Heat Networks: a low-carbon growth catalyst for towns and cities?

Author: Jasbir Basi FRGS , Head of Corporate Affairs at SSE (Enterprise)

UK Cities have a critical role to play in helping the UK go further and faster to meet the targets of clean power by 2030 and net zero by 2050.?

One of the key factors is that emissions per capita in UK cities are 41% lower than the rest of the country and have fallen faster over the past two decades. This is owing to their density of cities, which support choices over lower carbon lifestyles, whether that’s how we build, move or power cities.

UK greenhouse gas emissions per capita

et UK cities are less dense than their European counterparts – for example, Liverpool (with a population density of 4,422 people per km) is just over half as dense as Naples (8,222 people per square kilometre).??

A new report from the Centre for Cities about accelerating net zero delivery, sponsored by SSE, finds that bringing the density of UK cities in line with their European counterparts will speed up decarbonisation in terms of how we build, move or power.?

It provides policymakers with international case studies to show how cities with powers over key areas of transport and planning policy are using these to accelerate the transition.?

One opportunity on the horizon is the potential of heat networks to supply heat and cool buildings in towns and cities. This is evident in the case of Stockholm’s heat network, which has collaborated with the private and public sector, has source to use renewable and waste heat sources as a source of low-carbon heat.

What are heat networks?

Heat networks are a way of providing local, low carbon heat, from waste and recoverable sources to customers in dense towns and cities. Sustainable heat networks can be built to supply large anchor loads such as hospitals, civic buildings and universities, and then expand out to supply multiple customers across a wide geographic area.?

They are a critical part of the UK’s journey to decarbonising heat by 2050. Government analysis on UK heat networks shows that heat networks could provide 16-20% of total heat demand by 2050, requiring a significant increase from current levels of just 3%. A significant proportion of this future demand will be met in towns and cities.

What are the benefits of heat networks?

Heat networks with large thermal stores bring flexibility benefits to the wider electricity network grid, by smoothing electricity demand and peaks. A recent study on the benefits of low carbon technologies by Imperial College London as part of its UKRI funded “REMeDY” project concluded that heat networks supplying 20% of the UK’s heat, could avoid an investment of circa ￡1bn per year for every year up to 2050 in electricity generation, distribution, and storage.

They also offer the potential to bring social value and economic prospects for communities across the country, providing the UK access to a heat networks market worth ￡60-80bn by 2050. SSE is part of the Heat Networks Industry Council (HeatNIC), which represents sector leaders working together to grow the UK’s low-carbon heat network sector.

What is the right policy regime required to unlock future investment in heat networks?

Heat network policy is at an inflexion point. The recently adopted Energy Act 2023, proposed a new regulatory regime for heat networks from 2025, introducing secondary legislation. The Government consulted on in its initial policy proposals for heat networks earlier this year. But a series of?short- and medium-term steps are required to create an investable regime for heat networks. This includes:

• Short-term: Committing to extending the Green Heat Network Grant Fund, due to expire in January and introduce heat network zoning as planned in 2025.
• Medium-term: Set out a clear policy roadmap to phase out fossil fuel heating as soon as reasonably practical and outline a clear approach to gas and electricity ‘rebalancing’ levies, to incentivise the uptake of low-carbon heat, which is typically more expensive than higher carbon heat.

SSE's heat networks

At SSE, we take a Whole Systems approach to enable customers to decarbonise heat, transport and energy systems. We own and operate 18 heat networks across England and Scotland and have an ambitious project pipeline under development that is pioneering innovation in heat distribution including capturing heat from data centres, deep geothermal, electricity network transformers and energy from waste plants.

What’s certain is that the towns and cities of the future will need to incorporate heat network zoning as part of their local area energy plans.

Download the Accelerating net zero delivery (September 2024) report.