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District heating networks must be treated as long-term energy infrastructure to avoid sky-high energy bills for consumers, the Association for Decentralised Energy (ADE) has warned.
ADE’s director Tim Rotheray said in an exclusive column for Utility Week that the industry is in danger of treating heat networks as “short-term generation assets” which require subsidies to meet short payback periods on the investment.
Instead he says they ought to be treated as long-term energy infrastructure which has 30 year payback periods, and has called for a “dedicated infrastructure investment framework” to encourage investment.
Such a framework would level the playing field for investment in infrastructure and remove the need for subsidy, he said.
Gas distribution network Wales and West Utilities told the Energy and Climate Change Select Committee earlier this month that district heating investments will need a subsidy of 75p/kWh.
Rotheray said this level of subsidy, 15 times the domestic retail gas price, is only needed if the networks seek a seven-year payback period on the investment.
He said: “By setting long, stable investment horizons the major upfront investment is spread over the lifetime of the infrastructure, keeping bill payers’ costs dramatically down.
“If the energy regulator started requiring seven-year paybacks on gas or power network investment, our energy bills would skyrocket.
“As this nascent industry develops in the UK, the Government’s £300 million in support announced in the Spending Review can focus on developing the best, new, high quality exemplar projects,” he added.
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