Missing link: renewable liquid fuels

As of 2021, there were estimated to be 4.4 million homes not connected to a gas grid, accounting for around 15% of domestic properties. Approximately 1.5 to 1.7 million of these homes rely on oil for central heating, representing around 6% of all UK households. Although this number seems low compared to the 84% of UK homes that are connected to the gas grid, homes that use fossil fuels such as coal and oil to power their heating systems account for 13% of all domestic heating emissions.

Decarbonising the heating systems of off-grid homes plays an important role in the UK government’s climate targets, as they use some of the highest carbon-producing heating fuels. The Future Homes Standard dictates that, from this year, all new homes cannot be connected to the gas grid.

However, in 2023, Rishi Sunak announced a delay to the phase-out date for installing new oil and liquefied petroleum gas (LPG) boilers and coal heating for off-grid homes, pushing it back from 2026 to 2035, as part of a broader review of the UK’s net-zero policies.

There have been significant changes in the off-gas grid sector over the past couple of years, from new government policy and technical developments to a focus on training. Despite emerging challenges, OFTEC, the UK’s oil industry body, says there are also huge opportunities for heating installers.

Changes to the BUS

The Boiler Upgrade Scheme (BUS) currently offers grants of £7,500 to homeowners in England and Wales to switch to a heat pump (air or ground source) or £5,000 towards the cost and installation of a biomass boiler.

Changes were made to the BUS scheme earlier this year, removing the requirement that there should be no outstanding recommendations for loft and cavity wall installation on a property’s EPC to secure funding. The aim was to remove any barriers to uptake, but it could mean some homes are not suitable for the upgrade.

“On the face of it, this may seem like a small change to the criteria,” says Malcolm Farrow, head of public affairs at OFTEC. “However, it could potentially have significant consequences off grid. Both the previous Conservative government and new Labour administration are focused on heat pumps as the primary technology to achieve net zero. However, the requirements were there to protect consumers by ensuring their home was suitably optimised for a heat pump before funding was allocated.”

Upgrading a property to make it suitable for a heat pump can be costly and disruptive for homeowners, often requiring new radiators, insulation and a hot water tank. Removing this requirement in the BUS makes it seem as though heat pumps are less expensive to install. If this low-carbon heating technology is installed without buildings being fully optimised, households could experience poor results, including expensive heating bills and a system that’s less efficient overall. However, modern properties that are well insulated and more suited to a heat pump are an opportunity for installers, according to OFTEC.

“Competent technicians who diversify their skill set can advise homeowners on the best solution for their home, whether it’s a heat pump or another low-carbon technology,” says Farrow. “That’s why it’s the perfect time to upskill and take advantage of both markets.”

Alternative liquid fuels

Labour’s election pledge to scrap the 2035 target to ban the installation of new fossil-fuel boilers was welcomed by off-grid homeowners who previously faced a deadline with no viable alternative solution if a heat pump wasn’t suitable.

OFTEC has suggested that transitioning oil-heated homes to renewable liquid fuels such as Hydrotreated Vegetable Oil (HVO) could achieve carbon-reduction benefits similar to installing 150,000 heat pumps, offering a potentially more affordable and less disruptive solution.

Switching from traditional kerosene liquid fuel to a virtually zero-carbon option such as HVO, LPG or bioLPG (biopropane) would, in most cases, require no changes to the boiler or other elements of the heating system, which would operate in exactly the same way.

“Building regulations state that homes have to meet minimum carbon emissions, but there is nothing to say that the form of heating has to be heat pumps,” points out Alan C Black, FCIPHE and principal consultant at Oil Heating Consultancy Services. “For homes reliant on liquid fuel, in order to switch to HVO, all that would need to change are the boiler settings, and a different atomising nozzle would need to be fitted. If the boiler is older, installers may have to replace the burner to get better combustion, but this should cost less than £500.”

According to Farrow, HVO costs around twice as much as traditional liquid fuel and there is not currently enough to replace the estimated four million tonnes of heating oil used annually in the UK.

Additionally, Black suggests that the cost of HVO is artificially high because HMRC is yet to recognise it as anything other than an automotive diesel. He predicts that this could be overcome if the government relaxed taxation and duties on biodiesel required for heat applications.

Currently, fossil fuels such as gas are fiscally supported as a heat application energy source, but waste-derived sustainable biodiesel fuels including HVO aren’t, which seems counterintuitive.

“Eventually decisions are going to have to be made about how harder-to-treat off-grid properties can transition to low-carbon heating,” says Farrow. “That’s why we were pleased to see an amendment to the Energy Act in October 2023.

“Within the Act is legislation that, if invoked by government, would create the renewable liquid-heating-fuel obligation, and pave the way for the introduction of these fuels more widely. The legislation was introduced with the promise of a consultation on the technical details within a year. The Conservatives didn’t act on this. The new Labour government, which supported the legislation at the time, also hasn’t brought the consultation forward.”

OFTEC and industry partners are continuing to campaign for the government to keep this commitment and publish the consultation. This would not only provide a realistic and affordable solution for many off-grid properties, but also deliver long-term certainty for technicians.

“HVO is cheaper for homeowners than installing a heat pump,” asserts Black. “Currently, according to the Renewable Transport Fuel Obligation policy, if HVO is sold for automobile use, suppliers receive a carbon credit. The Energy Act consultation would give the equivalent fiscal legislative support and lower the cost. We need to bring all options to the market and let homeowners decide how they would prefer to decarbonise.”

Regulations and legislation

There are quite a few proposed changes that cover heating sector regulations, mainly for appliance manufacturers. However, the proposed changes to gas boilers include LPG boilers used in off-grid areas.

The proposed changes include, but are not limited to:

• all combination boilers must be able to modulate down to 15% of their maximum output
• all combination boilers must use open protocols to communicate to the chosen control system selected
• all oil-fired combination boilers must be capable of modulating down to 30% of full output
• heating engineers are to demonstrate competence on low-temperature heating design
• the banning from sale of controls in classes 1-3. This would include on/off room thermostats.

OFTEC competent person scheme

OFTEC-registered technicians can self-certify that their installation work meets building regulations, avoiding the need for it to be checked by a building control officer. This makes the whole installation process much easier, saving time and money. Work that is self-certified by an OFTEC-competent person carries a workmanship warranty against building regulation non-compliance. OFTEC offers registration for liquid fuel, solid fuel, biomass and heat-pump systems, plus MCS, Part P electrical and Trustmark.

“OFTEC-registered installers are also regularly assessed to ensure they uphold the highest standards of both safety and customer service,” explains Farrow. “As we navigate new low-carbon technologies, consumers will need to rely on trusted technicians to support and guide them through these processes. OFTEC delivers training for both renewable liquid fuels and heat pumps, which means registered technicians can be at the forefront of a successful off-grid transition to net zero.”