The Association for Decentralised Energy (ADE) has launched a task force on district heating, aiming to deliver a subsidy-free heat network market with strong protections for consumers.
The task force, which will represent a range of stakeholders, will provide recommendations on how industry and government can work together to deliver an enduring market framework, where heat networks can compete for investment with other utilities and forgo the need for further subsidy by 2021.
The task force will look at the most effective ways to increase investor certainty for heat network investments in order to attract the same low-cost investor capital that other forms of network infrastructure such as gas, water, and electricity enjoy. ADE said that heat networks need to see increased certainty and lower investment risk if the sector is to attract the low-cost investor capital it needs to become a self-sustaining market.
The task force will also consider how to build on the existing customer protection scheme, Heat Trust, including important consumer issues such as heat pricing, contract length and contract structure, areas that Heat Trust is not permitted by law to address.
The task force will address three key challenges:
- Ensuring heat networks have similar risk profiles as new gas, water and power network investments, and therefore attract low-cost capital from institutional investors.
- Addressing the challenges created by the natural monopoly of district heating network, including the role for regulation in price, contract length and structure, and competition.
- Understanding the key strategic opportunities that will help facilitate the expansion of district heating at the local government level, including planning rules, access rights and wayleaves, and business rate treatment..
ADE Director Dr Tim Rotheray said: “Homes and businesses will always need heat and hot water, and heat network infrastructure offers a future-proof investment that delivers for consumers. But we need to get the investment framework right, ensuring effective customer protection and increased investment certainty.
The government’s minister for industry and energy, Jesse Norman said: “Heat networks are already helping to decarbonise our heat supply and provide affordable low carbon energy to thousands of homes and businesses across Britain’s towns and cities. The task force will play an important role in considering how to establish a sustainable and fair market as the sector expands. We look forward to receiving the recommendations.”
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