Almost all UK homes have their own individual heating systems - most commonly, a gas boiler. But in some other countries, it’s much more common to share your heating system with other properties.

In Denmark for example, more than 65% of homes are connected to district heat networks, where heat is produced centrally and circulated to individual properties through a network of hot water pipes.

In the UK, it’s estimated that only around 500,000 homes are connected to shared heat infrastructure. This infrastructure varies from district heat networks that serve several buildings in an area to communal heat networks that serve several dwellings within a single building, to homes with individual heat pumps that use shared ‘ambient loops’ to collect heat from the ground.

Nesta and Baringa have been looking into how the UK could tap into the unfulfilled potential of shared heat infrastructure and we brought together key players to ask what needs to be done to make it happen.

Because of their potential to use low-carbon heat sources, like heat pumps, and to make use of waste heat, systems with shared heat infrastructure could be a key tool in cutting carbon emissions from heating. The Climate Change Committee’s models suggest that by 2050, they could meet around 20% of heat demand (up from 3% today), making a notable contribution to helping the UK reach net zero

But scaling up shared heat infrastructure isn’t straightforward.

Developers, and the investors that back them, have to take the risk that if they put ‘pipes in the ground’, over time there will be enough customers to make the project financially sustainable.

The coordination challenges are considerable - for example, negotiating with councils to find places to site heat pumps in city centres, with ‘anchor customers’ to get them to connect at the right time, and with producers of waste heat.

Getting the costs of low-carbon shared heating infrastructure to stack up against the incumbent - gas - is possible over the long term, but challenging in the short term, particularly as policy costs on energy bills are heavily skewed towards electricity, making it even more expensive relative to gas.

So could the state play a more proactive role in getting shared heat infrastructure off - or more precisely in - the ground?

At present, the UK government is supporting some development of these systems by providing pilot funding and working on regulation to set up ‘heat network zones’ in England. This will enable local government to designate areas for shared heat infrastructure and provide certainty for developers by guaranteeing some buildings will be connected to the networks.

Nesta and Baringa ran a roundtable discussion with developers, investors, umbrella organisations and government bodies to explore the potential for the state to work more closely with the sector.

This built on previous analysis by the two organisations on roles the state could play in the wider energy market.

The discussion suggested six ways that that government bodies - national and local - could play a bigger role:

• Planner: setting a clearer direction for heat decarbonisation at a national, regional, and local level
• Investor: using government backed finance or working with others to develop funding mechanisms that help de-risk investment
• Development partner: participating in joint ventures, facilitating pre-development and potentially, providing more hands-on support to local areas to set up schemes
• Enabler: going further in developing supportive policy, for example by incentivising producers of waste heat to make this available to heat networks, and shifting levies on energy bills so that electricity is cheaper relative to gas
• Coordinator: reducing some of the coordination challenges that developers currently face, for example by ensuring that where heat networks are in the pipeline, public buildings plan to connect rather than pursuing separate decarbonisation strategies
• Trusted messenger: helping to build public trust and confidence in shared heat infrastructure

With the UK government working on its Warm Homes Plan, and thinking in more detail about the roles of bodies like GB Energy and the National Wealth Fund, there’s an opportunity to shape ways for state bodies to work more closely with developers and investors to bring forward shared heat infrastructure.

The roundtable suggested an appetite from industry to form closer partnerships and suggested there would be value in further exploring how these roles could look and which bodies would be best placed to take them on.