Heat network zoning consultation

This consultation provides detail on the role of central and local government, zone identification, requirements in zones (consumer protections, emissions, requirements to connect) and zone delivery (selecting developers and ensuring construction).

Under zoning, central and local government will work with industry and local stakeholders to identify and designate zones where heat networks are the lowest-cost solution to decarbonising heat.

This consultation was closed on the 26th February 2024.

You can see the CIBSE response here and further details and the consultation questions on the consultation platform.

EXECUTIVE SUMMARY

1 - COMMENTS WHICH APPLY TO BOTH THIS CONSULTATION AND THE FHS/FBS CONSULTATION

1 – 1 The proposals in this zoning consultation seek to encourage the expansion of heat networks, but not their decarbonisation. This is reinforced by proposals under the current FHS / FBS consultation, in particular sleeving proposals. If heat networks are to be encouraged:

This must be on the basis of evidence and justified carbon accounting.
There must be clear requirements and incentives for their decarbonisation, much beyond the current proposals. The current proposals are far from encouraging decarbonisation of existing networks, and they allow the continuing development of high-carbon networks, which will by 2050 require additional expenditure and efforts to decarbonise.

1 – 2 The decarbonisation of networks which are currently in operation or being planned must be addressed.

This is a very real issue: the very large majority of heat networks operating in the UK (10,766 of the 11,847 networks, i.e. 91%) use natural gas or oil as their primary fuel (see Appendix A1).

In addition, the pipeline of expansions to existing networks continues the reliance on gas further into the future: over 45% of expansions have gas (for boilers or CHP) as their primary fuel (see Appendix B).

Neither this consultation, nor the FHS/FBS one, sufficiently address this need to decarbonise heat networks, nor do they set out a clear expectation and reasonable timeframe:

Proposals for sleeving (under the FHS / FBS consultation) do NOT sufficiently encourage the decarbonisation of existing networks: they only address, potentially, the installation of low carbon plant to serve new connections, not the existing fossil fuel plant. In addition, the proposed sleeving methodology may well in fact result in some existing networks increasing their average carbon content of heat – we are detailing this in our response to the FHS / FBS consultation.
The methodology for carbon limits in this consultation must be reviewed to truly account for the carbon emissions of networks (i.e. account for secondary losses, and not artificially reward electricity produced by gas CHP).
Alongside the initial 2030 limit, DESNZ should provide a trajectory of carbon limits applying to heat networks, through to their decarbonisation, so that networks have a clear direction and are encouraged to take early measures, before being required to do so.
Government must not wait until the mid-2030s, as currently proposed, to develop (maybe not even implement?) low carbon standards for networks. Given the scale of the issue and the significant time lags between planning and operation of heat networks, these standards must be created as soon as possible to provide a direction, and to start informing policy. CIBSE would welcome the opportunity to discuss this with DESNZ, as CP1 could play a role in this by establishing forward-looking best practice recommendations.

1 – 3 The current proposals, through artificial factors and accounting methods, create a real risk of misleading assessments against alternatives, and significantly under-estimating and misrepresenting the operational carbon impacts of heat networks: this applies to the calculation of carbon emissions from networks, in this consultation (see point 2-3 below), and to the setting of the notional network in the FHS / FBS consultation.

1 – 4 Central to our recommendations on both this consultation and the FHS/FBS one, and to support robust and transparent policy, it is crucial that a comprehensive public register of networks be created, maintained, and regularly audited by an organisation independent from heat networks interests. This public register could possibly be the fully rebuilt PCDB promised by this consultation. It should:

Be publicly available
Be maintained and regularly audited (from a very simple review, we have found worrying indications that the current heat register is not sufficiently audited: see details in Appendix, with clearly erroneous information on heat generation vs supply).
Include access to data from previous years, to allow tracking of progress
Be the single source of information for any policy relying on operational performance of networks, in order to provide full transparency and avoid loopholes and double accounting i.e. not just for FHS / FBS calculations, but also planning applications, EPC calculations, and other relevant policies and financial incentives. It should also be used for reporting linked to heat metering regulations, to reduce the reporting burden and improve consistency of information across data sources.
Include information currently included in the heat metering register, but with additional data on individual networks, and including energy use per fuel, allowing analysis of primary and secondary losses, and carbon content of heat. Details of the amount and source of “sleeved” heat should be declared. See details in Appendix A3.

This is far from being provided by the current PCDB, which is empty, and by the Heat Billing Regulations - Heat Network Register, as illustrated in Appendix A3. The upcoming regulation of heat by Ofgem creates the perfect opportunity to address this. CIBSE would be happy to support and discuss this with DESNZ at the earliest opportunity.

2 - SUMMARY OF RESPONSES SPECIFIC TO THIS ZONING CONSULTATION

2 – 1 CIBSE agree in principle that if heat networks are to be encouraged and deployed, heat zoning would help by providing more certainty and a more consistent process and methodology for developers and local authorities. However, the purpose of encouraging heat networks is to allow heat decarbonisation in a cost effective manner. We are concerned that the current proposals do not do this. Given it is the stated justification for networks, then carbon performance and costs to consumers should be central to the following elements, but is not in the current proposals:

Zoning methodology: see response to Q48
Exemptions for buildings not to connect: see response to Q31: carbon emissions and cost to consumers were proposed as part of the exemption criteria in the 2021, and were supported by the majority of respondents. In this consultation, only capital cost to consumers and timing are in the current list of allowable exemptions, with a non-committal note that carbon emissions may be an allowable exemption in certain circumstances. No justification is provided for this. It is a serious risk to carbon emissions reductions, and to consumers. This must be revisited.
Monitoring and reporting: see response to Q71
Revoking process: see response to Q75
Carbon limits for networks within zones: see response to Q43.

While it may be implicit, we are concerned that a number of gaps exist. Carbon objectives must be clearly stated and central to the proposals so that all actors – Regulator, Central Authority, Zone Coordinators, and network developers and operators - are clear from the onset about their objectives and duties.

2 – 2 Zoning methodology

The methodology should be made public, open to input in its development and subject to regular review and scrutiny, with open data. CIBSE would welcome the opportunity to be involved.

The mapping and assessment of opportunities must be of opportunities for networks to save carbon, or provide the same carbon savings at lower cost i.e. hard to decarbonise properties, and genuine opportunities that heat networks could capture which on-site plant would not or not as easily e.g. waste heat from other sources such as from datacentres and supermarkets (not Energy from Waste plants).

We strongly recommend that the methodology should make use of the National Building Model (NBM), also commissioned by DESNZ: https://www.ucl.ac.uk/bartlett/energy/news/2023/nov/national-building-database-step-change-understanding-energy-performance-buildings . This will represent a powerful and comprehensive resource, including every building in England, Wales and Scotland, its activities, building characteristics, and energy use. A key purpose of the NBM is precisely to inform decarbonisation policies, so this is obvious opportunity to capitalise on efforts and on digitalisation, to provide a robust and consistent assessment of policy options. Heat zoning should seek to make use of it (and, in return, the zoning methodology pilots could inform development of the NBM).

2 – 3 Carbon performance requirements on heat networks

We strongly agree that heat networks should meet carbon performance requirements if they are to be included in a heat network zone.

However, we do not agree with the proposed limits, because under the proposed methodology, emissions from networks risk being significantly under-estimated - see details in Q43:

Under the current proposals, the carbon content of heat would be calculated including primary distribution losses only. Secondary losses may be at least as high (see Appendix A2). They must be included in order to reflect the real carbon content of heat delivered to the customer.
The carbon content attributed to electricity produced by CHP (304g/kWhe), i.e. seen as a benefit from gas CHP attributed to heat networks, is completely un-representative of current electricity networks in the UK, let alone how they will be in the next few years as the electricity grid continues to decarbonise– and the factor is proposed for 2030 (!): it is almost double the average carbon content of electricity from all District Network Operators in England in 2023 - see Appendix C. None of the 11 DNOs in England had an annual average carbon content reaching that value.
Even when looking at half-hourly data, on the theoretical assumption that CHP may be controlled to run at times of high-carbon grid electricity, this is a highly unlikely carbon factor: the England average exceeded it for just 36 hours in 2023. Of the 11 DNOs in England, two did not operate a single hour in 2023 above that value, another six had only less than 10% of annual hours above that value, and two between 10 and 20%. The remaining two networks operated only between 30 and 40% of the time above that value. It is therefore likely that, in the vast majority of the time, in the majority of networks in England, CHP would run when much lower carbon electricity would in fact be available from the grid.

2 – 4 Impact Assessment

The impact assessment does not provide sufficient information to understand how the results were arrived at; we would like to see the full assumptions and methodology behind it, as well as the criteria (e.g. is the main criterion £ / ton CO2 saved?).

In addition, we do not agree that the main counter-factual to heat network zoning is a “do nothing” counterfactual: there needs to be much more attention to the “lower carbon” counter factual i.e. other options for heat decarbonisation: this is the real test of whether heat networks offer a cost effective decarbonisation option.