The route to off-grid heating beyond kerosene 

It is more than a year since HVO was first trialled in oil-fired boilers in the UK and the trial’s second phase is already well underway. 200 homes and businesses have been adapted to ensure compatibility with the biofuel and to help verify the logistics and practicality of extending HVO-fuelled heating to significantly decarbonise up to 1.7 million UK properties.

The route to off-grid heating beyond kerosene

With the trials successfully demonstrating, as anticipated, that boilers across the UK can use the biofuel for long durations with no discernible difference in heat output we hear from Andrew Dobson of Tuffa Tanks as he explores the challenges that remain in keeping HVO on the radar for off-grid and how the industry can influence the place of the biofuel in the future energy mix.

The UK Government is phasing out the use of kerosene in UK heating with a ban on the installation of fossil fuel burners in new build homes from 2025 and in existing homes from 2035. The recent ‘Off-Grid Consultation’ subsequently proposed an end to new fossil fuel heating installations specifically in off-grid homes from 2026 with a ‘heat pump first approach’ to their replacements.

Support from homeowners

Against this backdrop the liquid fuel industry has been lobbying for HVO to be recognised in future policy decisions as a valid and subsidised form of heating for off-grid homes. A recent survey from Future Ready Fuels (a UKIFDA / OFTEC collaboration) reveals that rural homeowners support this approach, with 98% welcoming the opportunity to convert to HVO heating.

When looking at the associated costs, it’s easy to see why; the average cost for a heat pump installation is around £11,000 alone, or around £25,000 if retrofitting work is needed to improve the EPC rating to the required ‘C’. The cost to adapt the existing boiler to burn HVO is around £500 – a conversion expected to take less than an hour.

Off-grid and on radar

The role HVO can play in sustainable, low carbon heating is beginning to find recognition in government legislation considerations. The recent Heat and Buildings Strategy recognised liquid biofuels (specifically HVO) as an alternative heating technology where heat pumps aren’t practical. Additionally, the UK’s Trade Remedies Authority recognised the pragmatism of using HVO for UK heating and, in December 2021, published its provisional recommendations supporting the removal of trade measures on importing HVO from the US and Canada.

A 30-day period, allowing interested parties to comment on the reports, follows the publication after which the TRA will then consider and produce Final Recommendations, which will be sent to the Secretary of State for International Trade who will make the final decision on whether to uphold the TRA’s provisional recommendations.

This last point is vital in enabling the expansion of HVO usage to greater numbers of oil-heated properties. Cost will significantly influence uptake from homeowners and available supply has been cited by government as the limiting factor for its use in heating UK homes despite representatives from the main European and US HVO suppliers having given OFTEC and UKIFDA reassurances that production levels will meet UK heating demands.

Worldwide HVO production is predicted to increase from around 7m tonnes in 2020 to 30m in 2025. Incidentally, the US is predicted to see the most rapid growth of all producers. With an estimated six-fold increase, reaching 12.6m tonnes of HVO, the US will overtake Europe as the world’s largest HVO producer. The removal of import tariffs from the US would, therefore, alleviate two of the biggest reservations about extending HVO usage to heating.

A transitioning demand

Demand for biofuels could also change rapidly. We’re experiencing greater investment in, and uptake of, electric vehicles which could result in less demand for liquid fuel. Investment in the production, storage and infrastructure for hydrogen-powered vehicles will similarly reduce future demand for liquid fuels which would free up a greater supply for heating.

It is also worth noting that the expectation isn’t for an immediate switch to 100% HVO but, to begin with, an HVO blend with HVO100 available for heating from 2025 at the earliest. This will ensure a smoother transition for homeowners, fuel distributors and the government while providing time to increase HVO production.

As one of very few sustainable aviation fuels, it is arguable that the aviation industry should take supply priority. However, by working together, the demand for heating and aviation could help to secure native HVO production with the use of HVO in heating and in sustainable jet fuel being countercyclical; demand for heating oil is highest in the winter whereas aviation fuel demand peaks during the summer. Sharing the resource between the sectors would create the consistent demand needed to give investors the confidence to back UK production which would also create jobs.

Incentivising uptake

Making HVO heating more affordable is also a major focus. With the backing of both industry and off-grid homeowners, the Future Ready Fuels coalition has been pressing for a technology inclusive approach in new heating policies. Through participation in the Government’s ‘Off-Grid Consultation’ the coalition has argued that a price reduction for HVO use in heating similar to that delivered by the RTFO (which would reduce costs by 81p per litre) would contribute to a rapid uptake amongst off-grid homeowners. This would deliver significant progress towards decarbonising UK heating while keeping user costs and disruption to a minimum.

The results of the Off-Grid consultation, and the publication of a dedicated UK biofuels strategy due later this year or in 2023, will give a clear indication of the extent that the government supports biofuels in domestic and non-domestic heating. Meanwhile, Future Ready Fuels will continue to work with fuel suppliers and heating technicians to prove the industry’s infrastructure is ready and waiting to tackle decarbonisation in UK heating now.