November 2013: The House of Commons Energy and Climate Change Select Committee is currently undertaking an enquiry into Heat. The terms of reference to the enquiry states that “so far much of government’s energy policy focus has been on low-carbon electricity generation (in particular, the Energy Bill, which aims to reform the electricity market). Yet heat is responsible for 46% of UK energy use, approximately a third of UK greenhouse gas emissions, and is a major cost in both the domestic and non-domestic sectors.”
The Greater London Authority (GLA) has submitted written evidence to the Committee outlining the significant decentralised energy programme underway in the capital. The evidence sets out a number of interesting points related to the wider scale deployment of heat networks as well as recommendations to Government in terms of its policies to promote decentralised generation. These include:
- The Mayor welcomes the Committee’s scrutiny of this often over-looked area of energy policy
- There are “inconsistencies in government’s energy policy and regulatory regime that are preventing heat generation and distribution in cities” which “…distort the market for heat by providing external financial support for some technologies, while largely ignoring heat networks“.
- Heat network deployment at the scale envisaged for London represents a significant infrastructural challenge, requiring approximately 3,600km of heat networks to be constructed by 2030 and equates to an investment opportunity of approximately £6bn
- Whilst district heating schemes can qualify for funding under ECO, the current two year target as well as uncertainty regarding longer-term target discourage energy suppliers from investing in these schemes. Government should consider setting longer term targets for the next phases of ECO, or provide guidance on how investment in district heating schemes can contribute to current or future targets
- We estimate that London housing development will generate at the very least £25m per annum under the proposed Allowable Solutions regime – by far the greatest amount of any region. Yet, because measures are likely to be cheaper outside London, London businesses and households will again be subsidising other regions and receiving less investment into low carbon, heating bill reducing measures. In addition, as Allowable Solutions investment is likely to lever ECO investment, there is a risk that the proposed scheme will exacerbate the imbalance in ECO investment away from London.
The Committee’s evidence gathering process continues in November – more of which can be found here.