£270m Green Heat Network Fund to boost district heating

Heating buildings, which overwhelmingly uses fossil fuels, accounts for 21 per cent of the UK’s total carbon emissions. Cutting these emissions through improvements in efficiency and alternative heating is a major part of the government’s decarbonisation plan.

The new heating fund will assist the rollout of the “next generation of heat networks”, which will enable more towns and cities to take up green heating technologies from 2022.

Heat networks, also known as district heating, supply heat to buildings from a central source, avoiding the need for individual buildings to have their own inefficient, energy-intensive heating sources such as gas boilers. At present, there are over 14,000 heat networks in the UK, providing heat to around 480,000 people. As well as improving heating efficiency for homes, heat networks are the only proven way that larger-scale renewable and recovered heat sources – such as excess heat from the London Underground – can be utilised.

The previous funding round provided £165m for schemes in England and Wales since 2018 and permitted fossil fuel sources of heat, provided that they provide some carbon reductions and would be replaced by lower-carbon alternatives over time. The new fund will differ from its predecessor in that it will only support applications if they include low-carbon heating technologies such as heat pumps, waste heat and energy from geothermal sources, and solar heating.

The Green Heat Network Fund could fund the delivery of an estimated 10.3Mt of total carbon savings by 2050; the equivalent of taking 4.5 million cars in England off the road for a year.

The government hopes the scheme will boost market demand for heat pumps, which require a large upfront investment. Campaigners have pressed the government to partly or wholly cover the cost of heat pumps for low-income households.

Energy minister Lord Callanan said: “Finding a mix of innovative solutions to how we heat our homes in the most affordable way is going to be vital as we support people to gradually transition away from gas boilers over the next 15 years.”

“Today’s announcement shows we are going even further in our goals to expand this tried and tested heat networks technology, making even more use of the likes of recovered heat from the London Underground to heat our homes. The Green Heat Network Fund will also allow us to drive forward the new, cost-effective and low-carbon technologies we need to kick-start new industries and support new jobs in the low-carbon technology sector as we build back greener from the pandemic.”

Heat networks currently meet two per cent of the UK’s demand for heating. The independent Committee on Climate Change has estimated that, with sustained support, they could provide 18 per cent by 2050.