Heat Decarbonisation Market Sees Welcome Movement

by | Oct 22, 2021

It’s been estimated that the heat network market needs approximately £30 billion of investment to meet the UK Government’s Net Zero targets by 2050. The goals are ambitious, and this is a particularly challenging industry in terms of making the required changes to meet them, which is why such a relatively large amount of money will be needed. However, forthcoming developments are expected to have a positive effect on current home and business gas prices per kWh, which will be very welcome in light of recent increases in home and business gas costs throughout the UK.

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According to the Climate Change Committee’s Sixth Carbon Budget, the country should try to reach levels of 20% of the overall UK demand for heating using low-carbon heat networks by 2050 to reach the established Net Zero goals. While this doesn’t sound like a particularly challenging target, it will by no means be an easy feat.

Approximately 40% of energy consumption and 20% of GHG emissions across the UK come from the supply of heating and hot water for buildings. And the International Energy Agency estimates that around half of all energy consumption globally is used in heating in industry and in homes.

However, hopes for a better future are rising with news of a collaboration between two large renewable energy companies. The joint venture between Scotia Gas Networks (SGN) and Vital Energi will create an Energy Services Company (ESCO) that will represent heat network providers and utility infrastructure.

ESCO will aim to deliver heat to developments planned by the SGN property arm, SGN Place, and other local areas where there’s demand for a low-carbon heat supply.

The aim of the collaboration is to supply new and existing industrial, commercial and residential facilities with alternative heat solutions in a move that’s likely to have a positive impact on business gas prices per kWh. The first two areas to be targeted are Scotland and the South East, with the initiative set to be rolled out to 20 other areas in due course.

Currently, SGN is planning to develop alternative heat solutions alongside its core gas distribution. It plans to expand into the district heating market by utilising a mix of current technology and various energy sources, potentially changing the way we heat homes and businesses in the future. Meanwhile, Vital Energi is looking to take part in asset ownership to complement its core design, its build and operations arms.

The combined assets, skills, and abilities of the two companies will ensure their ability to draw up compelling proposals for interested developers and will benefit commercial and industrial users. Public sector organisations seeking solutions to achieve low-carbon heating are also expected to benefit greatly from this partnership.

Commercial Services Director of SGN, Marcus Hunt, said that heat networks play a huge role in helping to reach the UK’s Net Zero goals. He added that the joint venture and collaboration with Vital Energi would allow SGN to build its presence in the heating industry. The plan is to create a heat infrastructure that supports and campaigns for decarbonisation.

Nick Gosling, Chief Strategy Officer of Vital Energi, said that collaborating and combining the resources and knowledge with SGN will produce better solutions faster for the UK’s transition to zero-carbon heat. Together, they aim to become major players in reaching the UK’s ambitious goals.

Options for Heat Decarbonisation

The Energy and Climate Intelligence Unit has proposed a list of options to accelerate the decarbonisation of heating in the UK.


Electrification is one of the main options. This process aims to help convert homes and other buildings into ones that use electricity instead of gas to generate heat. This is a potentially viable solution because the emissions created by using electricity to heat a home or office will decrease as the emissions from the power sector reduce.

Low-carbon gas

The use of low-carbon gases is also worth pursuing. Replacing natural gas with hydrogen is the key to this solution. Unlike natural gas, hydrogen does not release carbon dioxide when it burns. The only waste product is water. Biomethane is another viable alternative to natural gas as it produces lower carbon emissions than gas does.

Hydrogen can be used with some modifications and additions to the pipes in the natural gas grid. Home boilers will also need to be further changed or adapted; therefore, a possible downside to a switch to hydrogen for heating would be the cost. And while biomethane is more compatible with the existing infrastructure, it is only produced in limited amounts at the moment.

Hybrid technologies

Hybrid technologies can lend themselves to the decarbonisation of heating. In this process, hydrogen and electrification are combined. Electric heat pumps could be used to meet heating demands, with a low-carbon gas boiler available to take over if these cannot cope in spells of especially cold weather. This option would be advantageous in establishing a sufficient market for electric heat pumps, giving time to develop hydrogen production to the point where it can completely replace the use of natural gas in future.

Heat networks

Heat networks are another initiative under consideration. These provide better heating in highly urbanised areas and in industrial clusters where the demand for heat is concentrated and in a collective locale. A heat network connects to a central heating source and provides heating throughout an area using underground hot water pipes.

This type of system is currently being used in Denmark, where it supplies over 60% of homes. The UK government is expecting to see an increase in demand for these networks of approximately 20% in the coming 10 years.


Biomass is also being considered because it uses off-gas grid properties. Biomass uses solid materials, such as wood, to provide heat. However, the Committee on Climate Change said that this type of resource might be more suited to sectors such as construction.

Ken Hunnisett, the project director of the Heat Network Investment Project (HNIP), is calling for urgent investment to develop new heating infrastructures to support the country’s decarbonisation efforts.

Save Money and Be a Sustainable Business

Although there are many issues facing the heating industry, homes and businesses can now contribute to the UK government’s ambitious goals. If you use business gas on your business premises, there are plenty of ways you can already cut down on your carbon emissions and save money along the way.

Here at Smarter Business, we are keen on helping small to medium enterprises optimise their business energy use and save money. We are a group of professionals who have years of experience under our belts, and we know what can be done to make your business more efficient and sustainable. Call us today to get started.

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