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Next generation of heat networks to power UK’s green revolution

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Homes and businesses will be made greener as low-carbon energy is today placed at the heart of the latest round of funding for heat network projects across England.

The new £270 million Green Heat Network Fund, announced by the government today (Tuesday, 7 September), will only support low-carbon technologies like heat pumps, solar and geothermal energy in the roll out of the next generation of heat networks which will enable more towns and cities to take up this tried and tested technology from 2022.

Heat networks supply heat to buildings from a central source, avoiding the need for households and workplaces to have individual, energy-intensive heating solutions – such as gas boilers. At present, there are over 14,000 heat networks in the UK, providing heating and hot water to around 480,000 consumers.

Heat networks have the potential to be a cost-effective way of reducing carbon emissions from heating. They are the only way that larger-scale renewable and recovered heat sources – like the heat from large rivers and urban recovered heat, such as from the London Underground – can be utilised.

The previous Heat Networks Investment Project (HNIP) has provided more than £165 million of funding for schemes across England and Wales since 2018.

The new Green Heat Network Fund (GHNF) successor scheme will go even further, with applications only being supported if they include low-carbon heat-generating technologies, such as heat pumps, waste heat and energy from geothermal sources.

The successor scheme is set to play a significant role in kick-starting market demand for heat pumps, which will drive down costs for consumers and delivering a mix of low-carbon heating solutions as we incentivise people to gradually transition away from fossil fuel boilers over the next 15 years.

With heat in buildings being one of the largest sources of UK carbon emissions, accounting for 21% of the total, there is an urgent need to deliver a mix of new, low-carbon heating solutions to meet our legally-binding target to end the UK’s contribution to climate change by 2050.

Energy Minister Lord Callanan said:

Finding a mix of innovative solutions to how we heat our homes in the most affordable way is going to be vital as we support people to gradually transition away from gas boilers over the next 15 years.

Today’s announcement shows we are going even further in our goals to expand this tried and tested heat networks technology, making even more use of the likes of recovered heat from the London Underground to heat our homes.

The Green Heat Network Fund will also allow us to drive forward the new, cost-effective and low-carbon technologies we need to kick-start new industries and support new jobs in the low-carbon technology sector as we build back greener from the pandemic.

Although heat networks currently meet approximately 2% of the overall UK demand for heating, the independent Committee on Climate Change (CCC) has estimated that, with continued support, they could provide 18% by 2050 – which is why the government is driving investment through the Green Heat Network Fund.

The Heat Networks Investment Project had focused on accelerating the growth of the heat network market and has permitted fossil fuel sources of heat provided they offer carbon reductions and will be replaced by low-carbon alternatives over time.

However, the successor scheme will incentivise new and existing heat networks in England to move away from high-carbon sources, as well as exploiting waste-heat opportunities while bringing down costs for consumers.

The Green Heat Network Fund is expected to fund the delivery of an estimated 10.3Mt of total carbon savings by 2050 or the equivalent of taking 4.5 million cars in England off the road for a year.

Also being published today is an assessment of the potential for future heat networks to be sited across England, Scotland, Wales and Northern Ireland. The study identifies opportunity areas that could be best-placed to support future heat network projects and how much heat could be supplied by them.

It identifies areas for district heating in each of the four nations separately across the UK by combining heat demand data and potential sources of waste heat to determine where heat networks could be commercially viable.

New plans to make UK world leader in green energy

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The Prime Minister has set out new plans to Build Back Greener by making the UK the world leader in clean wind energy – creating jobs, slashing carbon emissions and boosting exports.

£160 million will be made available to upgrade ports and infrastructure across communities like in Teesside and Humber in Northern England, Scotland and Wales to hugely increase our offshore wind capacity, which is already the largest in the world and currently meets 10 per cent of our electricity demand.

This new investment will see around 2,000 construction jobs rapidly created and will enable the sector to support up to 60,000 jobs directly and indirectly by 2030 in ports, factories and the supply chains, manufacturing the next-generation of offshore wind turbines and delivering clean energy to the UK.

Through this, UK businesses including smaller suppliers will be well-placed to win orders and further investment from energy companies around the world and increase their competitive standing on the global stage, as well as supporting low-carbon supply chains.

The Prime Minister has also set out further commitments to ensure that, within the decade, the UK will be at the forefront of the green industrial revolution as we accelerate our progress towards net zero emissions by 2050.

These include:

  • Confirming offshore wind will produce more than enough electricity to power every home in the country by 2030, based on current electricity usage, boosting the government’s previous 30GW target to 40GW.
  • Creating a new target for floating offshore wind to deliver 1GW of energy by 2030, which is over 15 times the current volumes worldwide. Building on the strengths of our North Sea, this brand new technology allows wind farms to be built further out to sea in deeper waters, boosting capacity even further where winds are strongest and ensuring the UK remains at the forefront of the next generation of clean energy.
  • Setting a target to support up to double the capacity of renewable energy in the next Contracts for Difference auction, which will open in late 2021 – providing enough clean, low cost energy to power up to 10 million homes

These commitments are the first stage outlined as part of the Prime Minister’s ten-point plan for a green industrial revolution, which will be set out fully later this year. This is expected to include ambitious targets and major investment into industries, innovation and infrastructure that will accelerate the UK’s path to net zero by 2050.

Prime Minister Boris Johnson said:

Our seas hold immense potential to power our homes and communities with low-cost green energy and we are already leading the way in harnessing its strengths.

Now, as we build back better we must build back greener. So we are committing to new ambitious targets and investment into wind power to accelerate our progress towards net zero emissions by 2050.

This sets us on our path towards a green industrial revolution, which will provide tens of thousands of highly-skilled jobs.

Together with planned stringent requirements on supporting UK manufacturers in government-backed renewables projects, these measures will mean the industry can reach its target of 60% of offshore wind farm content coming from the UK.

Business and Energy Secretary Alok Sharma said:

The offshore wind sector is a major British success story, providing cheap, green electricity while supporting thousands of good-quality jobs.

Powering every home in the country through offshore wind is hugely ambitious, but it’s exactly this kind of ambition which will mean we can build back greener and reach net zero emissions by 2050.

Today’s announcement marks the latest stage of the government’s support for renewable energy. Last September the third round of the Contracts for Difference renewable energy auction delivered record-low prices on enough clean energy to power 7 million homes. Earlier this year the government announced the next round would be open to onshore wind and solar projects for the first time since 2015.

The UK has the largest installed capacity of offshore wind in the world, with around 10GW in operation off its coasts.

The government’s plan for renewable energy forms part of wider efforts to ensure the UK meets its legally binding target to reach net zero emissions by 2050 and build back greener from coronavirus.

Over the past decade, the UK has cut carbon emissions by more than any similar developed country. In 2019, UK emissions were 42 per cent lower than in 1990, while our economy over the same period grew by 72 per cent.

Hugh McNeal, CEO of RenewableUK, said:

The government has raised the ambition for offshore wind and renewables, and our industry is ready to meet the challenge. A green recovery with renewables at its heart will be good for consumers and jobs, as well as helping to meet our 2050 net zero emissions target. Support for new floating wind projects will ensure the UK stays at the forefront of global innovation in renewables, and provides new opportunities in the low carbon transition.

Energy UK’s Chief Executive, Emma Pinchbeck, said:

The UK’s power sector has reduced emissions by nearly 70%, but we know we need to go further and faster on the road to Net Zero. The energy industry will work with Government to turn our world-leading low carbon power sector into a Green Recovery for the whole economy.

The package of support for offshore and floating wind announced by the Prime Minister today takes a UK decarbonisation success story and winds it up to a scale fit for the Green Recovery, creating jobs and billions of pounds of investment.

We need to build back better for the environment, for the economy and for communities. We look forward to the Prime Minister’s ten-point plan for the low carbon industrial revolution, later this autumn.

Keith Anderson, CEO of ScottishPower, said:

These bold ambitions and clear targets are exactly the right signals at exactly the right time. They will encourage long-term investment and innovation from the renewables industry – and they will boost employment and economic benefits right across the UK. ScottishPower is committed to doubling down on our commitments to delivering 100% clean green energy that matches the UK’s aim to cut emissions for every home.

Benj Sykes, Industry Chair of OWIC, said:

Offshore wind is on track to become the backbone of Britain’s electricity system, providing reliable, low-cost clean power to homes and businesses across the country. The industry is investing tens of billions of pounds in new offshore wind projects, supporting local economies and employment in communities across the UK. Our global leadership in offshore wind, coupled with new support for investment in ports, will help unlock the huge opportunity for the UK to build a world-leading, competitive supply chain.

Alistair Phillips-Davies, CEO of SSE, said:

We welcome today’s announcement which will help ensure that more low cost offshore wind can be deployed before 2030, creating green jobs and putting the UK on the right path to net zero. This complements SSE’s own plans to invest over £7.5 billion in low carbon infrastructure over the next five years, including building the largest offshore wind farm in the world at Dogger Bank with Equinor.

Dame Carolyn Fairbairn, CBI Director-General, said:

Fuelling a sustainable economic recovery by reigniting business investment and creating green jobs is the right response to the challenges unleashed by COVID-19.

A low-carbon power system will underpin the green industrial revolution. Investment in port infrastructure and opening up already successful auctions for renewable electricity will help accelerate construction of offshore wind farms and secure low-cost renewable power for homes and businesses.

Duncan Clark, Head of UK Region for Ørsted said:

We welcome today’s announcement from the government which will unlock huge opportunities for world class UK supply chain companies, both domestically and overseas, to market the skills and innovative technologies that have been fostered in the UK offshore wind industry.

Offshore wind is the most cost effective way to achieve the UK’s net zero ambitions and delivering 40 GW of offshore wind by 2030 is an essential part of this roadmap. This is a challenging target but achievable if Government and the industry continue to work together to accelerate deployment and build out the UK project pipeline as quickly as possible, regenerating coastal communities while expediting our progress to a more sustainable, low-carbon future.

Dr Nina Skorupska, Chief Executive of the Association for Renewable and Clean Technology (REA) said:

We welcome this important commitment from the Prime Minister to lead a Green Industrial Revolution. The REA has long advocated that the UK can be powered safely and securely by renewable energy. We look forward to working with his Departments on further exciting opportunities for delivering renewable heat and transport and other renewable power technologies and flexibility markets also vital for meeting our Net Zero commitments.

Sabrina Malpede, ACT Blade, Managing Director said:

We are delighted to hear of the government’s plan to support clean wind power development in the UK. Investing in this industry has real potential to create jobs, boost productivity and promote sustainable growth. At ACT Blade, we strive to support wind energy development by contributing to lower its cost. We hope the Build Back Greener plan includes support for innovative technologies and its commercialization, as well as promote policies for a real clean energy transition.

Claire Mack, Chief Executive of Scottish Renewables, said:

The Prime Minister is right to acknowledge the UK’s renewable energy resource as one of the best in the world and right to focus on the development of wind power, as part of a balanced green energy mix, as a key way to power the UK’s green economic recovery.

All parts of the UK can and should benefit from the development of this resource and the renewable energy industry in Scotland looks forward to working alongside government to deliver jobs, investment and innovation as we move towards our ambitious net-zero targets.

Steve Scrimshaw, Vice President, Siemens Energy UK&I, said:

This is an ambitious announcement by the government. Offshore wind with hydrogen energy storage can provide reliable clean energy and will be vital to achieving net zero. The UK’s unique position means we can be at the forefront of developing deeper sea waters and the supply chain will welcome the commitment from Government in this innovative area.

Julian Brown, Vice President and UK Country Manager of MHI Vestas Offshore Wind said:

We strongly support the government’s plans to Build Back Greener! In addition to confirming the immense role offshore wind will have in the UK’s clean growth, the government’s injection of vital funds into ports and manufacturing locations will provide a real boost towards the realisation of many thousands of UK offshore wind jobs. This is truly a step forward for the UK’s green economic recovery.

Tom Glover, RWE UK Country Chair, RWE Renewables, said:

As one of the world’s leading companies for renewable energy, committed to be carbon neutral by 2040 and to grow our renewables portfolio in the UK, RWE welcomes the package of measures to further develop UK offshore wind sector announced by the Prime Minister today. This major step further cements the UK as one of the most attractive markets for investment in offshore wind. We will work with the government and the wider energy industry to deliver these ambitions, creating thousands of jobs and billions of pounds of investment. We look forward to the Prime Minister’s ten point plan for a green industrial revolution which we hope will include measures to overcome some of the restrictions to rolling out renewable energy even faster, such as the significant and co-ordinated investment in our grid infrastructure.

Mike Hughes, Zone President, Schneider Electric UK & Ireland, said:

We welcome today’s news of a substantial investment in next-generation offshore wind projects.

Green technologies hold huge potential to enhance the skills, know-how, and production capabilities across the UK, while also supporting our collective progress towards net zero emissions with high-quality products and technologies developed here in the UK.

We believe there has never been a better time to invest in renewables technology production, as the UK prepares to hosts the milestone 26th UN Climate Change Conference (COP26) next year.

Today, the UK today is already a world scale leader in offshore wind energy, as we pride ourselves on up to 40% renewable energy in our country’s electricity balance. Further investment in making the UK the world leader in low-cost green energy production will fuel growth while keeping costs and emissions in check.

UK government to cut electricity bills for consumers in the north of Scotland

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Households in the northern parts of Scotland could soon save money on their electricity bills thanks to UK government plans to more fairly distribute the costs for providing electricity to the Shetland Islands.

The isolated nature of Shetland’s electricity system means it costs £18 million more a year to keep its 23,000 residents’ homes and businesses powered, than it does to provide power on the mainland. The cost is currently picked up by consumers in the north of Scotland through their electricity bills.

These costs are expected to rise to £27 million from next year in order to deliver a necessary upgrade to Shetland’s power supply. The UK government is concerned about the burden this would place on consumers in the north of Scotland.

It has today (11 July 2019) published a consultation announcing plans to spread the costs of powering Shetland across Great Britain from April 2020, meaning consumers across the northern part of Scotland – from Thurso to Aberdeen – would save around £17 a year on their electricity bills.

Minister of State for Energy and Clean Growth, Chris Skidmore, said:

The UK government is committed to ensuring everyone across the country, including in the remotest parts of northern Scotland, has access to a reliable energy supply at a fair price. We’ve already shown this through our price cap – intervening in the market to protect loyal consumers in all parts of the union from being overcharged.

Consumers in the north of Scotland should not have to fund the costs of maintaining Shetland’s energy security alone. The ability to share costs more widely is one of the benefits of being part of the United Kingdom and these plans will mean consumers in the north of Scotland will soon receive a welcome saving on their bills.

Shetland is different to other Scottish islands as it’s the only part of Britain’s licensed distribution network that is isolated. It’s unable to benefit from the economies of scale enjoyed by other islands, which are part of the integrated network, which is why costs have always been higher.

Scotland Secretary David Mundell said:

I warmly welcome the UK government’s plan to cut the electricity costs of consumers in the north of Scotland. Spreading the costs across the whole of Great Britain reflects the unique circumstances in Shetland and northern Scotland. ‎The UK government is determined to deliver for all of Scotland’s communities.

The UK government’s Hydro Benefit Replacement Scheme already provides an annual cross-subsidy of £61 million to protect electricity consumers in the north of Scotland from the high costs of electricity distribution in the region. It is funded by charges on electricity suppliers across Great Britain.

The scheme will be used to deliver the new funding arrangement for Shetland’s electricity, meaning that the total assistance provided through to the north of Scotland consumers will be almost £90 million a year.

Loyal Energy Customers To Pay Fair Price From Now

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Around 11 million households who have stayed loyal to energy suppliers on poor value energy tariffs will pay a fair price from today (1 January 2019) thanks to the government’s price cap.

The cap will bring down the amount consumers have been overpaying to energy companies, including the Big Six, by £1 billion a year, starting this winter when households are typically using more energy to heat and light their homes. It will remain in place until at least 2020, while energy suppliers and industry continue to work with the energy regulator Ofgem and the government to build an energy market that works better for all consumers.

Prime Minister Theresa May said:

Our energy price cap will cut bills for millions of families and people across the UK who have been ripped off by energy companies for far too long. From today, money will go straight back into the pockets of loyal consumers, including the elderly and those on lower incomes who feel the pinch more acutely.

But work to tackle this issue doesn’t stop there. We’re working with regulators and industry to ensure that consumers are not unfairly overcharged in the future – whether on their phone bills or their insurance premiums.

Energy and Clean Growth Minister Claire Perry said:

Today marks the end of unjustified price rises on energy bills as this government delivers on time on its promise to protect millions of households from poor value deals, especially the vulnerable.

For too long, suppliers have failed to pass on any savings to their customers, who deserve to pay a fair price for their gas and electricity. Switching supplier is still the best way to find a better deal, but that doesn’t mean customers should be punished for their loyalty.

Bill payers can now be confident that any change to the price cap will be a fair representation of the actual costs of energy, rather than suppliers passing on inefficiencies to their customers or as excess profits.

Following a consultation, Ofgem set the price cap level at £1,137 per year for a typical dual fuel customer paying by direct debit. The amount customers will pay depends on how much energy they actually use, as the price cap sets a limit on how much suppliers can charge per unit of gas and electricity not on overall energy bills.

The cap will also protect around one million households who receive the Warm Home Discount currently protected by Ofgem’s safeguard tariff. Ofgem already caps energy prices through its safeguard tariff for 4 million households on pre-payment meters.

Ofgem will review the level of the cap every 6 months taking into account any changes to the actual costs of providing gas and electricity to energy customers. The first review will take place in early February coming into effect on 1 April 2019.

Dermot Nolan, chief executive at Ofgem, said:

Under the cap, Ofgem will protect consumers from being overcharged and ensure they pay a fair price to heat and light their homes. Consumers can have confidence that any rise in prices in the future will only be down to genuine increases in energy costs rather than supplier profiteering while falls in energy costs will always be passed on to them.

Households who are protected by the cap will be able to save even more money by shopping around for a better deal. In the meantime Ofgem will continue with reforms which aim to deliver a smarter, more competitive energy market which, combined with protection for those who need it, works for all consumers.

The Domestic Gas and Electricity Act, which passed Parliamentary scrutiny and became law on 19 July 2018, put in place a requirement on Ofgem to cap standard variable and default energy tariffs after the Competition and Markets Authority (CMA) found consumers had been overpaying the Big Six an average of £1.4 billion a year.

While the temporary cap is in place, energy suppliers and industry will continue to work with Ofgem and government to build an energy market that works better for all consumers, ensuring they get the best service for a fair price so that everyone reaps the benefits of the move to a smarter, more digital economy.

Other measures designed to deliver the government’s objective of clean, affordable and innovative energy, while tackling fuel poverty, as part of our modern Industrial Strategy include:

  • the rollout of smart meters
  • initiatives to promote smarter and faster switching
  • a joint review with Ofgem on the future of the retail market

 

 

Energy Systems Of The Future – Local Communities To Benefit Sooner

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Just under £10 million Industrial Strategy Challenge Fund investment will support even more people to get value from smart local energy systems.

A new research consortium and funding for business-led innovation projects will speed up the uptake of smart energy systems by local communities to start benefiting from cleaner, cheaper and more consumer-friendly energy.

Funding is by UK Research and Innovation through the Industrial Strategy Challenge Fund for clean energy – a £102.5 million investment in UK industry and research to develop systems that support the global move to renewables.

Rolled out by 2020s

Twelve projects from all across the UK will share £1.5 million to design ground-breaking, local, smart energy systems that are ready for roll out in the 2020s.

They will quickly bring forward energy systems with improved efficiency and productivity, at lower costs, in order to reduce energy bills for consumers and create better user experiences.

Ultimately this should help improve air quality in line with the government’s fifth carbon budget, at the same time as building the UK’s energy supply chain, creating high value jobs and export opportunities.

Projects include:

  • creating an energy marketplace and local trading platform between the predominantly commercial premises in London South Bank and Waterloo, using IoT sensors, predictive algorithms and storage systems
  • maximising existing and planned renewable generation assets in Bridgend, including solar farms and a nearby energy park, to develop a local electricity flexibility market, an electric vehicle charging network and improved service offerings for transport and heat
  • making use of an established energy innovation district group and new digital technologies, such as sensing and control devices, data analytics and artificial intelligence, the Cheshire Energy Hub will better manage energy use by industrial users, decarbonise and lower costs

Developing novel research concepts

To bring forward novel research in local energy systems and accelerate uptake, value and impact, £8 million will go to setting up EnergyREV, an energy revolution research consortium.

The consortium will be led by the University of Strathclyde and include 29 investigators across 22 universities, working to ensure that UK academic expertise delivers impact and a competitive advantage.

It will work closely with the Energy Systems Catapult to provide analysis, evaluation and assessment of the projects funded under the prospering from the energy revolution challenge.

Additionally, EnergyREV will deliver its own strategic research projects that address some of the industrial challenges in developing local, investable, consumer-centred energy approaches.

Improving uptake, value and impact

Professor Stephen McArthur, Deputy Associate Principal for Research, Knowledge Exchange and Innovation, at the University of Strathclyde said:

EnergyREV is excited about its role in supporting innovation in the prospering from the energy revolution programme.

The world-class knowledge, research teams and interdisciplinary expertise available through our university partnership will improve the uptake, value and impact of smart local energy systems.

We are focused on using our novel research to accelerate and help deliver the Industrial Strategy goals and enhance UK competitiveness.

Rob Saunders, Deputy Challenge Director, Prospering from the Energy Revolution, UK Research and Innovation said:

This is an exciting time for energy innovations.

We all rely on energy and we all need it to be cleaner and more cheaper, both as consumers and as a nation. New technologies point towards a new energy future, one of lower carbon and more efficient energy supply, distribution and storage, giving consumers more control.

This energy revolution – a crucial part of the Industrial Strategy – has the potential to unlock investment and create high-quality jobs and grow companies capable of exporting.