Heat network regulation is on the horizon. Although we don’t know the specifics, waiting for the regulations to arrive before addressing the efficiency of your heat network could be costly. Building owners must take action now to make sure they have a well-maintained heat network.
Following the Government's latest publication on consumer protections, the new heat network regulations are now imminent. These proposals are set to bring major changes, requiring all heat network operators to comply with Ofgem's upcoming authorisation and regulatory standards.
The actual phasing in of the regulations is due to start in 2025 and fully implemented by 2026. Although we expect there to be a transition period for some of these regulations to be in place, building owners need to assess their heat networks now to make sure they are regulation ready.
Overview of the regulations
Under the Government’s ambitions to increase the amount of heat from heat networks from 2% to as much as 20% by 2050, the regulations will provide consumer protections for customers and set certain technical standards. Heat networks have been around in the UK for many years. However, we stopped building them in the 1970s due to the discovery and subsequent roll out of North Sea gas. This has meant that more recent heat networks have suffered from a lack of knowledge and experience in design, build, operation, and maintenance, heat networks have often performed poorly, requiring investment to improve the reliability and reduce costs for building owners and residents alike. The government have also recognised that it will be more difficult to achieve their overall net-zero aims if older legacy schemes aren’t brought up to standard.
Owners of heat networks will need to comply with certain technical standards in construction and operation, known as the Heat Networks Technical Assurance Scheme (HNTAS). The Department for Energy Security Net-Zero (DESNZ) has recently published guidance on the scheme. Although only guidance at this stage, when the HNTAS comes into force, the scheme is intended to make heat networks more reliable by setting a minimum level of performance. This is already putting pressure on building owners to make sure they have a well-maintained heat network. And you could question why you wouldn’t do this as better maintenance and operation will reduce carbon, increase the longevity of equipment and bring down costs to residents as described below.
The regulations will of course improve the experience for residents on new heat networks. But building owners who are responsible for older or legacy schemes need to act now and assess their heat networks to make sure they are regulation ready. Scheme performance and efficiency will play a crucial part in meeting technical standards, which in turn will affect how building owners manage their costs and set tariffs.
What the regulations mean for heat network owners
As a building owner with a heat network or heat network owner you are likely to become the regulated party and you'll need to comply with legally binding duties related to the reporting and operation of your heat network. You'll also need to provide information about the efficiency of your scheme and how energy tariffs are calculated.
It's now more important than ever to prioritise the governance and maintenance of your heat network. Doing so will not only help you comply with your duties to reduce costs, but also ensure a reliable supply of heat for your residents. This will help you avoid the guaranteed standard of service compensation payments that will become required by law.
Is your heat network regulation ready?
If you’re a building owner responsible for a heat network – are you confident your scheme is operating as efficiently as it should? If you’re not sure, then you must act now. Any interventions that are needed now will have to be carried out in any case once the regulations are in place. So now is a good time to assess the performance of your heat network to make sure it is regulation ready. There are significant cost benefits to be gained in the long term by improving efficiency now. What’s more, you can also apply for funding under the Heat Network Efficiency Scheme (HNES) to help support optimisation studies and installations works.
What you can do now to prepare
If your heat network needs improvement, here’s what you can do:
- Start by understanding how your heat network is currently performing.
- Check what savings you could make through efficiency improvements, by using our Heat Network Efficiency Savings Calculator.
- Employ a specialist to complete an in-depth assessment of your heat network. Switch2 can help you undertake an optimisation survey of your heat network and identify the areas that need improvement.
- Apply for a revenue grant to fund an optimisation study under the Heat Network Efficiency Scheme (HNES). Round 7 of the HNES is now open for applications until 26th July 2024.
- Decide on the interventions that are needed. If required, you could apply for a further capital grant under the HNES to partially fund any installation works.
- Make sure you have ongoing specialist support now and throughout the life of your heat network.
We're here to help
At Switch2 we have an experienced team on hand to assist you. We can help you undertake an optimisation survey of your heat network and decide what interventions are needed. We can also provide you with pre-application support if you’re applying for HNES funding. If you need any assistance, please get in touch. We’re here to help you.
If you would like to speak to one of our experienced team at Switch2 about your heat network projects or need any support, we are here to help.
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