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Renewable energy

District heating

Are you looking for a way for your business to save money on heating and reduce carbon emissions, as well as support the local community? If the answer to all of the questions above is yes, district heating may be the right choice.

There are currently over 17,000 district heating networks in the UK and nearly half a million connections to them, generating 2% of the UK’s heat.

What is district heating?

Rather than having an individual boiler in your building with a heat distribution system, district heating allows the delivery of heat from a centralised energy centre.

Other commercial and residential buildings in your area will also get heat from this energy centre, connecting multiple buildings in the same heat network.

You will have a heating interface unit (HIU) installed in your office or building, meaning you can control the heat and hot water you receive without impacting the temperature of other buildings.

Not only could district heating help lower your fuel costs and reduce greenhouse gas emissions (depending on the source of energy generation), it can also help create employment in your local area. According to the UK Government, district heating can reduce fuel bills by up to 30%.

District heating is not the same as communal – or community – heating. This type of heating typically only services one or two buildings in proximity to one another, while district heating works on a much larger scale.

Currently, district heating in the UK is unregulated. However, the UK Government has targets in place for 15-18% of heat to be generated from district heating networks by 2050.

The Scottish Government is currently exploring a licensing system, while the Heat Trust was established in 2015 as a voluntary UK-wide scheme to set common standards across the sector and give consumers a voice.

Where are the best places to implement district heating?

District heating can be installed anywhere and works best in densely populated areas.

There are already several successful heat network projects operating in the UK. For example, Southampton’s main energy centre has over 45 different kinds of users, ranging from 1,000 residential properties, a hospital, shopping centre, university, police headquarters and a television studio.

Smaller district heating networks can link together to create more extensive district heating networks.

The benefit of district heating networks is that new users can be added over time, meaning buildings can benefit from cheaper, more efficient heating without having to make structural changes to other buildings or roads.

Support for district heating

Implementing a district heating network can be challenging. Expertise and research is needed to build and manage a scheme, and it is an ongoing commitment. But the results are worth it.

There are several ways you can request support for funding for district heating projects.

Heat Networks Investment Project (HNIP)

The UK Government launched the HNIP in 2018, offering £320 million in grants and loans to networks serving two or more buildings. Find out how to apply.

The District Heating Loan Fund

If you live in Scotland, you can take advantage of the District Heating Loan Fund. This scheme is open to SMEs, as well as local authorities and registered social landlords.

  • loans of up to £1 million are available as low-interest unsecured loans with repayment terms of either 10 or 15 years
  • loans for extensive projects above £500,000 are reviewed individually
  • loans of over £1 million may involve co-investment with a selection of different funding partners

Since 2011, more than £15 million has been lent to 50 different projects across Scotland.

In addition to these loan schemes, you and your business could get support from the Heat Network Partnership and the Low-Carbon Infrastructure Transition Programme, which offers support for large scale projects that help meet government decarbonisation objectives.

Are you based in Scotland?

If you live in Scotland, you can take advantage of the District Heating Loan Fund. This scheme is open to SMEs, as well as local authorities and registered social landlords.

Find out more

Last updated: February 10th, 2021