What is district heating? A low carbon solution for the UK’s homes

There are already over 17,000 heat networks in place in the UK*, and nearly half a million connections to them, most of which are domestic customers. They are a particularly attractive option in dense urban areas and have been cited as a way of tackling fuel poverty while also reducing housing management costs.

The establishment of heat networks, which can vary enormously in size, means that cheaper, lower carbon sources of heat generation can be added over time without additional, later upheaval such as digging up roads, or making changes in people’s homes.

It’s important to make a distinction between district and community heating. Community heating is about supplying heat to a relatively small development of one or perhaps two buildings with multiple dwellings, such as a multi storey block or sheltered housing complex. District heating has wider objectives: distributing large-scale sources of heat over a large area and connecting multiple buildings in a heat network. Both community and district heating can be described as heat networks.

It’s important that the potential benefits of localised heat generation are realised in practice.

Schemes to encourage uptake of district heating that assess and work alongside projects is one way of ensuring standards are met. In Scotland, the District Heating Loan Fund, funded by the Scottish Government, supported good quality schemes that reduced bills, reduced emissions and created jobs.

The fund closed in April 2024.

The UK Government’s non-domestic Renewable Heat Incentive (RHI) provided important fiscal impetus for the sector before it closed to new applicants at the end of March 2021. Plans for new heat networks require a life cycle approach to business planning, so long term financial leverage is required to make the business case stack up for trailblazing schemes.

In England and Wales, the UK Government launched a £320 million investment programme in 2018, as part of ambitious plans to extend district heating capacity, driven by local authorities. There is a target in place for 15-18% of heat to be generated from networks of this kind by 2050, and the Scottish Government has its own ambition to achieve big increases.

This is undoubtedly a growth sector, and it’s possible that a more common sight in coming years will be district heating included as part of new housing developments, such as the new Linen Quarter housing development in Dunfermline, where homes are heated through a district heating system that uses heat from landfill.

There is, though, a long way to go before the UK is anywhere near levels of uptake elsewhere in Europe. For example, the city of Copenhagen is almost entirely served by district heating, and around 65% of housing in Denmark as a whole, with not-for-profit organisations and consumer owned cooperatives heavily involved in supply. By way of comparison, there is just over 2% uptake of district heating in the UK at present with very few not-for-profit agencies delivering heat.

It’s important that as the heating supply becomes closer to home, there are adequate safeguards in place to protect consumers. The Scottish Government has recently introduced new legislation (the Heat Networks Scotland Bill), which will implement a licensing system for heat network operators to ensure best practice, while the Heat Trust was set up in 2015 as a voluntary UK wide scheme to set common standards across the sector and give consumers a voice.

For community groups thinking that district heating might be for them, it’s important to consider that a certain degree of expertise is required to build out and manage schemes. It’s a big ongoing commitment, requiring responsibility for heating, metering and billing – to all intents and purposes becoming a small utility company.

It’s clear, too, that there needs to be more advice for households looking to either connect to or disconnect from schemes. For those considering getting involved, there’s a lot to think about. Research is required, and it’s important to seek independent legal advice before signing any heat sales contract with a supplier. In Scotland, householders can contact Home Energy Scotland for advice if they are thinking of connecting to a district heating scheme.

There’s some way to go before district heating becomes a major part of the UK heat mix – but there is a lot of promise if it can be done right. A mix of the right support (including advice and funding) for both those looking to establish networks, and the householders who’ll be using the heat in their homes, could see potential become reality.

*Research carried out in 2018; more recent figures not currently available.