Energy Minister says new group will play important role in deliver ‘a sustainable and fair market as the sector expands’

The UK’s fledgling district heating sector will today launch a new taskforce tasked with developing a subsidy free market for the technology that retains strong protections for consumers.

The task force, which is being managed under the auspices of the Association for Decentralised Energy (ADE), will bring together a range of stakeholders to develop recommendations for how industry and government can co-operate in support of the sector.

The group has set a goal of ensuring heat networks can “compete for investment with other utilities and forgo the need for further subsidy by 2021”.

District heating or heat networks provide heat to a neighbour using a single network of pipes that either harnesses waste heat or transports it from a single combined heat and power unit. Advocates of the approach, which is commonly deployed in some European countries, argue it is more efficient than deploying boilers in every property leading to lower long term costs and carbon emissions.

According to analysis by the Committee on Climate Change, heat networks could meet up to 18 per cent of UK heating demand by 2030, up from a current level of just two per cent today.

However, the sector has struggled to scale up in the UK, facing challenges in attracting capital and criticism from some residents.

The government has committed £320m in capital support to deliver a number of new heat networks through to 2021, with the industry predicting the backing will help unlock up to £2bn of investment. However, the sector is aware that its longer term future depends on its ability to bring down costs so the technology can be deployed without subsidy.

The task force will now being work on a number of reports focused on how to tackle three challenges: ensuring heat networks have similar risk profiles to new gas, water and power network investments, allowing them to attract low-cost capital; addressing concerns sparked by natural monopoly nature of district heating networks; and exploring the policies required to deliver district heating at the local government level.

“The proposals that the task force are to develop will be an essential blueprint for enabling cost- effective investment and assuring robust consumer protection for UK heat networks,” said ADE Director Dr Tim Rotheray. “Homes and businesses will always need heat and hot water, and heat network infrastructure offers a future-proof investment that delivers for consumers. But we need to get the investment framework right, ensuring effective customer protection and increased investment certainty.”

The launch of the new task force was welcomed by Energy Minister Jesse Norman. “Heat networks are already helping to decarbonise our heat supply and provide affordable low carbon energy to thousands of homes and businesses across Britain’s towns and cities,” he said. “The task force will play an important role in considering how to establish a sustainable and fair market as the sector expands. We look forward to receiving the recommendations.”

The news comes just days after one of the UK’s largest heat networks came online in Gateshead, delivering heat from two gas-fired combined heat and power (CHP) plants to businesses and homes in the Baltic Quarter.

Source: Business Green