KEY TAKEAWAY The chicken and the egg –balancing flexibility with certainty
Cost constraints are obviously a major factor when working out how to best set up networks and reuse heat. Giving developers and infrastructure providers clearer timelines and policy certainty helps to manage cost and creates confidence to deliver.
Ongoing geopolitical uncertainty underscores the importance of flexibility when developing large scale projects where the value of energy provided is the key output and variable.
As gas prices rise, the relative cost of local energy solutions becomes more affordable, and more attractive to offtakers and end users. The opposite is true when the reverse happens. So policy frameworks and projects themselves must allow for adaptation and factor in a degree of market volatility.
For residential developers who are often the ones connecting into heat networks, this flexibility is critical. They may be reluctant to overcommit too early given the many variables and pressures they are balancing around their own project delivery in London. Meanwhile operators understandably want certainty. Finding ways to balance these interests and stabilise the market could help enable the scale of delivery seen in some European countries.
KEY TAKEAWAY ‘To
me, to you’ – who’s responsible for delivery?
Public private partnership isn’t an option, it’s a necessity. The scale of infrastructure required, and the long-term commitment and stewardship needed, means risk cannot sit with one party alone. Only together can local authorities and developers share risk, with decisions made with the interests of all parties, and ultimately the end users, in mind.
In practice, the private sector may deliver a heating network and a local authority may take the role of being a long-term steward, aligning with heat network zoning frameworks set at a subregional level. The GLA is leading this work in the capital and providing a model that is starting to be replicated across combined authorities.
KEY TAKEAWAY
Capitalising on opportunities, quickly
While the delivery of new housing across London has slowed, another sector is booming – data centres.
These heat-generating facilities create a chance to kickstart development of new infrastructure. With major competition for digital investment across Europe, recognising the urgency of the opportunity here in the UK is key. Developers can’t wait a decade to develop the infrastructure – it needs to happen now while they build out sites.
Reusing waste heat has clear environmental benefits, but extra work also needs to be put in to show that connections lead to commercially viable opportunities too. Heat network zoning is expanding across the capital and aims to provide a clearer framework for everyone.
KEY TAKEAWAY Using London’s size to upscale development
Policy SI3 of the London Plan notes the importance of heat networks in the capital’s decarbonisation strategy, emphasised further by the London Heat Map and heat network priority areas. The focus on waste heat is likely to be even more prominent in the next version of the plan.
The longer term aim is to create interconnected systems across all corners of London, rather than isolated projects.
Many of the largest heat sources – like sewage treatment plants and energy from waste facilities – can be found in outer boroughs, while the highest demand is in central London. Only joined-up, crossborough planning will turn individual developments into strategic heat corridors.
Connecting these major projects up can help move us beyond singleproject viability questions and maximise impacts and returns by delivering heat to tens of thousands of homes.
KEY TAKEAWAY Knowledge is power
Public understanding of heat networks and their benefits is relatively low, further hampered as some older systems reach end of life and cause frustration among consumers.
The sector needs to do more to engage end users directly. This includes ensuring residential developers and property managers, as well as estate agents and conveyancers, can clearly explain how heating systems work and what prospective homeowners are buying.
From carbon to cost savings, heat networks provide the opportunity to upgrade London’s ageing energy infrastructure, but this will only be unlocked by telling a clearer, more consistent story where consumer benefits are the priority. The Energy Act 2023 is starting to have a tangible impact including the role that Ofgem now plays in regulation. This, combined with providing what the public ultimately wants –cheaper and cleaner energy – should help build confidence and drive future demand.