The BEIS Heat Network Investment Project, with £320 million committed to capital investment until 2021, is a necessary step in developing the UK’s heat network industry. Both BEIS and the industry recognise that creating a stable, enduring investment environment after 2021 could require additional policy action.

To determine the best approach to securing investment and protecting consumers, the ADE has launched a Task Force on Post-2020 Heat Network Arrangements. 

Purpose of the Task Force

The purpose of the Task Force on Post-2020 Heat Network Arrangements (hereafter ‘Task Force’) is to produce a report to provide BEIS with industry and wider stakeholder views on how to create a self-sustaining market for heat networks.

Scope of the Task Force

The Task Force will address two key issues, which are outlined below:

Achieving equitable investment:

The Task Force will develop a policy proposal and industry recommendations focussed on reducing investment risk for new district heating networks to a comparable level with new gas, water and power network investments. The aim of the proposal is to reduce the cost of investment, and hence the cost of heat to customers, and increase investment into the sector to meet BEIS objectives. Key questions to be addressed:

• What policy or regulatory change would enable district heating investments to have a similar risk/reward profile to other energy and water infrastructure?
• How could policy repeat the long term stability in gas, power and water networks that allows investment across parliamentary terms?
• How could the preferred policy mechanisms be developed and enacted?
• What are the key policy areas which currently give stability and where change could be detrimental?
• What can the sector and industry do to reduce the long term risks of district heating networks?

Protecting customers:

 The Task Force will address the challenges created by heat networks’ natural monopoly, and consider whether there is a role for policy or regulation in building on the existing voluntary frameworks, such as Heat Trust, to ensure customers receive good service and a fair deal. Key questions to be addressed:

• What areas of customer protection have and have not been addressed to date?
• What may be needed in the area of heat price and contract length?
• What are the key points of contestability where competition could be enforced?
• Under what circumstances could these areas of contestability be used?
• Are there options for customers to obtain greater flexibility or choice over aspects of their service provision?
• Are there opportunities to provide better advice to customers on heat networks?

Depending on time constraints, the Task Force will also explore related issues that affect the long term stability of the sector, including interactions with other energy networks, and local issues such as planning, business rates, waste heat, access and wayleave rights.  

Participants