Combined Heat & Power, District Heating & Cooling, Demand Side Services, Energy Efficiency

Industry proposals respond to Government challenge of cost effective, secure and low carbon heat

23 November 2015

The Energy Secretary can unlock billions of pounds of heat infrastructure investment with a new policy framework set out by the decentralised energy industry today. The proposals call for an end to punitive business rates, a better sharing of investment risk to lower the cost of building networks, and an extension of the Government’s heat network advice body.

The Energy Secretary can unlock billions of pounds of heat infrastructure investment with a new policy framework set out by the decentralised energy industry today.

The proposals call for an end to punitive business rates, a better sharing of investment risk to lower the cost of network infrastructure, and an extension of the Government’s heat network advice body.

If enacted, the proposals would level the playing field for district heating, the UK's third energy network, and deliver on the Energy Secretary’s aim for a long-term plan for heat that keeps costs down for consumers. 

There are 15 heat network opportunities ready to attract £112 million in capital investment, with a further 165 projects in the pipeline. 

District heating, a network of pipes that take hot water from a local source to homes and businesses, is one of the cheapest ways to decarbonise heat in urban areas, and helps consumers benefit from heat which is currently wasted. Power stations, manufacturers and cities like London together waste more heat than is used by every home in the UK. 

The industry’s policy recommendations include: 

  • Exempting district heating from punitive business rates which are not applied to other energy networks
  • Reducing the cost of capital by better sharing infrastructure development risk between investors and Government, in line with other forms of network infrastructure like gas and electricity
  • Extend the role of the Heat Network Development Unit (HNDU) to support district heating development, all the way from planning through to commercialisation and financial close. 

These policy recommendations, as part of a wider package, will help deliver a step change in district heating investment, drive down the cost of this innovative infrastructure over the longer term, and keep costs low to taxpayers. 

The policy recommendations come on the back of nearly two years of industry investment in tools to ensure high-quality district heating and high standards of customer care. This includes the Code of Practice for Heat Networks, which establishes minimum standards for heat network design, delivery, operation and maintenance; and Heat Trust, which provides heat customers with comparable levels of protection to those who heat their homes with mains gas and electricity. 

ADE Director Dr Tim Rotheray said:

"When I speak to long-term infrastructure investors from across Europe, there is an overwhelming desire to invest in UK heat networks, if we can get the right policy framework in place. 

"If we can solve this puzzle, there is an enormous opportunity for UK cities, with billions of pounds in local investments to make the UK energy system more productive, more secure and lower carbon. Most importantly it will deliver for consumers, helping to keep their heating costs low.
"The industry's proposals are focussed on driving down costs and building investment confidence to enable the best energy system for Britain's consumers.

"In Wednesday’s Spending Review, we hope the Chancellor recognises that heat networks represent one of the most cost-effective ways to tackle heating costs and decarbonise UK cities." 

A summary of the policy paper which outlines the framework can be read here.

About the ADE
The Association for Decentralised Energy is the leading decentralised energy advocate, focused on creating a more cost effective, efficient and user-orientated energy system. The Association has over 100 members active across a range of technologies and markets, including district heating, combined heat and power and demand side energy services. The Association is widely recognised as one of the leading industry bodies in the sustainable energy sector. 

About District Heating 
A district heating scheme comprises a network of insulated pipes used to deliver heat from the point of generation, in the form of hot water or steam, to an end user. District heating networks provide the means to transport heat efficiently. Heat networks can be supplied with heat from a diverse range of sources including power stations, waste-to-energy facilities, biomass boilers and CHP plants, gas-fired CHP units, heat pumps, electric boilers and even solar thermal arrays. Click here for more information about district heating and here for case studies.

About the Code of Practice
To ensure that heat networks are designed and operate effectively, the Association for Decentralised Energy and CIBSE have brought together industry partners to draft a document that seeks to establish common standards for the development of district heating.
Setting minimum (and best practice) standards should provide greater confidence for specifiers and developers. Standards can also be included in the tendering/contracting process to specify minimum standards set out in the Code. The adoption of this Code of Practice by developers could ultimately be used to support marketing by providing assurance to customers and property purchasers that the district heating scheme has followed a set of design, installation and commissioning standards. The assurance provided by the standards should therefore have a significant effect on the district heating market.

Accessing the Code of Practice
The Code of Practice for Heat Networks is available to CIBSE members here and ADE members here, free of charge. Non members can purchase copies here. 

About Heat Trust
The district heating industry has worked with consumer representatives since 2012 to develop the proposals for Heat Trust. The scheme will be officially launched at Heat 2015 conference on Wednesday 25th November.
Heat Trust protection is aimed at heat energy suppliers who contract with metered or unmetered domestic and micro business properties where the heat customer pays their supplier directly for their heat energy. Although voluntary, the Scheme is supported by government, industry and consumer groups as an industry led, self-regulation initiative that recognises best practice.
Where appropriate, the level of protection afforded under the Scheme seeks to replicate that of gas and electricity customers. The proposals contain two key components:

  • Assessment criteria by which to evaluate the level of protection a Heat Supplier's Heat Supply Agreement provides to the heat network's customers; and
  • Independent adjudication, a low cost form of customer dispute resolution once heat supplier's complaint procedure is exhausted.

The Scheme has already attracted significant interest from heat suppliers, and expects to provide protection to over 20,000 heat customers in its first year.


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