ZONING - IS THIS THE MISSING PIECE OF THE DISTRICT HEATING PUZZLE?
As the UK continues to drive down its carbon intensity, real progress has been made in many areas. The energy generation sector is increasing renewable output via a diverse energy mix and great strides have been made within our transport system, with a general move towards electrification. However, a part of the eco-system where the solution has always been far more complex, relates to the way in which we heat our homes and businesses.
Over the past decade, the UK Government has pursued several pathways towards decarbonising heat. The UK strategy is still somewhat fluid but one such pathway comes in the form of District Heating (commonly known has Heat Networks or Communal Energy, at a single building level). Despite the real potential for Low Carbon District Heating to provide a significant contribution towards decarbonising heat, the number of heat customers and connections still sits at around 3% of the UK population. With a target of 20% of the UK population to hit by 2050, there are still a number of barriers to overcome.
In an attempt to energise the District Heating sector, the UK Government has provided significant funding to encourage growth. At the same time it is essential that when compared to other regulated utilities, a level playing field exists and ultimately, that the heat sector becomes far more attractive to the investment community.
I’m sure few will deny that having a proportionate regulatory framework will remove some barriers and make investment in the sector more appealing, but to be truly successful and align with our 2050 target, which we are already undershooting, schemes need to become far more ambitious. A seismic shift is needed towards city-wide heat networks.
On that note, when considering the investment already required for relatively modest schemes, you can imagine the far higher level of investment needed to deliver a city-wide scheme. In turn, the risks and complexity increase exponentially as the difficulties for securing connections over a long period of time are clouded.
Anyone involved in the District Heating fraternity will have heard, for some years, the buzz word “Zoning” - but is it just a buzz word? How widely is this term understood? Do organisations fully understand the significance of Zoning and the mission critical need for it to become an integral part of Heat Regulation?
As touched on above, for organisations to invest in city-wide heat infrastructure, regulation needs to compel both new build and existing non-domestic buildings to connect to a Heat Network route if it passes in close proximity (or plans to do so) - subject of course to a viability assessment. To encourage connections, the investment model will clearly need to capture connection costs, especially ahead of regulation, but as the volume of anchor loads grow, more importantly, so too does the potential for domestic connections and this becomes pivotal. On that point, it is worth noting that it is highly unlikely that such connections to existing domestic properties will be mandated and certainly not as part of the initial regulatory launch.
So this all sounds like a sensible plan, until we hear that the likelihood of regulation coming into force in England, coupled with Zoning, could still be two or three years away at best. If we believe that Zoning is mission critical, what happens now, and do we merely wait and fall further behind the curve? Well interestingly “the what happens now” is actually happening.
Despite the lack of regulation, and although the implementation of a regulatory framework and Zoning strategy will undoubtedly begin to reinforce the growth of the heat industry, organisations aren’t waiting. Instead they are pressing ahead, demonstrating a willingness and commitment to apply the principals regardless. Examples are also beginning to emerge with Local Authority lead schemes making long-term and strategic decisions that should see that seismic shift begin to take effect, even if deploying large scale infrastructure with limited connections against the short-term horizon.
To play devil’s advocate, the year 2050 is presently 28 years away, so surely we have time to make things work? Is there really an urgency to push ahead of the required regulatory building blocks and take unnecessary risks without guarantees? Well - if you consider that to achieve the required 8 million district heating connections by 2050, we will have to add every new house built from today plus a further 100 thousand existing properties each year - in answer to whether we can wait - you can quickly see that we are already years behind schedule. The entrepreneurial outliers of today with their innovative ideas and commercial models, rapidly need to become the norm.
It’s possible that 2025 will be a crucial trigger point, when the fitting of domestic gas boilers to new builds will be banned. For the UK to fully capitalise on Low Carbon District Heating as a viable pathway, Zoning, coupled with proportionate regulation, will need to be the practiced enabler for such developments and well before 2025. Zoning must become the obvious “No Regrets Solution”. For District Heating to become mainstream, ideally the decision to connect should be driven by the desire of the consumer.
On a final note, if the benefits of moving to Low Carbon Heat Networks weren’t clear enough prior to Covid, then now, taking into consideration the unprecedented energy and cost of living crisis the UK is living through, District Heating has the real potential to play a major role in bringing down costs, providing future-proofed flexible energy infrastructure and the security needed to support self-sufficiency.
We have been talking about regulating heat in the UK for many years now, and more recently coupling Zoning as a mechanism for lowering risk, so at the very beginning of this blog, I asked the question “Zoning – is this the missing piece of the District Heating puzzle”?
