(347d) Multi-Level Modelling of Low-Carbon Heating Systems: Integrating Household-Level Cost-Benefit Analysis with National-Level Value Chain Optimisation

Achieving net zero greenhouse gas emissions, as a number of countries have pledged to do, requires decarbonising all sectors of the energy system. In the UK, the decarbonisation of residential space and water heating presents a unique challenge because the current natural gas-based heating systems, present in around 85% of the housing stock, are often lower cost than the low-carbon alternatives being considered by the UK government, such as heat pumps, electric storage heaters, and a variety hydrogen heating technologies. In addition, there is a considerable variability in the characteristics, thermal efficiency, occupancy, and heating patterns in the current housing stock that is not represented in whole-system level modelling studies. This study aims to combine modelling at the household and whole-system level to answer the question “How do the costs and benefits of low-carbon heating, at the household level, support or undermine a whole-system optimisation approach”.

A cost-benefit model is being developed based on existing data from housing stock surveys, low-carbon heating field trials, and cost-benefit literature, to estimate the capital and operating costs of low-carbon heating technologies. This study will consider a wide range of building types, representative of the UK housing stock, taking account of building characteristics such as floor area and thermal efficiency. In addition, the model will take account of uncertainties such as occupancy levels and heating patterns. The results from the household level analysis will be used to identify relationships between the building characteristics and the levelised cost of heat, and highlight the types of households where the levelised cost of heat is most sensitive to personal preferences such as heating patterns and uncertainties such as fuel costs.

The Value Web Model, a mixed-integer programming optimisation model for integrated energy value chains, will be used to optimise the design and operation of the UKs heat and electricity system at the whole-systems level and the capital cost distribution from the cost-benefit model will be used to provide a detailed spatial representation of the UK’s housing stock by taking account of how capital costs vary between regions of the UK. These results will identify the mix of low-carbon heating technologies at the regional level that leads to the lowest whole-system costs and the energy generation and transportation technologies required to support heat decarbonisation. This will be compared to the results of the household level cost-benefit analysis to highlight the extent to which these approaches align, and consider the regional impacts of decarbonisation and suggest policy instruments that might be required to promote a low-carbon technology mix.