In an evidence session to the Energy and Climate Change Select Committee today (January 26), the ADE’s director Dr Tim Rotheray welcomed the £300 million the government has put in place to develop district heat projects, but said the government needs to develop a “regulatory investment framework” during this parliament to support future growth.
Rotheray said district heating needs a framework comparable to that which electricity and gas already have so “institutional investors” can compare options and evaluate them on a “level playing field”.
“These kinds of projects are 50-80 year long live projects so you need those investors to be able to evaluate them” he said.
“Fundamentally you want to get in the lowest possible cost of capital because that’s how you make sure it’s lowest cost for consumers but it will also allow you to choose what networks are right in the right place”.
The Energy Technologies Institute’s chief executive Dr David Clarke agreed that creating a “level playing field for capital is the key challenge” facing district heating, but also said the location of future power stations should be considered to allow the option of using waste heat.
Greater clarity for local planning authorities on the inclusion of district heating schemes within planning applications and a subsidy of around 75 pence per kilowatt hour were also put forward during the session as ways to increase development of district heating.