Unlocking the customer savings through successful implementation of the Heat Network Regulations

Phase 2 of the Heat Network Regulations require all operators to assess the feasibility of installing heat meters or heat cost allocators into properties by the 27th November 2021 and to have installed where feasible by 1st September 2022.

Robert Page, Specialist Project Manager for Orbit, explains the steps the housing association is taking to meet these requirements and reduce energy costs for its customers.

“The Heat Network (Metering and Billing) Regulations (HNMBR) were released in 2014 with the initial requirement for all heat networks to be identified to the Secretary of State every four years. A heat network is where two or more dwellings are supplied by heat from a centralised boiler or plant room, and which sits outside of those dwellings.

“In November 2020, the HNMBR were revised, specifying that heat network operators were required to conduct feasibility assessments for the installation of heat meters or heat cost allocators into individual dwellings by 27th November 2021, and for these to be installed where feasible by 1st September 2022.

“Why are operators being asked to undertake this work? Heat meters give customers more accurate data on their energy usage, and more closely links usage with costs. This enables them to take greater control, and studies of similar schemes in Europe have shown an average reduction in energy use of 20% as a result. This saves customers money, a fact that is particularly important when Orbit’s own research suggests that affordability is a key issue, with 1 in 4 customers report going without heating to save money, but it also reduces carbon emissions, supporting our national commitment to reach Net Zero Carbon by 2050.

“Heat network operators should be particularly interested in this. This particular source of greenhouse gas (GHG) emissions will likely be reported as Scope 1 or direct GHG emissions, and will therefore be under the most scrutiny in an organisation’s own decarbonisation plans and when undertaking compliance measures such as the Energy Savings Opportunity Scheme (ESOS) and the Streamlined Energy and Carbon Reporting (SECR) requirements. So, it’s a win win.

“It is believed that installing these devices will be feasible in the majority of properties, however, there is an exemption within the requirements for ‘supported social housing’, yet no clear definition of what this descriptor covers. Therefore, it is up to individual housing associations, in discussion with their suppliers and legal advisors, to determine what is in and out of scope.

Orbit’s Approach

“We have interpreted ‘supported social housing’ to include our extra care and sheltered housing schemes, where tenants do not pay separately for their energy bills, rather than the whole of our property estate. However, we believe all providers of social housing should consider the merits of installing meters, or heat cost allocators, where tenants’ behaviours can be influenced or where data can be managed centrally to identify energy saving opportunities.

“We are using the Government-supplied input cost effectiveness calculator, which works out if the cost of installing heat meters or heat allocators is financially viable, to help us shape our installation programme. The calculator is a complicated tool and requires a lot of information, some of which isn’t likely to be to close-to-hand for most registered providers, so we are supplementing it with a detailed viability study with Heat Cost Allocation provider, Ista. This will enable us to identify the costs associated with installation versus the potential savings for our customers. Obviously, if the cost to install heat meters is less than the saving’s predicted, then it’s an easy decision. But if the savings for our customers don’t outweigh the installation costs, we must consider the scale at which we take this forward.

“We know from our research that many of our customers are already struggling with their heating and energy bills, with 54% of our customers spending more than 10% of their take-home income on energy bills – over double the average UK spend of 3.9% according to Ofgem. This situation is particularly acute for larger families, with 76% of those with two children, rising to over 80% of those with four or more falling into this category. We don’t want to further put customers in a position where they must choose between whether to heat or eat. We need to be confident that the cost of heat meters is more than outweighed by the benefits they offer, and that they will relieve not increase pressure on lower income households.”