One year into this Labour government, and the work to deliver Clean Power by 2030 continues at pace. But in our pursuit of energy security, one huge challenge remains: our reliance on gas for heating homes, community buildings and commercial properties. Gas boilers currently heat 78% of homes, meaning that even after achieving clean power for electricity, consumers will remain exposed to the unpredictability of global gas prices. To protect consumer rights, lower bills and achieve energy security, we must consider the whole energy system beyond just electricity.
There is now growing focus on Clean Heat from both government and wider society. People are concerned about bills and the recent Spending Review promised a fully funded Warm Homes Plan with Clean Heat likely being the focus. The coming months will be critical as conversations concerning how we achieve Clean Heat, the mix of technologies that will be utilised, and how we finance the transition all progress. All this together presents a significant opportunity for investors that we should, and can, act on today.
Solutions for whole communities
The government’s advisory body, The Climate Change Committee (CCC), predicts most people will have to install an individual heat pump to decarbonise heat. While these are a fantastic solution for many, and installations continue to accelerate across the UK, they are not right for every building. Smaller homes, families on low-incomes, terraced streets or even whole neighbourhoods could benefit from collective solutions, where heat is produced for a community and delivered straight to their existing radiators – such as through Heat Networks.
Not only will these collective solutions reduce the burden on each household, but they will speed up the transition to Clean Heat. Heat networks are a way for whole areas to switch their heat provision through the same scheme. Critically, this can be delivered in a way that puts communities at the centre of the process and decision-making, providing greater choice in how they heat their homes into the future.
Introducing: Heat Networks
Drawing from an existing local source of heat, perhaps from underground, waste heat from local industry or from waterways, heat networks concentrate that heat and deliver it to all the buildings connected into the network. Whole communities can be connected to the same network – providing schools, neighbourhoods, hospitals and businesses with a reliable and affordable source of heat for the long-term, and without every individual needing to research and fund the right heat pumps one household at a time.
Heat networks are not a new idea. We can trace their origins all the way back to the Roman Empire, when they sent hot air or water through pipes to heat baths and greenhouses. The more modern technology has a strong fifty-year history, with approximately two thirds of Danish homes being heated by district heat networks already and wide uptake in many other countries too.
The government is now rightly committing to scale this technology in the UK, with the CCC advising growing heat networks from providing 3% of national heat demand to 20% by 2050. To achieve this, the government are focussing on identifying high density urban areas where heat networks would clearly be a better option than lots of individual heat pumps. These areas, or ‘zones’, will get prioritised for government support, seeing heat networks developed quickly and offering local people the choice of reliable, decarbonised and affordable heat.
While they must choose somewhere to start, this approach risks leaving other communities behind, limiting their choices for Clean Heat or forcing rural communities to pay to install their own heat pumps unlike communities joining government-backed heat networks in urban areas.
Where we come in
Heat networks are already a proven solution in the UK and internationally and can be a effective, affordable solution for both urban and rural communities. In the right places, heat networks could accelerate the green transition in areas across the UK and provide consumers with choice – even outside of designated priority ‘zones’. The key to unlock this potential is how we make the technology accessible.
As a social investor, we’re driven by our mission to support a fairer and more equal society, working in partnership with communities and providing the finance needed to scale local services and solutions. Ensuring all communities have access to alternative, affordable clean heat options is now a critical objective for Social Investment Business, and we’d invite other social and impact investors to consider their role alongside us.
We launched our Energy Resilience Fund in 2024 to support community organisations, charities and social enterprises to invest in heat pumps, electric vehicles, energy efficiency and renewables, and now we’re now expanding our commitment to this agenda with new investments with the launch of SIB Community Heat and several pilot projects underway.
If you’re an investor, foundation, community energy group or just an interested party then we’d love to hear from you and explore how we might partner to deliver Clean Heat to communities across the UK. Stay tuned for more blogs in the coming months as we unpick the role of private finance in piloting local heat networks, and the mutual benefits when communities remain at the centre of our plans.
