Decarbonisation of the domestic heating sector will be a crucial part of the journey to net-zero. In the UK, the vast majority of homes are currently heated by gas boilers, and these will need to be replaced with low-carbon alternatives such as heat pumps or hydrogen-fired boilers.
Many models have been built to simulate the optimal pathway to decarbonising the heating sector. However the choice of what heating system to use is typically made by households, who may have concerns that differ to what matters to the system as a whole. For example, consumers may place a value on having a system that they have seen in action elsewhere, that their local installers can recommend, and that provides non-monetary benefits such as reduced hassle or a lower up-front cost.
Earlier this year, Frontier Economics was commissioned by the National Infrastructure Commission to build an agent-based model (ABM) to explore these issues. Rather than trying to optimise the system from the top-down, an ABM is built from the bottom-up and considers the actions and interactions between different agents - such as consumers and installers. This ensures the model is based on real-world behaviour, and can help simulate “emergent” behaviour in the wider system resulting from individual decisions. This includes for instance, tipping points, where the take-up of heating technologies by a critical mass of individuals influences others. These types of behaviour can have important implications for government policy: our model shows how, targeted correctly, policies can benefit from the multiplier effects caused by these types of mechanism.
An NIC blog post about the model, and a link to our report, can be found here.
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El impacto de la estrategia de descarbonización en las oportunidades de inversión del sector energético español