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Could you warm to a district heating scheme?

A tiny house in someone's hands

District heating schemes could be a low-carbon solution for energy supplies, but customers are not protected by consumer regulations. Are you part of a shared heating scheme?

At Which?, we believe that for the energy market to be truly competitive, it needs to be far easier for people to compare the prices of different suppliers and switch to the cheapest one for them.

But for the 200,000 or so households who get their energy from a district heating scheme instead of through the wires and pipes of the National Grid, there is no choice of supplier. So with major interest in increasing the number of homes connected to district heating, otherwise known as a heat network, how do we ensure these people get a good deal?

What are district heating schemes?

If you’ve never heard of district heating schemes, they supply homes and businesses with heat through a network of pipes that take hot water or steam from a power plant (essentially a huge boiler) to individual properties.

Schemes can be powered by a diverse range of fuel sources, including low-carbon and renewables. Typical technologies used include energy from waste incineration, biomass fuel, and combined heat and power (CHP) plants.

CHP is an efficient use of fuel. Electricity is generated and the heat created by the process (which would usually just be waste heat) is used for another purpose, such as heating water that can then be pumped round pipes to heat homes. CHP can be gas-fired or fuelled by biomass. Therefore, district heating is potentially a more flexible and environmentally friendly way to heat more homes, as it is not dependent on just one type of fuel.

Turning up efficiency, but turning down choice

The downside is that directly connecting homes to a specific source of energy means it is virtually impossible to give people a choice of supplier. Households have very little control over who supplies their heat and the price they pay is not subject to the competitive pressures you find in a market where companies have to compete to attract and retain customers.

Households on mains electricity and gas are also protected by regulations set by Ofgem that suppliers have to comply with as a condition of their licence to supply energy. The same is not true for people on district heating. There is no consumer protection regulation at the moment and, therefore, no standards of service for the sector.

Are you on a heat network at the moment? Do you think you pay a fair price for your energy?

If you’re not on a heat network, how would you feel about living somewhere that’s connected to one? Does Ofgem need to step in to protect consumers, or could industry self-regulation be enough to ensure consumers benefit from good service and fair prices?

Comments

I have been living in an apartment building with district heating for the last two years. The initial information provided by the building company misled us into thinking that this system was more economical. It is simply appalling that these companies are not regulated. Since 2019 Jan, our standing charges have gone up more than 200% The heating price by itself is relatively agreeable, but hiking up standing charges so ruthlessly doesn’t seem ethical. I pay more for charges than heating. Furthermore, the energy company offers poor service in their daily operations and they are ever so nonchalant about it. As district heating schemes will grow exponentially in the near future, something has to be done about the way these companies work.