Heat Network Strategy Statement

The following statement addresses regional heat network development and opportunity in the West Midlands Combined Authority area, in the context of new and upcoming regulation.

WMCA statement on regional heat network development and opportunity, in the context of new and upcoming regulation

Reliable, fairly-priced and low carbon heating is essential for the UK to reach its Net Zero targets by 2050.  Heat networks, provided they are supplied by a sustainable and low carbon heat source, will play a vital role in delivering widespread low carbon heating and are projected to supply around one fifth of heat demand across the West Midlands in the future. The West Midlands Combined Authority therefore recognises the importance of heat network development and expansion to delivering on our Net Zero 2041 target.

However, the WMCA also recognises that past piecemeal development of heat networks in the absence of clear and comprehensive regulations has led to negative consumer experiences, performance issues and challenges to their effective design and strategic build out. The WMCA therefore welcome Government ambitions and actions to introduce a regulatory framework for heat networks to accelerate their development. We support new regulations where they will ensure higher standards of performance and consumer protection, as well as where they clarify the governance of heat networks and bring their regulation into line with that for electricity and gas networks.

Under these new and future regulations, Government will have powers to consult upon and designate defined areas as heat network zones – areas where heat networks are identified to be the most cost effective method to provide low carbon heat in buildings.  In these areas, Zoning Coordination Bodies – yet to be defined at local and / or regional level – will be required to ensure the development of heat networks across the area and to ensure that certain mandated buildings within that zone connect within a specific timeframe. Regulations on heat network zoning are expected to enter into force in 2026, and it is anticipated that a significant number of zones will be designated across the WMCA area over time.

We believe the new Regulations will form a crucial foundation for the accelerated development of high quality, efficient and fair heat networks across the United Kingdom.  Ahead of the Regulations coming into force, to ensure their optimal development to support delivery of a fair transition, thereby securing wider economic, social and environmental benefits for the residents of the West Midlands, heat networks developed in the West Midlands should align with the following principles:

1. Prioritise the most sustainable and low emissions solutions for heat network development, limiting dependence on grid capacity to facilitate system-wide decarbonisation, resilience and reliability. In practice, this means prioritising surplus and ‘waste’ heat from processes, ambient and renewable heat sources, exploring and integrating not only high-grade heat sources such as those from industry, but also building resilience and optimising the use of available resources of low and medium grade heat sources.
   
   
2. Enable strategic heat resources within or near to a potential zone area to supply heat into and between zones to maximise utilisation of these heat resources without contractual constraint. We are keen to work with stakeholders to identify where strategic resources are located across the region and define how this can be delivered in practice. Strategic heat resources include environmental sources such as aquifers and water sources, as well as surplus heat resources from industrial or regulatory processes.
   
   
3. Contribute to WMCA’s wider strategy, supporting local and regional environmental, social and economic aims and priorities. Specifically, this means early engagement with the WMCA to see how developer investment can be aligned to increase the outcomes sought by the region. This may include coordinating investment alongside public financing institutions and partners to increase impact and enable neighbourhood distribution asset development to provide reliable, fairly-priced services to customers, and including exploration of local cooperative ownership models. There should be exploration with the public sector at all levels regarding how fuel poverty can be tackled through the establishment of innovative, but practical approaches that support a just transition, while maximising region-scale decarbonisation.

   It also means the developer should explore, agree, report on and optimise targeted social value benefits, including decent local jobs and apprenticeships, local spend and environmental gains, in collaboration with and guided by the targets and recommendations of the local and combined authority.

4. Be designed to maximise future interconnection potential as part of the wider strategic roll out of heat networks across the West Midlands. Networks be designed to enable in accordance with the need to share heat resources and maximise the potential connection of buildings and developments in the city where heat networks present the most cost-effective decarbonisation solution.

5. District or Campus-style heat networks should be designed in coordination with all relevant local authorities and the Combined Authority to ensure that strategic opportunities are identified and secured, and to ensure that developments align with wider local and regional objectives. Heat network developers should work collaboratively and openly with the relevant local authorities and West Midlands Combined Authority to ensure that heat network development complements wider energy master planning both locally and regionally. This engagement and the subsequent final design of the heat network should minimise the risk that developments cherry pick only the most valuable commercial opportunities, or prevent future expansion of the heat network.

In view of the above principles, WMCA note the importance of a coordinating role for local and regional government to enable the optimal and strategic development of heat networks, at the pace and scale needed.

Work undertaken across our region has identified the immense scale of the opportunity in the West Midlands for heat network development. For example, as participant in the UK Government’s Advanced Zoning Programme, Birmingham City Council has identified that the city contains the most significant heat network zoning opportunity of any single local authority in the country. As the region with the highest rate of fuel poverty, it is also clear that it is critical heat networks in the region are delivered in ways that maximise their environmental and social value.

At the same time, in order to realise the opportunity for low emission, fairly-priced heat networks in the region, a strategic approach to heat network development within and between zones will be required. Simply put, this means that heat from one zone will need to be transmitted to one or more other zones for the benefits of heat networks to be fully realised.

Where strategic heat transmission between [potential] zones is required, it is crucial that the Combined and relevant local authorities are in the design and development of such connections. This will help to maximise the future interconnection opportunity and increase resilience of the energy infrastructure.

In view of this, as well as the above principles and evidence, we favour an approach to the development of strategic heat transmission mains involving the public sector, at and from the conceptual stage. Given the active nature of work being undertaken by the Combined Authority and its Local Authorities to identify future zones, the emerging and existing evidence of the future importance of strategic heat transmission across the region and the imminence of new Regulations around zoning, we would look to support proposals that aligned with our objectives as outlined above.

The WMCA is actively facilitating exchange between constituent local authorities on future heat network development, including in a context of heat network zoning, and are committed to continuing this effective collaboration under any future arrangements for Zone Coordination.  Energy Capital is actively working to identify the future opportunities for heat network development in order to provide the clearest and most comprehensive information to stakeholders once zoning comes into force and is seeking to demonstrate how a genuine place-placed approach to heat decarbonisation can be enabled at neighbourhood, local and regional scale. 

We recognise the enormous opportunity for heat network development across the region and are excited to work with all relevant stakeholders to achieve it alongside our objectives and principle for heat networks and the wider regional energy system.

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