Heat Trust has urged the government to take action to lower the cost of heat and has recently met the new heat networks minister, Miatta Fahnbulleh MP, to set out two new reforms.
Heat Trust’s first reform stated: “Regulate the price of energy (gas and electricity) used by residential heat networks to generate heat. Currently these energy supplies are classed as non-domestic and are unregulated with no price-capping mechanism.”
The company’s second reform said: “Ensure that the billions of pounds of essential remediation works needed to address the poor efficiency of existing heat networks do not result in households bearing large capital remediation costs over the coming decade.”
According to Heat Trust, non-domestic energy prices are currently around three times higher than before the energy crisis, whereas domestic capped energy prices are less than double pre-crisis levels.
It stated that regulating the price of the energy that heat networks use to generate their heat with an equivalent to the domestic price cap would ensure fair and stable prices for heat network consumers by shifting the hedging risk to the commercial energy suppliers, where it can be much more effectively managed. It would also end the inequity of heat networks with lower income households facing a poverty premium in energy costs due to being seen by commercial energy suppliers as high debt risk and priced accordingly, it was noted.
Heat Trust said that regulations should also require the commercial energy suppliers who supply the energy used by residential heat networks to guarantee the same security of supply to a heat network with domestic customers that they would to an individual domestic customer. The statement added that it should ensure that compensation for outages in energy supply to the heat network reflects the number of end domestic consumers affected.
To lower heat prices will also require “major remediation works” to improve the efficiency of existing heat networks, many of which are currently only 30-40% efficient, it said. The forthcoming Heat Networks Technical Assurance Scheme will require building owners to make these improvements over the next decade, it noted, and Heat Trust said it believes that the cost of these improvements is likely to run into many billions of pounds across the country.
Stephen Knight, chief executive of Heat Trust, said: “Heat networks will have an increasing role to play in how we heat our homes in cities and towns in the coming decades, as we move away from a reliance on gas boilers. However, we currently see too many examples of poorly designed, inefficient heat networks that generate heat using expensive commercial energy contracts. This often results in high heating bills for their residents as the end consumers.
“The regulations around how they are built and powered need urgent reform to ensure that they are efficient and can deliver low-cost heat to homes. This goes beyond the scope of current plans to regulate heat network operators.”