Heat Network Regulations Assessment

Who is impacted?

The Heat Network Regs apply to anyone supplying and charging for heating, cooling or hot water via a heat network. This is normally a commercial property landlord operating a multi-let office building with common services. This person is known as a ‘heat supplier’. Often it will be the landlord’s professional managing agent who has the responsibility for adhering to the HNR Regs.

What is the main purpose of the HNR Regs?

Heat suppliers may be required to install metering devices to final customers and bill them based on their actual energy consumption. This gives tenants greater visibility of their actual energy use, should help to reduce energy waste and deliver fairer billing to the end tenant. In many multi-let offices the cost of heating and cooling is calculated just on a floor area occupied basis. This crude apportionment does not encourage individual tenants to reduce energy waste. The largest percentage of CO2 emissions from UK buildings comes from space heating and cooling, so focussing on this area first seems appropriate.

What is a Heat Network?

Heat Networks are defined as centralised plant serving a shared heating/cooling system. The heating or cooling is distributed to tenants via pipework as either water, steam or chilled liquids. The HNR Regs apply to both district heating networks (involving two or more buildings) and communal heat networks (single buildings with two or more tenants). The networks are mainly multi-let office buildings but can include residential apartment blocks, shopping centres and industrial sites.

What do landlords and managing agents have to do?

Since 2014 heat suppliers have been required to notify the Government’s Department for Business, Energy and Industrial Strategy (BEIS) for each heat network they operate and then renotify every four years. Heat suppliers have been required to install final customer heat meters, where cost effective and technically feasible. There is a duty to maintain these meters, check they are working and bill tenants accurately for their actual consumption.

As from November 2020 landlords have been required to define the class of the buildings, to determine whether they must install heat meters.

If your building is classed as Viable then heat meters are always mandatory

If you building is classed as Open then heat meter may be required. You need to carry out an assessment to determine whether it would be technically feasible and cost-effective. The Government has provided an Assessment Tool to see if heat meters are required in a building.

If your building is classed as Exempt then heat meters are not required and no assessment is required.

Timing

By November 2021:

Determine whether your building falls under one of the three classes – Viable, Open or Exempt

Complete the Government’s Assessment Tool for buildings in the Open class.

By September 2022:

Complete the installations of heat meters for those Open buildings that meet the cost-effective and technically feasible threshold.

Landlords must use the meters and bill their tenants based on the actual amount of energy that the tenant has used. Floor area cost apportionments are no longer permitted.