Billing and funding for heat networks

Billing for heat networks

For each of the heat users, heat metering should be installed at the use, which allows for transparent tariff-based billing. Connection charges can also be used to give additional financial benefit to the project. This tariff will reflect the costs of running the energy centre and delivering the heat, but it must also be competitive with alternative solutions. Tariffs can be fixed-cost or variable charge based on the time that heat was used. Automatic Meter Reading (AMR) systems allow remote readings with detailed information on consumption patterns. Alternatively, smart meters could allow for real-time data reporting, with more information than standard AMR. This data can be used to optimise the running of the heat network, to reduce heat losses or reduce electricity/fuel costs.

Funding for heat networks

The Heat Network Investment Project (HNIP) 

HNIP is a government project for providing funding for large-scale heat network projects, it provides capital funding to installations that are deemed ‘high quality’. To gain funding, the installation must meet several eligibility criteria, including a low carbon heat source and a minimum of 2 GWh/annum heat generation. The installation must also meet the definition set out in the Heat Networks (Metering and Billing) Regulations 2014, which ensures heat consumer billing based on their consumption. 

It is important to note that HNIP funding cannot be used to cover costs for energy generation plants that are already supported through schemes such as the Renewables Obligation (RO), Contract for Difference (CfD), or RHI. It can only be used to fund the network infrastructure connected to the generation plant. Research from the Energy Technology Institute suggests that 37% of the capital costs are associated with the installation of the network, and 23% with the installation of Heat Interface Units (HIU) at the point of heat use. This balance will change depending on distance and number of heat users on the network.

Renewable Heat Incentive (RHI)

The non-domestic RHI will be closing for new applicants at the end of March 2021. To replace the funding to incentivise renewable heat networks, a new scheme called the Green Heat Networks Fund (GHNF) will be put in place, which will focus on low-carbon heat delivery: biomass, biogas, deep geothermal, and energy from waste. This scheme is very much still in infancy, with a call for evidence announced by BEIS on 30 September 2020, the results of which will help to determine what shape the scheme will take.

Case Study - Heating Swaffham Prior project by Cambridgeshire City Council

A large heat network project in Cambridgeshire, with initial retrofit connection to 166 households, heated with a combination of 130 borehole GSHPs and a large ASHP. This project secured £2.15 million in capital funding through HNIP, of a total £5.2 million to be invested into the project.