The Government has announced a new scheme for consumers and non-domestic users to participate in a trailblazing heat networks project. Delivering on its commitment to tackle energy bills using innovative, low carbon solutions, the government announcement means that consumers and non-domestic users such as hospitals, schools and council buildings will be able to participate in a mass rollout of heat networks.
Demonstrating its commitment to the Clean Growth Strategy, a key policy for the UK’s Industrial Strategy, the government’s Heat Networks Investment Project (HNIP) will offer grants and loans to both the public and private sectors in England and Wales, for networks serving two or more buildings. The scheme is designed to help deliver the 2050 target, outlined in the Clean Growth Strategy, that heat networks should be able to deliver networks 17% of domestic heat demand and up to 24% of heating for industrial and public sector buildings. Currently only around 2% of heating is delivered across the UK by heat networks.
The £320 million commitment was allocated two years ago in the Spring Budget 2015 and the criteria for funding has now been made public. Developers will be able to apply for grants worth up to £5 million, while loans offered under the scheme will be capped at £10 million. The government aims to leverage £1 billion of investment in heat networks via the HNIP. The scheme will offer a mix of grants and loans to developers but support will be limited to less than half the capital construction costs for the individual projects.
Schemes eligible for support will include new build heat networks as well as the expansion and refurbishment of existing networks if they deliver additional carbon savings. The HNIP cannot be used to directly provide generation already supported by other subsidy mechanisms like the Renewable Heat Incentive but can be used to fund costs of heat network infrastructure connected to such plants.
Heat networks distribute heat efficiently through insulated pipes from a central source to a variety of different customers. According to the Department for Business, Energy and Industrial Strategy (BEIS), residents in apartments could see heating costs reduced by as much as 30% if they use a heat network rather than alternatives such as individual gas boilers. As well as lowering bills for domestic and non-domestic consumers, they can reduce the UK’s carbon emissions.
Heat networks are destined to play a vital role in the long term de-carbonisation of heating, as they provide a unique opportunity to exploit larger scale renewable and recoverable heat sources. There are already a number of successful heat network projects already operating in the UK. A landmark project in Sheffield burns 12,000 tonnes of municipal waste each year as the main fuel source for its network. In Southampton, the Main Energy Centre has over 45 energy users ranging from over 1,000 residential properties, a hospital, university, shopping centre, police headquarters and BBC studios.
The scheme is due to open for applications this autumn with the first funding being made available in 2019.