UK Government allocates £54m heat network funding amid slow uptake of heat pump grants for individual homes

Pictured: An artist's impression of the CHP unit under construction in Woking. Image: Thameswey

The confirmation of the funding, from the Heat Networks Investment Project (HNIP), comes amid concerns that just 2,500 vouchers have been issued for individual heat pumps through the Boiler Replacement Scheme, which has made 30,000 vouchers available this financial year. More on that story below.

Opened in late 2018 after a pilot scheme during 2016 and 2017, the HNIP is set to allocate a total of £320m of funding from Government coffers. A £19.1m tranche of funding was made available in March, and the Government has stated that a larger pot is on offer this time to “shield homes and businesses from costly fossil fuels” amid the energy price crisis. Wholesale gas prices in the UK on 26 July were around six times higher than on the same day last year.

More than £27m of the funding will be allocated to two projects in Haringey, North London. The remainder will be split between a project in Stewartby, Bedfordshire (£17m) and Woking, Surrey (£9m). With this funding added, the HNIP has allocated around £250m to date.

The Department for Business, Energy and Industrial Strategy (BEIS) claims that the four projects confirmed to receive funding today will collectively serve around 28,000 properties.

In Haringey, the selected projects are the Wood Green District Heating Network and the Tottenham Hale and Broadwater Farm District Heating Network, with the former receiving five times as much funding as the latter. Heat for both networks will be supplied primarily from the energy recovery facility being built at the Edmonton Eco Park as an upgrade to the existing facility. The facility is an energy-from-waste facility that is due to come online in full by 2025-26, burning around 700,000 tonnes of waste from multiple London Boroughs. It will be co-located with a new recycling centre.

In Stewartby, BEIS’s funding will go towards Vital Energi’s plan to open an energy-from-waste plant in a former brick clay extraction pit. Vital Energi estimates that the facility could serve up to 12,000 properties if connected to a heat network. Other partners in the project include Veolia and Covanta, which claim that the project, originally granted permits by the Environment Agency in 2018, will process 550,000 tonnes of waste annually.

The chosen project in Woking is an expansion of Thameswey Energy’s existing heat network serving the town centre. Thameswey is a private company with the local council as the single shareholder. The network is served with heat generated at local combined heat and power (CHP) plants and currently has connections to around 2,000 properties. The investment will enable up to 3,450 new homes to connect.

BEIS Minister Lord Callanan said: “These projects will transform how tens of thousands of households and businesses keep their properties warm. By investing in cutting-edge low-carbon heating technologies we are helping to secure a lasting move away from using fossil fuels and protecting consumers from the costs that are driving up energy bills at a time of high global prices.”

Some may see the irony in this statement, given that BEIS has repeatedly stated its support for increased UK fossil fuel extraction since the publication of the Energy Security Strategy. Nonetheless, it has done so while increasing ambitions for offshore wind and nuclear and while pressing ahead with low-carbon heat plans.

On heat networks specifically, the Strategy confirmed plans for the Government to appoint a regulator of the heat networks market as it expands. Ofgem has been appointed to this role and will have powers and responsibilities to ensure that consumers get fair energy prices and quality customer service. The appointment will become official upon the passing of the Energy Security Bill.

Boiler Upgrade Scheme

In related news, Friends of the Earth has this week published a note obtained from BEIS confirming that the Boiler Upgrade Scheme has received a total of 4,100 applications – 2,500 of which have been approved and vouchers issued – since it opened on 23 May.

The £450 Scheme was first confirmed in last year’s Heat and Buildings Strategy and provides homeowners with a grant to replace their gas boiler with a heat pump.

BEIS has stated plans to issue as many of its 30,000 voucher allocations for this year as possible, but Friends of the Earth believes the way the scheme operates won’t be suitable to encourage most homes to participate. Applicants will be able to claim up to £5,000 towards the upfront cost of a heat pump, covering the product and the installation, but these costs can be up to £10,000.

Other common deterrents from heat pumps include concerns about the price of electricity and the perceived ability of the technologies to heat water and space efficiently. Homeowners must also consider the need for digging around their properties.

““Given the rise in energy bills, there will be fewer and fewer people who will feel as though they can afford to spend £5,000 on a heat pump right now,” said Friends of the Earth’s head of science, policy and research Mike Childs in an interview with The Telegraph.

“It is right that we are investing with this scheme but the grants are not big enough and times are hard. They need to be more generous so more people can afford heat pumps. Unless that happens, there is little chance of the Government hitting its target of 600,000 installations annually by 2028.”

Rishi Sunak, who is running for Conservative Party leader, cut VAT on heat pumps to zero as Chancellor. However, he has stated during TV debates that his preference as Prime Minister would be to scrap the boiler upgrade scheme and divert the funding to home insulation. Opponent Liz Truss has made no specific mention of energy efficiency or low-carbon heating in TV debates thus far, stating instead that she’d remove green levies from dual-fuel bills for homes.