Housing associations and heat network regulation

Zoning and heat network expansion

To grow the heat network sector, the government is regulating it, providing funding to expand it and using ‘zoning’ to drive up scale. In short, zoning will mandate new and many existing heat networks to connect up to heat network schemes in certain areas.

Technical standards and improving existing heat networks

While heat networks have generally been more affordable for residents than domestic heating systems, the best performing networks are estimated to run at just 65-70% efficiency and the majority estimated at just 35-45% efficiency. This means 55-65% of their heat could be lost before reaching consumers. For comparison, the average efficiency of a domestic gas boiler is around 85%.

More heat loss means higher bills for landlords and residents, as more heat has to be used to compensate for what’s lost. This lost heat can also cause overheating in various areas of a building. To lower costs, improve service and prepare heat networks for decarbonisation, the government is planning to mandate a set of technical standards that heat networks (both new and existing) will have to meet through an accreditation scheme. Owners of heat networks will need to:

• Roll out more metering.
• Analyse current performance.
• Bring existing heat networks up to higher standards.

The government is planning to consult on these technical standards and metering obligations in 2024. The Chartered Institution of Building Services Engineers (CIBSE) has developed a voluntary Code of Practice (CP1) that sets out minimum technical standards for heat networks. DESNZ is also working with CIBSE to update this throughout 2024, to ensure alignment with the new technical standards. The aim is to make the next version of CP1 freely available in 2025. CP1 (2020) is therefore not an exact representation of the standards heat networks will be required to follow within regulation but it is a very good starting point because CP1 (2020) compliant networks will be well prepared for forthcoming regulatory technical standards. 

The government is also planning to pilot their technical standards throughout 2024. Housing associations can get involved by contacting heatnetworks@energysecurity.gov.uk. More information is available here.

Another standard for housing associations to be aware of in preparation for regulation is developed by the Building Engineering Services Association (BESA). It is a voluntary test standard and testing regime for the Heat Interface Units (HIUs) that transfer heat from the heat network into the homes of consumers. It aims to ensure that the HIU market meets the needs of those developing and designing heat networks, which ultimately benefits consumers.

Consumer protection

All heat networks will be required to register with OFGEM as the new regulator and to provide OFGEM with a range of information. Citizens Advice will become the statutory consumer protection representative. Both the Energy Ombudsman and the Housing Ombudsman will have a role in providing redress to consumers (depending on the type of heat network scheme). OFGEM will be consulting on a range of areas regarding heat network consumer protection throughout 2024 including:

• Consumer vulnerability
• Complaints
• Guaranteed standards of performance
• Billing
• Pricing protection