UK government announces major expansion of heat networks in latest step to power homes with green energy

UK homes, university residences and public buildings will benefit from cleaner, more affordable heat and energy, thanks to £19 million government funding announced today to further expand Great Britain’s network of low carbon heating in December.

14 Jan 2022

Please note that this article and any associated media were originally published by the UK government, here.

The £19 million investment will go towards setting up 5 new heat networks, 2 in Bristol, and 3 across Liverpool, London and Worthing, providing households and workplaces with more affordable, reliable heating that offers a low-carbon, more cost-effective alternative to installing individual, energy-intensive, heating solutions such as gas boilers.

Heat networks supply heat from a central source to consumers, such as large rivers and heat from sewers via a network of underground pipes carrying hot water, like a giant central heating system serving many buildings, and supplies it through pipes to homes and businesses.

The £19.1 million funding announced today comes from the government’s £320 million Heat Networks Investment Project (HNIP), which supports the development of heat networks across England and Wales. Government-funded heat networks currently being developed include Leeds City County’s 16km district heat network, Cardiff Town Heat Network in South Wales, spreading across the Cardiff Bay area, and Newcastle University’s District Heat Network within their city centre campus.

As a proven, cost-effective way of providing reliable low carbon heat at a fair price to consumers, and as recommended by the Climate Change Committee, the UK government is working towards growing the heat networks sector, which provides roughly 2% of UK heat demand but could meet around a fifth of heat demand by 2050.

Minister for Climate Change Lord Callanan said: 

Almost a third of all UK carbon emissions come from heating our homes and addressing this is a vital part of tackling pollution, driving down bills and reducing our reliance on costly fossil fuels.   Today’s announcement builds on our commitments made in the Heat and Buildings Strategy to regulate the UK’s heat networks, protect consumers, and create opportunities for green jobs and investment across the country.

This will allow thousands of households and businesses to feel the benefits of projects that are breaking new ground and making our villages, towns and cities cleaner places to live and work.

To support this, the UK government has announced today that it will appoint Ofgem as the heat networks regulator for Great Britain to ensure consumers receive a fair price and reliable supply of heat.

The industry regulator will be responsible for enforcing rules and guidance on pricing and quality of service while facilitating the growth and decarbonisation of the market. Forming part of the government’s new Heat Networks Market Framework, Ofgem will also increase investor confidence in the market and play a key part in reducing the carbon footprint from heating homes and workspaces.

Taken together, these announcements demonstrate how government is giving consumers, investors and developers confidence in heat networks by both implementing a market framework, and putting capital investment into local projects to reduce bills, tackle fuel poverty, and support local regeneration.

Jonathan Brearley, chief executive of Ofgem, said:

We welcome the government’s announcement that it will appoint Ofgem as the new heat networks regulator. Heat networks can play a key role in reducing carbon emissions from heating and helping to achieve the country’s climate goals.

We will work with the government to design a regulatory framework which attracts the investment needed while ensuring heat network consumers, especially those in vulnerable circumstances, receive a fair price and reliable supply of heat for their homes as we make the transition to net zero.

The government’s response to the Heat networks market framework consultation, published today, sets out proposals for introducing legislation to regulate the sector, which we are committed to doing within this Parliament. This will include appointing Ofgem as heat networks regulator and Citizens Advice as the consumer advocacy body.

This legislation will play a critical role in protecting approximately half a million consumers across around 14,000 heat networks in Great Britain, of which approximately 2,000 are district heat networks and 12,000 are communal heat networks. 

The £19.1 million funding announced today comes from the government’s £320 million Heat Networks Investment Project (HNIP), which supports the development of heat networks across England and Wales.

Today’s announcement will help to deliver the commitments made in the Prime Minister’s 10 Point Plan to make the UK’s homes, schools and hospitals greener, warmer and more energy efficient, while creating 50,000 jobs by 2030.

They also support the government’s new target for all new heating systems installed in UK homes by 2035 to be either using low-carbon technologies, building on more than £3.9 billion of funding announced as part of the Heat and Buildings Strategy to decarbonise heat and buildings. The £3.9 million investment will fund the next 3 years of investment through the Social Housing Decarbonisation Fund, the Home Upgrade Grant scheme, the £450 million Boiler Upgrade Scheme and the Heat Networks Transformation Programme and reducing carbon emissions from public buildings through the Public Sector Decarbonisation Scheme.