Heating is responsible for about 20% of the UK’s greenhouse gas emissions. The government has accordingly identified heat networks as an essential part of its path towards decarbonising heat, enhancing energy security, and achieving net zero by 2050.
The Energy Act 2023 received Royal Asset on 26 October 2023 (“Energy Act”). The Energy Act is enabling legislation and provides the architecture for the heat networks legal landscape in Great Britain. Of note, the Energy Act introduces a regulatory framework for zoning regulations applicable to heat networks, as provided for under section 222 of the Energy Act (“Zoning Regulations”).
Consequently, on 18 December 2023, the Department for Energy Security and Net Zero (“DESNZ”) published a consultation document on heat network zoning in England (“Zoning Proposals”). DESNZ intends for the Zoning Proposals to inform (i) the drafting of the Zoning Regulations, (ii) the development of zoning guidance, (iii) the wider implementation of heat network zoning, and (iv) the application of the consumer protection regime to heat network zones. DESNZ intends to lay the Zoning Regulations in Parliament in 2024.
The Zoning Proposals provide detail on the role of central and local government, zone identification, requirements in zones (consumer protections, emissions, requirements to connect), and zone delivery (selecting developers and ensuring construction). Under the Zoning Proposals, central and local government will work with industry and local stakeholders to identify and designate zones where heat networks are projected to be the lowest-cost solution to decarbonising heat. DESNZ acknowledges that zoning is essential for the swift development of new heat networks in areas where it is most needed. Zoning is also intended to increase private sector investment by removing the current barriers that limit the development of large-scale heat networks in the UK.
We applaud the government for its ongoing commitment to developing policy in relation to heat networks. The government has also announced increased funding for the Green Heat Network Fund (another £458 million) and the Heat Network Efficiency Scheme (another £45 million), as part of a larger £6 billion capital funding announcement covering energy efficiency and decarbonisation spending for 2025 to 2028. This demonstrates the government’s continued commitment to heat networks as part of its larger net zero strategy and aim to reduce energy costs across the UK.
The Zoning Proposals are of particular importance to parties in the heat network industry in England, but the Requirement to Connect Rules, in particular, are likely to have implications for a much wider group of stakeholders. DESNZ has invited interested parties to submit representations on the Zoning Proposals by 26 February 2024. The full Zoning Proposals can be accessed here.
This article was written by Charles Robson, Director and Aviva Hoekstra, Associate.