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Government to consult on UK heat network regulation

Government expects by summer to begin taking evidence and case studies form industry to inform the shape of new framework to set out standards for heat networks

The UK government will establish a regulatory framework for heat networks with the intention to secure fresh investment and increased industry uptake of the technology, as well as flexibility to accommodate new business models and innovation.

A consultation is now scheduled to launch next summer to set out the shape of the framework and subsequent legislation to determine basic service provision standards.

This consultation is expected to build on industry work that considered some of the challenges facing the heating industry in terms of expanding interest and the viability of this network model.

The Department for Business, Energy and Industrial Strategy (BEIS) said in a statement, “We expect that any solution is likely to require a blend of measures across a range of areas such as data provision, planning, investment assurance, and statutory undertakings.”

“We are keen to hear stakeholders’ views as we develop the heat networks market framework.”

Some 14,000 heat networks are currently active across the UK, representing 480,000 consumers, according to BEIS. With heat networks ensuring the majority of its users are paying less than those relying on gas or electricity, there are a number of challenges facing the industry such as a lack of protections that are afforded to the regulated gas and electricity sectors.

The department responded to a ‘Heat Networks Market Study’ produced by the Competition and Markets Authority (CMA) by concurring that protections should be considered for both domestic and non-domestic customers.

MP Claire Perry, minister of state for energy and clean growth, said the framework would build on a £320m Heat Networks Investment Project that was launched by government in October to provide grants and loans for public and private sector projects.

She said, “To ensure that growth is sustained and that we fully realise the potential carbon savings, we must put in place a market framework which provides the right signals to investors, while also ensuring that consumers are protected.”

“Heat is vitally important to both households and businesses, and I recognise the importance of ensuring that consumers can heat – and cool – their homes and businesses reliably and affordably.”

The Association for Decentralised Energy (ADE) said the government’s consultation around regulating heat networks followed on from recommendations in the CMA’s market study that backed introducing legal protections to improve uptake of these solutions.

ADE director Dr Tim Rotheray said both consumers and industry stood to benefit from introducing regulation to the provision of heat network services.

He said, “Government has recognised that creating a market that protects customers and reduces investment risk are two sides of the same coin and that a well-considered regulatory framework can support the creation of such a market.”

“In proposing a framework that tackles investment risk and assures customers of the level of service they will receive, government is putting the appropriate steps in create a self-sustaining, cost-effective market that will benefit all.”

Dr Rotheray welcomed the commitment by government to consider lessons from other countries in the use of heat networks as part of the consultation process.

He added, “The heat network market is very different to the electricity and gas markets and we hope that government continues to bear this in mind as it develops the regulatory-framework over the coming year.”

“The ADE looks forward to working with government over the coming year to ensure that forthcoming regulation is fit for purpose.”

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