Levy rebalancing is needed to reduce the cost of electricity when focusing on heating homes and buildings, particularly as the UK is decarbonising – moving away from fossil fuel to electric heating systems. Our paper presents 4 Scenarios as to how levies may be ‘rebalanced’ to reduce running costs for electrically powered heating systems. However, our main conclusion is drawn: levy rebalancing alone will not be the sole-solution in incentivising consumers to make the switch away from fossil fuel systems.

Alongside levy rebalancing, the SEA recommends implementing wider electricity market reform, greater recognition/implementation of demand side response and flexibility within policy, and supporting improvements to the efficiencies of heat pumps and direct electric heating. Greater financial support is therefore also required, complimented by a strong regulatory framework that progressively reduces the carbon intensity of heating systems, such as the SEA’s Carbon Intensity Standard.