This article was written by Bindi Patel, head of customer experience at Vattenfall Heat UK
There are currently 26 million boilers that all need to be replaced with a low carbon alternative by 2050 to hit government targets. That’s the equivalent of replacing around 1 million boilers each year, and the Committee on Climate Change has already voiced concern that we are slipping off target.
In the race to net zero by 2050, district heating networks are an essential means of decarbonising heating and hot water on a city scale. Providing communal heating and hot water – via underground pipes that connect to homes, businesses and public institutions – such networks recycle waste heat from industrial and business sources, such as factories, sewage plants, commercial kitchens and airconditioned offices.
Heat networks are a common solution throughout Scandinavia, powered by a combination of this pre-existing heat and local renewable energy, they represent a powerful potential contributor in our collective race to net zero. In the UK, the district heating market is still in its infancy, but the government is already committed to heat networks providing 18% of all heating and hot water by 2050, attracting up to £80 billion in investment. With the market set to grow rapidly over the coming years to meet this objective, there is a pressing need to ensure that district heating customers have comparable protections in other utility sectors.
That’s why the government and Ofgem have jointly launched a consultation setting out its plans for new standards of service for district heating network operators that will be backed with fresh enforcement powers. Running until 27 October, the consultation is being jointly conducted with energy market regulator Ofgem. It contains proposals for ensuring that homes and micro-businesses connected to district heating networks are provided with protections mirroring those for customers using direct gas or electricity supplies.
For the market, the consultation is a welcome and important step in building trust with customers and securing investor confidence to attract the levels of investment required by bringing the sector in line with other utility services. We should be considered as the fifth utility and in gaining equivalent powers as other utilities, the sector must also be required to meet, and be measured against, comparable service standards.
Establishing robust consumer protection from the start and ensuring consumers are the primary consideration is fundamental to achieving high levels of consumer confidence. Having said that, there are material differences with heat networks meaning that regulation of the sector does not mean a straightforward copy and paste of existing gas or electricity supplier licence conditions.
Given the breadth of diversity within the sector, a balance needs to be struck with minimum rules-based requirement and principles that focus on delivering good and fair customer outcomes. The balance between rules and principles may change over time, as Ofgem and district heating providers familiarise themselves with the regulation.
But while the market is young, a measured approach will not only help ensure that market participants have time to respond to the new regime, but also facilitate technical innovation and broader market development – by giving companies the space to work out how to adapt or update their infrastructure. Transitional arrangements outlined in the consultation to support the market moved to a fully regulated framework are welcomed.
District heating networks are an exciting means of creating clean, green cities powered by waste heat and local low carbon energy. By 2050, one in five British properties will be connected to one of these communal sources of heating and hot water.
For a country where gas boilers are the established norm it’s undoubtedly a big challenge, but also a hugely positive development – helping meet our crucial climate goals, boosting British energy security and providing affordable energy for all.