Understanding consumer decision making is key to improving the uptake of low carbon technologies.
My family lives in a small, semi-detached home heated by electricity. With small children pottering around we try to keep a good level of comfort. But, like many houses in Ireland, the heat finds plenty of ways to escape. The recent cold snap led to some hefty bills and to an examination of what we could do to improve things. Several improvements are possible. Many are straight forward and government grants are available to help the cost of making these improvements. But as tenants we have a tough job to convince our landlord to invest, even with this financial help. This is indicative of the type of issue that can prevent householders and businesses from taking action.
As we plot our path for Ireland to reduce carbon emissions from heating, policy design needs to understand these issues. Quite often, I hear some people suggest that the mass deployment of a certain single technology or fuel will solve all problems. The gas industry advocates for the extension of the gas grid and increased use of renewable gas. The electricity sector sees heat pumps as the option. Building interests see deep retrofit as the solution. Alas these ‘cure all’ solutions are not as they might appear. These assessments lack consideration of the needs and circumstances of households and businesses. So what is the best way to reduce carbon emissions from the heat sector?
How do consumers make decisions about energy?
Understanding how consumers make decisions about energy is a good starting point. Here at SEAI we have a unique position at the coalface of the energy transition. We deal with thousands of households and business that make energy related decisions every year. We have asked our customers about their journey and we also asked those that have not invested about theirs. The resulting survey information is representative of the decision making approach Irish households and businesses take and is a rare example of this type of information internationally. The findings, shown in the chart below, provide some key guides for the policy pathways ahead. The most important finding is that getting consumers to take up any option in large numbers will take time. Why - because only a small proportion of consumers can and will avail of a low carbon option in any given year.
The relative cost of the options is only a consideration for consumers who are aware, motivated to act and have the budget available. And even for motivated, aware and capable consumers, the payback will only make sense for some. Consumers tend to invest in a new heating source only when the existing one starts to break down. Or invest in windows or insulation when major building works are happening. This implies that even with generous supports, a significant proportion will not invest in low carbon options.
How can policy help?
- Understanding of consumer needs can inform policy interventions to improve the annual uptake.
- Consumer awareness and motivation can improve though policy initiatives like information campaigns.
- Regulation may also be appropriate – something to help landlords to consider the options. Financial incentives like low interest loans can help overcome budget issues.
- Grants and other supports can help with the cost of going with a more sustainable option.
Still, the chart represents a very important limit to how fast policy can take effect. Also, it is by and large the same people who will be asked to buy the electric cars, upgrade their homes and install heat pumps and there is only so much motivation and money to go around. Financial incentives alone will not be enough.
What are the options?
SEAI have studied the sector in detail, including examinations of the transitions followed by other comparable nations, and several options are available.
- For businesses with high, year round heat demand, biomass fuel is a low cost option. Biomass boilers at these sites are a very cheap form of renewable energy. Heat pumps in well insulated buildings can also help. But both need consumers to choose these options which limits the speed of uptake. Also, most buildings will need to first improve their thermal performance to allow heat pumps to perform well.
- Putting renewable gas into the gas grid is another option that can have an impact. As the gas performs the same as natural gas, consumers can use their existing boilers and do not need to make a decision. But the industry in Ireland is still young and both supply chain innovation and economies of scale would need to be achieved to deliver a real impact.
- District heating infrastructure can have a large impact and cost effectively make use of heat that is currently wasted, particularly in areas of concentrated heat demand. Power stations and data centres produce large amounts of cheap heat suitable for heat networks. But district heating networks face many non-financial barriers. Also, in spite of the strong economic case in some locations, the option is not championed in the same way as the electricity or gas options.
The path forward
Ireland needs to see the deployment of all of these options as economics allow. To meet the 2030 targets, total national emissions will need to reduce by at least 10% per year as compared to our current path. No single option will be capable of achieving this on its own. An ambitious path would be to continue to improve the energy efficiency of the buildings, build heat network infrastructure where possible, encourage solid biomass for large heat loads and, where heat networks are unavailable, support heat pumps in efficient buildings and increase the production of renewable gas.
The money ear marked in the national development plan for sustainable energy is a vital step. Keeping the needs of consumers, small and large, at the heart of policy making will ensure the best use of the funds. It will also ensure that the implementation of policy and delivery of outcomes will have a far greater chance of succeeding. More cooperation between utilities will also assist. The heat sector is complex but a sustained and integrated policy approach can save carbon and make us all more comfortable at home and at work.