Regulation, finance and monitoring critical to success of district heating schemes



District heatingWider regulation, more technical and financial support and better monitoring systems are priority requirements for promoting district heating in the social housing sector, according to a new research report.

Published by environmental charity Changeworks, District heating: Delivering affordable and sustainable energy explores the experiences of UK Social Housing Providers (SHPs), such as local authorities and housing associations, in developing, delivering and operating district, communal and community heating (DCCH). The experiences of householders living with district heating were also investigated. The research, funded by the Joseph Rowntree Foundation (JRF) and carried out by Changeworks in partnership with the Centre for Sustainable Energy, investigates how schemes deliver on their affordability and sustainability promises to inform policy, current and future practice. Research findings are relevant as district heating is being strongly promoted by the Scottish and UK governments as an important way to decarbonise heat while tackling fuel poverty.

Teresa Bray, Changeworks chief executive, said: “This research recognises the potential for district heating, yet doesn’t shy away from exploring why the potential is not always achieved. The ability for schemes to deliver on promises of affordability and sustainability are reliant on a complex range of factors. Two areas which need to be addressed are the lack of both detailed monitoring and consumer protection due to an unregulated heat supply.”

Summary of research findings:

  • Aims: The most common aims of SHPs in delivering DCCH schemes are to reduce fuel bills and carbon emissions. They also enable SHPs to meet regulatory and policy objectives and open up new business models, for example, through sales of heat to businesses.
  • Affordability: The cost of generating heat is driven by multiple factors which vary across schemes. Among the case studies, delivered heat was priced between 4.12 and 10 pence per unit, with standing charges varying between no charge and 84 pence per day. Factors affecting costs include: cost of finance, availability of grant and subsidy, selection of technology and heat source, quality of design and build, accuracy of commissioning, standard of management and maintenance, and householder behaviour. This is often overarched by the landlord’s decision to control the price of heat charged to householders, regardless of the cost of its production. For example some SHPs consciously operate schemes at a loss. Without wider research this complexity makes it difficult to make definitive statements on the in-built capacity of DCCH to deliver low cost heat. However, the research finds that when DCCH schemes are correctly developed, operated and financed, they can deliver affordable warmth goals, particularly when replacing heating systems such as old style electric storage heating.
  • Sustainability: Modelling work suggests big carbon dioxide emission reductions are possible from shifting to DCCH schemes served by low carbon heat sources. This is because the size of heat demand achievable through a heat network integrates well with larger scale technologies supplying low carbon heat, such as Combined Heat and Power and biomass boilers. However some of the sustainability gains can be undone if: householders don’t understand how to use the system efficiently, distribution losses are too high or overheating causes householders to use electrical cooling.
  • Success factors: SHPs identified multiple critical success factors for effective schemes throughout a scheme’s development. These include:

  1. Early engagement and work with all stakeholders to build buy-in and support
  2. Good in-house skills to oversee and scrutinise projects at all stages
  3. Finance schemes in a way that residents do not pay high standing charges
  4. Operate systems at scale and carefully consider householder control systems, monitoring and transparent billing.



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