Heat networks - thermal energy target 2035: consultation

Annex A – Technical Analysis: Scenario and sensitivity testing on number of building connections

1. As set out in the consultation document (paragraphs 22 to 24 and 27 to 28) building connection scenario were developed for each potential target (for each Option). The scenarios (A: High domestic, B: Limited anchors, C: Low domestic, and D: Extreme domestic) are intended to be illustrative only and are not a statement of ambition. Real-world deployment will be guided by detailed heat network zoning, feasibility studies, and business case development. The scenario results are shown for the potential targets considered in Table A2.

2. Table A1, below, shows the maximum percentage of connections of each building type which occurs under each of the scenarios.

Table A1 notes

Domestic flats with existing heat pumps, as well as other forms of properties with existing electric heating systems, have been excluded from potential heat network connection. Domestic flats using direct electric heating systems have been included for potential heat network connection as such conversions can support fuel poverty objectives.

*Anchor loads tend to be non-domestic.

3. For all scenarios, domestic energy efficiency measures are applied between 2030 and 2035. (Proposals for domestic energy efficiency regulations currently have a backstop date of 2033.)

4. Under Scenario A (High domestic), domestic connections are the prominent connections in potential clusters, with a majority anchor load proportion of 70%. This scenario limits the number of non-anchor, non-domestic connections to just 10% of those in the applicable clusters to ensure the 90% domestic potential is realised.

5. Under Scenario B (Limited anchors), the anchor loads are limited to 50%, and there is a bigger scope for non-anchor load non-domestic connections. The domestic connections are limited to 80% in this scenario to ensure the 20% non-domestic loads are utilised.

6. Scenario C (Low Domestic) takes a more non-domestic led approach with a higher anchor load proportion (90%) and limited number of domestic connections. The anchor loads would principally be non-domestic connections.

7. Under Scenario D (Extreme domestic), within the identified potential clusters under the FNA, all domestic properties (that don't have heat pumps in the case of flats or aren't electrically heated in the case of other homes) connect.

8. As can be seen in Table A2 below, the actual demand figures for Scenario D are shown, with the targets in brackets. It can be seen that there is a shortfall for this scenario across all three options under consideration. In reality this could potentially be made up with more non-domestic connections or with heat networks extending to non-domestic properties outside of the potential clusters identified, if this were feasible.

9. Table A2, below, sets out the results for each of the four scenarios under each of the three Options (or potential targets) considered. For each target option, the analysis was carried out utilising the clusters within the FNA datasets. The dataset used for each option is shown in brackets next to the relevant option.

Table A2 notes

Number of connections rounded to nearest hundred. Figures in brackets for Scenario D are the potential targets.

10. The actual demand figures from Scenario D are shown, with the targets in brackets indicating that the shortfall is more than a third of the target output in every option.

11. Due to the modelled nature of some of the data underpinning the FNA, an additional analysis was carried out as a sensitivity check using alternative datasets. Non-Domestic Analytics (NDA) and Ofgem's Typical Domestic Consumption Values (TDCV) have been used for this and show a significant discrepancy in numbers of buildings connected. For example, this approach estimated that 156,700 non-domestic and 431,800 domestic building connections would be needed to meet a 12.5 TWh target (Option 3) and 112,200 non-domestic and 135,000 domestic building connections would be need to meet a 7 TWh target.

12. A key driver of this discrepancy is likely to be that the NDA/TDCV approach does not assume anchor loads connecting. While this approach does not capture the variation in heat demands which is possible through the FNA approach, it does identify that the FNA scenarios may underestimate the number of connections needed to meet the potential targets considered.