogen boiler | Gas | N | N | N | N | N | N |
| Oil | N | N | N | N | N | N | |
| Electric | N | Y | N | N | N | N | |
| Biomethane grid injection | Gas | N | N | N | N | N | N |
| Oil | N | N | N | N | N | N | |
| Electric | N | Y | N | N | N | N | |
| Hybrid HP + gas | Gas | N | N | N | N | N | N |
| Oil | N | N | N | N | N | N | |
| Electric | N | Y | N | N | N | N | |
| Hybrid HP + gas, with hot water cylinder | Gas | N | N | N | N | N | [2] |
| Oil | N | N | N | N | N | [2] | |
| Electric | N | Y | N | N | N | N | |
| Hybrid HP + bioliquid | Gas | N | N | N | N | N | N |
| Oil | N | N | N | N | N | N | |
| Electric | N | Y | N | N | N | N | |
| Hybrid HP + bioliquid, with hot water cylinder | Gas | N | N | N | N | N | [2] |
| Oil | N | N | N | N | N | [2] | |
| Electric | N | Y | N | N | N | N | |
| Hybrid HP + hydrogen | Gas | N | N | N | N | N | N |
| Oil | N | N | N | N | N | N | |
| Electric | N | Y | N | N | N | N | |
| Hybrid HP + hydrogen, with hot water cylinder | Gas | N | N | N | N | N | [2] |
| Oil | N | N | N | N | N | [2] | |
| Electric | N | Y | N | N | N | N | |
| Hybrid HP + direct electric | Gas | N | N | N | N | N | N |
| Oil | N | N | N | N | N | N | |
| Electric | N | Y | N | N | N | N | |
| Hybrid HP + direct electric, with hot water cylinder | Gas | N | N | N | N | N | [2] |
| Oil | N | N | N | N | N | [2] | |
| Electric | N | Y | N | N | N | N | |
| District heating | Gas | N | N | N | N | N | N |
| Oil | N | N | N | N | N | N | |
| Electric | N | Y | N | N | N | N |
Legend:
Y - Applies for all dwellings
[…] - Applies for some dwellings. See numbers below.
N - Does not apply for any dwellings
[1] Only applies if the counterfactual technology is direct electric heating
[2] Only applicable where the heat pump is meeting the hot water demand. Where the boiler is meeting hot water demand then on-demand hot water from a combi boiler is assumed.
| New system | Existing system | Point of use DHW | Radiator upgrades | Decommission boiler and non-cooking gas appliances | Decommission / replace cooking appliances | Installation of liquid fuel tank | Hydrogen pipework and conversion |
|---|---|---|---|---|---|---|---|
| ASHP GSHP ASHP + solar thermal |
Gas | N | [4] | Y | [6] | N | N |
| Oil | N | [4] | Y | N | N | N | |
| Electric | N | [4] | N | N | N | N | |
| High-T ASHP High-T GSHP |
Gas | N | N | Y | [6] | N | N |
| Oil | N | N | Y | N | N | N | |
| Electric | N | N | N | N | N | N | |
| Communal ASHP | Gas | N | [4] | Y | [6] | N | N |
| Oil | N | [4] | Y | N | N | N | |
| Electric | N | [4] | N | N | N | N | |
| Electric storage Electric storage + solar thermal |
Gas | [3] | N | Y | [6] | N | N |
| Oil | [3] | N | Y | N | N | N | |
| Electric | N | N | N | N | N | N | |
| Electric resistive Electric resistive + solar thermal |
Gas | [3] | N | Y | [6] | N | N |
| Oil | [3] | N | Y | N | N | N | |
| Electric | N | N | N | N | N | N | |
| Electric boiler Electric boiler + solar thermal |
Gas | N | N | Y | [6] | N | N |
| Oil | N | N | Y | N | N | N | |
| Electric | N | N | N | N | N | N | |
| Solid biomass boiler | Gas | N | N | [5] | [6] | N | N |
| Oil | N | N | Y | N | N | N | |
| Electric | N | N | N | N | N | N | |
| BioLPG boiler | Gas | N | N | N | [6] | N | N |
| Oil | N | N | Y | N | N | N | |
| Electric | N | N | N | N | N | N | |
| Bioliquid boiler B100 | Gas | N | N | Y | [6] | Y | N |
| Oil | N | N | Y | N | Y | N | |
| Electric | N | N | N | N | Y | N | |
| Hydrogen boiler | Gas | N | N | N | [6] | N | Y |
| Oil | N | N | Y | N | N | Y | |
| Electric | N | N | N | N | N | Y | |
| Biomethane grid injection | Gas | N | N | N | N | N | N |
| Oil | N | N | Y | N | N | N | |
| Electric | N | N | N | N | N | N | |
| Hybrid HP + gas | Gas | [3] | N | N | N | N | N |
| Oil | [3] | N | Y | N | N | N | |
| Electric | N | N | N | N | N | N | |
| Hybrid HP + gas, with hot water cylinder | Gas | N | N | N | N | N | N |
| Oil | N | N | Y | N | N | N | |
| Electric | N | N | N | N | N | N | |
| Hybrid HP + bioliquid | Gas | [3] | N | Y | [6] | Y | N |
| Oil | [3] | N | Y | N | Y | N | |
| Electric | N | N | N | N | Y | N | |
| Hybrid HP + bioliquid, with hot water cylinder | Gas | N | N | N | [6] | Y | N |
| Oil | N | N | Y | N | Y | N | |
| Electric | N | N | N | N | Y | N | |
| Hybrid HP + hydrogen | Gas | [3] | N | N | [6] | N | Y |
| Oil | [3] | N | Y | N | N | Y | |
| Electric | N | N | N | N | N | Y | |
| Hybrid HP + hydrogen, with hot water cylinder | Gas | N | N | N | [6] | N | Y |
| Oil | N | N | Y | N | N | Y | |
| Electric | N | N | N | N | N | Y | |
| Hybrid HP + direct electric | Gas | [3] | N | Y | [6] | N | N |
| Oil | [3] | N | Y | N | N | N | |
| Electric | N | N | N | N | N | N | |
| Hybrid HP + direct electric, with hot water cylinder | Gas | N | N | N | [6] | N | N |
| Oil | N | N | Y | N | N | N | |
| Electric | N | N | N | N | N | N | |
| District heating | Gas | N | [4] | Y | [6] | N | N |
| Oil | N | [4] | Y | N | N | N | |
| Electric | N | [4] | N | N | N | N |
Legend:
Y - Applies for all dwellings
[…] - Applies for some dwellings. See numbers below.
N - Does not apply for any dwellings
[3] Point-of-use hot water system is an option to provide on-demand hot water where a combi boiler is not available/used to provide hot water in space constrained homes. This is therefore applied in space-constrained homes assumed not to have a hot water cylinder (assumed to be the case here in all homes where the existing system is a boiler) in the following cases: (i) alongside electric resistive or electric storage heating; (ii) alongside hybrid heat pump + resistive heating (not alongside any other types of hybrid heat pump).
[4] Applied when standard radiators are deemed to be insufficient to supply peak heat demand, based on an assumed oversizing factor for standard radiators of 1.3: if (1.3 x baseline space heating demand) divided by (required oversize factor x energy demand after energy efficiency) is less than 1 then radiator upgrades are required. The required oversize factor is determined by the flow temperature of the system.
[5] Cost is applied in the model, but suitability assumptions do not allow biomass boilers in on-gas homes therefore this cost is not applied in practice
[6] Assume that 62% of gas households have a gas hob and 35% have a gas oven; a weighted average cost is applied to all gas households assuming £500 conversion cost for either hob, oven, or hob and oven replacement, and assuming all households with a gas oven also have a gas hob.
1.4 Fuel cost
Fuel costs considered in this study for the period between 2020 and 2050 are shown in Figure 6 and Figure 7. Data sources and assumptions behind the cost of fuels and grid electricity are summarised in Table 9. The methodology and assumptions around the cost of hydrogen are reported in section 1.4.1.
Table 9: Sources and assumptions on the cost of fuels and grid electricity
(Fuel type, Sources, Assumptions)
Fuel type: Electricity (Standard, Off Peak, On Peak)
Source: Projections from BEIS Green Book data tables, Long-run variable costs of energy supply (LRVCs): Electricity LRVC – Central, Domestic.
Off peak cost = 60% on-peak cost from Evidence gathering for electric heating options in off gas grid homes (2019), Element Energy for BEIS
Assumption: "Electricity - Standard" composed of 70% on-peak and 30% off-peak
Fuel type: Heat from DH
Source: Cost calculated from modelling results based on District heating and local approaches to heat decarbonisation (2015) Element Energy for CCC 2015
No Assumption:
Fuel type: LPG (bottled gas)
Source: Costs based on ratio of annual retail cost of LPG compared to natural gas from Biopropane for the off-grid sector (2016) EUA
No Assumption:
Fuel type: BioLPG
Source: Costs based on ratio of annual retail cost of biopropane to natural gas from Biopropane for the off-grid sector (2016) EUA
No Assumption:
Fuel type: Biomethane
Source: Costs based on ratio of annual retail cost of biomethane to natural gas.
For large scale production, cost of biomethane: USD 0.65/LGE = 7.36 $c/kWh (from IRENA, Biomethane), natural gas price of 4.3 $c/kWh (from Oxford Institute for Energy Studies 2017, Biogas: A significant contribution to decarbonising gas markets?).
Cost assumed to remain constant over time (from IRENA 2013, New fuels for transport: the cost of renewable solutions).
Assumption: Assuming large scale production of biomethane. Cost of biomethane assumed to be 70% higher than natural gas in 2018.
Fuel type: Bioliquid 100
Source: Costs based on ratio of annual retail cost of bioliquid B100 to diesel.
Proportion of cost of Bioliquid B100 and of diesel from DOA alternative fuel price report (from US DOA, Alternative Fuel Price Report).
Assumption: Cost of Bioliquid B100 25% higher than for diesel in 2018.
Cost assumed to remain constant over time from 2020.
Fuel type: Gas
Source: Projections from BEIS Green Book data tables, Long-run variable costs of energy supply (LRVCs): Gas LRVC – Central, Domestic
No Assumption:
Fuel type: Oil
Source: CCC's long-term targets analysis (2019)
No Assumption:
1.4.1 Hydrogen cost
While the cost of hydrogen predominantly depends on the chosen type of production technology and on the year of demand, additional costs for repurposing the current gas network to operation with hydrogen must also be considered. Additional costs considered in this study include the cost of upgrading the gas distribution and transmission networks, as well as the creation of hydrogen interseasonal storage in large salt caverns, as reported in Table 10.
| Capex (£bn) | Opex (£bn/yr) | |
|---|---|---|
| Distribution grid repurposing[2] | 22.2 | 0 |
| Hydrogen transmission network[3] | 4.9 | 0.28 |
| Hydrogen storage[3] | 6.5 | 0.39 |
The cost of the infrastructure upgrade is assumed to be levelised over a period of 30 years with a discount rate of 3.5%. The deployment of the grid upgrades and of the storage capacity is expected to occur gradually, achieving 10% of completion in 2020, 75% by 2030 and 100% by 2040, such that only the capex of the completed portion is incurred.
The network upgrade cost per kWh of hydrogen produced was finally estimated for a high-demand and a low-demand scenario. The values of high hydrogen demand are based on the “Full Hydrogen” scenario utilised in the recent report on hydrogen in the UK by the CCC, considering repurposed gas networks and widespread hydrogen availability, with heating delivered by hydrogen boilers[4]. The values utilised for low hydrogen demand consider a less intensive utilisation of hydrogen, leading to roughly half the demand of the “Full Hydrogen” scenario.
Deployment rates, assumptions on hydrogen demand between 2020 to 2050, as well as total discounted upgrade costs per kWh H2 are reported in Table 11.
| Unit | 2020 | 2030 | 2040 | 2050 | |
|---|---|---|---|---|---|
| Deployment of upgrades and H2 storage | % | 10% | 75% | 100% | 100% |
| Capex | £bn | 3.4 | 25.2 | 33.6 | 33.6 |
| Opex | £bn/yr | 0.67 | 0.67 | 0.67 | 0.67 |
| Hydrogen demand (high) | TWh/r | 21 | 203 | 385 | 704 |
| Hydrogen demand (low) | TWh/r | 13 | 101 | 192 | 352 |
| Network upgrade cost (high H2 demand) | p/kWh H2 | 4.1 | 1.0 | 0.6 | 0.4 |
| Network upgrade cost (low H2 demand) | p/kWh H2 | 6.6 | 2.0 | 1.3 | 0.7 |
Two main types of technologies for the production of low-carbon hydrogen were considered in this study: reforming with CCS and electrolysis.
Steam Methane Reforming (SMR) is currently the most common reforming technology employed for hydrogen production. While Advanced Reforming with CCS has the potential to offer a higher capture rate than SMR with CCS, this technology is expected to be deployed at commercial scale at a later date. In this study it was assumed that low-carbon reformed hydrogen is produced exclusively via SMR + CCS until 2030, after which the portion of hydrogen produced with advanced reforming + CCS will increase, reaching 50% of production in 2040 and 100% in 2050.
The most mature technology for the production of electrolysed hydrogen are alkaline electrolysers, currently producing the vast majority of electrolysed hydrogen worldwide. A minor portion of global hydrogen is produced with Proton Exchange Membranes (PEM), a cheaper technology which is currently at the demonstration stage5. In this study it was assumed that alkaline electrolysers dominate the production of electrolysed hydrogen until 2025, after which PEM electrolysers are introduced at scale, reaching 100% of electrolysed hydrogen production by 2040. All fuel production cost assumptions are reported in Table 12.
| Unit | 2020 | 2030 | 2040 | 2050 | |
|---|---|---|---|---|---|
| Reforming + CCS[5] | p/kWh | 4.4 | 4.4 | 4.4 | 4.4 |
| Electrolysis[5] | p/kWh | 9.2 | 8.6 | 7.3 | 6.2 |
Figure 7 reports the cost of hydrogen including both production and levelised cost of network repurposing. Cost estimates are produced for both reforming and electrolysis technologies in case of both high and low hydrogen demand.
Note that the fuel costs reported for the reforming option will be subject to fluctuations of the cost of natural gas. Additionally, electrolysed hydrogen may be cheaper if produced with low-cost electricity from excess low-carbon power generation, preventing renewables curtailment and providing flexibility to the grid. However, the limited availability of very low-cost electricity is expected to restrict the supply of low-cost hydrogen to 44 TWh in 2050, i.e. ~6% of consumption in the high hydrogen demand scenario[5].
Contact
Email: zeroemissionsheat@gov.scot