Heat in buildings is a significant contributor to greenhouse gas emissions, and the de-carbonisation of heat will be a critical part of the journey to meeting the UK’s Net Zero Carbon target. One policy area which has been under review by the UK government is the Heat Network (Metering and Billing) Regulations.
These regulations seek to increase the metering, monitoring and accurate billing of heat use in communal and district heat networks with the aim of facilitating the identification of opportunities for energy savings and efficiency improvements. Long awaited changes to these regulations have come into force on 27th November 2020, which will see the requirement for many heat suppliers to undertake cost effectiveness evaluations for the installation of heat meters by 27th November 2021.
New guidance has been issued by the Office for Product Safety and Standards (OPSS) to help heat suppliers to comply with the new regulations. The amendments to the regulations introduce 3 building classes – viable, exempt and open class.
1. EXEMPT CLASS
Those in the exempt class, as the name suggests, will be exempt from installing heat meters and undertaking the cost effectiveness evaluation. Included in the exemptions are the following:
- Buildings with communal systems where heating/cooling is distributed by a means other than water (for example split unit and VRF systems which use refrigerant).
- Existing buildings comprising of supported housing, almshouse accommodation and purpose-built student accommodation (for those buildings connected to district systems, this applies only to buildings which do not fall in the viable class).
- Existing buildings where more than 10% of the premises/dwellings are subject to a leasehold interest where the lease began before 27th November 2020 and contains a provision which prevents billing based on actual consumption (for those buildings connected to district systems, this applies only to buildings which do not fall in the viable class).
2. OPEN CLASS
Those in the open class will be required to undertake the cost effectiveness and technical feasibility evaluation, and install meters (or if heat meters are not feasible, heat cost allocators/hot water meters where cost effective/technically feasible) for final customers where confirmed to be viable based on this assessment. This includes the following buildings:
- Newly constructed building with a communal heat network (which does not fall in the exempt class) connected on or after 27th November 2020 and before 1st September 2022.
- Newly constructed building with a communal heat network (which does not fall in the exempt class) connected on or after 1st September 2022 where there is more than one entry point for the pipes; or the building (or any part of the building) is supported housing, almshouse accommodation or purpose-built student accommodation.
- Existing buildings where heat meters or heat cost allocators are installed in all private dwellings or non-domestic premises within that building.
- Any other existing building which does not fall into the exempt class or viable class.
3. VIABLE CLASS
Those in the viable category will have a mandatory requirement for heat meters to be installed. This includes the following buildings:
- Buildings connected to district heating systems which are newly constructed and connected to the network on or after 27th November 2020.
- Buildings connected to district heating systems that undergo major renovations relating to the technical services on or after 27 November 2020.
- An existing building where meter installations have previously been mandatory.
- A newly constructed building connected to a communal network, which is connected on or after 1st September 2022, which does not fall into the open or exempt classes.
Heat suppliers will therefore first need to determine which category each of their heat networks falls into. For those in the open class, where the cost effectiveness evaluation deems the installation of heat meters to be viable, the relevant devices are required to be installed by 1st September 2022.
It is possible for properties to change class after their initial determination where changes occur to the building. Where a building moves from an exempt class to an open or viable class for example, the requirements of the newly applicable class will apply.
Many of the original regulatory clauses remain including requirements to notify of existing heat networks every 4 years in line with the government notification template, to maintain heat meters and ensure they operate accurately, and to issue accurate billing based on actual meter data to final customers, where technically possible and economically justified to do so.
It has now been clarified that the billing requirements apply to all meters installed on the heat network, regardless of whether they have been installed under a duty in the regulations or existed prior to introduction of the regulations. This clarifies the position for those heat networks where heat meters were installed which pre-date the introduction of the original regulations in 2014.
The new guidance also stipulates that replacing meters (at the end of their life or in the event of failure/inaccuracy for example) is expected to be generally possible. However, in cases where it would be technically impossible or the estimated cost would be unreasonable, this must be evidenced to OPSS. Again this has implications for properties where heat meters exist which pre-date introduction of the regulations, but meters have not been maintained/are not accurately recording and require replacement.
In summary, the updates to the regulations introduce many of the requirements which were originally intended to be included when the regulations first came into play in 2014. However, the changes made through the consultation process do go some way to providing a more pragmatic approach to the assessment of meter cost effectiveness through the introduction of the building classes. Timescales for compliance may sound like some time away, but suppliers with many networks across their portfolio will need to act as soon as possible to ensure that compliance can be achieved in time, in the event that heat meters are also required to be installed.