Keeping heating bills as low as possible is always desirable. In today’s highly volatile energy market that’s particularly important. With ongoing conflicts in Ukraine and the Middle East, it’s wise to anticipate future energy price shocks - and that means reining in costs wherever possible.
There are a number of ways to do this. However, often the biggest impact is achieved through improving equipment performance.
Waste not, want not
When heat networks perform optimally, they use significantly less energy than homes heated by individual gas boilers. Comparing a one-bed apartment on a high-performing heat network to one with an individual gas boiler, the annual energy spend can be 70% lower.
Yet the reality is often far from this. Many UK heat networks run at only 35-45% efficiency, primarily due to ineffective operation and management. Improving performance by just 10% within a 50-property development can result in total annual savings of £9,612, while a 20% enhancement can save as much as £16,121.
Part of the problem is that heat networks are still new to many people. With just 3% of UK homes currently connected to one of these complex, high value systems, it’s no surprise that costly mistakes are common, and often continue undetected for long periods.
Enable big savings
It follows, then, that a big part of the solution lies in better information, for both residents and property managers.
When people can see in real-time how much heat and power they’re consuming, for instance, via a pay-as-you-go (PAYG) metering system combined with a web-app on their mobile phone, their energy use drops by 24% on average. It also makes it easier to coordinate household budgets, so energy debt levels are around 14 times lower than in similar properties that are credit billed. Energy debt is a major contributor to the overall cost of heat networks, therefore effecting all residents, not just those struggling to pay.
Operational data from meters and sensors at key points across a heat network is also vital. If not continuously and meticulously monitored, inefficiencies can go unnoticed, potentially resulting in higher heating bills, repair costs and emissions, not to mention impaired comfort for residents, and even potential safety issues.
Examining performance data gives a clear understanding of what optimum functioning looks like, so that any faults or inefficiencies can be swiftly spotted and rectified. In short, what gets measured gets managed.
Fortunately, harnessing this information is getting easier. Thanks to the availability of cloud-based dashboards providing accessible, accurate, real-time data, you can monitor your network remotely.
Hand-in-hand with thorough monitoring should be excellent maintenance, ideally via a planned preventative maintenance (PPM) contract. This should enhance heat network performance, lengthen equipment repair and replacement cycles and give you a trusted supplier to call on if things do go wrong. Faults where residents are without heat or hot water tend to increase by up to 100% in winter, putting engineering teams under intense pressure. Heat network maintenance providers inevitably prioritise existing contracted clients over ad hoc emergencies from unknown entities. Heat network operators should therefore make sure they have someone they can call in a crisis.
It's also important that regular maintenance routines cover every part of the system, including meters and heat interface units (HIUs). Heat network maintenance is very different from ordinary individual boiler maintenance. With multiple properties connected to the same system, changes to any component can impact the entire network. It’s essential to ensure your service provider understand this and can provide detailed strategies for optimising efficiency and minimising heat loss.
A good indication of a supplier’s expertise is their level of knowledge of CIBSE's CP1 for Heat Networks: Code of Practice 2020. Although adherence to these standards is not legally required, they provide comprehensive guidance on optimising heat network performance.
Listen to experts
Once you find a knowledgeable contractor, do heed their advice. We regularly provide our clients with recommendations to reduce energy waste and enhance efficiency. We wouldn't suggest these if the cost/benefit ratio wasn’t compelling.
When setting up new energy supplier contracts, there’s no need to commit to a long-term tie-in - unless it’s to lock in a great deal. While a fixed price can offer stability in an unpredictable market, it could also see you paying too much for too long. Annual contracts offer more room for manoeuvre.
That said, it’s crucial to stay on top of any shifts in incoming tariffs. Failing to act quickly when rates change can lead to residents overpaying or the pain of having to recover missing funds.
The Heat Trust advises giving residents at least 31 days’ notice of any price increase. Tariff changes often coincide with supplier changes, so setting a diary notification eight weeks before a contract ends, allows time to notify everyone involved. That includes your metering and billing provider giving them sufficient time to update billing rates.
If your incoming fuel supply contract has already changed, conduct an urgent financial analysis to determine any recoverable deficits and the applicable rate. For example, 25% could be added to top-ups made to a PAYG account.
Keep heating on
It may seem counterintuitive, but switching off heating in vacant areas may cost more than leaving the system operational. Besides posing a risk of damp or mould to the property if temperatures fall below 16°C, restarting the system can take time and may cause distribution pumps to seize up or network water to become contaminated, reducing efficiency. It’s better to factor the cost of void periods into the heat tariff or maintain a contingency fund to cover them. Most metering and billing providers can help with this.
At this time of year, the focus is on budgeting for the year ahead. However, to get that right you need a sound understanding of all the cost factors involved with managing heat networks, as well as who’s responsible for covering each one. These include expenses related to management, maintenance, repairs, metering and billing, fuel procurement and a sinking fund not just for voids, but also things like equipment failure, residents’ unpaid bills or unexpected tariff changes.
Prepare for emergencies
One step that shouldn’t be overlooked is preparing for power outages. With the growing prevalence of heat networks in rural areas, the risk of outages increases.
Is your system reaching an age when power failure might occur? Do you have surge protectors? If you’ve previously experienced outages, think about what the underlying cause might be and take steps to rectify it.
Residents might not actually know they’re on a heat network, or what this means. Or they may feel, because it’s a communal system, there’s nothing they can do to make a difference. It’s down to property managers to make people aware of the things they themselves can do to reduce their own bills and emissions.
In a similar vein, make sure you keep in close contact with your suppliers. Notify them of any changes and lean on the ones with heat network expertise to help you reduce costs and get the most out of your equipment. Don’t wait until you’re hit with a big bill to find out there’s a problem.
Toby Steel, Head of Client Services at Insite Energy.