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Meet your obligations with heat network regulations

Posted by Ian Allan

Wednesday 7th February, 2024

How can we make heat networks more efficient – lower bills, improve customer satisfaction and reduce complaints?

Posted by Helen Newman

We were invited to host Housing Quality Network’s webinar about making heat networks more efficient and how to lower bills, improve tenant satisfaction and reduce complaints. Ian Allan, Head of Market Strategy at Switch2 played host to the event. Paul Fleming, Business Development Manager at Switch2 spoke about how to improve the efficiency of heat networks.

Whilst the main focus of this blog is about heat network efficiency, it also touches on the different angles on tackling optimisation and efficiency that our other guests spoke about.

  • Mick Field at Leeds City Council took us though their journey in successfully rolling out the flagship district heating network in Leeds city centre and talked through how you can address legacy issues using government funds.
  • Paul Fleming at Switch2 shared his expertise on how to improve the performance of heat networks and ways to make them more efficient.
  • James Grinstead at Devonshires Solicitors gave us an overview of upcoming regulations and delved into the details around the Heat Network Technical Assurance Scheme (HNTAS).
  • Louise Singleton from Gemserv who run the Heat Network Efficiency Scheme (HNES), provided an overview of the government support and funding that is available and how heat network operators can access the help.
  • Stephen Knight from the Heat Trust talked about the organisation’s role as consumer champion and highlighted the issues that customers living on a heat network are facing today.
  • Bobbie Hough and Pam McCann at Hough Bellis, specialists in communications, gave us some valuable advice on how to overcome negative perceptions and improve customer engagement.

Setting the scene, Ian kindly took us through a bit of potted history from the days of using heat networks to deliver heat from coal in a cleaner way to where we are today. Ian has been in the heat network business for over 30 years and is now seeing big changes come into the industry. The spotlight is most definitely on heat networks and the government is on a drive to increase the amount of heat supplied through heat networks from 2% to 20% by 2050. It’s an ambitious target but it forms part of the government’s plans to reach the net zero target. With the recent energy crisis driving up energy prices, customers becoming the focus and regulation coming into place, the question is what should we be doing with heat networks to prepare for the changes?

An important driver behind regulation, and Ofgem being appointed as the regulator, is the customer - the end user of heat. Consumer protections are expected to be introduced to give customers more transparency, fairer prices and more reliable heat provision. A key factor in achieving this is making sure heat networks are working as efficiently as possible. If you are operating a heat network, what does this mean and what are the key indicators in determining efficiency?

Paul spoke to us about how to improve the efficiency of heat networks. The huge challenges facing building owners are costs and the upcoming regulations. However, maintenance is the key to overcoming these. Before the energy crisis, bills were relatively low and there were fewer complaints. Residents are generally satisfied with their heat and hot water supply, that it is until something goes wrong. Since the energy prices rocketed, we’ve seen a big change and people are now more interested in how much they are paying. Customers want to know more, they want to know how their tariff is worked out. It’s clear that there needs to be higher customer engagement. What’s more, with regulation coming in and the requirement to publish tariffs, the transparency of costs is going to become even more significant.

It’s recognised that the industry approach to managing heat networks today is also changing and there is a shift to using just one contractor. When you are driving for efficiency, it’s not manageable having to deal with several contractors. A holistic approach is needed. You also need a strategy for improving efficiency. It’s critical to understand your energy costs before you can start to manage your heat network efficiency. Building owners need to think about how recently their heat networks were reviewed, identify the issues and decide what interventions are needed. There are various measures that can be used in assessing how well a property is performing and how heat is being used. These measures can help to optimise the performance. It’s also all about building a profile of what good, better and best looks like.

Another challenge for building owners is access to properties. It’s a great result if you can identify poor performing properties, but if you can’t access the property then you can’t intervene. This is where good customer engagement comes in. As well as changing negative perceptions, it’s about increasing understanding and being transparent. We know that some residents moving into properties don’t even know they have a heat network. And we’ve heard many stories of heat network residents having a problem and calling out a domestic gas engineer to fix it. This is sufficient evidence to show that there’s still a lot of work to do in raising awareness of heat networks and improving the levels of understanding amongst residents.

Residents need to know that they have a reliable source of heat. It’s important that they get the information they need to understand what it means to have a heat network and how it works. How do they get heat and hot water? How do they operate it? Do they understand their bills? What do they do when there’s a problem? Is there a clear and robust process in place when things go wrong?

All of these questions boil down to awareness, providing clear information and having a two-way dialogue with residents. In turn this leads to increased trust and better customer engagement. But we also need to remember that we need to ensure that building owners have the same level of support with access to appropriate resources to enable them to engage with their residents too.

In summary, we know that the regulations are expected to start phasing in from 2025 and the rules will be in force in 2026. We know we need to begin to decarbonise the heat we use, but it’s important that customers are the centre of these plans. As well as the introduction of consumer protection standards, the regulations will also enforce minimum technical standards. It’s important to start taking steps now to understand how existing heat networks are performing before we can even start to make improvements to drive efficiency to meet these standards. The regulations also mean there are opportunities too and building owners are encouraged to take advantage of the funding that is available. There are many things that building owners can be doing right now to prepare to improve the efficiencies of their heat networks. The key take out is not to wait around for regulation. We know that a poorly operating heat network will impact hugely on costs and ultimately the customer experience.

If you would like to speak to one of our experienced team about your heat network projects and how we can support you, please get in touch.

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