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ADE backs heat network regulation to improve technology take-up

Findings looking at potential to step up heat network use as part of UK decarbonisation plans argues of need for minimum cost and service standards

New findings from the Association for Decentralised Energy (ADE) have called for the introduction of a regulatory framework for heat networks to tackle a lack of minimum standards in implementing the technology based around pricing and customer service quality.

A report from the association, published following a year of consultation with a specially convened taskforce of figures working both within and outside the industry, calls for clear regulations and standards when considering use of heat networks. The ADE also urged more detailed plans for how use of the technology can be stepped up to meet the UK’s energy decarbonisation aims.

These ambitions were outlined broadly in the government’s Clean Growth Strategy that was published last year.

A key conclusion of the ADE taskforce’s report was that the introduction of regulation would help curb investment risks and improve technology costs so that heat networks can be a more viable solution for tackling heating demand over the next three decades.

The report noted that two per cent of the UK’s current heating needs are met through use of heat works, but there was potential for expansion of such technology, citing figures in the government’s Clean Growth Strategy.

The ADE said in a statement, “Repeated analysis indicates that cost effective heat decarbonisation requires a major growth in heat networks, which could meet up to 20 percent of heat demand by 2050.”

“However, current deployment rates are not sufficient to meet government decarbonisation objectives. With the anticipated growth in the heat network market, important questions are raised as to how heat network customers can be assured a good deal and reliable service.”

The report’s conclusions argued that a regulatory framework based around the principle of demand assurance - this considers risks around meeting the country’s heat demand - would improve the desirability of heat networks in planning new systems around the country. This demand assurance concept would also need to be linked with binding customer protection standards, according to the ADE.

The report added, “An investment framework would also establish the route to ensuring customer protection. For customer protection to be effective it needs to be both binding on, and aligned with, the interests of those supplying the service of heat provision.”

According to the ADE, analysis of tenders published in the Official Journal of the European Union (OJEU) said that there was £260m worth of spending on public contracts involving heat networks during the first ten months of 2017.

The report said that between three million and eight million homes, along with a “major share of commercial and public buildings”, could be connected to heat networks with reasonable costs, based on government research.

The report added, “The two main markets for heat networks are new-build and retrofit, and each present a set of advantages and limitations. In the retrofit sector, heat networks can achieve the most cost and carbon emission savings by replacing higher carbon systems.”

“The system installation can sometimes be significant but also provide the opportunity for wider building fabric efficiency improvements, which in turn leads to better consumer experience. In the new build sector, if opportunities are identified early enough the capital costs of laying the pipes in the ground can be reduced by sharing the civil engineering costs with other infrastructure.”

Lower carbon aims

The possibility of new, more energy efficient homes would also create properties that could be connected to so-called ‘fourth generation heat networks’ that operate at lower temperatures and use low grade waste heat sources, according to the ADE.

The report also notes the importance of further work to decarbonise heat networks with the possible use of a greater number of alternative fuels.

It noted, “Diverse energy sources are used on heat networks: mostly gas (56 per cent) and efficient gas CHP (32 per cent), but increasingly other energy sources form part of heat networks’ energy mix, such as large-scale biomass (10 per cent), energy from waste and large-scale heat pumps.”

ADE argued in its report that heat networks under construction or currently being planned were expected to be mostly reliant on more efficient gas, as well as heat pumps and waste energy to a smaller degree.

Meanwhile, the Heat Network Investment Project requires the consideration of low carbon sources of heat beyond gas CHP.

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