Catapult Energy Systems has conducted a study which claims that reform of energy tariff pricing could encourage consumers to make choices and switch from gas boilers to low-carbon heat pumps.
With it being 8 months since the UK’s largest heat pump installation in Enfield, the study found that the fixed charges components of energy bills may inadvertently distort market behaviour towards favouring investment in decentralised generation technologies, such as solar PV and diesel, over demand technologies like heat pumps. Catapult Energy Systems said: “Ensuring energy pricing is more cost reflective would improve the overall efficiency of the electricity system and reduce costs.”
Catapult outlined two main market decisions that are influenced by the way costs are allocated through energy bills:
- Choices made by power generators
- Choices made by consumers
Varied allocation of costs through energy bills can influence the type of fuel used by power generators. It can also alter the way they connect to the power system: transmission, distribution or within a consumer’s permises.
This dilema can also influence the type of fuel consumed by consumers. Although they have no physical control over how energy flowing into their house is produced, they do have a key choice between whether to use gas or electricity for heat. All consumers that drive a vehicle are also able to make a choice regarding whether they use petroleum or electricity for transport. Perhaps one of the industry’s undergoing massive transformational change currently is the automotive industry. With the likes of Northern Powergrid and BP Chargemaster engaging with the switch to electric, the decision of many others could be swayed by allocated costs.
Consumers can also make choices about the time that they consume energy as retail prices vary throughout the day. Switching consumption to between 13:30 and 16:00 or overnight until approximately 07:00 will further contribute to the lowering of energy bills.
More on the heat pump study can be found below.