Shoosmiths energy & infrastructure experts attend Switch2 Energy ‘cost, carbon and compliance’ conference

Shoosmiths’ energy and infrastructure head joined a panel discussion focused on the challenges facing heat network operators.

Head of the E&I team, James Wood-Robertson, was a speaker at the Switch2 Energy ‘Cost, Carbon and Compliance’ conference hosted in Manchester.

The conference aimed to address the triple challenge of cost, carbon and compliance which is currently impacting housing associations, local authorities, private developers and managing agents who manage heat networks as part of their portfolio.

Throughout the day, a number of key themes came up as enablers for the rapid growth the sector expects to experience, in terms of efficiency, transparency and the delicate balance between flexibility and consistency.

Below, we reveal the key takeaways from the event:


Cost

  • The energy crisis has seen unprecedented levels of fuel poverty, and this has brought with it extraordinary challenges for residents. Conversely, these challenges have driven efficiency to a new level of importance for all stakeholders in district heating (residents, building owners and service providers). Operations and maintenance (O&M) is critical in maintaining ongoing efficiency, and there is a real, tangible, monetary benefit to residents of having an efficient system. Energy prices are such that O&M from a specialist provider can pay for itself through ongoing efficiency savings.
  • Recording and access to data is key to enabling specialist, targeted O&M which can make the access challenges easier by reducing the frequency and duration of visits required.
  • Access continues to be a key challenge, and this is a barrier to achieving efficiency gains and cost reductions. Transparency and clarity around the tangible benefits to allowing access (the “carrot”) were universally considered more likely to improve access over the long term rather than punishments or penalties for residents who do not permit access (the “stick”), but it was generally agreed that there is no single “right” approach which will work for each network.
  • Quality control in the build stage, as well as the engagements of architects as part of the design & build process for new heat networks were also identified as key areas which can affect an improvement in both efficiency and carbon reduction.

Carbon

  • Carbon savings are inevitably tied to efficiency. One consequence of the energy crisis has meant the subsequent focus on efficiency is that this is beginning to make a clear business case for carbon reduction, as reducing gas in heat networks has a tangible, real saving to bill payers.
  • One of the key challenges to decarbonisation of existing systems is the need to work within the existing constraints (pipe width, architecture, insulation etc.). This has potential impacts on efficiency (and cost) as well as the potential for carbon reductions, so future regulation needs to provide enough flexibility to address the challenges these schemes are facing.
  • Although the final destination of net-zero heats networks by 2050 is known, industry is hoping for more clarity on what future regulation looks like (particularly around zoning) to help plan for any capital investments that can be made in decarbonisation now without the need to wait.

Compliance

  • Industry has broadly supported and welcomed regulation as a way of setting clear expectations and standards, but until the detail is known, there is a hesitation to take capital investment decisions. The Ofgem consultation expected this summer is likely to accelerate decisions of this kind.
  • Regulation can itself support carbon and cost reductions, by setting efficiency standards which need to be met in order to connect into zoned heat networks. Again, this is broadly supported, but the detail will be critical.
  • As well as the immediate cost upside of running an efficient network, with upcoming regulatory changes, including heat network zoning, there is a longer-term need for existing infrastructure to improve its efficiency ready to connect to these new networks.
  • A consistent framework for quality standards and KPIs is expected as part of the new regulations. This will aid transparency but needs to be balanced against the need for flexibility, given the number of existing schemes and the unique engineering challenges that each individual system presents.

Disclaimer

This information is for educational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given. © Shoosmiths LLP 2024.

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