Achieving a better balance of policy costs and taxes between electricity and gas would unleash the mass uptake of heat pumps by consumers, Octopus Energy has claimed.
Speaking at an online event on the Energy White Paper, organised by the Policy Exchange thinktank this week, the challenger supplier’s director of external affairs Clementine Cowton said that heat pumps are still a “cottage industry.
But she said that there is “massive scope” to cut the cost of the technology, which is currently too expensive for many households compared to gas boilers, by making electricity more attractive for heating.
Highlighting the importance of the government’s review of energy fairness and affordability, which the white paper says is due to kick off with a call for evidence in April, she said: “We effectively subsidise fossil fuel gas consumption in this country and penalise electricity consumption, which makes electric heat less attractive to consumers than continuing to burn gas.
“Once you solve that problem you solve everything else. Effectively what we do is we put a sin tax onto electricity when it should be on gas.
“Fix that dynamic and that allows you to unlock mass consumer power.”
Alan Whitehead, shadow minister for energy, said that while the white paper signalled a welcome shift in direction to renewable technologies, it left a lot of policy decisions unresolved and subject to consultation over the next 18 months.
As an example, he pointed to nuclear where the government has limited its commitment to one major plant receiving a final decision on investment by the scheduled end of the current Parliament in 2024.
“That ducks the wider issue of how many nuclear plants there should be in the system, how they work with a predominantly renewable system and whether there is a system view of nuclear within the overall scheme of things. None of that is addressed in the white paper.”
Whitehead also expressed “particular disappointment” that the white paper hadn’t gone any further on tidal power and warned that the government’s target to roll out 40GW of offshore wind is “not achievable” unless the “tremendous” issues of integrating this form of renewable power with the grid is resolved.
Josh Buckland, who was special advisor to ex-business secretary Greg Clark and is now a director at public affairs company Flint Global, said the time to judge the white paper will be in 18 months when the swathe of policy documents it promises have been published.
“If we have delivered all of those, we will be in really strong position,” he said, adding that the government has taken steps to improve the delivery of net-zero policies, such as strengthening central co-ordination of cross-government through the Cabinet Office.