The Heat Network Regulations have changed – here’s our guide to compliance
If you supply heating, cooling or hot water to tenants via a heat network, you may be affected by The Heat Network (Metering and Billing) Regulations.
The regulations were launched in 2014 and updated in November 2020 with new obligations for ‘heat suppliers’. Our guide explains more, and what you need to do to comply.
What are the Heat Network (Metering and Billing) Regulations?
The Heat Network Regulations aim to drive energy efficiency in domestic and commercial tenanted buildings. They apply to anyone supplying and charging for heating, cooling or hot water (known as a ‘heat supplier’) via a heat network.
Under the regulations, heat suppliers may be required to install metering devices to final customers and bill them based on consumption. This gives occupants greater visibility on their energy use, drives energy efficiency and supports fair and transparent billing to end customers.
What are heat networks?
Heat networks are shared heating systems, as opposed to individual boilers. On a heat network, heating or cooling is provided by centralised plant (such as a large boiler or heat pump) and distributed to customers through pipework as either water, steam or chilled liquids.
The regulations apply to both district heating networks (involving two or more buildings with at least two end-users) and communal heat networks (single buildings with two or more end-users).
Therefore, the scope of the regulations is wide. They could apply to landlords leasing office space to multiple tenants, residential apartment blocks, shopping centres, social housing developments and industrial sites, to give a few examples.
Why are they needed?
As an example, imagine four commercial office tenants share their building’s heating bill, based on their percentage share of the floor space they rent.
If one office works hard to use less heat, they will not be rewarded, because their bill has nothing to do with the heating they really use. So, there is no financial incentive to close windows, turn thermostats down or become more energy efficient.
The largest share of CO2 emissions from UK buildings comes from space heating and water heating, so driving energy efficiency in this area is an important part of the UK’s decarbonisation goals.
How to comply – and what’s changed since November 2020
Since the regulations were launched in 2014, heat suppliers have been required to notify BEIS of each heat network they operate, and then renotify every four years. Suppliers of district heating have been required to install accurate building level heat meters. Suppliers of communal and district heating have also been required to install final customer heat meters and temperature control devices, where cost-effective and technically feasible. There is a duty to maintain these meters, check they are working and bill customers accurately for their consumption.
Essentially, these requirements still stand. But, as of November 2020 heat suppliers are first required to define the “class” of their building, to determine whether they must install customer meters.
There are three building classes: Viable, Open and Exempt. The definitions of these are lengthy and can be found on p.32 of the government guide, but:
- If your building is classed as Viable: final customer meters are always mandatory.
- If your building is classed as Open: final customer metering devices may be required. You need to carry out an assessment to determine whether it would be technically feasible and cost-effective.
- If your building is classed as Exempt: there is no requirement to install metering devices for final customers (and no assessment of technical feasibility and cost-effectiveness is required).
Actions required – and deadlines
The 2020 update stipulated new deadlines for heat suppliers as follows:
By 27th November 2021
- Determine whether your building falls under one of the three classes: Viable, Open or Exempt.
- Complete a technical feasibility and cost-effectiveness assessment for buildings in the Open class. You can find an assessment tool on the government website.
By 1st September 2022
- Complete the installations of final customer heat meters and temperature control devices in all buildings that fall into the Open class (if you’ve established it is technically feasible and cost-effective).
- If it’s not technically feasible and cost-effective to install final customer heat meters but it is cost-effective to install heat cost allocators, thermostatic radiator valves and hot water meters, then you must do so by this second deadline.
- Mandatory billing requirements will apply to all existing and new metering devices, whereby the heat supplier must ensure that billing for the consumption of heating, cooling and hot water by a final customer is accurate, based on actual consumption. Heat suppliers are only exempt from meeting this requirement if the total cost of doing so, as defined within the regulations, exceeds £92 per final customer per year.
A word on Brexit… do the Heat Network Regulations still apply?
Yes. The Heat Network Regulations were originally introduced to implement an EU directive, but they remain in force now that the UK has left the EU.
How Concept can help
The Heat Network Regulations are complex and can be challenging to navigate. In many cases expert advice is needed to determine whether you are in scope.
Concept provides support on a number of key aspects of the regulations; we work with clients to determine building classes, identify what is ‘in’ and ‘out’ of scope and assist with notifications. We will take care of cost-effectiveness and feasibility assessments where needed, and if you do have a duty to install metering devices, our specialist metering team can undertake the design and installation process.
If you think you may be affected by the Heat Network Regulations contact us for more information on how we can help.