MARKET OVERVIEW UK DISTRICT HEATING
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1 MARKET OVERVIEW UK DISTRICT HEATING Date April, London
2 London, April 2016
3 DISTRICT HEATING IN THE UK Map of successful HNDU rounds 1-5 Local Authorities. Round 1(Red). Round 2(Blue). Round 3(Green). Round 4(Yellow). Round 5(Pink) The UK Government is taking district heating seriously and an increased amount of work is going on in the public and private building sector with the potential for this to increase significantly. The Department for Energy and Climate Change (DECC) plans to allocate enough capital subsidy to district heating networks over the current spending period (2016 to 2021) to unlock 2 billion of new projects. In a period where budgets are cut, the Government has made a commitment to maintain the Renewable Heat Incentive (RHI) for the current spending period, allocated 300 million earmarked for heat networks and continued the work of the Heat Network Development Unit (HNDU). An additional 295 million will be spent on energy efficiency in public buildings which will further encourage the university and hospital sector to invest in CHP and district heating networks. So far, 9.7 million has been provided in grant funding (about 14.5 million with match funding) to 122 municipalities which represents 180 heat network projects and a further round of funding (Round 6) has been launched. An overview of the HNDU projects is found below. Multiple supply chain opportunities for plant up to 700m and O+M value over lifetime of schemes up to 800m The current heat network project pipeline can be described as: A diverse range of potential heat network schemes ranging from 3-4m up to projects in excess of 40m A combination of new build and retrofit connections
4 A mixture of public and private sector connections, with initial anchor loads primarily from the public sector Technology agnostic; so a variety of heat supplies Scotland Scottish Ministers have devolved responsibility for heat, and the Scottish Government has a number of grant and loan schemes which are used to support the deployment of district heating. An official taskforce estimates that the 103 known heat network projects being developed in Scotland offers a total investment opportunity of between 200m to 440m including: Heat distribution networks 85m - 190m Heat plants 74m - 223m End-user connections 28m - 70m Current market Today the UK has over 2000 district heating networks serving approximately dwellings and commercial and public buildings. The majority of the schemes are relatively small by Danish standards and fuelled by natural gas or energy from waste District heating covers about 2% of the heat demand in the UK The Department for Energy and Climate Change s ambition is that heat networks will deliver between percent of all heat by 2050 These characteristics are presented in the pie chart below, which shows an overview of energy Source and capacity in existing schemes:
5 Interested in the UK District Heating market? Contact: Rasmus Leth Traberg Energy Sector Lead The Trade Council Danish Embassy in London + 44 (0) rastra@um.dk
6 The Trade Council is a part of the Ministry of Foreign Affairs and is the official export and investment promotion agency of Denmark. The Trade Council benefits from around ninety Danish Embassies, Consulates General and Trade Commissions abroad. The Trade Council advises and assists Danish companies in their export activities and internationalisation process according to the vision: Creating Value All the Way. The work in the Trade Council follows specific procedures and quality guidelines. In this way our customers are secured the best possible quality under the varying working and market conditions at any given point of time. Ministry of Foreign Affairs of Denmark Royal Danish Embassy in London 55 Sloane Street London UK +44 (0) rastra@um.dk
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