By Johan du Plessis, CEO of tepeo
At tepeo, our mission has always been clear: we develop solutions that drive the transformation to a world where heating is flexible, carbon free, low cost and accessible to everyone. Our heat battery, the ZEB, is at the heart of this mission, offering a central heating solution that not only helps reduce carbon emissions but also provides an affordable and reliable alternative to products like oil and gas boilers.
What is clear for all to see is that the market for low-carbon heating is growing far more slowly than is needed to meet the Government’s net zero targets. There’s plenty of demand from consumers who want to do the right thing – so what’s the problem?
The Crucial Role of Heat Batteries in the Low-Carbon Transition
Heat batteries, like the ZEB, are a vital component of the low-carbon heating solution mix. As the UK moves towards decarbonising the home heating sector, there is an increasing need for solutions that are not only efficient but also flexible and scalable – like heat batteries.
The ZEB is designed to work in a range of housing types, from flats to detached homes. Unlike heat pumps, they require no outdoor space. ZEBs consume electricity flexibly and store it as heat until the home needs it, much like a battery. This ability to make use of low cost renewable energy when it’s available makes heat batteries an essential part of the transition to a zero carbon electricity supply and the UK’s broader net zero target.
Heat pumps will work in most homes but in at least 20% of homes they are not viable – a recent Government report found that outdoor space is the most common barrier to installing heat pumps.
The Policy Challenges Facing the Industry
The problem is that policy currently only supports heat pumps (and curiously also biomass boilers) which receive VAT relief and a £7500 grant through the Boiler Upgrade Scheme. The reality is that, like with any new low-carbon technology, financial support is required to enable the industry to scale and for costs ultimately to come down. If there were no support for heat pumps there would be almost none installed in the UK. Without support for heat batteries, the industry simply will not scale.
Without this financial support many households, who want to do the right thing, simply cannot afford to install a heat battery or believe it’s unfair the government won’t support them with decarbonising their home – so instead they continue to burn oil or gas.
Changing any government policy takes time, and this has created significant challenges for businesses like ours. In particular, the lack of VAT relief and subsidy for heat batteries – despite support from MPs, industry stakeholders, and the public – has left many prospective customers waiting for equal treatment with heat pumps.
There are however, enormously positive changes underway and the new Government has acknowledged the important role heat batteries need to play. In a Westminster Hall debate on 8th January, Miatta Fahnbulleh MP, Minister for Energy Consumers, confirmed that heat batteries are a promising alternative electric heating technology and that the Homes for Net Zero project is monitoring up to 50 heat batteries in existing homes. Most of these are tepeo ZEBs! This evidence base will be used to support any changes when they review the policy framework, including subsidies.
The Impact of Policy on Investor Confidence
Policy change is critical particularly in ClimateTech, where so often existing policy and regulation stifles innovation, climate action and prevents new markets expanding. Investors are clamouring to invest in UK based companies like tepeo, with technologies that support decarbonisation of heating and the built environment – but it’s also a space that’s strangulated by policy, regulation and support for incumbents – including the gas industry.
Investors need to see meaningful change in this space before they will fund growth. The market for alternative low-carbon heating technologies cannot take-off without at the very least having a level playing field.
The Waiting Game
At tepeo, we are fortunate to have the ongoing support of our investors, who believe in our mission and in the essential role for the ZEB in decarbonising heating. However, the slower than expected pace of policy change has made it harder to attract growth investment.
As we navigate the challenges of scaling, I want to be transparent about some difficult decisions we’ve had to make in recent weeks. In response to slower than expected growth in the low-carbon heating market, tepeo has been forced to restructure.
We remain absolutely focused on supporting our existing customers and partners and we continue to install new ZEBs across the country. There is no change for our current or prospective customers!
The changes we have made allow us to support existing and new customers while we work with the Government to make the changes needed to unlock the market for alternative low-carbon heating.
A Call to Action: What Needs to Change?
We are hopeful that Labour’s Warm Homes Plan and next fiscal event can bring subsidy and VAT relief for heat batteries – policy makers should be under no illusions as to the importance of these changes for meeting their legally binding net zero targets.
In the meantime, we continue to support our new and existing customers, partners, and the wider industry. We are relentless in our determination to decarbonise home heating, and we will not rest until we have done so.
While tepeo has needed to adapt to the slow pace of change, the road ahead is exciting and with the right policy changes, the ZEB and other innovative technologies have the potential to transform the way we heat our homes – reducing carbon emissions, lowering energy bills, and creating a cleaner, more sustainable future for all.
We’ve put together an FAQ section here to address any questions regarding these changes.