The difficult challenge of decarbonizing the UK’s heat sector was recognized at a forum in London this week. Labour shadow energy spokesperson Alan Whitehead said the discussion indicated ‘just how badly the UK is doing in decarbonizing heat and how relatively well we are doing in decarbonizing electricity.’ 

Also speaking at the Westminster Energy Forum’s ‘Priorities for heat networks in the UK’ discussion midweek, Dan Osgood, director of the heat and business energy directorate at the department of Business, Energy and Industrial Strategy (BEIS) said the government was still researching the best way forward for tackling the issue.
Alan Whitehead MP
“It’s a big challenge,” Osgood told the gathering of industry professionals. “Despite the complexity and time available, the Climate Change Act sets out legally binding targets for 2050 and we have an obligation to obey the law.”

Osgood said heat networks made particular sense in urban areas, where heat demand was highest, and where there were opportunities to exploit on a larger scale and reduce costs.

A government-funded £300m capital support for heat networks is in place, with £20m of that currently being used in nine pilot projects around the country.

“We are looking to significantly increase the number of heat networks in the UK and build sustainability in the market. We are working with the heat delivery unit (HDU) to support local authorities to achieve that aim and build their capacity.”

A contentious issue for the industry at the moment lies in the area of regulation. Forces within and outside the sector are keen, following some notably bad customer experiences, that the area is properly regulated for the good of all concerned. However, both the government and energy regulator, Ofgem, are non-committal at present in taking on board the regulation of what is still perceived to be a small industry, despite the carbon volumes associated with it.

Osgood said, “we are working with industry to drive up technical standards and the development of the Heat Trust to protect consumers and there is more to be done. There is good practice in the market and some evidence of difficulties.”

In Q&A, Fiona Riddoch of Edinburgh University pointed out that the decarbonization of heat was three times larger a problem than electricity, yet electricity was being given more attention. She asked if the experience of decarbonizing that sector would form some of the thinking in tackling heat.

“We have to get the right balance between innovation and deployment,” Osgood said, “How do you keep costs down, while dealing with heat impacts? There are lots of lessons we can learn from decarbonizing electricity- but there are differences –we can’t transport heat over the same distances as electricity for example. But understanding those differences is the focus of the working group.”

The director also acknowledged that the government was taking a wide view, in terms of energy efficiency, and how that could potentially bring down the costs involved in decarbonisation of heat.

“Well-designed heat networks can reduce bills by significant amounts for consumers but the easiest way is to shrink the problem and energy efficiency allow us to do that. Heating less in the first place is key,” he said.

Another strong strand of discourse at the forum surrounded the issue of cooling, and the inefficiencies involved.

Professor Toby Peters of the University of Birmingham said ‘cooling is absolutely forgotten’ yet represents a huge threat as well as opportunity for decarbonization ambitions.

“70 per cent of our food in the UK and EU is chilled or frozen, data centres require 50 per cent cooling for their operations, while air conditioning is 50 per cent. Two million tonnes of food were lost last year due to inefficient cold chains. By the end of this century cooling will account for 50 per cent of the world’s new energy and by mid-century will have overtaken demand for heat.”

Peters included other indicators as to the enormity of the cooling issue, including the fact that India has less than 15 per cent of the refrigerated trucks it needs, while a refrigerated unit produces 29 times more particulate matter and six times more NOx than a typical European engine.

“Cooling emits over 3.3 billion tonnes of CO2 making it the third biggest emitter after US and China,” Peters added.

Alan Whitehead, Labour’s shadow minister for energy and climate change said it’s clear that ‘cooling has been underdiscussed.’

“We know demand for cooling is going up substantially – if we don’t incorporate cooling a lot of the good we do in terms of heat will be undone,” he warned.

Despite that evidence, the BEIS director admitted that cooling was down the pecking order in the UK’s energy priorities.  

“As you know the current support scheme is very much on the heat side of things. I suspect we will see more focus on cooling in the future, in the non-domestic sector, particularly how you integrate heating and cooling needs.”

Although there is a growing understanding of the impact of cooling, heating dominated the agenda.

Colin Calder, CEO of PassivSystems was keen to impress on the audience how much more effective district heating in the country could be if they installed up-to-date control systems on heat networks. It highlighted another factor facing the sector, the need to modernize the existing heat infrastructure.

His demand-response firm had recently worked on a project that had found ‘staggering results’ in deploying its platform of smart home controls, automated readings and network load management.

“We worked with Parsons Brinckerhoff who independently assessed the project which found a 40 per cent improvement in operation efficiency on the district heat network in question. In customer response measured, 85 per cent said they would recommend our controls over previous controls.”
Westminster Energy Forum
In a later panel discussion Association for Decentralised Energy policy chief, Jonathan Graham said that in London alone, enough heat is being wasted to heat every building in the city.

He also warned of a possible gap in policy after 2021 that threatened progress made.

“We need to ensure the delivery of heat network expansion post-2021 and keep contented customers while reducing investment and policy risk and ensuring high quality networks”.

“Post-21 we need to see the creation of similar levels of investment certainty as other network assets, and delivery of customer protection which builds on the work of the Heat Trust, as well as deal with wider questions, such as planning and access rights.”

In closing speeches, Martin Crouch, senior partner, improving regulation at Ofgem, said the regulator had no plans as of yet to take the heat sector under its wing.

Despite this he said that ‘decarbonization of the heat sector is the biggest challenge in energy policy that we face,’ due to the difficulty associated with consumer impact.

“It’s about getting the acceptance of consumers. Electricity was mostly change upstream along with choice on purchasing solar panels for example. We think regulation would be helpful but don’t want to expand our remit.”

Crouch warned of the ‘disconnect’ that can take place in the development of heat networks, and how the industry needed to work to minimize the possibility of consumers being disadvantaged.

“Take a property developer in a building or greenfield site, who procures installation for a heat network, then sells to an occupier and heat network installer who then sells on the role of running the heat network to another company. This may be a stereotypical example but there are cases where the heat network supplier supplying the occupier and commercial framework that set it up are long gone by the time the heat network is in place. We need to make sure what’s left works well for consumers- there is a disconnect potentially y and we shouldn’t be surprised if that causes problems.”

Ofgem and the government want the sector to do more in terms of regulating its own industry and Crouch issued various advice on how that can be gradually achieved.

He said that the heat installation companies should bear the costs of design upgrades rather than pass through to customers, and generally ensure customers were no worse off compared to alternative heating solutions.

“Some users are paying for refurbishment and that’s not a good commercial infrastructure for the consumer and not in the interests of the industry, not a long term solution for the industry. Give the consumer some surety and transfer some of the risks which can give customers more confidence and increase demand for heat networks. When you reduce demand risks that companies face, it leads to increased investment and economies of scale and it becomes a virtuous circle.”

“The interests of the industry are not always in the interest of individual companies,” he added. “I saw it with gas network operators and it led to capping prices. It’s about balancing the interests of investors with customer protection.”

In closing remarks, chair of afternoon sessions Alan Whitehead was forthright in his assessment.

“This morning highlights just how bad we are doing in decarbonizing heat and how relatively well we are doing in decarbonizing electricity.”

“There is a danger here in the perception of it being positive. Decarbonizing heat is a key issue in the overall scheme of meeting climate obligations. Heat has virtually not been talked about until relatively recently, and cooling not at all. We are really doing badly there on cooling and that has to be a direct product of global warming and a further challenge coming increasingly into our domestic lives.”

“We will have to make some pretty far reaching decisions about how our systems are going to work and it can’t be done entirely by competition.”

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