Preparing for Heat Networks

With intensified government attention, forthcoming regulation and increased funding directed towards this sector, activity is only going to heat up in the next few years.

At Mills & Reeve, we have a team of specialists with experience in this area drawn in particular from our energy sector group. We offer some reflections here on the opportunities and challenges ahead. 

The evolving landscape of Heat Networks

The UK Government has directed considerable attention to the roll out of Heat Networks. It's estimated that the transition to 18% supply will require a £60 – 80 billion investment by 2050. In response to this, the Heat Networks Industry Council was established in June 2020 to guide the investment of up to £50 billion into low carbon Heat Networks by 2035. Little over a year later, in October 2021, the Heat and Buildings Strategy was released to complement the Government’s Net Zero strategy, allocating £3.9 billion in funding.

There have been various pots of grant funding made available, including the Heat Transformation Network Transformation Programme, backed by £338 million of investment over 2022/23 to 2024/25, designed to scale up heat works, which has been superseded by a £288 million capital grant fund, the “Green Heat Network Fund”, that is open to bids until November this year. 

There's also been an inflow of substantial private investment with the Energy Act 2023, designed to further encourage investment by providing a favourable regulatory environment. Part of this is by way of a “zoning” with different districts encouraged to invest and develop low carbon heat supply alternatives. The intention in the long run being to move away from grant funding to a self-sustaining model, led by local authority partnerships with the private sector.

Typical areas for the development of Heat Networks will include cities, town centres and campus locations. Some examples of recent, ongoing, and in-development, Heat Network projects include:  

• Bradford Heat Network – A planned low-to-zero carbon district heating network that will supply up to 30 major public authority buildings in the city centre via 8km of pipework. The project is supported by substantial private and public sector investment.
• Leeds City Council “Leeds PIPEs” – This is an ongoing project with total investment to date of more than £62m. At present, it involves more than 19km of network, but this is due to expand by a further 2.4km over the next two years to connection additional buildings in the city.
• Vital Energi – Hull – Hull has made use of £22m from the GNHF to develop infrastructure to heat 14 public sector buildings and other industrial buildings. 
• Warwick University – This was a six year, £5.4m, programme that began in 2018 and came online this year to deliver a 23km Heat Network at the University of Warwick. 
• Vattenfall – London, Bristol, and Midlothian Vattenhall are investing more than £1bn into the UK to develop heat network infrastructure eg £300m into Bristol as part of a low carbon transition, with the Heat Network there now supplying heat to 5000 homes.
• Plymouth City Council – On the 26 April 2024, Plymouth City Council issued a prior information notice to explore potential partnerships with developers.

Final thoughts on Heat Networks

The summary above represents a selection of the key points related to Heat Network projects. The sector is set to continue to flourish over the coming decades to meet the UK’s demand for a low carbon heat supply alternative to gas, and regulation will shortly be upon us. The practical implementation of projects will remain challenging so sourcing the right people with appropriate expertise will be critical to success.

How can we help?

We would be delighted to talk to you about Heat Networks and the challenges and opportunities for your organisation.