Building Partnerships in Decentralised Energy
It is a privilege to address you today. Since my arrival in the department a year ago, the Association for Decentralised Energy (ADE) has been instrumental in helping me grasp the complexities of this sector. They have proven to be a reliable and esteemed ally as we navigate the challenges surrounding heat networks.
For nearly six decades, ADE has been a strong advocate for decentralised energy systems and district heating solutions. This collaboration is particularly significant today, as the demand for such innovative solutions continues to grow.
Embracing New Roles in Energy Transition
In July, upon receiving the Prime Minister’s request to remain in the department, I was also appointed as Minister for Local Energy and Jobs. The rationale behind this role is straightforward. The energy sector is vital for our nation, providing employment to tens of thousands and contributing substantially to the economy.
As we embark on a significant energy transition, my priority is to ensure that every region of the country reaps its benefits. Communities must experience tangible advantages such as reduced energy bills, improved infrastructure, and diminished pollution levels. It is essential that individuals feel they are part of this transformative journey, rather than passive recipients of change.
A Vision for the Future
This transition presents an opportunity for rejuvenation across the nation, provided we execute it effectively. The government is committed to reindustrialising the country and making energy more affordable. We are fostering an environment where local communities can make informed decisions that benefit their unique contexts.
This commitment extends to the growth of the heat network sector. When appropriately implemented, heat networks represent a cost-effective, low-carbon heating solution that reduces our dependency on imported fossil fuels by utilising locally sourced heat. Developing these infrastructures not only aligns with our reindustrialisation goals but also generates skilled employment opportunities for communities nationwide.
Ambitious Goals for Heat Networks
During my initial visits to various projects, such as the district heat network in Cardiff, I witnessed firsthand the industry’s potential to provide heating solutions while simultaneously creating jobs and bolstering local economies. Since then, I have been a strong proponent of heat networks and their widespread benefits.
We have set ambitious targets for this sector, aiming for heat networks to supply 7% of England’s heating demand within the next decade—effectively doubling current figures. By 2050, we aspire for them to account for a fifth of all heat supplied in England. While challenging, I believe these targets are attainable through a concerted effort from both government and private sectors.
Progress and Investment in Low Carbon Projects
In the past year, the industry has made remarkable strides. Several government-backed heat network projects have begun delivering low-carbon heat, including initiatives in Seaham Garden Village and Lancaster University, with others in Hammersmith soon to follow.
Through four announcements regarding the Green Heat Network Fund, we have allocated over £200 million to support twenty low-carbon heat network projects. These projects employ various innovative heat sources, including data centres, wastewater, rivers, and energy-from-waste facilities, which can positively influence local grid capacities.
Addressing Policy Uncertainty
While we celebrate these achievements, we acknowledge that recent policy shifts have created uncertainties for the industry, complicating long-term planning. It is crucial that we address this uncertainty and instil confidence in the sector to facilitate growth.
To that end, the government is supporting the heat network industry through several key strategies. Firstly, we are providing funding via the Warm Homes Plan, which positions heat networks as a central element of our strategy to upgrade homes across the nation.
Creating a Sustainable Economic Environment
We are also actively collaborating with the National Wealth Fund to explore enhanced support for the sector, recognising that the cost of low-carbon heat remains a significant barrier to growth. By reducing these costs, we can ensure that all communities benefit from the energy transition.
Our objective is to foster a favourable economic and policy landscape that encourages the electrification of heating solutions and unlocks long-term private investments necessary for substantial sector growth. This entails developing a market that inspires investor confidence while reducing the financial barriers associated with major heat infrastructure projects.
Enhancing Regulatory Frameworks
Secondly, we are committed to ensuring that the regulation of heat networks yields optimal outcomes for both the industry and consumers. The sector holds tremendous potential, but we must address past service failures that have undermined public trust.
In response, we have introduced regulations aimed at eliminating poor practices and providing consumer protections akin to those in the gas and electricity sectors. With Ofgem now empowered to act against unfair pricing or inadequate service levels, we are taking significant steps to enhance protections for the half a million consumers reliant on heat networks.
Improving Technical Standards
However, we understand that regulation alone is insufficient. We must also take meaningful actions to enhance the efficiency and reliability of heat networks. Many existing systems, both old and new, suffer from high heat losses or poor design and maintenance standards. Earlier this year, we consulted on the necessity of mandating minimum technical standards, and we are committed to developing a scheme that is both rational and achievable.
Empowering Local Communities
Lastly, we are focused on decentralising power to local areas. The Prime Minister has frequently discussed our department’s efforts in this regard. Devolution will empower local leaders, enabling them to shape investment strategies that align with their communities’ needs.
It is essential that decisions regarding energy and housing reflect local contexts, and devolution provides the framework for integrating investments across various sectors, including energy, housing, skills, and infrastructure. This approach is already yielding positive results in several regions.
Collaborative Efforts for a Sustainable Future
As we move forward, I am eager to engage in discussions about the challenges we face in our panel discussions. Collaborating with the industry is vital to achieving our shared objectives: establishing an energy system where bills remain affordable, regions are empowered to make informed decisions, and our heating demands are met with minimal emissions.
In my view, local energy is pivotal to resolving our current energy crisis. I am committed to working alongside all of you to realise our collective vision while welcoming your constructive feedback on areas where we might improve or accelerate our efforts.
By fostering this collaborative spirit, I am confident we can achieve remarkable progress in the months and years to come. Thank you for your attention.