MAINTENANCE, REFURBISHMENT & REGENERATION
New heat network regulations: what you need to know
H to users. This is essential and overdue. Although they
With big legislative changes set to be rolled out next year, it’s a challenging time for heat network builders, owners and operators. Emily Lister, sales & marketing director for heat network services provider, Insite Energy, explains how to prepare
are a core component of the country’s net zero strategy thanks to their potential to provide highly efficient, low carbon heat at scale, most UK heat networks are currently operating at only 35-45% efficiency*. Clearly, that has to change. The new regulations are not designed to catch organisations out, but rather to support necessary improvements. Nevertheless, understanding what’s involved and how to meet requirements can feel somewhat overwhelming, particularly when the final details are still to be drawn up and publicly shared. The good news is, we already have a pretty clear sense of what the new rules will entail and there’s plenty that can be done ahead of the planned roll-out which is due to start next spring.
What to expect
Since the change in government in July 2024, there has of yet been no indication of any change in policy or delay in the implementation timetable. The forthcoming requirements are being built around existing Ofgem regulations and Heat Trust’s consumer protection standards, as well as being informed and updated by an ongoing series of consultations with heat network sector stakeholders. As such, they’re underpinned by a set of principles which call for heat network operators (organisations with significant control over heat network assets) and heat suppliers (organisations who hold heat supply contracts with end customers and/ or are responsible for paying incoming fuel bills) to behave fairly, honestly, transparently, appropriately, and professionally. The areas covered in the new Ofgem rules include energy pricing, quality of service, metering, information provision, step-in arrangements, and support for vulnerable customers. Tariffs are likely to be sector- benchmarked and broken down into cost components, including asset depreciation, repairs, administration, and variable fuel and production costs. Information provided to customers will need to be “in plain language, complete, not misleading, and sufficient for informed choices”. If services fall short of the expected standards, customers will have access to support from advocacy bodies and the Energy Ombudsman to resolve complaints.
Ofgem is still considering the best ways to monitor compliance with the new laws and how to deal with failures. This might be a mix of approaches including third-party auditing, the imposition of penalties or repeal of licenses. The Department for Energy Security and Net
Zero (DESNZ) will also introduce additional regulations encompassing technical standards to improve efficiencies and reduce carbon emissions. DESNZ has also established England’s first six heat network zones** – geographic areas where heat networks are expected to provide the lowest-cost solution for decarbonising heat – with more zones to be designated if the trial is successful.
Getting regulation-ready
Perhaps the single most important thing to do to prepare for the new regulatory regime is to ensure your heat network is working well and being properly maintained. Implementing a thorough maintenance regimen covering every aspect of the system, ideally via a planned preventative maintenance (PPM) schedule, is crucial. This will help keep energy
10 BUILDING SERVICES & ENVIRONMENTAL ENGINEER DECEMBER 2024
eat networks are entering a new era of tighter regulation and better consumer protection aimed at delivering a cost- effective, energy efficient, and environmentally friendly service
bills as low as possible and reduce repair and replacement costs.
Another essential matter is metering. Precise consumption measurement is essential for correct and transparent billing and Ofgem reporting. Smart meters should be installed as standard across all properties, barring a small number of exceptions. This is also a good time to review policies and
procedures around areas like pricing, safety, communications with users, complaints, and protections for vulnerable customers. Make sure they align with best-practice guidelines. If all this sounds like a lot to get on top of, rest assured that if you’re already following the Heat Trust standards, you should be well on your way to where you need to be in most areas. If you’re not, it’s a great place to start. We’ve also created a detailed checklist of tasks in our heat network consumer protection guidance document which aims to alleviate the stress of preparing for the pending regulations. It’s worth remembering, too, that while it may be the legal responsibility of heat network operators and suppliers to ensure compliance with the new regulations, it doesn’t mean they have to do it alone. There are several industry bodies and associations that offer resources and support, and heat network service providers should also be able to help put in place what’s required. Start talking to your providers now to make
sure everyone understands who is doing what and what is required from each other to
achieve the shared end goal. Our guidance document will help you unpick which activities can be delegated to different types of service providers and which should be carried out by internal teams. This is an appropriate moment to check terms and SLAs as well to see if they’re sufficient for your needs. Where appointing new contractors, check they have complete and up-to-date knowledge of the changing regulatory landscape, the Heat Trust standards, and the intricacies of heat network management. Above all, don’t panic. Ofgem have outlined a phased approach of implementation, meaning organisations aren’t expected to be fully compliant with all the new rules from day one, so long as they are moving sufficiently in the right direction.
It’s an exciting time for heat networks. From next year, regulatory standards will finally be on a level with the rest of the energy sector. The new legislation is designed to benefit all stakeholders and society at large, as well as the environment. This is a once-in-a-generation opportunity to enable heat networks to fulfil their potential to be the most prevalent and efficient heating solution for modern urban buildings, and we should certainly embrace it.
* Source:
https://www.heattrust.org/about-heat- networks ** Source:
https://www.energylivenews. com/2024/10/25/six-towns-and-cities-selected- for-englands-first-heat-network-zones/
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