In a report released today ADE has called for a guarantee on future heat connection capacity to reduce the risk for investors, lower business rates for heat networks to match those for electricity and gas networks, and an expansion of the role of the Department for Energy and Climate Change’s Heat Networks Delivery Unit.
ADE said the three measures would “help attract lower-cost investment by reducing heat network capital risk, lower network costs by creating a fairer tax regime, and provide local authorities with the support they need to move forward with new network investments.”
The government estimates there are £2 billion in district heating investments under consideration in more than 150 local authorities, and technical potential for district heating networks to meet up to 20 per cent of heat demand by 2030, and has therefore committed to provide £320 million in capital support for district heating networks over the next five years.
ADE’s director Dr Tim Rotheray said: “All other UK network infrastructure have clear investment frameworks to secure low-cost capital investment.
“An investment framework for heat networks has the potential to reduce investor risk, drive down the cost of heat supply, and attract major international and UK investors.
“Working collectively with industry, government and stakeholders we have examined the barriers and opportunities for local energy solutions and set out a policy roadmap to 2021 that will allow the most cost effective options to come forward.”
The report has also called for low-carbon heat sources to be included in the Renewable Heat Incentive (RHI) from 2021, district heating companies to be provided with the same access rights as other utilities, encourage local authorities to consider district heating in planning processes and encourage compliance with industry standards.
Last month the Solar Trade Association warned that government plans to remove solar thermal technology from the domestic and non-domestic RHI will “kill off” a potentially important contributing technology to the district heating sector.