We’re living in a time where phrases such as ‘net-zero’, ‘carbon-neutral’ and ‘eco-friendly’ have become part of our day to day vocabulary. In the aftermath of the COP26 summit the urge to implement and adopt environmental policies is as pressing as ever. The Department for Business, Energy & Industrial Strategy (BEIS) recently published their consultation on one such policy “Heat Network Zoning” which carries significant implications for the real estate industry.
What are heat networks?
A Heat Network involves heat generated from a central location being distributed to various consumers via insulated underground pipes. The networks are designed to utilise large-scale renewable heat sources such as industrial waste heat and heat from rivers and mines. The network’s size and composition will vary depending on the area that it is intended to cover, and offers an economical and environmentally friendly option to replace individual boilers or heaters in each building.
Why?
We do not need to underscore the growing importance of net-zero strategies in tackling climate change. In the UK heat in buildings is responsible for 23% of greenhouse gas emissions and the target is to eliminate these emissions in the coming decades. In the 2020 Energy White Paper it was estimated that heat networks could increase from providing approximately 3% of the UK heat demand to 18% by 2050. The networks are sought to improve the energy efficiency of our buildings requiring less direct energy such as gas, hydrogen or electricity, and in addition utilise what is referred to as ‘wasted heat’. The Greater London Authority believe heat wasted in London could meet 38% of the city’s heating demand making heat networks an increasingly attractive opportunity in meeting the UK’s net zero target.
Who?
The proposal is that heat network zoning will become a national government run scheme, mapping the intended locations and drawing out standardised methodology for their implementation. It will then fall to the Local Authorities to refine each network within their area. It is envisaged that a Zoning Coordinator will be elected to carry out various functions between local authorities in a specific area such as designating heat zones, enforcing requirements and once running, reviewing their operation. The Coordinators will likely have powers requiring that all new buildings, large public sector and large non-domestic buildings connect to a heat network.
How will it impact us?
To date it has been ‘new builds’ that have featured at the centre of heat network projects, but given the small proportion of properties that these will account for existing ‘retrofit’ buildings may also be compelled to connect to the network. This means it won’t just be limited to developers, but tenants of both commercial and residential property may also be impacted.
Heat networks aren’t a new concept and are already widely adopted in countries such as Denmark and the Netherlands. In the UK we currently operate around 14,000 of them. Concern has been raised regarding how the networks are regulated and whether councils have the appropriate resources and expertise to monitor both the networks and their providers. Many businesses have already begun addressing the need for more eco-friendly ways of generating heat, and the compulsion to join government run networks may be financially detrimental. Buildings which already use and operate their own eco-friendly heat sources or have good reason not to join one of these zones, such as timing or cost, will want to be confident that they are exempt.
Conclusion
Environmental strategies will need to be heavily adopted in the coming years if we are to meet our net-zero targets. The implementation of strategies such as Heat Zoning creates jobs whilst tackling one of the major issues of our lifetime. Yet there remain some serious questions as to whether a government run centralised scheme is the best way to roll out these strategies, and many will have concerns about the practicality, cost and effectiveness of joining a heat network zones. Although the BEIS consultation has concluded there will still be ample opportunity through both pilot studies and future conversations to address these questions.
Key Points
- Legislating for net zero emissions by 2050 will mean the decarbonising of our heating.
- Whilst there isn’t one single strategy to do this heat network zoning is looking like both a realistic and current strategy to help achieve this.
- A one-size fits all approach clearly won’t be appropriate and the government will need to establish a flexible framework depending on both the area and intended user.
- Appropriate support, funding and resources will need to be invested in order to ensure the Zoning Framework is both implemented and followed.