Heat Network Regulations
Wednesday 20th January 2016
An E2 blog post last year described the requirements of the Heat Network Regulations as they were at that time – with emphasis on the 30th April 2015 deadline to report all heat networks. Since then the deadline was moved to the end of the year due to low levels of awareness of the scheme in the first months of the year.
Further changes included the withdrawal of the viability tool in July, which was issued to define whether heat meters or heat cost allocators were ‘technically feasible and financially viable’. Like many, we had used the original tool to give landlords an idea of whether they would need to carry out significant work in 2016 to comply with the regulations. We generally found that the work was only necessary for large buildings, with few tenants and a straightforward heating system. However it is likely that the new tool will require action in far more cases. For it to be possible for landlords to meet the December 2016 deadline for making the assessments and then carrying out the required work, it will be necessary for the NMRO to get a final viability tool in place as soon as possible.
The tool is designed to estimate the cost of metering for each heat network, and where the NPV is lower than the forecast energy savings from the work over ten years, define the work as technically feasible and financially viable. However, in reality the cost will depend on many variables (which the NMRO have admitted cannot be accurately estimated by their viability tool) and the possible savings are likely to vary even more widely.
Once the viability tool is confirmed as final, we will be carrying out assessments for a number of our clients. The next deadline of 31st December 2016 is for both carrying out the assessments and undertaking the required work. In some cases this could be significant, and so we would advise any landlords to carry out their assessments as soon as the tool is released, to be able to forecast the amount of work that will be required before the end of the year.