The future of UK heat networks – critical comparisons with European markets

The UK faces a variety of challenges in terms of tackling heat decarbonisation and implementing effective, low-risk options to serve toward meeting 2050 targets. Carbon produced from heat is the single largest contributor to overall emissions in the UK, at 37% of the total per year. Heat networks may have a key part to play in advancing the decarbonisation agenda, connecting homes, business and industry to a web of low-carbon heating alternatives in future.

Ultimately, the government’s vision for heat networks is:

  • To create a long-term, self-sustaining heat network market with a framework that is flexible to accommodate a range of new business models and innovation
  • To develop a range of measures that will facilitate a heat market and upscaled heat networks, including investment, a policy framework, planning, industry regulation and consumer protection
  • To deliver, through the creation of a competitive market, attractive investment opportunities, lowered costs of heating for the consumer and a contribution to decarbonisation targets

However, there has been a relative hiatus in terms of heat network development, due to risks encompassing their development, compared to the rest of Europe. The actions taken across the continent may serve as examples to accelerate the rate of heat decarbonisation and level the playing field.

In this paper, we examine three countries as comparison, Netherlands, Germany and Sweden to infer successes in terms of policy, legislation, regulation and investment opportunities into heat networks that can be translated back across to the UK to aid development and negate associated risks.

To keep reading, please log in to your account or sign up for free

Alternatively, please sign up to receive free market insight online and direct to your inbox

Related thinking

Low carbon generation

Four technologies to reach net zero

There is no single technological fix to resolve the climate crisis. Instead, a range of technologies must be developed and deployed at scale to tackle the vast challenges associated with the deep decarbonisation of the economy. This report will cover a few of those technologies, including carbon capture, hydrogen, floating...

Heat networks

Who pays for supporting the net zero transition

The costs of decarbonising the power system have mainly been funded through consumers’ electricity bills. In 2020-21 these costs amounted to £10bn with the expectation that support for low carbon generation will continue to be necessary. If we are to maintain a trajectory to net zero carbon emissions at 2050,...

Low carbon generation

The net zero paradox – challenges of designing markets to bring forward low marginal cost resources

The scale and speed of the net zero targets require a refocus of the traditional goals of electricity market design to ensure efficient dispatch, adequate capacity and optimal investment. Electricity markets need to support the investment and dispatch to meet low carbon objectives, but the fundamental drivers of the electricity...

Energy storage and flexibility

Optimal coordination of active network management schemes with balancing services markets

WSP, Cornwall Insight and Complete Strategy are undertaking a Network Innovation Allowance (NIA) funded project on behalf of National Grid Electricity System Operator (NG ESO) and Western Power Distribution (WPD). The project is investigating the optimal coordination of Active Network Management (ANM) schemes on both the distribution and transmission networks...

E-mobility and low carbon

Leading the charge! Fleet charging – a catalyst for the EV revolution

PwC & Cornwall Insight have partnered to better understand and explain the rapidly evolving market for fleet electrification. Fleet charging has the potential to revolutionise EVs. It has the scale to accelerate the adoption of EVs across the UK, improve air quality, lower noise pollution and ultimately play a critical...

Low carbon generation

Rationalising Micro-generation Exports

In this Rationalising Micro-generation Exports insight paper, we set out a four-part solution to ensure the continuation of a guaranteed route to market for micro-generation exports as the Feed-in Tariff (FiT) scheme closes to new investment on 1 April 2019. This paper builds on the September 2018 UnFiT for Purpose...

E-mobility and low carbon

Electric Vehicles: ‘Driven to Disruption’?

The electrification of road transport is rising swiftly up the policy agenda. It will have profound impacts across the electricity value chain. This paper explains and evaluates the electricity supplier offerings emerging for electric vehicles (EVs), driven largely by consumer demand, and how policy and regulatory frameworks need to adapt...

Low carbon generation

Turn up the volume: reinventing CfD auctions

We argue that changes to the CfD regime should be closely examined to address several limitations in the targets, timings and integration of the auctions with the wider energy system and market landscape: The current approach does not ensure that CfD procurement meets the UK’s decarbonisation trajectory;Investors do not have...