Achieving net zero will not only require investment in new energy infrastructure, but also the decarbonisation of existing facilities. The Heat Network Efficiency Scheme (HNES) is a timely invitation for existing heat networks to come in from the cold and undertake some much needed improvements.

What is the Heat Network Efficiency Scheme?

HNES, for which first round applications opened on 7 February, is a £32 million Government grant support programme helping finance upgrades to existing heat networks.

The scheme, which is led by BEIS' delivery partner Gemserv, will provide funding to existing projects by making available:

  • £30 million of capital grants to part-fund delivery of network efficiency upgrades
  • £2 million of revenue grants to fund heat networks procuring third-party support to identify and assess packages of efficiency improvement measures.

HNES will typically fund between £15,000 and £24,000 for revenue grant funding depending on the scale of the project. There is no upper or lower limit for capital grant applications.

Why is it needed?

The primary aim of HNES is to improve heat network performance where customers and/or operators are experiencing sub-optimal outcomes.

Some heat networks are over 40 years old and haven’t been upgraded since installation. Many of those networks are inefficient due to issues with installation, poor maintenance and outdated equipment. HNES will help operators to upgrade the equipment with more energy efficient alternatives such as replacement pumps, pipe insulation and underfloor heating controls. Innovative data monitoring systems will be used to ensure the networks are performing correctly.

At a time when households and businesses in the UK are facing increasing energy bills, upgrading existing heat networks can play a key role in tackling the energy crisis, with cost savings passed on to customers.

Who can apply for funding?

Public, private and third sector entities responsible for the operation and/or management of heat networks can apply. HNES will prioritise projects with "customers in need" (e.g. social housing, low-income housing, customers in fuel poverty, extra care housing, care homes and supported housing) and where significant improvements to the performance can be made. But applicant projects can be made up of different customer types (including commercial).

Key takeaways

  • Achieving the UK's ambitious net zero targets will require investment in new large scale heat network projects. However, upgrading existing schemes can present an additional, cheaper and quicker solution towards achieving those targets
  • HNES also provides an opportunity for heat network operators to upgrade old equipment and utilise modern technology to monitor performance, improve customer service levels and raise standards in preparation for the long-awaited regulation of heat networks by Ofgem.

What next?

  • Until 31 March, heat network operators can request an application form from Gemserv and bid for funding
  • Guidance on applying for funding, videos setting out how performance of heat networks can be improved and contact details for Gemserv can be found here.

Womble Bond Dickinson have a dedicated heat networks practice that advises clients on heat networks on a daily basis. We believe in the value of heat networks and the importance of delivering net zero carbon. We are therefore committed to achieving net zero by 2030 - and one of our offices is connected to a heat network. If you operate and/or manage a heat network and would like to discuss the issues raised by the above article, please do not hesitate to get in touch.

This article is part of Womble Bond Dickinson’s Growing Global series. For more insights, click here to visit our Growing Global hub.