Northern Ireland heat network consultation could pave way for sector growth

Matthew McMurray and Jeremy Chang, energy industry experts at Pinsent Masons, were commenting after the Department for Economy published a consultation on heat networks regulation.

Heat accounts for approximately 44% of Northern Ireland’s total energy consumption, according to the Department for the Economy, making decarbonisation of the sector a critical component of its energy transition.

While there is already some heat network activity in Northern Ireland, the market remains relatively undeveloped compared with Great Britain and parts of Europe. The consultation seeks views on establishing a regulatory framework for heat networks, providing greater certainty for developers, investors and consumers.

McMurray said: "Clear and robust regulation is needed to facilitate the demand base required for heat networks to develop at scale and support the deployment of city-wide schemes similar to those seen elsewhere in Great Britain and Europe. Implementing a clear regulatory framework at this stage of market development creates an opportunity to encourage standardisation and efficiency and ensure good customer outcomes from the outset.”

The consultation currently focuses primarily on regulation and consumer protection and does not yet propose wider measures aimed at stimulating demand for heat networks. This compares with the approach taken in neighbouring jurisdictions where policymakers are pursuing additional interventions to support demand. For example, Ireland’s proposed Heat Bill includes provisions for a mandatory connection regime for certain public sector buildings, while Great Britain is preparing to implement a heat network zoning regime under which certain categories of buildings could be required to connect to a heat network where one is available.

McMurray said: “A mandatory connection regime overcomes the ‘chicken and egg’ scenario that can otherwise deter investment in the sector. By establishing an anchor load of demand, the network developer can more easily secure investment for the project.”

Responses to the consultation will be important in helping the Department for the Economy determine whether future policy measures may be required alongside regulation.

Chang said: “The consultation is a positive step in the right direction, but it is important that industry stakeholders play their part in sharing knowhow and experience from other markets in order to help inform future policy decisions for Northern Ireland.”

Many businesses across Northern Ireland are already working towards decarbonisation targets for 2030. With this in mind, Chang highlighted the need for progress to be made quickly to allow firms to align their processes.

“If a clear glidepath for heat networks is not set out, organisations will have little choice but to consider alternative technologies to decarbonise their heat use, such as unit-level electrification,” he said.

The consultation follows broader efforts to develop Northern Ireland’s low-carbon heat sector, including a recent consultation on geothermal regulation.

Chang said: “Geothermal energy, along with other renewable, low carbon and waste heat sources, can be used in tandem with heat networks to help decarbonise heat and increase resilience by reducing reliance on imported fossil fuels.”