Goverment unlocks millions for new heat networks as it sets out plans for stricter regulatory framework for low carbon heat market

Just over £19m of funding has been unlocked to support the development of low carbon heat networks in Bristol, Liverpool, London, and Worthing, the government announced last week.

The Department for Business, Energy, and Industrial Strategy said the funds, drawn from its £320m Heat Networks Investment Project capital investment programme, would help decarbonise heat supplies for thousands of homes, university residences, and public buildings across the country.

Two heat networks in Bristol, as well as schemes in Liverpool, London, and Worthing are to receive a tranche of the £19.1m funding package announced on 29 December.

Climate Change Minister Lord Callahan said accelerating the roll-out of low-carbon heating systems across the UK would help reduce the reliance on fossil fuels and drive down energy costs for consumers.

“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,” he added. “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.”  

Heat deploy underground pipes to carry water heated at a central site to a building or a cluster of buildings situated close to each other. They represent a low-cost decarbonisation solution for buildings in close proximity to sources of waste heat, such as industrial or power plants.

There are currently 14,000 heat networks in Britain, according to government data, of which 2,000 are district heating networks where heat is piped to multiple buildings.

The government announced the investment on the same day it revealed that it had appointed Ofgem as the heat networks regulator for Great Britain.

The role will see the energy regulator tasked with ensuring Great Britain’s half a million heat network customers receive a fair price and a reliable supply or heat, the government said, by enforcing rules and guidance on pricing and quality of service, while facilitating the growth and decarbonisation of the market.

Jonathan Brearley, chief executive of Ofgem, welcomed the government’s decision to add heat networks to the regulator’s remit.

“Heat networks can play a key role in reducing carbon emissions from heating and helping to achieve the country’s climate goals,” he said. “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.”

Setting out its plans in its written response to the Heat Networks Market Framework consultation, the government also confirmed Citizens Advice is set to be appointed the official consumer advocacy body for the growing heat network market.

The government said it expects to lay primary legislation to regulate the sector by the end of this parliament. The move follows complaints from some heat network customers over the service and billing arrangements they have experienced, with critics arguing that what can amount to a monopoly service for customers has been under-regulated in the past.

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