The future of heat networks: what can we learn from the new draft London Plan?


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Heat networks have become an increasingly common feature of large- scale development programmes in recent years. This has principally been driven by planning requirements which aim to reduce carbon emissions and improve energy efficiency in new-build developments.

In November 2017, The Mayor of London published a new draft London Plan (the Plan), updating the existing strategic plan for London highlighting priorities to tackle carbon emissions and air quality. The Plan focusses on moving away from gas combined heat and power plants (CHP) and towards heat networks powered by waste heat, and renewable technologies.

While the Plan is London-specific, the issues it addresses are common to all urban areas in the UK and flags the enhanced role that heating infrastructure will play in meeting Government targets to reduce carbon emissions.

The Plan outlines increased requirements on development proposals to use design solutions to prevent or minimise exposure to air pollution and to address problems of poor air quality. Large-scale development areas must aim to be "Air Quality Positive" by implementing measures to actively reduce air pollution. This could be achieved by the provision of low or zero emission heating, together with other measures like improvements to public transport or cycling infrastructure.

Major developments are also expected to achieve net zero carbon emissions. This means reducing carbon dioxide emissions during the construction and operation stages. Developments must aim to use less energy, manage annual and peak energy demand during the construction process, exploit local energy resources and generate, store and use renewable energy on site.

The zero-carbon target for major residential developments in London has been in place since October 2016 with a target of on-site carbon reductions of at least 35% beyond Part L of the Building Regulations 2013. Under this regime, gas CHP technologies have tended to generate large carbon savings. However, the Standard Assessment Procedure 2012 for assessing carbon savings is due to be updated in the coming year, and the new emission factors are likely to significantly reduce the carbon reduction benefit of gas CHP. This is largely due to current assessment factors assuming gas CHP is displacing heat generated by fossil fuels, but as the grid decarbonises and more energy is generated from renewable sources, this rapidly decreases. This means that currently available CHP technologies are unlikely to achieve the 35% carbon reduction required to meet the zero-carbon target.

The Plan notes that London will need to shift from relying on natural gas as its main energy source to a more diverse range of low and zero-carbon sources, including renewable energy and secondary heat sources. The London Environment Policy recommends that developers should investigate generating and storing renewable energy onsite, as well as using it onsite, to contribute to London’s security of energy supply.

Although it is not due to be implemented until autumn 2019, the Plan is a material consideration in planning decisions for current or future development projects. Landlords and developers must therefore take the Plan into consideration (together with current policy and any specific local policies) when developing energy strategy and planning applications. While planning decisions on energy strategy remain at the discretion of the relevant planning authority, any applications made in compliance with the Plan are likely to be considered favourably.

The Plan does not affect planning applications that have already been approved in accordance with previous policies. That said, landlords and developers may consider seeking variations of existing permissions where there are advantages to changing a proposed heating system to reflect the requirements of the Plan.

Despite its London-centric scope, the requirements and targets reflect central government commitment to improving and diversifying heating solutions. There remains a drive towards district-wide heat networks, which the Government is aiming to roll out with the injection of over £300 million of funding first made available in 2015 to local authorities across the UK for this purpose. However, the big challenge for new large- scale developments will be defining what will replace gas CHP as the heat generation technology. There are emerging alternative options (using renewable technologies, heat pumps or connecting to a secondary or waste heat source) but these are likely to be more complicated to implement than has been the case with gas CHP and will depend on the scale and location of the particular development.

The Plan is currently still under consultation with an Examination in Public shortly to commence where comments received during the consultation period (which ran earlier this year) will be reviewed by the Independent Planning Inspector, appointed by the Secretary of State. The anticipated timeline is that the Examination in Public will take place in autumn 2018 and the finalised new London Plan will be published in autumn 2019. It remains to be seen whether the Mayor and/ or the Government will give a further steer on the future of heat networks and expectations for new-build developments in this interim period. Watch this space.

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