Heat networks for block managers explainer guide

What are heat networks?

Heat networks are a mode of providing heating to buildings. There are two main types — firstly a large, centralised plant that heats various buildings in a network, and secondly, the one that most property managers will encounter day-to-day where there is a communal heating system (usually gas boiler fired) for a single block. Heat networks provide a shared source or sources of temperature control to multiple units using water, steam or coolants. The heat is sold to the building occupiers by the heat supplier, who may be a third party or the owner of the building. Billing can be either within the service charge or under a separate arrangement, and can be based upon the lease or actual consumption.
Heat networks for block managers explainer guide

Heat networks are not a new idea, and are used in commercial buildings as well as residential. However, Government regulation of heat networks is relatively new. The beginning of regulation is due to the Government’s aim of increasing the usage of heat networks from the relatively small numbers of networks there were in 2014 when regulation began, to the projected 8 million users of heat networks by 2030 — part of the UK’s net zero initiatives.

Heat networks glossary

Provides fuel such as gas or electricity to a heat network’s energy centre. A fuel supplier is not directly involved in supplying heat to the buildings it supplies.

The difference between the heat that’s created and the heat that’s needed.

A communal heating system with a single heat-producing energy centre that distributes heat to multiple individual units, rather than each unit having their own heating system.

The person or persons responsible for the operation and maintenance of the heat network. Can be used almost interchangeably with heat supplier.

Used to control the heating within individual units in a heat network, the HIU acts similarly to a boiler with a thermostat and allows the occupiers to control their own heat usage.

According to GOV.UK: “A heat supplier has responsibility for operating a network to generate heating, cooling or hot water, and distribute this supply to customers. Where multiple parties are involved in running a network, the heat supplier is the beneficiary of the customers’ payments.

Typically, this is the party using customers’ payments to pay fuel bills to keep the network running. Where multiple parties are involved in running a network, the heat supplier is the beneficiary of the customers’ payment.” Can be used almost interchangeably with heat network operator.

Allows for the measuring of individual energy consumption within a communal heating system. Sub-meters can be used to make sure occupiers are only paying for the energy that they use. 

How are modern heat networks different from older heat networks?

Heat networks are just a method of delivering heat to multiple individual units. However, as technology advances, heat networks are becoming increasingly optimised and ‘clever’. Whereas older energy centres just created a set amount of heat and distributed it throughout the network equally, newer heat networks are able to increase and decrease their output based on need, with the goal of greater efficiency for everyone involved.

Modern heat networks are more likely to have each unit fitted with an HIU that measures and delivers heat on a very granular level. The intention behind this is to make sure occupiers are paying for what they actually use, rather than a flat rate set out in their lease and paid via the service charge. Ideally, this will create fairer bills for everyone, cut down on energy usage, and create a more energy efficient system.

“The overriding principle is to provide heat at an affordable price without affecting the environment.” Rupert Mackay, Director, Data Energy

 

How do heat networks fit into net zero targets?

The UK Government has set a legally binding target for the country to hit net zero emissions by 2050. As of 2022, 18% of UK carbon dioxide emissions came from buildings, 90% of which are residential. This means that transferring residential heating to a more energy-efficient system is absolutely crucial to reaching net zero emissions.

Currently, there are around 500,000 people in the UK whose heating is provided by around 14,000 heat networks across the country. The Government’s projection is that this will increase to 8 million people by 2030, but this will take a big effort and require a lot of resources and education directed towards heat networks.

What are the benefits of heat network vs gas boiler apartments?

For property managers, there are big benefits to communal heating systems in the UK.

  • A single communal heating system requires less maintenance than many gas boilers.
  • Heat networks tend to have a longer equipment life than gas boilers, with up to 25 years compared to just 15 for a regular boiler.
  • Lower bills associated with heat networks can lead to leaseholders who are much more satisfied with their service charge.
  • Modern heat networks monitor individual energy consumption, so bills can be charged individually based on use rather than a flat rate that is part of a service charge.
  • Heat networks can be more environmentally friendly than individual gas boilers in each unit of a building, as the PM can optimise the entire network rather than relying on individual occupiers to be responsible for their own energy consumption.

In comparison, gas boilers have very few benefits that heat networks do not also deliver for less money and more efficiency.

What are the heat network responsibilities for property managers?

The Heat Network (Metering and Billing) Regulations are a wide-ranging set of rules that outline how heat suppliers must operate their heat networks.

What property managers must do:

  • Ensure heat networks comply with Heat Network (Metering and Billing) Regulations.
  • Submit notifications to register each operated network at least every four years.
  • Install metering devices on networks where required and economically viable.
  • Bill occupiers of metered properties in line with their energy consumption.

The owner of a block is normally considered the heat supplier, as they are the person legally responsible for making sure the building’s heating system correctly provides heat to all the units within. Needless to say, the day-to-day operation will usually be delegated to a managing agent, if there is one. The fuel supplier and the heat supplier are separate entities with different responsibilities within the regulations.

The Heat Network (Metering and Billing) Regulations overrule terms in any leases related to heat networks, such as a lease that states leaseholders will be billed a flat rate regardless of energy consumption. This however relies upon the installation of metering to be economically viable. Managing agents operating heat networks must ensure they are in line with the regulations, no matter what the lease says. 

How to comply with heat network regulations

The Heat Network (Metering and Billing) Regulations outline rules that the heat network operator must notify the Office for Product Safety Standards (OPSS) of the network on the day it begins operating and every four years thereafter. This notice must be submitted in Excel format to heatnotifications@businessandtrade.gov.uk and done for every individual heat network for which the operator is responsible.

After the initial notice, the supplier must notify the OPSS of the network on a recurring basis every four years. Exempt buildings will fall back into the Open category after four years, and you must provide evidence that they are still in the exempt category. The OPSS can dish out fines of up to £5,000 for failing to supply a notice.
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When do heat networks need to be metered?

Where it is economically viable to install heat meters, this should be done. This will allow billing based on actual consumption to be implemented, meaning a fairer allocation of costs, encouraging people to be more energy efficient and directly rewarding those that do so.

 

Building classes explained

A building in a heat network can fall into three building classes: Viable, Open, and Exempt.

In Open class buildings, meter installations are mandatory unless the heat network occupier can demonstrate that installation is not cost-effective. Most buildings are in the Open class.

In Viable class buildings, meter installations are always mandatory. Buildings are classified as viable if they are any of the following:
  • New builds connected to communal heating on or after 1 September 2022.
  • New builds connected to district heating on or after 27 November 2020.
  • Buildings that underwent major renovations to technical services on or after 27 November 2020.
  • Existing buildings where meter installations were previously mandatory.

In Exempt buildings, meter installations are not required. Other heat network regulations still apply. Buildings fall into the Exempt classification if they are any of the following:
  • Purpose-built student accommodation.
  • Supported housing.
  • Almshouse accommodation.
  • Covered by a lease preventing consumption-based billing of network customers that took effect before 27 November 2020.
  • Mainly non-domestic premises, and the network transfers heating or cooling by means other than heated or chilled water.

How to optimise your heat network

Making sure your heat network is providing both you and your occupiers the best value as best achieved through managing the heat delta — something property managers may not even be aware of.

Making sure the heat is used as soon as it is brought into the building should be the goal, rather than allowing extra energy to be wasted. Heat waste can happen when, for example, hot water is brought into the building but is not used, with the heat dissipating as the hot water wates in the pipes.

Property managers should aim to be proactive rather than reactive, responding to external temperatures (such as not supplying as much water at the height of summer) and anticipating needs so that the building is as optimised as possible.

If there’s a unit that, for some practical reason, uses more heat than the rest of the building, suggest taking them off the system and fitting them with their own so the rest of the building’s units isn’t paying for their consumption.

Planned preventative maintenance

Discover how you can take heat network repairs and maintenance off your mind so you can focus on optimising your buildings and growing your portfolio.
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