Heat Networks

A heat network is a system that uses one or more central sources to generate heat, which is then pumped through underground pipes to provide space heating and hot water to homes and businesses. They can operate at high or ambient temperatures and often the heat is supplied alongside cooling and private wire electricity. 

They are a common feature of new build residential and mixed-use developments, city regeneration schemes and commercial/industrial buildings. Capturing and supplying waste heat from sources such as incinerators or data centres can also create revenue opportunities. Boosted by government funding and first-time regulation, the UK market is rapidly growing and attracting private investment. 

Some heat networks are large enough to attract an energy services company (“ESCO”) to operate the network and supply heat to customers on a full-risk basis. Others are landowner-led where one or more services are outsourced to a service provider, such as operation, billing and customer services. Some schemes are best served by a hybrid of the two.

Heat generating technologies

The most appropriate technology can depend on the customer demand profile, density of the buildings to be supplied, the ground conditions and the proximity of the site to a waste heat source. Larger schemes can utilise more than one type of generating plant along the network.

• Gas - the vast majority of the UK’s legacy heat networks are gas-fired high-temperature systems and can often be used to generate both heat and electricity, known as “combined heat and power” or “CHP”. They are no longer considered low-carbon and new installations will not meet planning or building regulation standards. Over time, existing systems will be phased out for lower-carbon solutions.
• Heat pumps – these run on electricity. They take ambient heat from the air, water or ground and can boost and/or reduce the temperature to provide heat and/or cooling. They can also boost the temperature of waste heat from sources such as industry and data centres. Large-scale heat pumps are the most widely used alternative to gas-fired CHP and smaller-scale ground source schemes are ideal for low density housing.
• Waste heat recovery – many commercial and industrial process create heat as a byproduct, which can be harnessed and either re-used by the owner or sold to third parties, perhaps neighbouring developments. Energy from waste plants and data centres are common sources.
• Geothermal – heat can be taken from the ground at temperatures ranging from 10°C to 40°C degrees, depending on the depth of the borehole. Former coal and tin mines provide ideal extraction infrastructure.

Property rights

All heat networks run through land or buildings and so operators will have to ensure that they have sufficient access rights. Short-term service operators should be granted a simple access licence, whereas ESCOs taking long-term operational risk will expect a lease of the generating plant and a lease or easements over the network. It is imperative that landowners accommodate such rights in their development and disposal plans.