With around 40% of the UK’s carbon emissions linked to the built environment, achieving our climate targets depends on the sector’s sustainable transformation.
Building Regulations around operational energy efficiency and CO2 emissions have evolved. The Government has just launched the Future Homes/Buildings consultation, in what they hope to be the final step for regulations to ensure that all new buildings will either be “zero carbon” or be able to make the transition without retrofit, as the electrical grid decarbonises.
The Future Homes Standard (FHS) consultation offers two options. For the domestic sector, the options are similar in that they will ban fossil fuels, effectively mandating heat pumps. Table 7.1 in the consultation documents summarises the notional differences between the two options.
Option One also includes higher fabric standards, ventilation and solar on the roof, which Option Two doesn’t. The estimated build cost difference is £5,000, so it is significant and makes it difficult for the industry to plan with confidence.
The proposed fabric standards are either identical to those currently in force, or, in the case of Option One, a slight improvement. This has surprised many and will be a point of contention, but I am broadly supportive of the government’s explanation and position.
The consultation explains that modelling shows that higher fabric standards show only a very small reduction in energy use for a large cost. What is increasingly important is the smart management of energy, rather than just how much you use. The area of smart energy is addressed vaguely, and I think this should be an area of focus; if we don’t recognise it as fundamental to the future of our homes then this update will not deliver the change we need.
An area where there has been significant lobbying is the inclusion of embodied carbon in Building Regulations. Whether Building Regulations is the place for this needs debate, but it is important.
If you look at lifetime CO2 emissions from a new house, about 80% will be from the embodied carbon. That will reduce over time, but slowly. There is confirmation the Government are looking at the issue separately, so it looks like something policy/regulatory will be coming.
The most significant change proposed in the consultation is to ban gas boilers and effectively require heat pumps. Despite sustained year-on-year growth in heat pump installations, reaching a 62% increase in 2023 compared to the previous year, we are still only putting in tens of thousands of domestic systems a year. To put this into perspective, the UK currently sees 1.7 million domestic gas boilers installed each year.
As the UK adds around 200,000 new homes to the market annually and aims for more, it will mark a step change in the rate of heat pump deployment and the whole supply chain is ramping up to meet this.
With the proposed significant surge in heat pump installations, there's speculation that this could substantially raise the peak energy demand on the grid. This is because heat pumps use electricity.
Combining this with the need for electric vehicle chargers suggests that there will be a huge increase in electrical demand. Our work on the subject suggests the problem may not be as big as has been feared. New homes are more efficient than existing homes, but the big difference we are seeing is that residents manage energy smartly when they have an EV charger and a heat pump, using variable price tariffs to reduce their bills and their peak demand. We expect there to be a revision of assumptions as more data becomes available.
As most of the current heating networks operate using gas boilers, new developments will only be able to connect if there is an equal addition of generation to the heat network of heat pumps. This is positive as it will eliminate the situation where new developments are required by policy to connect to high-carbon heat networks.
The need to use heat pumps in new or retrofitted networks will increase costs and change their economics. The new consultation by the government on heat network zoning suggests a maximum of 11% of building heating coming from heat networks in England, lower than has been quoted previously.
The biggest difference between the two options in the consultation is around rooftop solar. Option One includes it and Option Two doesn’t. The consultation makes the point that, with the electricity grid so decarbonised, solar isn’t necessary to allow homes to become net zero over time.
Solar will add a significant cost to a new home, around £3,000 each, but it will save the household around £500 a year on energy bills. They are a good investment, but in this case, the house builder pays and the resident benefits.
It will be interesting to see how the responses go, I think Option One is better on balance as we need to show that new homes are going to be a better experience for residents.
The FHS consultation also includes proposals to replace the current Standard Assessment Procedure (SAP) with the Home Energy Model (HEM). Unlike SAP’s monthly measurements, HEM analyses energy demand and supply every half hour, enabling it to calculate the advantages of actions like heating a hot water tank at specific times. This innovation promises the ability to estimate lower bills and reduce carbon emissions.
The implementation details of the new software remain unclear, however. If the Government implements the HEM with default static prices and emission factors, it could undermine the system’s benefits. To ensure success, accurate and dynamic pricing and emission factors must be integrated, enabling consumers to make informed decisions for cost savings and environmental sustainability.
The FHS consultation crosses the Rubicon of eliminating fossil fuels in the new build sector, but the uncertainty around which option will come forward and vagueness around smart energy mean there is still much to be confirmed.
As I have said before, this change could bring a real cachet to new homes; they won’t need retrofitting and will benefit from variable energy tariffs and long-term electricity price reductions. Up to now, there has been concern in the industry about whether customers would resist heat pumps,
(a bit like solar before), but we may be moving fast to a world where the public marks down homes without one. The post-2025 housing stock could be of higher value than homes built before.