‘Big Offer’ an ambitious plan for UK’s district heating future

The UK heat and power industry is hoping that its Big Offer programme of proposals can persuade government to back district heating throughout Britain.

The Big Offer was presented at the UK Combined Heat and Power Association’s conference to Energy Secretary Ed Davey on Thursday and Deputy Director Ian Manders said he hoped that it would help the rest of the UK follow London’s example, which has seen significant investment in the development in the schemes in the capital.

Ed Davey

Mr Davey used the occasion to announce a à‚£1m allocation of funding towards four cities’ feasibility studies into district heating initiatives.

Mr Manders referred to London’s decision to retain an agency to promote district heating schemes in the city, something he believes can be extended nationwide.

“The big offer is primarily all about getting that agency into local authorities. One of the central parts of it is that we are proposing that DECC mimic what happened in London, where the London Mayor, and his predecessor before him, have paid for a support agency to help local authorites develop the schemes.

The success of that work means there is going to be over a à‚£100m worth spent on district heating in London over the next few years.”

The Big Offer aims in the short term to initiate the building of more district heating schemes under current market conditions. In the longer term, CHPA wants to substantially increase the market for district heating by reducing the cost of capital and increasing the quantity of finance available, with the help of state-backed loan guarantees.

CHPA estimate that the Big Offer short-term measures will produce district heating projects worth à‚£300 million pounds in capital investment, leading to the creation of over 7,000 jobs, mainly in the construction phase.

Britain is behind its European neighbours in developing district energy infrastructure, primarily due to the availability of North Sea gas, but that fuel source’s creeping expense has led to more interest in continental style heating as is common to cities like Copenhagen and Paris.

Mr. Manders says London’s use of agency to assist the growth of such schemes is an important precedent, but the government and the industry itself need to do more to create awareness and educate on the benefits.

“Really any city worth its salt is in the process of either examining or actively developing district heating schemes. There is a lot of work going on in London with new sites coming on stream in the next few years. King’s Cross has a big district heating scheme by UK standards and there is going to be a very big scheme at Nine Elms, which is going to be the biggest in London after the Olympic site.

Local authorities around the country don’t often know how to contract a professional partner to help them because they don’t understand enough about district heating and why would they?

It is not a core activity and not part of their statutory duties. They are doing this either because of fuel poverty issues or because of economic development to reduce the cost of heat energy in their areas so that commercial businesses and their own buildings can benefit from it.”

Energy Secretary Ed Davey acknowledged the potential for the industry during his speech at the Royal Society, but added that proof of profitability needed to be asserted.

“Low-Carbon Heat networks, providing heat to dense urban areas, will be an important part of Britain’s energy future. Up to half of the heat demand in England is in areas with high enough heat density to make heat networks feasible. But that doesn’t mean they will all be practical, or profitable.

We need to know more about the commercial realities and the barriers.

Mr Davey also had encouraging things to say about the UKCHPA’s proposal for agencies to assist local authorities in establishing the schemes.

“Central government is not going to build their networks for them, clearly. But we know from the experience in London and from the ‘Big Offer’ that a small amount of help in the initial phase of a project can go long way.

It can help to move projects to the point of commercialisation ” where the Green Investment Bank and commercial lenders can take up the reins, investing in heat network projects with profit-making potential.

And I can today announce that my Department will shortly be providing around à‚£1 million to at least four cities ” Manchester, Newcastle, Nottingham, and Sheffield ” to undertake feasibility studies on exciting new district heating projects within their cities.

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