Decarbonising buildings is a challenging aspect of the pathway to Net Zero carbon emissions in the UK. Notwithstanding future innovation, we already have many of the technological solutions needed to reduce energy demand and transition to low-carbon heat. The crux of the challenge, therefore, lies in the implementation of these solutions.
There are many moving parts in the approach to local planning surrounding low carbon technologies and decarbonisation of demand, with a significant amount of interest from local and regional authorities in delivering a coordinated approach to reaching net zero emissions in their area.
When it comes to the role that heat networks could play in meeting our carbon targets, the Climate Change Committee (CCC) estimates that they could provide 18% of heat demand by 2050 in a least-cost pathway. Energy UK’s previous blog ‘Towards a roadmap for heat networks’ sets out how heat networks operate, and their potential for boosting UK growth as they decarbonise a significant proportion of the UK’s heating demand.
With the Energy Bill reaching its final stages in Parliament, the legislation makes provision for heat network zoning, the first of which are set to be designated by 2025. An effective framework for zoning is needed that will overcome implementation barriers to developing this infrastructure in suitable localities across the country, and the government is due to consult shortly both on its approach to the framework for heat network zoning and the role, responsibilities and activities of the Zoning Coordinator (ZC), such as identifying, designating, enforcing and monitoring these zones.
Taking an energy systems approach to heat network zoning
Local Area Energy Plans (LAEPs) are locally-led strategies for a community to meets its Net Zero targets. LAEPs can enable heat network zones, and building decarbonisation more broadly, to be considered from a whole energy systems perspective, taking into account factors such as building density and availability of local waste heat sources. The Government has previously committed to providing clarity on how LAEPs and heat network zoning could interact, and this should be set out within the forthcoming consultation.
Members of the shadow cabinet have also expressed support for policy that adopts local approaches to delivery, with proposals being developed for energy efficiency programmes that reflect the enterprise and investment zones of the 1980s. A targeted approach to home improvements could deliver savings for consumers while delivering more certainty about funding streams and timelines for delivery.
To further support a coordinated approach to reaching Net Zero, Ofgem this year consulted on the future of local energy institutions and governance, which included proposals for how the Future System Operator (FSO) should carry out the role of a Regional System Planner (RSP) in order to support greater consistency and coordination. Energy UK supported this in principle. As part of its responsibility to ‘facilitate dialogue’, the RSP will need to ensure that the ZC is supported to develop heat network zones with a wider consideration of the needs of the regional and national energy system.
Support for the ZC from frameworks such as LAEPs and institutions such as a Regional System Planner will be essential, as this will help address some of the initial skills and experience gaps within the ZC as the heat network sector starts to grow.
While collaboration is essential, additional capital funding for local authorities to be able to fulfil any aspect of the ZC role is absolutely crucial at a time when planning departments are already constrained due to a lack of resources. Without additional support, zoning may not be prioritised sufficiently to unlock the growth and investment that the heat networks sector potentially represents.
Designing the Zoning Coordinator role to be focused on growth
The ZC will likely designate zones according to a standardised methodology set by the central authority, informed by government-led pilot schemes. Consistency in the form of a standardised approach is welcome in terms of providing certainty to developers looking to invest across the country in new projects, and avoiding a postcode lottery for communities.
However, the extent to which the ZC’s activities may fall into other areas, such as enforcement and monitoring, is a key factor that must be considered in close consultation with the energy industry, and other stakeholder groups. For example, moving some of the proposed regulatory responsibilities across to Ofgem, such as enforcement, could help ensure that there is regulatory oversight and mitigate the risk of conflicts of interest where the ZC may be the zone designator and the developer.
It has been proposed that the Secretary of State could intervene to designate a heat network zone where an appropriate area has been identified but not designated. Consistent with this, elements of the enforcement framework should therefore sit with the central authority to ensure that the ZC is not only democratically accountable to its community but that Central Government can support and intervene where necessary.
The ZC is the key player in ensuring that heat network zones are a success, and while it’s likely that this role will be adopted by the local authority, there should be an emphasis on collaboration between institutions, communities, and the private sector throughout. Heat network zones will only reach the level and pace of growth that is needed to meet the government’s targets by unlocking significant investment from, and expertise sharing from, the private sector. Commercial models for zones that facilitate development at scale and pace, such as joint ventures, will be necessary to achieving the government’s target of getting the first spades in the ground by 2025, and the ZC role should be sufficiently flexibly to enable this.
The Zoning Coordinator is key to the successful delivery of heat networks. It is essential that this role places an emphasis on collaboration in order to support a whole energy systems approach to designating zones and to ensure that commercial models are brought forward that enable the development of networks at scale and pace.