Making sense of the heat network regulations

The Heat Network (Metering and Billing) Regulations 2014 are still causing confusion and concern among building operators and managers. Hywel Davies offers some guidance on what they mean and who needs to comply

Last March, this column reported confusion around the introduction of the Heat Network (Metering and Billing) Regulations 2014. These have since been amended and, in October, the National Measurement and Regulation Office (NMRO) issued updated guidance on their scope – so a review of the requirements seems timely.

Articles 9-12 of the EU Energy Efficiency Directive 2012/27/EU (the EED) address the supply of distributed heat, cooling and hot water. Article 9 requires that ‘member states shall ensure, in so far as it is technically possible, financially reasonable and proportionate in relation to the potential energy savings, that final customers for electricity, natural gas, district heating, district cooling and domestic hot water are provided with competitively priced individual meters that accurately reflect the final customer’s actual energy consumption, and that provide information on actual time of use’.

Article 9 requires ‘competitively priced individual meters’ to be installed when an existing meter is replaced, a new connection made in a new building, or when a building undergoes major renovation – unless it is not technically possible – or cost-effective relative to the estimated potential savings. This provision must be made from 31 December 2016.

Buildings on the King’s Cross development in London are connected to a heat network

Heat suppliers must also notify the relevant ministers1 of the location of heat networks, their extent, total installed capacity, heat generated and supplied, number of meters and final customers of the network. Frequency and content of billing information, and details of any analysis of cost-effectiveness or technical feasibility carried out in relation to the regulations, must also be supplied. The April 2015 deadline was changed to 31 December 2015.

The first important question is: who is a heat supplier? According to the NMRO, the term describes a person who supplies and charges for the supply of heating, cooling or hot water to a final customer, through communal heating or a district heat network.

The guidance says: ‘This includes the supply of heat as part of a package, paid for indirectly, perhaps through ground rent, a service contract or other means. Such a payment does not need explicitly to mention the supply of heat, but there will be a reasonable expectation by the final customer that heat supply is part of the service. Heat suppliers are not just local authorities and owners of energy service companies; many smaller suppliers are identified within the regulations as a heat supplier.’ In other words, if you furnish someone with some space, and it is heated or cooled – or you provide hot water as part of the deal – you are a heat supplier, and may now have a duty to notify.

A final customer is ‘a person who purchases heating, cooling or hot water for their own end consumption from a heat supplier’. So what is a district heating network?

According to the NMRO – which is enforcing the regulations – it is a means of ‘distribution of thermal energy in the form of steam, hot water or chilled liquids from a central source of production through a network to multiple buildings or sites for the use of space heating or process heating, cooling or hot water’. This would seem to mean that space that is heated or cooled by a liquid-based system – such as radiators or fan coil units – or that receives domestic hot water from a central source, is served by a heat network. But a concession in a store heated by warm air is not, unless it also gets hot water.

The NMRO states ‘the minimum criteria for an installation to be considered a district heat network are two buildings supplied with heat, and at least one final customer. A heat supplier cannot be their own final customer.’ But if ‘a heat supplier is using the heat for their own use and is also supplying heat to a second party in another building, then this is sufficient to meet the criteria of a district heat network’. A remote source supplying multiple buildings, each with multiple occupants, is also a heat network.

Suppliers are not just local authorities and owners of energy service firms

Communal heating is limited to a single building, and is ‘the distribution of thermal energy in the form of steam, hot water or chilled liquids from a central source in a building, which is occupied by more than one final customer, for the use of space heating, process heating, cooling or hot water. It is not necessary for the heat supply to be within the building.’

For domestic purposes, a user is considered a final customer when they occupy a partitioned private space intended to be used as a domestic dwelling, and they have a living and sleeping space, and private washing and toilet facilities, as well as cooking and food-preparation facilities. This excludes university halls of residence and multiple-occupation houses.

A non-domestic user is a final customer if they have access to a partitioned private space, though some services – such as sanitary facilities or reception – may be shared. Wholly open-plan areas serving multiple tenants, or where only communal areas are heated, are not considered part of a network. It is likely that the retail sector will look carefully at its concessions in light of this guidance.

There is, possibly, an unforeseen consequence of the inclusion of cooling in the regulations. Chilled liquids supplying multiple heat exchangers to deliver cooling to more than one final customer are also covered. Air conditioned systems using local compressors, purely ducted air or variable refrigerant volume/flow (VRV/VRF) are not.

The latest NMRO guidance clarifies and refines some earlier indications, including the column in last March’s CIBSE Journal. However, there is no substitute for checking your own circumstances at the start of a deregulatory new year.


1 Secretary of State for Energy and Climate Change or, in Scotland, Scottish ministers