Overview

Heat network zoning is a national government led initiative to speed up the development of new heat networks across England. The Department for Energy Security and Net Zero (DESNZ) summarise the purpose of heat network zoning as follows:-

Since Putin’s illegal invasion of Ukraine shook the foundations of the energy market, we’ve been exploring how to make our power supply more robust and resilient, while reducing our reliance on fossil fuels imported via volatile global markets.

Heat networks are the perfect example of the type of technology that helps address these issues. By using heat from a variety of different sources, they can reduce the need for fossil fuels and provide lower-cost heat to local areas. That is good news for both consumers and the climate. Already, heat networks provide about 3% of our total heat. But as they continue to spread, that figure could rise to 20% by 2050.

Heat network zoning will be essential to speeding up the development of these new heat networks. By indicating where heat networks are expected to be the lowest cost low-carbon heating option, we hope to catalyse growth where it’s most needed.

We also want to give local areas in England greater certainty and confidence about the best locations for heat networks, so that they can better serve the people that live there. And we want to give developers and investors more certainty about the number of likely connections to networks, to help enable the investment needed to build them. Building confidence in the tangible heat network opportunities will unlock huge investment for the UK.

Heat network zoning will give local communities the tools to accelerate the development of heat networks in their towns and cities. Zoning will ensure that more homes and businesses can have access to greener, cheaper heat sooner by removing the barriers which currently limit the scale and pace of developing heat networks.

How Zoning Could Work

The precise details of how zoning will work has not yet been finalised. In December 2023 DESNZ shared its plans in a detailed consultation document, the aim of which is to obtain views from various bodies ahead of the adoption of legislation which it hopes to bring into force in 2025.

Our very brief summary of this zoning consultation is as follows:-

1. Zone Identification – Heat network zones across the UK will be identified, most likely in cities and other densely populated areas.
   
2. Zone Designation – Each zone will be formally registered, following which zone requirements and powers would come into effect.
   
3. Zone Delivery – Heat network opportunities within the zone will then be brought to market, following the adopted commercial delivery model. ‘Zone Developers’ would be appointed and granted the exclusive rights to develop heat networks within the zone.
   
4. Zone Operation – The appointed ‘Zone Developers’ would construct and operate heat networks within the zone. Powers would be granted to legally require certain buildings to connect, and for sources of waste heat to be made available to support the networks. Powers would also be granted for installing pipework.
   
5. Zone Review – Regular reviews of zones would be undertaken with the aim of expanding existing zones and creating new ones.
   

Customers of heat networks would be given protection thought separate new consumer protection legislation, in particular around service standards and heat pricing.

Local Authorities would have opportunities for form joint ventures or become controlling members of the appointed ‘Zone Developers’.

‘Zone Developers’ would be bound by the new legislation, being required to meet certain standards to help ensure availability of heat, value for money, and reduced carbon emissions.

Our Involvement In Zoning to Date

Harbour Project Management have been involved in the development of Heat Network Zoning since 2021. Our role has been to provide regular support and advice to Liverpool City Council (LCC) and Liverpool City Region (LCR) under the following initiatives:-

Heat Network Zoning Pilot Programme (HNZPP)

Liverpool was one of 28 English cities and towns selected to help develop and test a national methodology to identify and designate heat network zones. This involved regular meetings with the DESNZ appointed national team, focusing on accounting for local circumstances and the practical application of theoretical approaches. Much of the work undertaken at this stage has been adopted and helped to shape the forthcoming legislation.

Advanced Zoning Programme (AZP)

Liverpool are one of the few cities to be taken forward to the next stage of the work, the Advanced Zoning Programme (AZP). This is focused on the accelerated construction of new zonal scale heat networks ready for the introduction of heat network zoning. It will also serve to provide ‘real world’ live examples of zone identification, designation, delivery, and operation to help test the new legislation.

Our role in the support of Liverpool City Council and Regional Authority is set to continue through 2024. We plan to provide a further update to this case study as things develop.