Evidence from a new report by Energy Systems Catapult (ES Catapult) has shown that consumers must be the “central pillar” of heat network regulation in the UK.
Funded by the energy company Vattenfall, the Heat Networks: Consumer Protection Regime, predicted rapid growth within the heat network sector, with heat networks expected to serve 1 in 5 homes (18% of the UK’s heat demand) by 2050.
A heat network (district heating) refers to a network of insulated pipes which are interconnected with multiple buildings in an area to centralised sources of environmental heat – thus, removing the need for property-by-property generation.
At present a number of organisations provide heat and hot water to 14,000 heat networks, serving approximately 480,000 UK consumers.
As the sector grows, the report calls for an “appropriate regulatory framework” to ensure customers have comparable protections to those offered to consumers receiving their heat and power from the grid. This is particularly relevant for those on low incomes and vulnerable situations.
The UK Government’s Energy Security Bill announced in May 2022, is set to lay the foundations of a framework which introduces statutory rights for consumers and sets obligations for market participants to manage the potential monopolistic characteristics of heat networks.
“Heat networks are an important solution for moving away from gas for heating our buildings and helping to alleviate the challenges of meeting peak heating demands through electricity only,” said Nick Geddes, business leader – whole systems and networks at Energy Systems Catapult.
“However, as with the creation of any new regulatory environment, we need to ensure that consumers are the primary consideration. Protecting key consumer groups, enabling innovation, and minimising consumer risks, must be at the heart of the regulatory framework and in how market participants operate.
“We have an opportunity to build a framework that learns the lessons of the gas and electricity markets and applies them to the unique characteristics of this market, to make a holistic consumer-centric heat network market that drives innovation”.
Bindi Patel, head of customer experience at Vattenfall, added: “With the planned rapid deployment of heat networks, expected to serve 18% of the UK’s heat demand by 2050, it is important to establish the correct regulated consumer protection from the get-go.
“We welcome the fact that the government is currently putting measures in place to protect heat network consumers and hope the report will be a valuable contribution to the development of policy.”
