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The Green Investment Bank is planning to back district heating projects as interest in opportunities for renewable heat grows, climate change minister Greg Barker announced on Wednesday.
A £6 million grant funding programme launched by the Department of Energy and Climate Change (Decc) two months ago has already attracted more than £3.5 million worth of heat network projects, Utility Week understands.
The GIB has yet to finance any projects in renewable heat, which is one of its “non-priority sectors”. Under European rules, it is obliged to direct 80 per cent of its budget to “priority sectors”.
Speaking at Heat 2013 conference in London, Barker said: “I am delighted to announce the Green Investment Bank, encouraged by the formation of the Heat Network Delivery Unit [in Decc] and the flood of applications, has decided to look more actively at financing heat network opportunities.
“The bank will be liaising closely with the Unit, and is looking for refinance and new-build projects with both the public and private sectors.”
A GIB spokeswoman said “we are definitely really interested in” district heating and invited developers to get in touch.
In a straw poll, around two thirds of delegates thought government should prioritise district heating over other forms of renewable heat. Only a handful said national scale solutions, such as injecting biomethane into the gas grid, were more deserving of Barker’s attention. A larger minority backed household options such as heat pumps and biomass boilers.
Brian Tilley, head of policy at Eon, said economies of scale allowed 25 per cent cuts to both carbon emissions and customer heating bills on heat networks the energy company operates.
District heating networks, most of which are local authority initiatives in new developments, are not currently regulated. Louise Strong, senior policy advisor at Which?, said customers who had no choice over their heating provider wanted evidence they were getting a fair price.
“We have had several frustrated district heat customers come to us and they say price transparency is really important,” she said. “There is currently no standard price comparator.”
The industry’s voluntary customer protection scheme, announced last month, is “a useful transitional arrangement but it is not a long or even medium term solution,” she added.
Barker ducked a question on the extent to which heat networks should be regulated, saying “there are various different models” and “we need to big up the local element”.
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