Sunday, June 23, 2024

The government’s national heat network plan: What’s in it for communities?

Richard Lane, Community Energy Consultant

It’s well known that the government is looking to increase the number of heat networks in the UK, but there has been little coverage of the plans for exactly how. At Sharenergy, we are calling for community and social benefit to be at the front and centre of the Heat Network Transformation Programme and are taking action through our Community Heat Development Unit project.

The Department for Energy Security and Net Zero (DESNZ) recently held a consultation on proposals to create heat network zones across the country which could then be licensed for development, in a similar way to the PEDL licensing system for companies wanting to look for fossil fuel reserves.

The benefits of heat networks are clear: they can offer heat potentially at far lower costs than individual heat pumps and offer a route to decarbonise heat whilst avoiding extensive, expensive and disruptive retrofit. They can allow households to benefit from heat that would otherwise be wasted from industrial or commercial sources like data centres or – unsustainable as they are – waste incinerators. Further decarbonisation advantages are available through centralised heat storage, which offers the chance to shift times of demand and thereby support intermittent renewable electricity generation. Hot water tanks are an order of magnitude less expensive than chemical batteries and don’t require exotic minerals with dubious supply chains.

Sharenergy’s Community Heat Development Unit project

Sharenergy is a community energy consultancy based in Shrewsbury but active nationwide, with extensive experience supporting communities to develop renewable energy projects. We have helped to secure over £30 million in community energy investments, through over 10,000 individual investments by members of the public. We are a co-operative and have a strong social purpose.

We are working on a Community Heat Development Unit (CHDU) project which brings a data-led approach to identifying where the best chances for successful community heat networks are – drawing on existing experience but adding the crucial element of community ownership and representation that is Sharenergy’s specialism. This 18-month project, running in partnership with Community Energy England and the Marches Energy Agency, will develop a business model that can operate in these ‘sweet spots’, as well as a Community Heat Delivery Unit to support the development of locally-owned networks.

We want communities all over the country to be able to take control in the effort to decarbonise their heat needs. Hence it was essential that we spent some time understanding the consultation proposals and their implications for communities.

What’s being proposed?

The proposal that went out for consultation is that DESNZ, as “Central Authority”, will identify areas in which a heat network has the potential to offer cheaper low-carbon heat than would be achieved through every property installing an individual air-sourced heat pump. Each such area becomes a “designated zone”, and is licensed to a developer by a local “Zone Coordinator”. The coordinator may be the local council, a regional body or combined authority, or DESNZ itself. Zones are licensed through a “competitive and open process”, and four preferred commercial delivery models are given, three of which involve partial ownership by the local authority.

Within a designated zone, many nondomestic properties are likely to be compelled to connect to the heat network. The same would apply to existing communal heating systems, and new buildings are likely to be required to be “heat network ready” on construction.

As a heat network expands within a zone, the developer has the power to compel more nearby sites to connect to it. This applies both to consumers and sites on which significant amounts of heat are generated, such as waste incinerators, which would be identified as potential heat sources by the Zone Coordinator.

The powers being conferred onto these licensed zone developers are significant – both the powers of compulsion and also the monopolistic position they then occupy, able to set the price of heat for buildings that are likely to be reliant on the network. No details on the planned zones are given, but a map showing the output of a preliminary zone modelling exercise appears to show several thousand heat network zones across the country. The Committee for Climate Change (CCC) suggested that heat networks could supply 18% of UK heat demand by 2050 – equivalent to 5 million households and 387,000 nondomestic properties.

The licensing work is due to get underway next year (2025) and will require local authorities selected as Zone Coordinators to work with DESNZ to agree heat network zones. Each zone will be consulted on with the intention of developing a pipeline of heat network builds for the next 10-15 years, with each awarded through a “short competitive process”.

Our questions and concerns

We have three major causes for concern with this process, but all basically boil down to the total neglect of communities from any part of this process. Oversight (via elected politicians) and consultation are not the same as community engagement, and we’re seeing far too many cases where net zero infrastructure is seeing its social support eroded as a result of a failure to address communities’ needs meaningfully.

Our three main questions are:

What lessons have been learnt from previous experiences of licensing monopolistic infrastructure to private operators via a competitive process?
The issues surrounding the operation of the rail and water systems should give us pause for thought before embarking on more of the same to supply buildings with heat for the next 40-50 years. Competitive processes reward back-loading of costs and the loading up of infrastructure with debt. Partnership working between the public and private and/or third sector organisations could have a better chance of growing the sector and retaining wealth in our communities. We also think that underlying the whole process should be an understanding that the infrastructure will come into public ownership in the future, after an initial operational phase.

Why is social benefit not considered? Even within a purely privately owned model, the social offers of heat network developers can vary massively. Zone Coordinators must have a mandate to provide benefit to their communities when acting as regulators. Governance should be a legitimate consideration when awarding licences – social enterprises with community purpose are already running theatres, libraries and leisure centres very successfully all over the country.

What is expected to happen for residential properties? No requirement is proposed for residential properties to connect to heat networks within zones, nor any obligation for heat network developers to enable their connection. Domestic properties represent 60% of our heat consumption nationally – it is very conspicuous that no provision is made for them. If it’s too politically difficult, doesn’t that say something about the process they’re proposing? The regulations should encourage, possibly oblige, developers to offer connections to domestic properties and regulate how these connections are treated. Why do half the job?

The amount of infrastructure to be built under these regulations is immense, yet they have not featured on the radar of public political debate. The potential for community benefit – and indeed harm – is great.

To keep up to date with our CHDU project visit https://www.sharenergy.coop/community-heat-development-unit/ and sign up for our newsletter.

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