Heat network? Or not work? - Consumers have their say

Written by Joseph Halawin and Carrie Davies

The government has identified decarbonisation of heat as a strategic priority in the path to net zero. Heat networks offer an excellent opportunity to decarbonise heat at scale. However, to date heat networks have been a patchwork of localised solutions, of varying quality. To address this and accelerate the roll-out of heat networks in areas where population density suggests they can have a meaningful impact on the country’s emissions the government is using three main approaches:

1. Authorisation for existing and future networks – to deliver defined and measurably improved outcomes for consumers connected to heat networks;
2. Standardised technical performance standards for heat networks;
3. Zoning to promote private sector investment in heat networks and accelerate development.

Taken together, these three approaches are expected to mean that by 2050, 20% of England’s heat demand should come from heat networks (up from about 3% currently). 

This means that the sector is undergoing huge change and in the next 20 years there will be significantly more consumers receiving their heating and hot water from heat networks. To set a baseline, both Ofgem and Citizens Advice (the heat networks consumer champion) have been undertaking surveys to better understand how consumers on heat networks find the experience.

Ofgem has recently released the results of two surveys that asked both domestic and non-domestic consumers about their experiences with being connected to heat networks. The participants of the non-domestic survey comprised 28 businesses, and the domestic survey comprised 34 consumers. While not a broad sample, the responses serve as useful information for operators and suppliers and suggest some simple steps that could be taken to prepare the market for the expansion of the sector. 

Domestic consumers 

Ofgem found that:

• Respondents had limited initial understanding of what having a home connected to a heat network involved, few had lived in a property connected to a heat network before.
• Initial expectations shape consumer experience. Consumers reported being told that being on a heat network would be lower-cost and less trouble than heating solutions with which they were more familiar. However, even where consumers had a positive overall experience, finding out that they could not switch and had limited control led to negative perceptions.
• Consumers expect, and need, consistent, reliable supply. Even for those for whom this reliability and consistency was their typical experience, the disruption caused by outages, and particularly, difficulties in resolving outages were felt to be more problematic than where, for example, they had a faulty gas boiler.
• Views on affordability varied. Perhaps unsurprisingly, the most positive feedback was from residents who experienced stable, predictable costs which they perceived to be lower than alternative forms of heating. Negative feedback was from those whose costs were unpredictable, rose sharply and / or were not explained well.
• Consumers reported that their customer experience journeys were more complicated, with multiple organisations involved, and that response times were slower than those they experienced for other utilities such as gas and electricity. 
• Those consumers who receive bills reported having greater access to detailed information about charges, than those on prepayment meters or paying through service charges. Billing transparency is clearly key to building trust and helping consumers to potentially reduce costs.
• When issues arose, residents often found the process more complicated where multiple organisations were involved.

Non-domestic consumers 

Ofgem found that:

• Other than where a participant had made a conscious choice to connect, most respondents had limited understanding of heat networks. Those who had made a conscious decision to select premises because they are connected to a heat network cited cost efficiency, and sustainability as determining factors.
• Those who rented premises had an indirect relationship with the energy company (which differs from relationships with electricity and gas suppliers). Being unable to switch and therefore having a weak negotiating position and / or ability to determine whether pricing is competitive were also seen as concerns.
• Participants were generally satisfied with their experience if heat networks, with only occasional supply issues that were usually resolved in line with expectations. Respondents noted that consistent, reliable heat and hot water was important for staff and customer welfare, and for health and safety as well as for their business’ reputation.
• Costs were generally viewed as affordable, with consistent, predictable billing helping respondents forecast and plan.
• Some participants found bills difficult to interpret, making it harder for them to understand costs and identify potential future savings.

Conclusions

As heat network operators and suppliers work through their compliance requirements for registration with Ofgem, many of the issues cited by consumers in the Ofgem surveys are likely to be addressed. Future surveys should, therefore, show progress against the baseline.

However, there is clearly also much to be done to educate people about the benefits of heat networks. The survey findings should serve as a motivator for all of us who are committed to the development of the sector, to improve the ways we communicate about the multiple benefits heat networks can deliver. 

Learn more – visit our suite of free resources on our Points of Connection hub - our knowledge and expertise in district energy to support anyone operating in, or coming into, the sector. 

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