Notting Hill Genesis has around 40 Heat Networks which are managed by our energy team. A heat network – sometimes called district heating – is a distribution system takes heat from a central source such as a combined heat and power plant and delivers it to a number of domestic or non-domestic buildings.
Heat networks form an important part of the plan to reduce carbon and cut heating bills for domestic and commercial customers. They are one of the most cost-effective ways of reducing carbon emissions from heating, and their efficiency and carbon-saving potential increases as they grow and connect to each other. However, they are not without their challenges.
No regulatory framework
Unlike electricity and gas, heat networks are largely unregulated in the UK and customers cannot get redress via the energy ombudsman. Currently there are only voluntary technical standards to which new networks must adhere and no controls on heat network tariffs.
Because they are natural monopolies, customers with a heat network are unable to switch providers like those with a domestic gas boiler if they are dissatisfied with the cost or service. Heat network operators buy their gas on the commercial markets, so the Government’s price cap does not apply to heat network customers. Even though commercial gas prices are lower than in the domestic market, commercial gas prices have also risen around 4 times pre-crisis levels.
In late 2021, the UK Government confirmed that as part of its plan to expand low carbon heat networks Ofgem will become the heat network regulator. They will be responsible for enforcing rules and guidance on pricing and quality of service to help the new market grow. Primary legislation for this is expected to be introduced in the Queens’ Speech this May, with the transition to the regulatory framework taking place from late 2023.
The new regulations – called the Heat Network Market Framework – will build on the work of the Heat Trust which is an industry-led, non-profit consumer champion for heat networks. It has paved the way in setting standards for customers, making sure customers are treated fairly and putting protections in place.
Notting Hill Genesis committed to regulation
Though we have considered it, we are not members of the Heat Trust but have aligned our processes with their standards. Our customers already have many of the protections in place that the Heat Trust offer such as repairs response times, a complaints procedures and support for vulnerable customers.
The new Heat Market Framework will replace the Heat Trust standards and we are committed to implementing them and have been supporting the Department for Business, Energy and Industrial Strategy and Ofgem with setting the new regulatory standards.