Government launches £320m scheme to help decarbonise UK’s heat networks

The Government has launched a £320m scheme to help accelerate the adoption of low-carbon heat technologies across the UK's public, private and domestic sectors, on the same week that further tweaks to the Renewable Heat Incentive (RHI) were criticised.

Called the Heat Networks Investment Project (HNIP) was announced in April and officially launched on Tuesday (16 October). The scheme will offer grants and loans to businesses, hospitals, schools and local authorities with a heat network of two or more buildings.

The scheme is being operated by the Department for Business, Energy & Industrial Strategy (BEIS), which claims that switching from an individual gas boiler to a heat network system could reduce heating bills for those living in flats by 30%.

BEIS additionally claims that a switch to heat networks could “significantly” reduce the UK’s carbon emissions, if the transition is carried out at scale.

Specifically, the department has predicted that heat networks will meet up to 17% of the national heat demand for homes and almost one-quarter (24%) of the heat demand for industrial and public sector buildings by 2050.

“The UK has led in the decarbonisation of electricity, and [this scheme] shows we are just as committed to tackling heat,” Energy Minister Claire Perry said.

“[The HNIP] creates a route to market for innovative energy projects across the country and demonstrates a key objective of the Clean Growth Strategy; to help deliver technologies that can lower bills, cut carbon and improve the quality of life for communities across the country.”

The funding will be allocated on an application-by-application basis, with the last of the grants and loans set to be allocated by 2021. Heat networks could deliver up to 18% of UK heating demand by 2030, the Committee on Climate Change (CCC) has claimed.

The Delivery Partner of the initiative comprises of AECOM, Triple Point Investment Management, Amberside Advisors, Ecuity Consulting, Germserv and Lux Nova.

In the pipeline

The launch of the scheme comes after BEIS began a six-month pilot study into low-carbon heat networks in October 2016.

During the pilot, researchers concluded that the projects supported by the full scheme would provide heat to approximately 5,000 domestic customers and 50 non-domestic buildings across nine heat networks.

BEIS claims that these nine networks will collectively deliver more than 85,000 MWh of heat annually, eliminating the equivalent of 216,324 tonnes of CO2 emissions within a 15-year period.

The move to launch the scheme was welcomed by E.ON’s chief executive Michael Lewis, who said it forms a “first step towards creating the right market conditions” for the uptake of low-carbon heating technologies.

“As a country, we need to tackle the issues of heating and transport if we are to meet our environmental commitments and to make our cities and streets healthier places,” Lewis said.

“We are ready to meet the challenges set out by the ambitions of the Clean Growth Strategy.  What we need is more ‘meat on the bones’ and crucially new policies that clearly signal to investors that there are opportunities for investing in the future UK market. Government and industry need to work collaboratively together to help develop opportunities over the longer term to put the industry on a sustainable platform.”

RHI concerns

The launch of the programme coincides with the Government’s decision to hold a consultation on proposed changes to the Renewable Heat Incentive (RHI) to exclude further support for biomass installations in urban areas on the gas grid.

The RHI was set up in 2011 to encourage businesses and more recently homes to switch from fossil fuel heating systems to renewable and low-carbon alternatives such as biomass boilers and heat pumps. However, the National Audit Office (NAO) has suggested that the system has “not achieved value for money“.

The latest proposed amendments to the scheme would impact modern biomass boilers, which are already regulated, in order to improve poor air quality levels in urban areas. According to the Wood Heat Association (WHA), more than three-quarters of biomass boiler models emit less than a third of legal limits and are therefore eligible for Government support through the RHI.

The WHA’s chair Neil Harrison said: “The latest proposed reforms to the RHI risks being a knee-jerk policy reaction to the air quality crisis. The industry has lobbied for many years for actions to ensure the very safest levels of emissions from biomass boilers in all parts of the UK, not just urban areas.  Modern biomass boilers, fitted with high-performance filters, achieve particulate emissions equivalent to that of conventional fossil fuelled boilers, while making significant carbon savings.

“The government should be promoting and enforcing quality standards, rather than applying a blanket ban. Such a ban would cut off one of the key options for the decarbonisation of heat in larger public and private sector buildings, and would ignore experience from every other developed country which has seen the successful deployment of biomass heating across their economy.”

Sarah George & Matt Mace 

Action inspires action. Stay ahead of the curve with sustainability and energy newsletters from edie