The energy to heat our homes and offices is referred to as ‘space heating’. Quite literally, it is hot air. Space heating is a big-ticket energy item, accounting for 65% of total energy consumption in a typical UK/EU home, according to Eurostat.

A perfectly insulated building would hold its heat forever - there would be no need for re-heating. In practice, buildings leak heat for two main reasons - conduction and ventilation. Conduction refers to heat slowly seeping through walls and other parts of a building’s structure. Ventilation is heat escaping more quickly through open cracks and windows, or via pipes constructed for air freshening.

Heat losses from both conduction and ventilation are proportional to the temperature difference between the air inside and outside of a building. One way to think about temperature difference is to imagine a thermostat that keeps your house at one specific temperature throughout the year. Over the days and seasons, this will produce an ‘average’ temperature difference driven by the weather. More complex calculations of temperature difference can be calculated on this basic principle.

Other important determinants of heat losses through conduction include the area and thickness of walls, windows, ceilings and floors, and the construction materials used.

For ventilation, additional critical factors are the space volume of the house, and how drafts affect the airiness of different parts of the house (typically higher in bathrooms and kitchens and lower in bedrooms). As a rule, conduction is the bigger of the two losses in the average UK house.

The crux of it all is that we can think of heat losses from a house as being driven by a set of factors that we might call its ‘leakiness’, and by the weather.

That gives us initial clues about the main ways to stay warm at home - either reduce leakiness or turn down the thermometer and adapt to the weather in other ways - putting on a pullover during the day and sleeping with an extra blanket are simple examples. Abstracting from a few other technicalities, it boils down to that!

Before even talking about heat pumps or gas boilers, the simplest domestic energy lessons are twofold. Firstly, deal with unnecessary heat leaks from homes by installing better insulation. Secondly, for the fit and healthy, there is an even simpler solution - adapt in ways other than turning up the thermometer. Together, these two strategies could cut your household energy demand by up to half!

Benefits stretch beyond hard cash. There are health advantages within our individual homes from burning less fossil-fuels. It all integrates to lower global greenhouse gas emissions, yielding planetary benefits. With growing concerns around national energy security, a plan of action around domestic energy use represents a credible home-guard response to any perceived threats from foreign energy dependence.

And there is further good news. Technology is our energy friend. A heat pump extracts heat from the air outside (or from the ground) and brings in into the home. Somewhat counter-intuitively, there is always heat in the air outside, even when it feels very cold to us. The technology of heat pumps is well understood – they work like an air conditioner or fridge. The only real difference is that a heat pump has a reversing valve to allow it to provide space heating rather than cooling.

A heat pump has a critical edge over a gas boiler. It simply moves heat rather than generating it through fossil-fuel combustion. This key differentiator allows it to reach much greater levels of efficiency.  According to Octopus Energy, heat pumps use a quarter of the energy than the most efficient boilers to generate the same amount of heat. In a UK context, this can slash your carbon footprint by 70% (improving every year as the electricity market is decarbonised), together with other environmental benefits.

Moreover, research from the Rocky Mountain Institute indicates that modern air-sourced heat pumps can be more than twice as efficient as gas boilers even allowing for their reduced efficiency at harsh weather sites in the coldest States of the US.

Still unconvinced? Well then let me resort to my ‘back to nature’ test for technology relevance. Does nature embrace the heat pump idea? Well, yes it does.

Air enters the body via the nose. The nasal cavity humidifies the air, heating it towards the body’s internal temperature before it enters the lungs (vice versa when we breathe out, to prevent the body losing a large amount of heat). Nature invented the idea of exchanging heat long ago and has further developed it through evolution ever since.

Hence, a technology from nature’s distant past looks set to play a key role in our energy future. It may be hard to see, but it is right in front of our very eyes!

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Disclaimer: The blog does not aim to give investment advice, but is designed to afford relevant longer-term context to investors, encouraging a broad perspective where uncertainty is high and a spirit of learning is important. The views expressed are those of the author, not those of Investec.