Guidance

Energy Security Bill Contextual Note: Heat Network Zoning and the Planning System

Updated 1 September 2023

Introduction

This is an explanatory note on the intended interaction between the planning system and our proposals for heat network zoning, which are included in the Energy Security Bill. It sets out the principles we intend to follow to ensure that heat network zoning works alongside the planning system in order to avoid heat network zoning undermining the planning system, or vice versa.

Heat network zoning

A heat network – sometimes called district heating – is a distribution system of insulated pipes that takes heat from a central source and delivers it to a number of domestic or non-domestic buildings^{[footnote 1]}.

Heat networks are a crucial part of how the UK will reach its net-zero targets as they can be one of the most cost-effective ways of decarbonising heating at a fair price to consumers, while supporting local regeneration. They are uniquely able to unlock otherwise inaccessible larger scale renewable and recovered heat sources such as waste heat from industry and heat from rivers and mines.

They will therefore play a key role to achieving net zero. The Climate Change Committee has estimated that around 18% of UK heat could come from heat networks by 2050 to support cost-effective delivery of our carbon targets (up from around 2% currently).

The 2020 Energy White Paper committed us to support local government to designate new heat network zones in England, no later than 2025. Heat network zoning is a key policy solution to help reach the scale of expansion of heat networks required to meet net zero. Certain areas are particularly suited to heat networks due to a range of factors such as building density and availability of heat sources (for example, excess heat from industrial processes or environmental sources such as ground and river source heat).

We recently consulted on our zoning proposals,^{[footnote 2]} which involve central and local government working together with industry and local stakeholders to identify and designate areas within which heat networks are the lowest cost solution for decarbonising heat. Certain buildings and sources of heat within zones may be required to connect to the heat network. This will help overcome barriers to deployment that the heat network market currently faces. Key components of the policy are set out in the Annex.

Principles governing interactions between heat network zoning and the planning regime

Although the proposals for Heat Network Zoning will be a separate regulatory regime to the planning system, we recognise that they will interact with the wider planning system and local government’s functions within it.

Planning for heat networks will need to take into account the proposals in development plans (and potentially some large-scale planning decisions), and similarly, when preparing development plans and planning proposals, there will be advantage in considering existing and potential heat network zones to support the transition to net zero.

Where there are any interactions between heat network zoning and Local Plans, then DLUHC and BEIS will work together to ensure a joined-up approach.

We are keen to ensure that heat network zoning works alongside the planning system and to avoid an outcome where heat network zoning undermines or cuts across the planning system, or vice versa.

While planning system activities may be a ‘trigger’ for heat network zones or zone policies, heat network zones should not be dependent on planning functions and development plans, nor inappropriately burden and delay development planning decisions.

Successful delivery of heat network zoning policy will be dependent on local government having the right resources to deliver their responsibilities effectively. How these additional costs will be met will be an important consideration and we want to avoid a situation where they are drawn from planning teams’ existing budgets.

Respondents to the recent consultation provided views on the range of skills/expertise that they consider would be necessary including those relating to technical, project management, commercial/legal and data. We will ensure we engage with the relevant parties to inform our policy development going forward.

Alongside the specific points above regarding the interactions between heat network zoning and the planning system, we will also aim to learn from initiatives such as the Local Nature Recovery Strategy pilots^{[footnote 3]}.

Next steps

We will work with partners across government and with external stakeholders to further explore the likely interactions between heat network zoning and the planning system and develop clearly articulated positions on them. By way of example, we expect to engage key parties including the Local Government Association, the Royal Town Planning Institute, the UK District Energy Association and the Association for Decentralised Energy.

This engagement will help inform a consultation planned for later this year on the detail of how heat network zoning will be delivered. This will inform the secondary legislation (regulations) that will implement the policy.

Annex: Key elements of the proposed heat network zoning framework

A standardised methodology^{[footnote 4]} will identify potential heat network zones; initiated by a central authority with a second phase of local refinement to define the boundaries of a zone.

Our expectation is that local government and communities would need to be engaged with the local refinement stage to ensure that local factors, data and stakeholder engagement are integrated into the methodology to help ensure that the boundaries of heat network zones are optimally established.

We will give local government the power to act as or establish a local Zoning Coordinator to undertake certain zoning functions including designating areas as heat networks zones.

The level of local government at which the Zoning Coordinator is established will remain flexible, including the possibility of multiple local authorities at different levels of government working jointly to deliver zones.

Zoning Coordinators will have powers to request information to support its work and will also be required to seek and consider the views of specified parties before designating a zone.

While the expectation is that the Zoning Coordinator role will be fulfilled by local government, there will be powers for the BEIS Secretary of State to intervene and direct local government to designate a heat network zone, designate it on their behalf and/or fulfil the functions of the Zoning Coordinator. The DLUHC Secretary of State will be involved in any decision to intervene and local government will be consulted before such a decision is made.

Certain specified buildings in a heat network zone will be required to connect to a heat network within a prescribed timeframe. Exemptions may be sought to avoid suboptimal outcomes. In the zoning consultation response we confirmed that we are minded to require that this obligation would apply to all new buildings, large public sector buildings, large non-domestic buildings and communally heated domestic premises within zones. We will consult further on how these categories of buildings are defined.

Zoning Coordinators will have powers to request information from heat sources to help them assess the technical and economic case for connection. There may be circumstances under which sources of heat will be required to connect to a district heat network. The detail of this power will be subject to further consultation.

New heat networks and new connections of existing heat networks within zones will be a subject to a low carbon requirement. The level and form of the low carbon requirement will be consulted on further.

Price protections to be introduced through the heat networks Market Framework^{[footnote 5]} will be extended to all consumers required to connect to a district heat network within a zone. In addition Ofgem, as the heat networks regulator, will have broad powers to introduce a consumer protection framework within zones which may diverge from the wider Market Framework protections should Ofgem deem it necessary.

1. [https://www.gov.uk/government/publications/what-is-a-heat-network (https://www.gov.uk/government/publications/what-is-a-heat-network) ↩

2. https://www.gov.uk/government/consultations/proposals-for-heat-network-zoning](https://www.gov.uk/government/consultations/proposals-for-heat-network-zoning) ↩

3. https://www.gov.uk/government/publications/local-nature-recovery-strategy-pilots-lessons-learned/local-nature-recovery-strategy-pilots-lessons-learned ↩

4. A pilot of the zoning methodology is underway in 28 towns and cities across England. This and other BEIS studies will provide evidence which we will use to inform further policy design. ↩

5. https://www.gov.uk/government/consultations/heat-networks-building-a-market-framework ↩