The Chancellor has announced that there will be an end of fossil fuel heating systems in all new homes from 2025 as part of a ‘Future Homes Standard’, with an accompanying improvement in the efficiency of new build homes and low consumer bills as a result.

For social landlords, the implications of this move are significant in two key areas.

The requirement to improve energy efficiency is an extension on Philip Hammond’s commitment to halve energy use in homes and will require substantial changes to the way that homes are designed and delivered.

At present there is a significant performance gap between the way homes are built and commissioned and stated design standards. Given the wider indicators focused on efficiency, it can be expected that some element of performance monitoring will be built into the Future Homes Standard – similar to the “Be Seen” element of the GLA’s London Plan, which will require performance to be monitored post occupation, with penalties likely for non-compliance.

This push towards greater energy efficiency should be applauded, as it directly tackles fuel poverty. However, it does mean that social housing organisations will need to work with supply chains and restructure delivery processes, to close the performance gap.

The other major implication is with regards to energy infrastructure.

With heat representing over 40% of end use consumption in the UK and responsible for a round a third of the UK’s carbon emissions, it was only a matter of time before there was going to be a mandatory shift away from gas boilers.

The question is what technology, or mix of technologies, is going to replace gas boilers in homes, and how can the social housing sector manage the transition?

The answer is likely to be a mix of heat networks and heat pumps.

Heat networks, which provide homes with heat and hot water from a central source, are increasingly recognised as a key part of the UK’s future energy infrastructure and represent a logical next step in delivering low cost, low carbon heat, with proven examples of successful implementation in other parts of Europe (e.g. Sweden). Importantly, they are technology agnostic, allowing transition away from fossil fuels over time.

There have already been significant strides in developing the heat network capability of the UK over the past 10 years. London has been particularly successful in incentivising heat networks, with one study estimating that 72% of London’s new build homes were on heat networks by 2015.

Scotland has also made substantial investment into heat networks in recent years, with a significant number of new heat networks and a maturing industry.

These are models that can now be replicated across the country.

However, to do this we need to ensure a rapid transfer of knowledge and competencies, as capabilities need to be in place before 2025.

The CMA carried out a market study into heat networks, with a final report in 2018. As expected, the finding was that heat networks offer an efficient supply of heat and hot water at prices which are competitive with other potential sources of supply and with comparable service standards. However, it also found that there is significant variability across the sector and that where there are problems, the impact on residents can be significant.

In cases with problems, the issue has often been that organisations have not had the capabilities in place to deliver these systems and have taken a ‘traditional’ approach to development.

Having had such experiences, some social housing landlords (particularly those in London) have changed their approach to delivering heat networks. In many cases the results have been excellent.

Social landlords who are new to heat networks would be well advised to reach out to other organisations who have already been through the process. The good news is that there are well trodden paths to follow and organisations in the market (such as FairHeat) who are there to help.

Alongside heat networks, it is heat pumps that are likely to be the primary source of heat generation for new builds. The transition to heat pumps will need to be carefully managed, as it is still an immature market and social landlords would be well advised to take manufacturers’ claims with a large pinch of salt.

Particular caution should be taken with regards to new technologies as previous technologies haven’t always delivered the cost and energy savings promised, which in some cases has left residents in heat poverty. Landlords should always ask to see performance data from real world installations, prior to investing in new technologies.

In summary, with the right technologies, good use of data, and sharing learning and knowledge from other landlords that are already on the journey with low carbon technologies, the Future Homes Standard is a real opportunity for the social housing sector to change the way it approaches new developments and put a real focus on energy efficiency. This should create tangible and lasting benefits for residents.