The government has announced that it will be launching its programme to kickstart the mass roll out of heat networks this autumn.
It has published the criteria it will use to distribute funds from the £320 million allocated two years ago for the Heat Networks Investment Project (HNIP).
The scheme will offer a mix of grants and loans to developers of heat networks serving two or more buildings. Developers will be able to apply for grants worth up to £5 million, while loans offered under the scheme will be capped at £10 million.
Support available will be limited to less than half the capital construction costs for the individual projects.
The HNIP is designed to help foster a supply chain for heat networks with the aim that the sector should be self-supporting by 2021 when the scheme is due to end.
The government aims to leverage £1 billion of investment in heat networks via the HNIP.
Schemes eligible for support will include new build heat networks as well as the expansion and refurbishment of existing networks if they deliver additional carbon savings.
The HNIP cannot be used to directly provide generation already supported by other subsidy mechanisms like the Renewable Heat Incentive but can be used to fund costs of heat network infrastructure connected to such plants.
The scheme is designed to help deliver the target, outlined in the Clean Growth Strategy, that heat networks should be able to deliver networks 17 per cent of domestic heat demand and up to 24 per cent of heating for industrial and public sector buildings by 2050. Currently around 2 per cent of heating is delivered across the UK by heat networks.
According to the Business, Energy and Industrial Strategy department, flat dwellers’ heating costs could be reduced by as much as 30 per cent if they use a heat network rather than alternatives such as individual gas boilers.
Applications are expected to open in the autumn with first funding decisions being made in 2019.
Energy minister Claire Perry, said: “The UK has led in the decarbonisation of electricity, and today’s announcement shows we are just as committed to tackling heat.”
Bindi Patel, head of scheme at Heat Trust, added: “Today’s announcement is an important step in developing a future heat network sector that designs and operates efficient, low carbon heat networks that deliver good outcomes for consumers.
“Heat Trust welcomes government’s requirement for HNIP funding applications to meet Heat Trust (or equivalent) customer service standards. Ensuring customers are protected is imperative to the sustainable development of heat networks in the UK.
“We are therefore pleased that HNIP will require heat networks seeking public funding to comply with industry-wide standards on customer service and network design.”