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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
Guest
QueenslandRd says:
20 July 2014

We live in a new build owned by Barret Homes. They have a 25 year contract with e-ON to supply our flat with heat via DHS so we have no choice of another supplier. We noticed after a couple of months are bill were exteremly high. We now limit our heat to just hot water, enough for two showers, and the bill is still 50/month. Since we now use a minimual amount of heating I looked at moving to the lower tarriff but due they increase the KwH charge so much it makes no difference.
I have complain to e-on highlighting two ways they could make pricing fairer to their customers:

1. Review the amount they charge for insurance (which is part of the standing charge). Unlike other providers under a DHS scheme you have to pay insurance. E-on evaluate other providers insurance at around 400 pounds a year, when in fact you can get boiler insurance at 180 a year. If they want to offer a competitive price, as they claim, they have to review this cost.

2. As mentioned the difference between using a low and standard tarriff when you are using a small amount of heat makes no difference to the bill. I have asked them to reduce the 19p pre KwH on the low tarriff to a level that makes sense for a low user.

Guest
Charlotte says:
24 March 2017

We have the same problem with Eon. We live in a one bed flat, have the heating on 20/21 in the morning and evening and our bills for the last three months have been £93 a month. Eon refuse to help and we can’t switch supplier. i am reaching out to our local MP and I suggest you do the same.

Guest
Gideon Corby says:
16 October 2014

I live on a development which was completed 2 years ago. The CHP unit has yet to start supplying our heat and energy. We have been told it was made operational last weekend. One problem is that it leaks so much heat into the flats above that air-conditioning units have been installed while the contractors try to remedy the problem. Extra insulation was retro-fitted to the ceiling and a vent and fan have been fitted to extract and pump heat into the courtyard outside.

We have been relying on the back up generators for our heat so far and buy electricity from regular utility companies.

The heat is charged at a per unit rate comparable to regular energy companies so we have no benefit from the economies promised by CHP adoption. The unit rate is not directly comparable to buying gas off the grid (heat vs energy) but the bills we receive mean that the costs appear similar. A major problem is the standing charge is very large – typically two thirds of the cost of a bill so there is little incentive to cut down on the use of energy.

Guest

Sounds a real mess Gordon. Thanks for providing more insight into how to c**k-up by developers.

I used to do budgets for flat/housing developmemts on the maintenance side – insurance , cleaning , gardens , sinking fund. One of the problems on new developments was that the developers wanted us to offer a very low figure, and if they did not sell all the flats then they were not too keen on making up the difference. I wonder if there is something similar going on with your development.

Incidentally giving the standing charge as a percentage of usage is not as useful as figures …. you may be using very little power! At this time of night it helps my poor brain : )

How to do better:
http://www.zerocarbonpartnership.com/
http://www.buildingdesign-news.co.uk/sept-14/mitsubishi-recognised-with-two-awards.htm

Guest
G.Parry says:
6 December 2014

I moved into a housing association house in March 2008 (Scotland), the heating system is community biomass, supplied by said HA. When I first moved in the HA had promised to keep a low price for three years (which cost about £15-£20pw – winter), and the heating system seemed to work OK (underfloor downstairs, radiators upstairs and hot water). However, when the three years was up, the price just doubled, and at present I am averaging £5.80 per day (£40.80pw, £174per 30 days) for an incomplete system (keeps breaking down), and I only use the underfloor in the living room and hall (on constant because it’s takes so much credit to keep heating it up), water once a day and very rarely use my radiators, but according to the representatives of the HA this is about normal. I basically can’t afford to heat my house, and because it’s biomass/community heating I can’t change supplier. I’ve also never had a bill statement so I don’t even know how much I’m being charged per tariff. Is this legal, and is this a normal amount to be paying each day?

Guest
frozen orange juice says:
6 December 2014

look on the gov.uk website Policy
Increasing the use of low-carbon technologies
seems like social landlords are getting money per unit generated and used . unless its a new build but read and see
you could argue that they have to pay for installation but i think this is grant aided also .
so the more you use the more they get .not just what you pay them
its not about keeping you cosy its about saving the planet and keeping landlords rich and the tenant poor .and poorer in heat as well by the sounds of it .
back to cave man times

Guest
Trudy Stewart says:
22 January 2015

I live in a village on a Country Estate and in June last year, work was completed on a district heating scheme within all the houses in the village. The system has been very problematic but my biggest problem with it is the expense. We received minimal info from our landlord and in December, I received my first bill for £365. Since then (even though the property was empty for 12 days) I have supposedly gone on to use another £167 worth of heating.
One of the radiators had a leak from the day it was installed (fixed yesterday) and almost every day, there is 1 problem or another with the system from low pressure to overheating temperatures.
Yesterday I took a reading and it was a 4 digit number. This afternoon, the Evinox Viewsmart display screen went black and the red fault light started flashing. It was back on within 5 minutes but the heating consumption is now a 9 digit figure!
I would be interested to know if anyone else has experienced similar problems. I also cannot understand why, from talking to one of my neighbours, I am being charged 3 times as much as him although we both use the heating for a similar amount of time each day and have the same amount of radiators “on”.
There are a number of unhappy customers/residents within my village and it is by no means turning out to be the cheaper fuel alternative we were promised.

Guest
Jim Forrest says:
23 January 2015

Hi. I have been an Energy advisor for 7 years, my client’s are my number one priority, I have been involved in a couple of District heating projects in the last couple of years and I cannot believe Ofgem are not getting involved in regulating the pricing. The District heating system is a very good way of guaranteeing that suppliers will have someone tied in to their supply whether they like it or not. Getting back to the pricing the whole idea behind District heating is to help alleviate fuel poverty so they say, so how come the less energy you use the more expensive the kWh becomes. The standing charges are a rip off people are being charged whether they use their heating or not and if you are Energy efficient and use less energy you will pay more. It does not make sense lets get real on the pricing. Ebico a not for profit organisation no hidden costs no standing charges only pay for what you use.