Future of Heat

Energy used in heating demand is currently very carbon intensive and accounts for a significant proportion of Great Britain’s carbon emissions. If the carbon targets are to be met, there must be a step change in how our homes and businesses are heated. There are many solutions coming to market that aim to facilitate this change. We see a need for a combination of these solutions, with enabling technologies, to decarbonise heat at the most efficient cost to consumers and we see gas continuing to have a key role.

Key statistics

Heat is responsible for around a third of GB’s greenhouse gas emissions

Why is heat a problem?

Heating buildings accounts for around 700 TWh/year of energy demand in GB, around half of the total demand. Most of the energy demand is for domestic space heating and is satisfied with natural gas boilers in homes throughout the country. However, residential and industrial sectors are responsible for roughly equal emissions due to industry needing higher temperature heat, which is provided by more carbon intensive fuels. Space heating resulted in the emission of approximately 100 megatonnes of carbon dioxide equivalent (MtCO2e) into the atmosphere in 2008, 18% of the total carbon emissions including industry, power stations and transport. Total heat demand, including industry, contributed 182 MtCO2e, bringing the total to 32%.

To meet the government’s legally binding carbon targets (80% reduction in carbon emissions against 1990 level by 2050), the energy used in heating must be decarbonised by reducing the amount used and focusing on using cleaner sources. The industry is starting to address this via a range of potential solutions.

Potential solutions

Heat pumps

The first place to start with reducing the carbon intensity of heat is to consider alternatives to traditional gas boilers. Gas boilers convert gas to thermal energy with an efficiency factor of approximately 90% before distributing the heat around buildings with a wet system (water in radiators) or a dry one (hot air in vents).

Replacing gas boilers with a different appliance, such as a heat pump, could be an effective solution. Heat pumps are designed to be far more efficient, taking advantage of the latent heat that exists in the air, the ground or in bodies of water. This means that there is potential to get two or three units of thermal energy for every one unit of electrical energy. Therefore, heat pumps have no carbon emissions at the point of use and also use less energy for the same thermal output: a win-win.

Heat pumps don’t provide a perfect solution though as the implications of installing heat pumps across the country are significant. The cost of electrifying heating is significant, ranging from the network costs to more generation assets. These costs are passed on to the consumer through higher electricity prices. Heat pumps are also more expensive to install than gas boilers and need different heat distribution systems in homes to gas boilers, adding to their cost.

Heat pumps can be used in hybrid systems, where gas is used to ‘top up’ and meet heat demands at peak when the heat pump is running at its lowest efficiency. This setup avoids requiring an electricity system built to meet peak demand and the high associated costs. Using gas at peak utilises assets that already exist; without gas, meeting peak demand would be considerably more expensive.

The electricity still has to be generated in a clean way to see any carbon benefits (the carbon intensity of electricity from the grid is currently around 400–450 gCO2/kWh), which means either more renewable generation or carbon capture and storage (CCS) must be built to reduce carbon emissions from thermal generation.

Industrial and commercial heat pumps can take advantage of waste heat from other processes. Refrigerators and freezers vent heat as part of their cooling system and this heat can be recycled, using heat pumps, at high efficiency to effectively move heat from places that need to be cooled to places that need to be warmed. These solutions can be bespoke for a particular building but still use off-the-shelf equipment.

Heat networks

Heat networks centralise the task of changing primary energy into thermal energy and remove the need for each individual building to have a heating appliance. This can take advantage of thermal economies of scale before circulating the heat into buildings via insulated hot water pipes.

Installing a new heat network is costly and disruptive: new pipes must be laid in streets and residents must support the scheme. To maximise heat networks’ success, everyone in the catchment area needs to sign up to spread the initial investment costs. This requires residents relinquishing control of their heating systems, a prominent cultural change. Heat networks are most efficient in high density areas, allowing for shorter pipework and more participants and thereby keeping costs as low as possible.

Many of these setup issues can be addressed by installing the heat network in a new housing estate. This avoids the cost of digging up roads, required in a retrofit, because the work can be integrated into the build, avoiding some costs, and new residents will have the heating already installed without needing to make a conscious decision to become greener. This, however, leaves the developer with a legacy problem of who will own, run and maintain the asset as well as hold any associated liability if it breaks down.

There are a range of possible heat sources, but the most effective would be to use waste heat from a power station or factory. This heat would usually be low grade (a lower temperature than required) but could be upgraded to a useful temperature and therefore make the heating appliances installed more efficient. This puts a second constraint on the location of an effective heat network: being close to a heat source.

Another option would be to use gas combined heat and power (CHP) units to generate both electricity and heat. The heat can be pushed through the network and the electricity exported to the grid or used to power heat pumps. This is greener than using grid electricity and a gas boiler in the short term, but there is a tipping point as grid electricity becomes greener (this depends on CHP efficiencies but it’s around 1.4 times the intensity of burning gas) where CHP is then more carbon intensive than the alternative. Once the heat network is in place, the heating system can be transferred to alternative heat sources with minimal problems or CCS can be added.


Biogas can be produced using a technique called anaerobic digestion (AD). This is where organic waste material is broken down by micro-organisms which expel biogas as a by-product. This gas can be cleaned up so that it is suitable to be injected into the local distribution network and then burnt to produce heat, just the same as natural gas. AD occurs naturally when waste is left to rot and the resulting methane is vented into the atmosphere. Biomethane has a double counting effect on reducing carbon emissions (not venting in the first place and replacing natural gas); this is because methane’s impact on climate change is equivalent to about 25 times the impact of CO2.

Biomethane is chemically identical to naturally occurring methane and so can be used as an alternative, greener, source of gas. A significant benefit over other heating solutions is that biogas utilises the existing distribution networks and incumbent gas boilers.

However, a great deal of waste is required to produce biogas in serious quantities. One tonne of waste can produce anywhere from 100 to 3,000 kWh of biogas depending on the quality of the organic material. It has been estimated that it is possible to produce and inject into the distribution network around 20TWh/year of biogas by 2050, although this represents less than 3% of the current gas demand. Given these restrictions biogas can only ever represent part of a wider solution.


Hydrogen is often proposed as a clean solution for energy. There are several issues which need addressing before this potential can be realised, ranging from production to transportation and end use.

The vast majority (more than 90%) of hydrogen production is currently done by chemical reactions with fossil fuels, primarily methane. However, this only moves emissions to a different point in the process. Alternatively, hydrogen can be produced with electrolysis and could take advantage of excess supply from renewables like wind and solar. The electricity is used to convert water into hydrogen and oxygen. Currently, however, this is not a very economic use of this spare capacity.

Once made, the hydrogen could be injected into the current gas distribution system in small quantities (up to 2% by volume) which would effectively lower the carbon intensity of the gas from the grid. However issues need to be addressed with appliances being adapted to utilise hydrogen effectively. In larger quantities a hydrogen gas grid could be built along with hydrogen boilers installed in buildings; clearly a great deal of investment would be required to make this worthwhile and competitive.

Next steps

Each of these solutions requires investment into technologies and infrastructure as well as gaining buy-in and acceptance from the end customers who will ultimately see a change in their home or business. There are physical constraints for some, like heat networks, which prevent wholesale installation. These technologies lend themselves to a mixture of installations, each targeted to resolve the problem of decarbonising heat in their own focus area.

For thermal generation to be decarbonised, and included in the heat mix, CCS will need to be part of the solution. CCS, a system whereby carbon emissions are captured at source and then piped back into the ground, is expensive to implement and needs infrastructure external to the power stations (or industrials) to function. Therefore they are most economical in high-density clusters of industrial activity and near a carbon sink point — the North East of England and Scotland are obvious contenders that meet both of these requirements.

To further investigate heat networks we have commissioned a study with Buro Happold and University College London (UCL), aiming to inform our scenarios for 2016. The study will review existing heat networks, the location and potential scale of economic heat networks and, crucially, the sources of low carbon heat production that could support a future heat network. We intend to also review the plausible expansion of CCS networks and interaction with potential heat and gas networks.

Understanding the practicalities, deployment and potential geographical opportunities for CCS and heat networks will have a knock-on impact to our energy demand and supply scenarios. We aspire to a better understanding of the interaction with existing and potentially new energy infrastructure, with a view of further enhancing our Future Energy Scenarios for next year.

None of these solutions are completely new, but they will require a step change to make them competitive against the current preferred heating solutions. The government may have a part to play in investment or incentives, as will obtaining economies of scale from interested parties working together in partnership to utilise waste heat efficiently. It is clear that a mix of solutions will be required that suits the infrastructure that already exists, is cost effective, and returns significant carbon reductions for the required investment.

This piece first appeared within National Grid’s 2015 Future Energy Scenarios document in which we we explore how the complex energy landscape is changing and analyse how the future might play out.

It was prepared by Iain Shepherd.

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