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Heat network customers to benefit from fairer energy prices

Hundreds of thousands of heat network customers could benefit from fairer energy prices under new plans unveiled by the government on 4 August 2023.

Under the proposals, homes and businesses supplied by heat networks would receive greater consumer protections currently only afforded to those on traditional gas and electricity contracts.

This would ensure fairer prices through their inclusion in a potential future price cap on energy bills, consistent standards for quality of service and supply of heat, backed up with regular and clear bills.

From 2025, Ofgem will be able to step in where homes and businesses have problems with disproportionate pricing, poor customer service and poor reliability.

Ofgem’s actions could also include fines for poor service and ensuring operators pay compensation to customers if there is a supply outage.

People in vulnerable circumstances, such as the elderly or those living with health conditions, would also be better protected, with heat network operators required to keep a register of these customers.

Lord Callanan, Minister for Energy Efficiency and Green Finance, said:   “We’re investing millions to build new heat networks, reducing emissions and providing low-cost heating to communities across the country.

“Heat networks allow people to heat their homes more cleanly, while cutting their costs and reducing carbon emissions. They are also an important tool in our push for greater energy security and independence.

“As more homes and businesses are connected to these innovative systems, it’s only right we ensure consumers are properly protected, pay a fair price for their energy, and are given the best service possible.”

Heat networks can supply heating and hot water by unlocking large scale renewable and recycled heat found underground or generated through manufacturing, providing low-cost energy to thousands of people.

The consultation will contribute to the target of 20% of the country’s heating being supplied by heat networks by 2050.

Views from consumer groups and industry will also be used to help shape the regulatory framework that Ofgem will use to monitor and enforce consumer protection regulations.

A regulated and trusted sector where standards are harmonised and where heat network developers can benefit from rights and powers to help them develop will also attract greater investment.

In May, the government announced £22 million of funding to develop the UK’s first system drawing heat from deep underground in Cornwall. The Langarth Deep Geothermal Heat Network will use geothermal energy from hot granite rocks beneath Cornwall to heat 3,800 local homes and public facilities in the region.

This was one of seven ground-breaking heat network projects across England that received a share of £91 million through the Green Heat Network Fund.

The government has also launched the £32 million Heat Network Efficiency Scheme to make vital upgrades to old and inefficient heat networks, providing thousands of homes in England and Wales with cheaper, greener energy.

The Heat Networks Consumer Protection Consultation can be found on GOV.UK and will be live until October 27 2023.

Stakeholder quotes:

Caroline Bragg, Interim CEO of the Association for Decentralised Energy: “We commend the government’s decision to launch a consultation with Ofgem on consumer protections for heat networks — a milestone long awaited by our sector.

“If the UK is to successfully deliver on net zero, zero carbon heat networks must indisputably take centre stage as the primary heating solution for buildings, and so it is critical that the millions of businesses and households that will benefit from them are properly supported.

“A low carbon, resilient and affordable energy future hinges on our collective commitment to clearing the barriers that stand in the way of widespread heat network adoption and rapidly scaling up deployment across the UK – to enable that, what we need to see next is regulation and zoning coming together to propel the exponential growth of heat networks.”

Tom Woodward, Association Secretary, The UK District Energy Association: “Whilst we know that many customers connected to heat networks have received a good quality service at a fair price, we welcome this consultation on behalf of our 160 members as the next step on the journey to the introduction of sector wide regulation, which will support those many customers who have not received this fair deal and quality of service they should expect from their heat network.”

Stephen Knight, Director, Heat Trust: “As the national consumer champion for heat networks, Heat Trust has long campaigned for the regulation of the sector and we therefore welcome this important consultation. Heat networks have a key role to play in the decarbonisation of heating in the UK, but customer experiences must improve if consumers are to gain confidence in district and communal heating systems.

“Whilst many heat network customers get a reliable and value-for-money heating system, sadly, too many do not. Too often customers experience high prices, unreliable systems, and poor customer service.

“It is therefore critically important that this consultation helps deliver regulations that achieve tangible improvements in terms of price protection, reliability and service quality and we urge all those with an interest in the sector to respond.”

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