With a general election on the horizon in 2024, numerous policy updates and sector issues are likely to be on the agenda in the coming months, from the cost of fuel bills to how the UK meets its climate goals and sustainability objectives.
As Government policy on energy has lacked some consistency in recent times, you can be forgiven for not following every twist and turn. Polls currently suggest that a new Government will be formed, bringing with it much change and new plans that will directly impact the sector and all businesses, brands and organisations operating within it.
Here, we break down the big debates and outline what they might mean for you.
The big technology question
Last month, Rishi Sunak announced that the ban on fossil fuel boiler installations would be delayed until 2035. This was driven by a concern that the public were bearing the brunt of the cost of the Government’s net zero policies, as well as a lack of certainty about the future of hydrogen.
Work on hydrogen has been slow – trials that were promised haven’t happened yet and no decision has been taken on its use in home heating. Hydrogen has recently fallen out of favour, and the majority have recognised it is not a short- or medium-term option for home heating.
At the same time, the cost of installing a heat pump can be high and Labour is sticking with the diluted targets on the gas boiler phase out, and whilst it has said it will spend a significant chunk of the new ‘Green Prosperity Plan’ on home decarbonisation, there isn’t much detail on what this looks like yet.
So, how should businesses prepare? It will be important to be able to offer consumers a choice of different technologies and help them to understand what works best for them. With slightly less pressure on manufacturers, now is the time to use this breathing room to innovate and develop new technologies that are ever more efficient. Hybrid heat pumps were a breakthrough, what’s next?
Seizing an opportunity
For decades, campaign and industry groups have called for an ambitious Government energy efficiency and retrofit scheme. Not only to support net zero goals, but to provide a huge boost to the sector and support installers all over the country. There was dismay when the Government cancelled the Green Homes Grant in March 2021 which provided support for energy efficiency upgrades, although the Boiler Upgrade Scheme has since been boosted by 50% to £7,500 towards the cost of a heat pump.
This year, the Lords Environment and Climate Change Committee found that Boiler Upgrade Scheme is failing to deliver, with a ‘disappointingly low’ take-up of grants and poor promotion of the scheme. Installers and manufacturers advertising products can help address this by pointing customers towards schemes which can make them savings and, in turn, boost the market you’re operating in.
And be ready – Labour has promised a 10-year scheme which would insulate 19 million homes and, it says, create and sustain 515,000 new jobs over four years. Similar schemes in heating systems will be under consideration. By integrating savings schemes into your communications you can take full advantage of Government efforts to boost the sector and make sure they drive business to you.
Developing skills for the future
What the future technology mix looks like will dictate what skills are needed across the sector. It’s not just a question of how many hydrogen engineers are needed versus heat pump specialists – the future energy system will be connected. This means electric vehicles plugged into both homes and the grid, providing power to the UK’s network at peak times and charging overnight when demand (and prices) are lower. Even now, we have smart heating systems and small-scale energy storage technologies.
Government has been slow to provide the sector with the certainty – or indeed support – it needs. For a long time, campaigners have called for reform to the apprenticeship levy which, at present, sees big businesses pay in money earmarked for apprentice training that they’re then unable to spend. Labour have promised to end restrictions on the levy, allowing businesses more flexibility in spending on different types of training. Expect people to call for even more flexibility, including being able to gift spend to smaller businesses across supply chains.
Whilst it’s difficult to plan – employers need to start developing these skills now or risk being left behind. By upskilling your team to be able to install and maintain a wide range of technologies, you will be able to offer customers a one-stop shop. It’s not just the practicalities of being able to offer an installation service, but having the right knowledge of the best technology for each customer and being able to provide that advice in the home.
Getting energy costs under control
Following Russia’s invasion of Ukraine, energy costs shot up. Since then, Government has tried a number of schemes to bring energy costs down for both consumers and businesses, to varying levels of success.
Personal finances are squeezed so consumers will be driven by fuel bill savings when making decisions on the tech they want installed in their homes. Government can help through support schemes, but they could also help by reforming how the energy system works. The price of electricity could be much cheaper as much of it comes from renewables, like wind farms. However, at present it is linked to the price of gas which jumps about and, at present, is very high. The Government has started work to address this, but there is a long way to go. If electricity does become much cheaper than gas, we will quickly see demand for electric technologies – like heat pumps – rocket.
Aside from the impact on your customers, the sector is struggling with high energy costs at all levels. The current Energy Bills Discount Scheme for businesses, which is already much less generous than the last, expires in March 2024. The more generous support scheme for Energy and Trade Intensive Industries also has very narrow eligibility which means lots of manufacturers cannot benefit. With an election next year, expect big questions about how businesses will be supported into the future or how each party will address the root problems in the energy system.
Caitlin Fordham, Energy Policy Specialist, Hanover Communications.
For more information and to discuss how policy might impact your business, brand or organisation during an election year, contact cfordham@hanovercomms.com
