Are local authorities making enough progress in delivering low carbon heat?

The government released its first Heat Strategy in early 2012. It set out their approach to addressing the challenge of providing low carbon heat, including the important role of local authorities in the development of heat networks.

Nearly three years on from the publication and we’ve seen interesting progress, particularly the creation of the Heat Network Delivery Unit (HNDU) within DECC to provide funding and guidance to local authorities.

There is undoubtedly a far greater level of awareness of the benefits that heat networks can bring. Decentralised energy conferences used to be few and far between, but are now a regular feature on the events calendar. More information is being shared, and many more local authorities now understand why a heat network might benefit their town or city.  

That increased awareness isn’t simply a function of the heat strategy or heat policy. A number of organisations and individuals have been working hard to promote heat networks for many years. But having the benefits explicitly recognised and backed by policy has certainly helped.

This awareness, together with the existence of grant funding, has enabled a huge increase in the number of local authorities investigating opportunities. They are commissioning work to look at capturing waste heat from anything from sea water to mine workings, as well as more traditional incinerators and gas-fired combined heat and power (CHP).

What is interesting is that we’re not yet seeing a significant increase in the number of projects coming to market. This is particularly surprising given that many projects had already been in development for some time before asking for funding. As such, many people expected a rush to procurement as those longstanding ambitions became real projects reaching financial close.

So what more could be done to get those projects over the line?

There are several possible reasons for projects not getting to procurement as quickly as we might have hoped. At the Carbon Trust local authorities are still telling us that continuity is a challenge, and that contributes to a number of other problems.

It’s still rare for project resources to be mapped out from beginning to end. This is understandable as the level of uncertainty at the start of the process is high. The sums of money involved to develop a project from start to finish are even higher.

We’ve often seen projects struggle in the face of general budget cuts and internal reorganisation. That is the current reality for the public sector and is likely to continue into the foreseeable future. Individual officers can be absolutely critical in ensuring a project keeps on the right track. The question is whether we can afford to keep relying on those dedicated individuals to single-handedly take on the development of strategic infrastructure, or whether we need to offer them a constant and dedicated means of support.

But there are two sides to the continuity question. Any support that is offered should be able to see a project all the way through from the initial brainwave to collecting the first heat revenues. If the support only takes you to a certain stage, there’s a risk that becomes the point where the project will stall.

A welcome extension of the HNDU was recently announced, and a review of its impacts has been commissioned. The unit has undoubtedly had an incredibly positive effect on the amount of feasibility work and investigation work taking place, but has perhaps been hampered by the constraints around the level of input they can give and the stages of project development at which they can intervene. It is part of the solution to the problem, but not the whole answer in its current form.

Whether or not HNDU is given the broader scope some would like to see, there are things that local authorities can be doing now to increase their project’s chances of ultimate success. Whilst there is greater general knowledge of heat networks, we are still very much building the skills base in the UK. The reality is that most local authority staff have not set up a mini-utility before, and they will need support. The complexity and individuality of projects should not be underestimated. We are still a long way from a one-size-fits all delivery model and local authorities should be wary of relying on other people’s limited experience.

There’s clearly been great progress since 2012 but we still have a long way to go. In a long and complex project development process it’s easy to lose sight of your original goal, but the wrong compromise will always be a false economy. 

This article first appeared in Public Sector Executive.


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