Heat represents just under half of the energy we use and around 20% of the nation’s carbon emissions generated by domestic heating, taking action to decarbonise heat sources is arguably one of the biggest challenges facing UK energy policymakers over the next few decades.
Heat Networks, which supply heat from a central heat production facility through an insulated pipe system to a number of buildings or dwellings, have evolved to be the low carbon heat technology of choice in many European countries. The Government here has also clearly signaled their support, establishing the Heat Networks Delivery Unit and making £320m available through the Heat Network Investment Programme. However recently heat networks have come under scrutiny, with the Competition and Markets Authority (CMA) launching an investigation to ensure that customers are getting a fair deal.
With ten years’ experience in the design, operation and customer service provision for heat networks, SSE is ideally placed to highlight the improvements that can be made through all stages of a heat network’s project development which will ultimately enhance the customer’s satisfaction with heating system.
Whilst other utilities are subjected to stringent regulation regarding service provision and customer interaction, the relatively nascent heat network market only has a voluntary scheme (through the Heat Trust) to provide any standardised customer protection. Although the establishment of the Heat Trust (amongst other initiatives) shows the industry has already made progress; as the market continues to grow it is essential we have robust standards of build and service for customers.
This is why we welcomed the CMA’s recent investigation, and support the development of focused regulation; regulation targeted at the right areas and in proportion to the size of the market. For example, customer service standards can be significantly improved with limited intervention. As a founder of the Heat Trust we, and many other heat networks operators, already operate in compliance with the Heat Trust service standards. Therefore making these mandatory and introducing a supply licence setting out required standards for all market participants seems like a pragmatic first step.
Regulation of network and building design standards can also make a difference. Too many customers are suffering the effects of poorly designed schemes. Well designed, more efficient schemes are more resilient (reducing the likelihood of outages) as well as lower cost to run. We have a recent example of a scheme where we believe customer bills would have been 10% lower had an optimised design with fewer maintainable components been adopted. Design for performance (not just peak load matching) must be paramount.
Our experience in the market has shown us heat supply information provided to the customer through the letting/purchase process for their property is often very limited with many customers not aware their property is heated by a network rather than a conventional gas boiler when they move in. This is undoubtedly a cause of poor customer experience and low satisfaction, and provision of information can play simple role in improving this. We suggest developers and heat suppliers should be obliged to provide information to the customer about the heat network, including tariff information, how it is operated and key customer service contacts, at each stage of the property purchase/letting process to improve transparency.
Because of the multiple delivery and operational models used to construct and run heat networks, understandably there are also a wide range of methodologies used to calculate heat tariffs. However we believe it is important customers understand how their heat bills are calculated and have transparency of the components parts of their heat charge.
With a substantial number of heat networks already operational, and more in progress, SSE Enterprise is a market leader when it comes to the delivery, operation and maintenance of heat networks. We believe heat network market growth offers a significant opportunity to provide low carbon and low cost heat, and a satisfying experience to consumers, and we remain committed to working with the CMA, Government, industry and others to deliver this.