Speech

Speech to the Community Heat Conference

Baroness Verma addresses the first Community Heat Conference.

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

Baroness Verma

I’m delighted to be invited join you at your first Community Heat Conference.

Amongst a number of things that struck me when I joined DECC was the scale of its heat challenge – but also how communities and heat fit so well together.

In the UK we cannot operate - as businesses, local authorities or communities without heat –we also need a secure energy future and we must tackle climate change.

The scale of these wider challenges are significant – as is the challenge on heat. We are not going to meet our long-term climate change targets without input from communities and consumers changing the way they generate and use heat.

There are benefits too. We want people to have warmer homes, lower fuel bills, we also want to reduce emissions from the energy they use. We want affordable heat for community and council office buildings, having the ability to sell heat to local consumers.

Nearly half the energy we use is for heating. Currently 70% of the heating in the UK is produced from natural gas, a fossil fuel increasingly imported. We know that the price of oil has fallen recently but the long-term trend is rising costs for heating particularly off the gas grid.

Local heat covers several themes and connects to energy efficiency. It involves:

  • reducing carbon emissions through improving the energy efficiency of buildings, reducing heat demand
  • better linking demand and supply
  • identifying key local resources. This could be waste heat from industrial processes, regional woodfuel or utilising the heat from a local river.

There are a range of technologies for alternative heating, such as heat networks, Combined Heat and Power (CHP), geothermal, biomass and heat pumps.

In 2012, we published The Future of Heating: Meeting the Challenge. This set out our long term vision for the role of heat networks in our towns and cities and the growth of renewable heating in the countryside.

The Renewable Heat Incentive is making real headway in beginning to realise this vision, providing a major boost to the renewable heating market and various technologies, including biomass boilers and heat pumps.

So far we have seen 7,300 non domestic and 6,200 domestic biomass boilers accredited for RHI – with 2.2 terawatt hours of renewable heat generated and paid for by the scheme. That’s enough to heat the equivalent of almost 150,000 homes for a year.

It is important that fuel system use is sustainable. We understand concerns about the origins of woodfuel and the need for promoting regeneration of managed woodlands. So from October 2015 biomass boilers owners will need to demonstrate that their fuel is sourced sustainably.

To ensure this is not too much of a burden on consumers we have introduced a biomass suppliers’ list where they can easily find suppliers of sustainable woodfuel. We’re also hosting a series of workshops where RHI participants and businesses can find out more about these requirements.

The Renewable Heat Incentive is also proving the platform for innovative heat projects enabling any building to get support to make the transition to renewable heating which is eligible for RHI.

Last year, the Secretary of State for Energy, Ed Davey turned a switch at Kingston Heights, a pioneering new development using heat from the Thames to keep 136 residential units and a hotel warm. The National Trust in Wales has begun using the Menai Straits to power a marine source heat pump to heat a historic mansion.

We want to enable more of our rivers and lakes to be utilised for heat, in an environmentally-friendly way. That is why we expect to publish later in March, a `Water Source Heat Map’ as a new layer on the National Heat Map, to highlight opportunities for deploying water source heat pumps. This will help planners in England identify potential sites for water source heat pumps in their areas of interest.

Our Heat Networks Delivery Unit – commonly known as ‘HNDU’ has been providing the expertise and support to local authorities who are best placed to facilitate and to drive change. The Unit combines grant funding with guidance from experts in technical, commercial and legal aspects of heat networks.

In its first full year of operation, HNDU awarded just under £7 million of grant funding to local authorities to explore heat network opportunities. It has had four rounds of funding and each has proved more successful than the last.

Heat networks have the potential to decarbonise heat, not only from exploiting waste industrial heat but unlocking the potential of indigenous sources - such as deep geothermal.

Through HNDU’s support for heat mapping, master planning, feasibility studies and detailed project development, up to 115 local authorities are developing heat network opportunities.

The Networks Energy Investment Report published by Government in January indicated that if 25-50% of this portfolio were built, it would represent an investment opportunity of £400-800m.

I am pleased to announce the publication - today - of 74 winning projects from 55 local authorities in HNDU’s fourth round worth £2.9m of grant funding. We are now supporting a total of 180 projects across local authorities in England and Wales.

The portfolio of projects being supported includes technologies such as:

  • heat pumps utilising heat from waste, mine water and rivers
  • CHP fuelled by gas, biomass and energy from waste; and
  • deep geothermal wells.

Let me touch on community energy. Community energy is locally-owned energy - with benefits that flow to the local area - whether developed by parish, district or borough councils, community groups, charities or urban local authorities, ideally working in partnership.

The complexity of heating networks means that communities often need to work with other bodies, such as local authorities to develop viable schemes and local authorities working with community groups across England can access the £15m DECC/Defra Rural Community Energy Fund along with its counterpart DECC’s £10m Urban Community Energy Fund.

Last year DECC published the UK’s first Community Energy Strategy covering energy efficiency, collective purchase and energy generation. The focus of community groups was on electricity due to Feed-in Tariffs - but with the support of the Renewable Heat Incentive, we are now seeing some possible results from a community approach on heat.

The Rural Community Energy Fund is supporting campus-style biomass heat networks and rural village heat schemes - such as one being planned in Barcombe in Sussex, developing a small-scale heat network to supply a primary school, a residential home and local households.

The Fund has seen an interest in a community water source heat pump on a historic canal. In fact, 38% of the projects gaining support from the rural Fund are for community heat.

In Wales, community heat projects are also starting to emerge, through the Welsh Government’s community energy support scheme, Ynni’r Fro. Currently, Welsh Government is developing a scheme to replace Ynni’r Fro and community projects to develop heat will be supported under this new programme.

The Community Energy Strategy set out a number of actions on heat. One of them was the publication of a Community Biomass Guide, developed in partnership with The Forestry Commission. The Forestry Commission is launching this online Guide today on its website.

There is potential to produce several million tonnes of woodfuel from currently neglected or undermanaged woodland in the UK, without diverting wood from existing end-users. Broadleaved woodlands in particular are often under-utilised and the biodiversity they support degraded.

Bringing these woods back into productive management to provide woodfuel will also improve habitats and increase resilience to pests, disease and climate change.

The Community Biomass Guide will help communities assess whether to apply for funding for professional advice on developing local woodfuel supply chains. It offers information on sizing boilers, as well as on funding, skills and setting up a community group.

Scaling up community heat matters too. You may have heard about off gas grid community halls which have installed an air source heat pump saving on bills, improving thermal comfort and earning an income from RHI. This is just the start.

There is potential for demonstrating all scales of community heat projects – both small-scale community heat networks and larger local authority networks. These can also link up.

We believe one barrier is lack of information and awareness on the potential of heat. We need ‘local heat champions’ who can communicate the potential of heat to their locality.

We also need access to experts and case studies. We know from the OxFutures ‘Powering-Up’ Conference last September that communities want more information on the customer journey for heat projects.

This afternoon we are asking you to contribute experience and ideas to the development of a ‘community heat toolkit’ to help communities and local authorities tackle the customer journey for heat.

DECC has given £100,000 in seed funding to develop a community energy advice and information website, currently being developed by the Energy Saving Trust to be taken over by Community Energy England.

This platform will link to the heat ‘toolkit’ and also provide interactive social media to help communities compare notes on everything from consultants to community engagement and planning.

Communities also have a role to play in helping the roll-out of smart meters. The Smart Metering Programme involves installing over 50 million smart electricity and gas meters by the end of 2020 impacting every home in Great Britain and over 2 million smaller non-domestic sites.

Smart Meters will bring an end to estimated billing and give consumers greater control over how they use heat - and how much they pay for it. Community groups and other ‘trusted’ third parties have a key role to play in making sure that all consumers, particularly those who are vulnerable, or on low income, receive the benefits of smart metering.

Tackling constraints in the supply chain is essential to increasing the take up of renewable heating systems. We have invested £650,000 in the up-skilling of existing heating engineers to ensure they have the right skills and knowledge to install renewable heating systems.

The Renewable Heating Skills and Apprenticeship Voucher Scheme, launched by the Secretary of State in October 2013, has been a big success with over 1,600 vouchers issued. Of these, 843 installers have completed their training and 53 apprenticeships have joined the pilot Apprenticeship scheme.

We now need to see the industry, working with the training community, to build on what has been achieved to date. To support that aim we are investing a further £80,000 to establish a national forum that will address best practice and quality assurance of renewable heat training.

DECC has appointed SummitSkills to lead the forum and we want to see those organisations involved in the delivery of renewable training working together to ensure we have competent installers delivering high performing renewable heating systems to communities, homes and business.

DECC is also supporting the work of the Chartered Institution of Building Service Engineers and the Association for Decentralised Energy on technical standards for Heat Networks. We are also implementing the heat metering and billing requirements from the Energy Efficiency Directive.

DECC is funding a Heat Networks Demonstrator competition – worth £7 million to stimulate innovation and help address the cost and performance efficiencies of heat networks in the UK.

So there is real progress - but we need more. That’s why we are working collaboratively on overcoming barriers which some of you have told us are holding the sector back. For example, in relation to water source heat pumps – in addition to the new interactive map.

  • we are working with the Environment Agency to improve the application process for environmental permits backed up with a central point of contact to aid early pre-application discussion;
  • we are funding the development of an industry-led Code of Practice, to drive up technical standards; and
  • we will be running a series of heat pump roadshows in the summer, including one focusing specifically on those looking to install water source heat pumps.

To conclude:

By working together, we believe we can make a real step change on heat. Ultimately, we want heat to become a community issue – so that we can provide a real boost to the local economy and meet our climate change targets at the same time.

I am sure that this conference will enable us to engage in a wide ranging debate and I very much look forward to reviewing feedback from the day’s deliberations.

Thank you.

Published 10 March 2015