Back heat networks for £17 billion investment in local growth over next 10 years
The Heat Network Industry Council and Energy UK have released a new report today, ‘Heat Networks: Driving local growth through a new economic model’. Energy UK has published the following press release on the report:
Public investment made today, alongside the development of a new economic model for the clean heat technology that will ultimately provide up to a fifth of the UK’s heating demand would crowd in tens of billions of pounds of private capital, a new report has found.
Heat networks, which use a central source of energy to heat multiple homes and buildings, currently meet around 3% of the country’s heating needs. But government plans suggest this will rise to 20% over the next 25 years, or as high as 50% in some towns and cities.
A new report out today, Heat Networks: Driving local growth through a new economic model, from Energy UK and the Heat Networks Industry Council (HeatNIC), highlights that a £1 billion government investment today would provide the certainty needed for a further £4 billion of investment from the private sector by the end of the decade.
From 2030, the introduction of a Regulated Asset Base (RAB), a funding model used for major infrastructure development in multiple sectors, would provide the revenue assurance needed to help close the cost gap to gas. It would significantly improve investor confidence and certainty, reducing the cost of projects and the prices charged to customers, and driving an exponential increase in private capital going in the sector. This will enable government to meet its long-term ambitions for the sector, driving £17 billion investment by 2035 and £100 billion by 2050.
Read the report here.
“Heat networks are an essential piece of the puzzle in a cleaner, more secure energy system.
“By supporting this sector to crowd in private investment in the coming years, and providing confidence and financial certainty beyond 2030, they can drive economic growth, support tens of thousands of skilled jobs across the UK and strengthen our energy security.”
“Heat networks are the missing key ingredient of a resilient energy system which brings down users bills by using more homegrown energy to heat and cool our homes and businesses. Heat networks drive local economic growth across the UK, the creation of local jobs, and deliver huge improvements in air quality and health.
“The Heat Networks Industry Council is pleased to join forces with Energy UK to help more stakeholders understand the very significant and wide-ranging benefits of heat networks, and to promote discussions around how we can bring scale and pace to the industry in the very near term in order to bring down users bills.”
Five reasons to back heat networks
1. One heat network can connect thousands
A single district heat network can provide heating and hot water to thousands of customers, including homes and businesses.
This includes large nondomestic buildings such as hospitals, museums and leisure centres. By aggregating demand economies of scale can help to spread installation, maintenance and operating costs across customers, resulting in lower bills.
Vattenfall is expanding its existing Bristol heat network which currently supplies the equivalent of 13,500 homes including a fire station and a primary school. The long-term vision is to connect more than half of Bristolians by 2050.
2. Heat networks can increase energy security and decrease carbon emissions
Heat networks can switch their heat source to low carbon alternatives, without requiring the customer to make changes to their property.
As more heat networks make this switch to low carbon heat sources this will reduce reliance of volatile fossil fuels and bring about wider community benefits by reducing air pollution.
1Energy has connected more than 10,000 homes in communities across Bradford to its heat network, delivering an immediate 75% reduction in emissions to connected customers compared to gas boilers.
3. By using waste heat, heat networks can help to bring down bills
Heat networks can use excess waste heat to provide low-cost heating. This can include from rivers, mines, underground rail systems and data centres.
Vital Energi uses heat from an energy-from-waste plant to power its Leeds PIPES network. It cuts the city’s carbon footprint by around 7,000 tonnes and delivers cheaper tariffs to 1,400 vulnerable customers.
4. Everyone stands to benefit
The introduction of heat networks at scale will unlock significant system benefits by reducing electricity demand, making savings in investment needed on grid upgrades.
Heat networks can also introduce larger flexible capacity by enabling network operators to switch between heat sources in response to price signals and by activating storage in both larger thermal stores and the insulated pipes themselves.
E.ON’s innovative low-carbon district heating technology, ectogrid™, efficiently shares, balances and stores energy across the Silvertown development in East London’s Royal Docks.
5. Heat networks can support local growth
The heat network industry plans to unlock £5 billion of investment by 2030 and £100 billion by 2050, supporting both national and local economic growth.
Investment in heat networks leads to good, long-term jobs and investment throughout the local supply chain.
Downstream benefits include support for community groups, businesses and charities.
Hemiko’s Worthing heat network supports 48 local jobs and £3.8 million in local investment, as well as 30 opportunities for local businesses. It’s expected to bring £500 million in investment when the development is complete, and will support 500 jobs by 2050.
