Changing the price of energy tariffs could encourage a switch from gas boilers to low-carbon heating, a new study has suggested.

The Energy Systems Catapult and the University of Oxford looked at whether or not the fixed charges within energy bills – for network, environmental and social costs – are efficiently distributed between the standing charge and unit (per kWh) price of electricity and gas tariffs.

They found that the current arrangement of fixed and volumetric charges within electricity and gas tariffs may inadvertently distort market behaviour towards favouring investment in decentralised generation technologies – like solar and diesel – over demand technologies like heat pumps.

The study said different consumers pay different contributions for the same fixed costs of making energy supply available, such as transmission and distribution charges, because costs are recovered through the unit price.

2050 targets

Phil Lawton, Power Systems Practice Manager at the Energy Systems Catapult, said: “With heating and transport accounting for around two thirds of UK carbon emissions, growth in heat pumps and electric vehicles will be important in meeting our 2050 targets.

“We need to make sure the way we charge for the fixed costs in the energy system reflects these exciting changes in technology and does not discourage consumers from taking them up.

“And we need to make sure consumers that generate their own electricity, through solar or diesel, are not over-rewarded, by avoiding some of these fixed costs at the expense of those who use the grid all the time, including vulnerable households.”

> Download the report