Market report: Heat Networks in the UK

As the UK transitions to a low carbon and digitalised world, new opportunities arise to transform the way we heat our homes and buildings. The Government has identified heat networks as a key technology to decarbonise heat and has allocated £320m of funding out to 2021 to grow the heat networks market. This funding is expected to draw in up to £2 billion of additional capital investment and lead to the construction of hundreds of heat networks in England and Wales. Scotland has an ambition to connect 40,000 homes to heat networks by 2020, serving 1.5TWh of heat through heat networks.

Heat networks connect heat sources, including local waste heat, with homes and businesses through a network of pre-insulated pipes carrying hot water. Heat networks are a well-established technology in other parts of Europe. Heat networks provide a number of key benefits:

1. Local Infrastructure: As local energy infrastructure, heat networks enable the use of local renewable energy resources (such as biomass and geothermal energy) at a larger scale, and the recovery of waste heat from industries and power stations.
2. Low carbon: Low carbon and renewable energy sources for heat networks can significantly lower carbon emissions from heat (between 50 to 100gCO2 /kWh for a biomass network), compared to traditional solutions (above 200gCO2 /kWh).
3. Planning asset: Heat networks can be fitted to new or existing buildings as part of local sustainability strategies. The greatest carbon savings can be achieved in the retrofit sector, with research for the Joseph Rowntree Foundation suggesting potential carbon savings of up to 42% per dwelling
4. Consumer value: Well designed and operated networks can offer competitive and stable heat prices over the long term, as well as low carbon heat.

This report highlights the opportunities offered by heat networks through developing a clearer picture of the market. Information contained in this report is based on a survey of heat network operators (i.e. ESCOs, housing associations, local authorities). This report also builds on previous research on heat networks in the UK (i.e. Pöyry 2009, Databuild 2013 and AECOM 2015)2.

Between January and November 2017, the ADE undertook a survey of heat networks in Great Britain. Information on heat networks was collected from a wide range of organisations, including public and private actors, and the information covers about 160,000 domestic and commercial customers on 810 different networks. In light of the BEIS Regulatory data published in February 2017, the sample of networks on the ADE database represents one-third of the overall number of customers connected to heat networks in the UK.

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