HOT|COOL NO. 2/2019 - "Smart Heating System Integration"


NORWAY • Local directive planning policies and national energy efficiency standards : Local government supported market development by adopting directive planning policies and helping companies to plan strategically in relation to new property developments. Norwegian energy efficiency standards for waste incineration also ensured a (publicly owned) actor with an interest in DH development at scale. • Licensing of concession areas: Companies developing a new heat network require a license. Licensees have exclusive rights to development in a designated area, and the right to apply for mandated connections of new developments within the zone. Licensing offers protection from competition, whilst legitimising the heat service through certified economic, social and environmental standards. • Consumer protections: Concession agreements are linked to consumer protection standards, avoiding risk of monopoly exploitation. Local government can intervene where necessary, and customers have a standard of accountability, and an option for collective switching to a new operator, or provider of last resort, if the service is unsatisfactory. This protects heat demand across the network, and hence financial viability. NETHERLANDS • Cooperation between local government and industry: Governance is a joint responsibility of public authorities and industries, underpinned by legislation. Rotterdam government facilitated DH development through these cooperative relationships by granting exclusive concessions to utilities and applying supportive building control policies. Concession areas encompassed existing buildings and new developments. • Consumer protection through transparent finances: Customers were concerned about exploitation by companies making excessive returns, but investigation of DH businesses showed that financial returns were quite low. This demonstrated the importance of open access to financial data for customers or their representatives to assess the fairness of heat prices relative to company profits. A standardised method for open book accounting was established. • Local government finance: Netherlands government retains majority control of local budgets, but local governments own stakes in regional energy enterprises, and local political leaders exercise discretion over budget allocation. They also have prominent roles in state and European politics, providing scope to steer local energy development.

IN CONCLUSION Current UK policy to support DH as a low carbon solution is a necessary step but lacks the means to de-risk infrastructure investment for essential economies of scale and carbon saving over the long-term. Our research suggests that one part of the solution is local heat planning, using a cluster-density model. The model results in connecting 50% more heat demand than a zone- density model and has considerable cost efficiencies. A second component of the solution is licensing and regulation, including customer protection, as in Netherlands and Norway where new heat markets have developed faster than in the UK. These measures would make DH feasible, securing benefits for low income households and for older buildings that are difficult to retrofit to high energy performance standards. ACKNOWLEDGEMENTS This article is extracted from Meeting strategic challenges of UK district heating - a Briefing Guide Read our research in more detail at Research was funded by EPSRC Grant Ref EP/M008215/1 and University of Edinburgh Impact Accelerator. Thank you to our expert reviewers for very helpful feedback, and to our cross- sector contributors.

Janette Webb, For further information please contact:


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