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Higher gas prices increase payback of heat network metering

Record high gas prices have multiplied the payback of installing individual smart metering systems in homes connected to heat networks, according to Switch2 Energy.

'Residents typically save 35 to 50% on their bills where they have heat meters and pay only for the energy they use, rather than a fixed flat rate charge based on a share of the heat network fuel costs, as with unmetered properties, ' says Ian Allan, head of market strategy for Switch2.

'In our experience, when residents gain full visibility of their energy consumption and costs from smart metering and benefit directly from any savings they make – they start making conscious decisions about their energy use. We see behaviour changes, such as turning the heating off when they are out and closing windows.

'The resulting cost savings are even greater now that gas prices are around 250% higher than they were at the start of the year. While these prices may soften, forecasters don't expect gas tariffs to return to previous low 2020 levels.'

than a third (in excess of 170,000) of homes connected to UK heat networks are currently unmetered, but government legislation is driving a switch to cost and carbon saving heat meters.

The Heat Network Metering and Billing Regulations will mandate retrofitting of individual metering to most unmetered homes, wherever it is technically and financially viable – as proven using a cost effectiveness tool assessment.

'With much higher gas prices, this assessment is now more likely to prove financially viable', added Ian Allan. 'Our modelling shows that with a 100% or 150% increase in gas prices, installing final customer meters will deliver big cost savings. We believe that actual savings will be much higher than those predicted by the assessment tool, which estimates the demand reduction benefit of smart metering and billing at 20%. Our experience shows that this is in excess of 35% and up to 50% in many UK social housing schemes.”

Under the regulations, heat network suppliers should assess whether it will be compulsory to retrofit final customer meters or heat cost allocators in unmetered homes by 27 November 2021. Where metering is proved viable, they have less than a year (by 1 September 2022) to complete installations. This is likely to involve the installation of smart heat metering systems.

It is already mandatory for new build projects and most buildings undergoing major refurbishment to fit final customer heat meters. It is also compulsory for all heat networks to install point of entry meters, which record the amount of heat delivered into the building.

19 November 2021

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