© 2025 News On The Block. All rights reserved.
News on the Block is a trading name of Premier Property Media Ltd.
© 2025 News On The Block. All rights reserved.
News on the Block is a trading name of Premier Property Media Ltd.
With sustainable living and energy in particular dominating the latest headlines can residents benefit from a sustainable energy supply from community services as well as ‘common sense’ measures such as energy efficient lighting and switching off appliances? What are the merits of community services with private billing?
Community and district heating follow similar principles. A district heating system delivers heat energy to more than one building, usually for space heating and domestic hot water generation. One or more fuel (traditionally coal, oil and gas but also more recently biomass) is used to generate heat in an energy centre, either directly or via a Combined Heat and Power (CHP) system . Alternatively the heat source may be geothermal or reclaimed from waste incineration or an industrial process. The heat is typically distributed using hot water or steam as a medium, conveyed by underground pipes connecting the energy centre(s) with the buildings. Community heating describes the same approach using the same technology on a smaller scale, to a ‘community group’ e.g. a block of apartments.
District heating became common in the UK, particularly in big cities such as London, after the Second World War. Local authorities constructed numerous residential developments on large bomb and slum clearance sites, which were well suited to district heating by virtue of their high density and public sector ownership, operation and maintenance.
One of the most famous examples is Pimlico District Heating Undertaking (PDHU). Established in 1950 it became the first CHP system in the UK. Waste heat from Battersea Power Station was piped to a pumphouse on the opposite side of the River Thames, serving Churchill Gardens estate in Westminster. Previously the waste heat was rejected into the river Thames causing local environmental impacts. With the closure of the power station in 1980, the heat source was replaced by coal fired boilers initially, and then gas-fired boilers in 1989. It currently supplies 3,100 residential properties, 48 commercial properties and a school, and has a maximum generating capacity of 30 MW.
Unfortunately the reputation of these systems was tarnished by frequently poor levels of user control (lack of thermostats and Thermostatic Radiator Valves) and maintenance. Limited public sector house building throughout the 1980s further undermined the popularity of district heating, as private sector developers favoured lowest capital cost systems, usually electric heating.
As a result district heating now represents less than 2 % of the energy market in the UK (CHPA 2006) compared to 10 % in Europe (OTEC 2006). In Denmark the figure is 60 %.
However district heating is making a comeback in the UK due to its potential for reducing CO2 emissions. At the large end of the scale the Mayor of London is supporting proposals for four major district heating schemes in the capital.
At a smaller scale planning authorities are increasingly favouring or requiring community heating systems in all new developments of, typically, more than 10 residential units, citing their increased efficiency and greater potential for integration of low carbon technologies. The argument for economy of scale is undermined by the increased distribution losses and need to make heat available for, say, 18 or 24 hours a day. Results from the approved Building Regulations software show little difference in terms of carbon emissions between centralised and decentralised plant. But there is no question that in flatted accommodation in particular community heating facilitates the use of CHP, solar water heating, biomass boilers and Ground Source Heat Pumps.
Residential developers are typically unenthusiastic about community heating because of the increased capital cost and the landlord’s ongoing role as an Energy Supply Company (ESCO), responsible for operation, maintenance and billing, though this is often outsourced. Because these systems are unusual and tarnished with a poor reputation in the UK occupants are also frequently sceptical. Furthermore since the system requires them to buy heat rather than fuel to generate heat (such as gas or electricity) they cannot choose their supplier; the operator has a monopoly and dictates the cost.
The electrical equivalent of a community heating system is a Private Wire Network (PWN). Under this arrangement the electrical distribution within a development is privately opened, allowing those supplied by the system to benefit from electricity being generated onsite by CHP, wind turbines or photovoltaic (PV) cells.
In contrast to heat, the electricity market is ‘deregulated’. Privatisation separated generation, distribution and supply (though there are vertically integrated companies operating in all three markets). Occupiers are free to choose their own supplier, each of which purchase capacity from generators and pay charges to the infrastructure operator to distribute the electricity from generator to consumer. Since infrastructure operation is by its very nature a monopoly the charges are regulated by OFGEM.
Typically the ESCO operating the PWN generates some electricity onsite and bulk purchases any shortfall from a supplier. Ideally all occupiers are supplied and billed by the ESCO. However consumers have the right to choose their preferred electricity supplier. Where this occurs the ESCO is entitled to charge this supplier for distributing across the PWN, the charges being regulated by OFGEM to ensure a free supply market.
PWNs are much less common than community and district heating and do not suffer from the same negative perception. Though developers’ concerns regarding the ongoing ESCO role remain, PWNs are usually capital cost neutral (sometimes less costly) and the occupier retains choice of supplier.
The prevalence of district/community heating systems and PWNs in new developments is set to continue to grow in response to planning policy. But should these community services be retrofitted to existing buildings?
In terms of government policy on climate change there is a strong argument for turning attention away from new to existing buildings. Only about 1 % of the building stock is replaced each year so the scope for reducing overall emissions without tackling the existing stock is limited.
There should certainly be an assumption that existing district/community heating systems should normally be replaced like for like but retrofitting community services in buildings with decentralised heating is much more complicated. Practically the key issue is space in landlord areas for centralised plant and distribution pipework; this is very site specific and tends to be most problematic in densely occupied urban sites. In terms of cost a large capital investment is required; some residents may have recently replaced their own boiler and may therefore feel financially disadvantaged by a switch to community heating.
A major strategic benefit is the potential for integrating sustainable sources of energy, usually gas-fired CHP and/or renewables. These elements can attract grant funding from the Low Carbon Buildings Programme (LCBP) but overall the net cost of retrofitting community heating remains a costly option in most cases.
The answer to reducing capital cost and utility bills in both new and existing buildings may lie with third party ESCOs. The secure revenue stream associated with monopoly of heat supply, investment in technologies with short to medium term payback periods, and bulk fuel purchasing discounts can, on larger schemes, offer a sustainable medium to long term business model. In some cases specialist ESCOs are therefore able to offer a capital cost contribution to the installation and/or discounted energy supply costs (e.g. the cost of heat to the resident is guaranteed to be at least 10 % lower than the decentralised equivalent, based on the average cost of gas from a basket of ten suppliers) if the residents are committed to a medium to long term supply contract.
Presently, in most cases, retrofitting community heating systems in existing flatted accommodation is costly, challenging, inconvenient and, therefore, unusual. But in the medium to long term trend will surely be towards community heating as without it there is limited scope for migrating to sustainable energy sources. (Replacing decentralised gas-fired boilers with electric heating is controlled, and effectively prohibited, by the Building Regulations, and is costly to operate.)
This should not be seen as a fundamental problem. Modern electronics rectify traditional problems with controls, though good maintenance remains critical to a successful system, key to winning over a sceptical public. Community heating should be seen as simply another landlord service, no different to a door entry system or lighting to the common parts, albeit with higher maintenance and costs. This does perhaps present an opportunity for profiteering for unscrupulous landlords but proposed/recent changes to the leasehold system should offer protection.
In some areas new district heating schemes will afford some buildings a simpler and less costly route to sustainable community heating systems.
If onsite electrical generation is introduced to an existing building a PWN may be necessary to ensure that the residents benefit economically. In many cases this will require only minimal modifications to the existing electrical infrastructure, though the change in ownership will attract costs.
On larger schemes ESCOs may be able to offer favourable financing arrangements. Their role in the evolving energy market is the subject of a forthcoming article in this publication.
RYB Konsult is a consultancy offering advice on energy, environment and engineering. For more information please go to www.rybkonsult.com
Ross French
Associate Director
RYB Konsult
Email: ross.french@rybkonsult.com