My name is Jody Pittaway and I'm the Sector Director for SSE’s Heat Networks Business. I've been working for SSE for about 15 years and 12 of those, roughly 12 of those have been in various roles in and around the Heat Network sector. Our Heat Networks business started life in London about 13 years ago with supplies to a residential site there in Woolwich. And since then we've grown and evolved and developed to the point now where we’ve got a team of over 80 people working on all aspects of heat networks, projects development, through construction and then into asset operations and looking after the customers that connect to our networks.
And we're now looking at a really exciting portfolio of projects that are going to be taking waste heat sources and distributing that waste heat to customers in towns and cities across the country. So yeah, it's been a real evolution and it's gone in parallel, I think, with government policy, which has become increasingly supportive of heat networks on the journey to net zero by 2050.
Well, I think it's a complex subject, isn't it? And it often involves all aspects of a business’ operation. So, as a starter, I think it can be quite difficult for businesses to understand and measure their existing carbon footprint, which is obviously important when you're when you're plotting a decarbonisation strategy and plan. Then there's often capital costs to be considered to your operations which clearly need to be factored into any decision-making process. If we look at heat in particular, and heat decarbonisation as a country, we've obviously had the vast majority of our heat is from natural gas boilers and natural gas CHPs, and historically that's been relatively cheap. So, at the moment there is kind of lack of a commercial driver for businesses to want to decarbonise in some circumstances. When you put all that together, it's a big challenge and that's probably why we're not seeing things moving faster than we are at the moment.
Fundamentally heat networks are a brilliant way of distributing low carbon heat cost effectively to lots of customers in an urban environment where you've got density of demand and big anchor loads such as hospitals and universities. And what they enable you to do is kind of take away this reliance on fossil fuels so we can start to remove gas boilers and replace them with a low carbon heating network as well as reducing our dependance on energy imports from overseas. So, you've got that local resilience and your energy supply coming from local sources. SSE’s role in that is to make the customer's journey as simple as possible and to take some of those risks away. Understanding their current costs, addressing their concerns about what is quite a significant change in their heating system and, through our strength, longevity and our experience in this area, we can hopefully give them the confidence in that. In the future they can think about a connection to an SSE Heat Network in the same way they think about a connection to a gas or electricity network now, Just a pipe in the street with low carbon heat in it and you plug into it. That's kind of the journey we’re looking to take customers on.
All of our heat network projects are really about low carbon; trying to deliver low carbon heat as cost effectively as possible. We've got some good examples of that. The first of those would be an example of how we are decarbonising our existing network in Woolwich in South East London, where we've agreed with the developer there that we will install large centralised heat pumps which will connect into the existing network and bring down the overall carbon content of that network. We've been able to do that without increasing charges to customers, which is really important on that existing network. And over time we'll bring in more electrified low carbon heat sources to that network and we will slowly decommission the gas heating systems down there.
We’re also working with some customers, such as universities, working through different technical solutions with them as we take on the construction and the integration of their existing networks so that they can transfer that risk to us. Working with one university in particular to effectively install a new heat pump led energy centre connecting to their existing network on a phased modular basis, so there's no big impact on their existing network or buildings. Over time, as we add more heat pumps, we'll start to decarbonise that heat. And the key thing there is that the university will buy heat from SSE, they won't pay for the construction of that network. So effectively we're doing a financed arrangement for them: Development, installation, sale of heat, and they pay for it all through a price of heat which is known and stable for a period of time.
And then the last project I'd like to mention is what we're doing up in South East Leeds, where we're working with a developer of energy from Waste Plant. Those plants have significant amounts of heat which are produced by the processes there, by the incineration of waste, which we want to capture, we don't want that going to atmosphere. We'll capture that heat, which is a really usable temperature, and we'll build a new heat network which will supply initially a couple of large industrial customers, commercial customers in the vicinity. And in time our plan is to take that pipe and run it up in a northwest direction, up towards where Leeds City Council have their own network in the center of Leeds and interconnect. Providing a really expansive heat network fed from different waste heat sources which will be supplying a very large proportion of Leeds’s heat demands.
So that's really exciting and that's probably a blueprint for the kind of projects that we want to roll out across the country in the next few years.
As we're moving away from natural gas and towards what will tend to be electrified heat networks, where we'd be boosting the temperature of a heat source with heat pumps which obviously require electricity, all of a sudden you've got an integration piece there. And that's where the Whole System Thinking comes in and I think about that in terms of both ends of the heat pipe, really.
Let’s take the energy centre at the supply end. We need to think about where the electricity is going to come from, that's going to supply those heat pumps. You've now got options perhaps around solar and batteries to store the electricity that's coming from that, the solar can potentially feed those heat pumps. Those two things would then need to be integrated, and so you might distribute that electricity by means of a local private wire or microgrid on site.
Then at the other end of the pipe where we supply the heat into buildings where we'll be supplying that heat into multiple buildings via heat pumps, which are the most efficient when they are providing heat at a slightly lower temperature than traditional methods. And that necessitates some change to the heating and cooling systems within those buildings and potentially to the fabric of that building as well. We've got teams within the business here who understand those current heating systems, and can make recommendations for how the temperatures in the buildings can be brought down without any impact on the operation.
So, we've got expertise at both ends of the pipe, which we need to bring into play to make sure that the heat network as a whole is run as efficiently as possible. To maximise the benefit of any heat network, you need to think about the end-to-end system.
The project I talked about in Leeds I think is, as I mentioned, likely to be a great example of the sort of projects that we are going to be doing in the future. We know we've got some important policy change coming down the line in the next couple of years and a big chunk of my role is involved in looking towards supporting the development of that policy that's going to really kickstart this sector. There’s a couple of crucial things within that.
One is Ofgem becoming the sector regulator from 2025 likely across the whole of the UK. And the second part of that is heat zoning.
It'll take on slightly different flavours in Scotland from England and Wales, but the concept is very similar and effectively there we're going to have defined areas within most major towns and cities across the country, within which it will have been defined that a heat network is the lowest cost, lowest carbon heating solution for an area. And there are likely to be rights issued to network developers to come and build networks in those areas, distribute heat and probably obligations on owners of larger buildings to connect to those heat networks.
It's a real step change in terms of what we're doing as a sector. There's an enormous amount of policy work to do and also work with the owners of the buildings that are going to connect to these networks to get them ready, to help them to understand what this is, because we want people connecting through all the great benefits of heat networks rather than through a policy that mandates their connection.
Those are the kind of networks that we want to be building and developing. And that really is kind of the direction of travel for the next, well, 30 years probably. But definitely the way we're going in terms of getting the policy right in the next two years to underpin it.