News story

Government’s ‘central heating for cities’ scheme to bring energy bills down

£320 million will be invested over the next five years in schemes across the country’s towns and cities to take low carbon heat and supply it to keep homes and businesses warm.

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£320 million will be invested over the next five years in schemes across the country’s towns and cities to take low carbon heat and supply it to keep homes and businesses warm.

The Government is consulting on how best to deploy £320 million allocated in the Spending Review for investment in heat networks. Dubbed ‘central heating for cities’, heat networks are already used widely across Scandinavian cities to keep homes warm in winter. And with potential to reduce heating costs by more than 30% for some households, this investment is exciting news for the country’s towns and cities.

Heat can be taken from a range of sources including large heat pumps, combined heat and power plants and deep geothermal plants, which take heat from underground rocks miles below the surface of the earth. It is then pumped around homes and businesses which is great for bringing down the cost of energy bills and it also helps to reduce carbon emissions.

We also waste lots of heat, pumping it out into the air from our waste incinerator plants, factories and offices. But all this is about to change, with the help of a network of pipes that can catch this heat and pump it around the homes and businesses nearby to provide warmth when they need it.

Secretary of State for Energy and Climate Change said: “This is an important next step in developing more home-grown energy, which is a vital part of our plan to ensure long-term energy security and affordable energy for our families and businesses.

“The funding we’re consulting on today will enable these schemes to provide affordable low carbon energy to thousands of homes and businesses across Britain’s towns and cities.”

Notes to Editors

Background on how Heat networks work

  • A heat network is like “central heating for cities” – instead of individual heaters in each building, there is a big central heat source (or more than one source) and this is then taken by pipes to a number of buildings, potentially whole districts which can all be linked up. These central heat sources are often “Combined Heat and Power” plants, which means they are small power stations that also capture the heat produced in electricity generation and use it locally. This new project will be supporting combined heat and power projects, but is also promoting the more innovative use of recovered waste heat sources described above

  • Without a network, it is impossible to re-use this heat and it simply gets dumped into the atmosphere. In Islington for example, they are expanding their existing heat network at Bunhill so that it can take heat that comes out of the London Underground (Northern line) and put it into their network. The SoS visited this development in March 2016.

Some history on heat networks in the UK

  • Heat networks already exist in the UK – city centres in Sheffield, Nottingham, Birmingham, Southampton etc already have heat networks, as do many high rise housing developments. One of the largest new networks is the Olympic Village network in East London.
  • But we have far fewer networks than other European countries: extensive networks in France, Germany, and Scandinavian countries deliver cheap and lower carbon heat to thousands of buildings connected to networks, with multiple and varied sources of heat going into the pipes. For example there is a ring of deep geothermal heating around Paris; 90% of homes in Copenhagen are on a network.

Background on Timing

  • We are now consulting with current and potential heat network sponsors, investors, supply chain, and any other stakeholders with views on how best to use the capital support funding to overcome barriers to investment in heat networks and increase heat network deployment rates.
  • We are inviting views on a range of scheme design issues, including the organisations and types of schemes that should be eligible for investment support, what form this funding should take, and the criteria that should be used to assess applications for funding.
  • Consultation responses are requested by 3 August 2016.
  • We are aiming to launch the first funding round this year. There will then be a series of funding rounds through to early 2021

Interesting facts

  • Heating is the largest single user of energy, and emitter of greenhouse gases. It is also a major component of most people’s energy bills.
  • Heating accounts for around 45% of UK energy use: predominantly for space heating (in homes and offices), heating water, cooking and industrial processes. 42% of this heating is for non-domestic use.
  • Heat production accounts for around 30% of UK carbon emissions (most heating comes from burning natural gas, with some electric heating and oil heating. All these add to carbon emissions). It is likely to be more cost effective to tackle heating emissions than emissions in some other sectors like heavy industry and transport.
  • 30% heat cost savings from a report by AECOM (2015) Assessment of the Costs, Performance, and Characteristics of UK Heat Networks. Compares estimated heat price for a small flat using a gas boiler (10.24p/kWh) with average heat price from gas-supplied heat networks studied (6.43p/kWh) – pp. 35-36
Published 29 June 2016