Hotting up: are heat networks about to take off in the UK?

You might obsess about turning the lights off but, the truth is, electricity only makes up a tiny part of your carbon footprint. In fact, around 80 per cent of UK home energy use comes from heating space and water, and most of that is generated by individual gas boilers sitting in dusty cupboards. While that’s clearly an improvement on burning coal, it’s still a fairly inefficient system, dependent on fossil fuels, that needs to be tackled to cut the nation’s carbon footprint.

The UK’s heat sector accounts for about a fifth of national CO2 emissions, and the government’s advisory Committee on Climate Change has been highly critical of efforts to decarbonise it. In a recent report it recommends that new homes should not be connected to the gas grid from 2025. Instead, it says, they should be built on systems such as heat networks, where a group of buildings are linked to a central energy source through underground pipes.

The promise of heat networks, also known as district heating systems, is that they can provide greener heating to many homes or businesses at once and may be cheaper and more reliable than alternatives. The think tank Institute for Public Policy Research estimates their development could also create up to 81,000 jobs and generate up to £22bn in private investment into the economy. The government is enthusiastic, hoping they will account for at least 17 per cent of heat demand in homes and almost a quarter in industrial and public-sector buildings by 2050.

That’s a big increase on the current 2 per cent. The UK’s first district heating scheme was built in Pimlico in the 1950s to funnel waste heat from Battersea Power Station to thousands of homes and businesses. Heat networks grew in popularity and some councils bought into them enthusiastically, particularly for social housing. But the idea never gathered steam the way it did in parts of Europe, particularly the Nordic countries, Germany and the Netherlands, and fizzled out in the latter part of the 20th century.

There are many reasons why the UK has not embraced heat networks with the same warmth. Lily Frencham, head of operations and heat and efficiency policy lead at the Association for Decentralised Energy (ADE), says countries where heat networks are common have more coordinated heat network markets and centralised urban planning models. This encourages developers to design with heat networks in mind and means they can be built to a standard template and more easily linked up.

The UK, by comparison, has a fragmented heat market with a variety of different business models and little regulation. That, alongside high capital costs and low rates of return for building and running heat networks, as well as the fact that the UK already has an extensive national gas grid and low gas prices, has provided little incentive for either developers or consumers to consider different heating options.

Richard Long, Engie’s business development director for urban energy, adds that many earlier systems were installed cheaply with little long-term thought. “That’s partly led to a poor reputation in the UK of district heating, where the only degree of control was opening your windows.”

All this could be about to change. Frencham says the idea of heat networks has been rekindled over the last 15 years because of pressure to meet carbon emission targets. In London and Scotland, in particular, planning policy that strongly encourages heat networks in larger developments has led to a variety of innovative projects (see box). “It’s allowed a lot of customers at once to decarbonise, so governments are really interested in that,” says Frencham.

In October, inspired by the success of a pilot which found that nine projects alone could save 216,324 tonnes of carbon emissions over 15 years, the government’s energy and business department (BEIS) pumped £320m into its Heat Networks Investment Project (HNIP). It is now offering grants and loans to businesses, hospitals, schools and councils in the hope of igniting a sustainable commercial heat network market.

Do the hoped-for benefits stack up? One key selling point is lower heating bills. A 2017 BEIS report found that the median price for heat network customers was £100 a year less than those not on networks, although there was no difference in the mean and prices varied hugely across the country.

The efficiency and reliability benefits aren’t clear-cut either. Frencham says a heat network is essentially just a distribution system with an energy centre at its heart. “That doesn’t make it more or less likely to perform. However, it’s the ongoing monitoring and maintenance that would lend comfort in terms of reliability,” she says, rather than relying on individuals to spot problems and call out an engineer. This is improving rapidly as the technology behind heat networks develops (see box).

Frencham also notes that changes can be made to a heat network much more effectively than to individual boilers. “If we figure out how to do something like a tweak to make it run better or a new low-carbon energy source you can put it in place and all those people benefit, instead of changing out 1,000 in-home technologies. That’s a very exciting proposition.”

Most importantly, the purported CO2 savings of heat networks depend on where their energy comes from. Tim Chapman, director of engineering consultancy Arup’s infrastructure design group, cautions that heat networks are not inherently low-carbon “and may, if fossil-fuel based, lock us into a higher carbon future at a higher cost”.

Networks can use heat from many sources, but most are still dependent on gas, either in standalone boilers or combined heat and power (CHP) plants. Engie’s Long says gas has been a useful energy source to get schemes up and running. “But it won’t deliver the carbon savings needed for district energy to play the part that the government wants it to in the decarbonisation of heat.”

Renewable energy sources such as geothermal (ground-source heat pumps), biofuels, solar and air-source heat pumps are growing in popularity, but their viability depends on where the buildings are located. Networks can also recover waste heat generated by heavy industry and infrastructure; that is starting to happen, but it’s still a nascent idea and again highly location-specific.

Part of the problem is that the government has not yet committed to a long-term plan for how the country will generate heat and the two main ideas – replacing natural gas with hydrogen and electrification from a decarbonised grid – are still a long way off. Research into replacing the gas grid with hydrogen remains at an early stage and probably relies on the development of carbon capture and storage (CCS) technology. Meanwhile, there are doubts over whether the national electricity grid would be able to cope with the additional load once electric vehicles take off as well.

This uncertainty means not everyone is convinced that networks are the solution to the UK’s heating woes. Arup’s Chapman believes there is a place for district heating if it’s installed in new developments in dense cities, is well planned and is compulsory so it has a large number of users. But, he pours cold water on the idea that it will play a big role in the UK’s heat future, saying it detracts from the most powerful way that the country can lower the carbon footprint of heating: insulating buildings properly.

He adds that government goals for heat networks can’t be met without retrofitting them to existing buildings – and that’s both expensive and disruptive.

However, Stuart Allison, head of solutions at Vattenfall, stresses that district heating must be understood in a wider context. “One of the advantages of a heat network is flexibility in how a city uses heat, where you’re able to recover it from some buildings and use it in others. A good example would be a data centre, which has a high electrical demand and produces a lot of waste heat. At the moment one of its big challenges is how to get rid of this heat. With a heat network you can capture it and supply it to the building next door at low cost.”

‘One of the advantages of a heat network is flexibility in how a city uses heat, where you’re able to recover it from some buildings and use it in others’

To make this work, heat must be seen as a valuable form of energy that can be recycled. As well as feeding off waste industrial heat, it might mean taking heat back from consumers and feeding it back into the system, ensuring attached buildings are more energy efficient, and linking heat much more closely to other utilities such as electricity and cooling. “It’s now a much more organic thing than a linear ‘generate some heat, send it through a pipe to a user’,” says John Armstrong, head of operations at E.ON. “Actually, when it gets really exciting is when you start thinking about it more as a living and breathing system. That delivers significant benefits in terms of carbon and performance.”

Cooling, in particular, will be a big issue as global temperatures rise. “We’re seeing increased heat stress across cities and we want to be designing the right infrastructure for what the world in 2050 looks like,” says Vattenfall’s Allison. “If we can design the infrastructure in a way that can share heating and cooling, that’s far more efficient, and a heat network is crucial infrastructure to doing that.”

Allison cautions that although networks can be designed to fit into a variety of possible futures, they need to be planned properly to achieve this, whether that means installing buried infrastructure that will stay in the ground for the next century or designing a network to operate at lower temperatures to accommodate newer energy sources. “It comes down to having a good masterplan for the network, and not thinking about it as a little standalone project.”

That will involve long-term thinking at every level in the complex heat network chain, including planning authorities, developers, energy firms and consultancies.

One thing companies hoping to get a stake in the emerging market agree on is that they would like some form of standardisation. Following recommendations from the Competition and Markets Authority and the Heat Network Industry Taskforce, BEIS is now designing what it describes as “light-touch regulation” for the sector. An updated code of practice setting out how heat networks should be designed, built, operated and maintained is also in development, and the Heat Trust has been set up to give customers some consumer protection.

Stuart O’Neil, heat networks business lead at Siemens, says this will create much more predictable outputs for schemes and stronger consumer protection, resulting in lower risk and hopefully attracting more investment.

Heat networks taking off could mean wholesale changes to the way that buildings in the UK are heated – although as a householder running a bath or turning up your heating you may not even notice.