The new £270 million Green Heat Network Fund will open for applications from public, private and third sector applicants in England in April 2022.
The Fun will only support low-carbon technologies like heat pumps, solar and geothermal energy in the roll-out of the next generation of heat networks, which is set to enable more towns and cities to take up this technology from 2022.
Energy Minister Lord Callanan commented on the announcement: “Finding a mix of innovative solutions to how we heat our homes in the most affordable way is going to be vital as we support people to gradually transition away from gas boilers over the next 15 years.
“Today’s announcement shows we are going even further in our goals to expand this tried and tested heat networks technology, making even more use of the likes of recovered heat from the London Underground to heat our homes.
“The Green Heat Network Fund will also allow us to drive forward the new, cost-effective and low-carbon technologies we need to kick-start new industries and support new jobs in the low-carbon technology sector as we build back greener from the pandemic.”
Heat networks supply heat to buildings from a central source, avoiding the need for households and workplaces to have individual, energy-intensive heating solutions – such as gas boilers.
At present, there are over 14,000 heat networks in the UK, providing heating and hot water to around 480,000 consumers.
The Green Heat Network Fund (GHNF) scheme was announced by the Chancellor in the March 2020 Budget.
The previous Heat Networks Investment Project (HNIP) has provided more than £165 million of funding for schemes across England and Wales since 2018.
The new GHNF successor scheme is set to go even further, with applications only being supported if they include low-carbon heat-generating technologies, such as heat pumps, waste heat and energy from geothermal sources.
The successor scheme is set to play a significant role in kick-starting market demand for heat pumps, which will drive down costs for consumers and delivering a mix of low-carbon heating solutions as the government incentivises people to gradually transition away from fossil fuel boilers over the next 15 years.
Heat in buildings is one of the largest sources of UK carbon emissions, accounting for 21% of the total.
Although heat networks currently meet approximately 2% of the overall UK demand for heating, the independent Committee on Climate Change (CCC) has estimated that, with continued support, they could provide 18% by 2050.
The Green Heat Network Fund is expected to fund the delivery of an estimated 10.3Mt of total carbon savings by 2050 or the equivalent of taking 4.5 million cars in England off the road for a year.
An assessment of the potential for future heat networks to be sited across England, Scotland, Wales and Northern Ireland was also published today.
The study identifies opportunity areas that could be best-placed to support future heat network projects and how much heat could be supplied by them.
It identifies areas for district heating in each of the four nations separately across the UK by combining heat demand data and potential sources of waste heat to determine where heat networks could be commercially viable.
The government’s response to the consultation on how the GHNF should be designed has also been published today.