Heat networks in the UK are becoming an increasingly popular way of heating homes under the Government’s strategy to reach Net Zero by 2050. Heat networks have been around in the UK for many years, however due to a lack of knowledge and experience in design, build, operation, and maintenance, have often performed poorly, requiring investment to improve the reliability and reduce costs for building owners and customers alike. This is even more important now that gas and electricity prices are soaring...

Why has funding been made available for heat network improvements?

Under Government plans to increase amount of heat from heat networks from 2% to 18%, heat networks will shortly be regulated for customer service and technical standards. This of course will improve the experience of residents on new heat networks, but the Government is conscious that residents on older schemes will be left with higher costs if nothing is done.

What funding can housing associations and local authorities access to improve the performance of their heat network(s)?

In 2021, BEIS (Department for Business, Energy & Industrial Strategy) launched the Heat Network Efficiency Scheme (HNES). This demonstrator programme was solely aimed at supporting performance improvements to existing heat networks where outcomes for customers and operators are sub-optimal.

The demonstrator scheme proved incredibly popular, with Switch2 supporting several applications for funding, indicating that there is indeed an appetite to improve the performance of heat networks.

The Heat Network Efficiency Scheme (Main)

Following the success of the demonstrator round, the main HNES funding will open in February 2023. The funding will allow applicants to apply for the following:

• Revenue funding for Optimisation studies – If an optimisation survey wasn’t carried out during the HNES Demonstrator round, or prior to the new funding opening, building owners can apply for 100% funding for a survey. Following the survey, applications can be submitted for 50% funding of capital works. It is worth noting however, that the funding pot is limited to £30mil, and with the survey being a requirement of the capital funding application, it’s likely those who wait for survey funding will miss out on funding for capital works. But why wait for funding to start improving your heat networks? The cost of gas and electricity is so high now, even with the October Government support scheme, that you could be making a significant contribution to elevating fuel poverty by acting now. Prepare yourself the capital funding support – and start saving.
• Capital funding of up to 50%  – Unlike the demonstrator round, the main HNES funding will award 50% funding for capital works, subject to suitability. This is the route we would recommend building owners go down, as many who had a survey carried out will be applying directly for the capital funding, which is limited, meaning those who have not had a survey carried out before applications open are at a significant disadvantage.

All applicants to the HNES Main scheme must evidence how the funding will meet the objectives set by the Government for the scheme. These objectives can be found in the guidance for applicants documentation.

Key takeaways

The performance of heat networks can no longer be ignored, as rising costs and carbon savings take centre stage. If a heat network is known to need improvement, here’s what you can do:

• Start by understanding what savings you could make through efficiency improvements, by using our Heat Network Efficiency Savings Calculator.
• Employ a specialist! Switch2 can undertake an optimisation survey of your heat network(s), and identify the areas requiring improvement, so ready for capital funding, and can take advantage of low “hanging fruit” immediately.
• Decide on the interventions to carry out and prepare for the next round of HNES funding which opens in February 2023, ensuring specialist support is available to help prepare and submit the application.