Heat Utilities: The Future of UK Heat
A sobering reality facing the UK is that for many people, heating has become a luxury. Driven by surging gas prices and mounting cost-of-living pressures, around 6.5 million UK households are now in fuel poverty – and many more are teetering on the brink. Unaffordable gas heating isn’t just dangerous for individual homes and families; it’s a cost to our entire society that all of us inevitably have to pay. This crisis will only worsen if we continue relying on a single, high-pollution heat source.
To lift the financial burden off consumers, we need to convert gas heating zones to future-proof infrastructure that makes heating cheaper, greener, and more secure. This need is driving interest in district heat networks, which are projected to supply at least 20% of the UK’s buildings by 2050. These underground piping systems supply homes, public and commercial buildings with hot water, which a Heat Interface Unit (HIU) transfers to the space and water heating systems. Unlike gas boilers, heat networks can utilise a variety of renewable and low-carbon technologies such as large-scale heat pumps, waste heat from combined heat and power stations and stored heat from excess power generation. However, we can only eradicate fuel poverty and reach Net Zero by utilising one of our cheapest and most sustainable heat sources: waste heat from industry. And that requires planning heat networks as part of larger heat utilities and utilizing heat transmission systems, known as heat highways.
A Fast Lane to Clean, Low-Cost Heat
Heat transmission highways can harvest low-cost waste heat from commercial and industrial sources across an entire region. And once connected to local heat networks, they can supply households with cheap, renewable heat that would otherwise go to waste. This circular approach can drive a fast, cost-effective conversion of our national heating supply while drastically reducing emissions. And unlike natural gas – around half of which we import from abroad – there are abundant waste heat sources all around us: power stations, supermarkets, bakeries, waste and water treatment plants, abattoirs, distilleries, data centres, and many others. Ushering in a new green industrial revolution will open up for a new circular economy too, that not only keeps money that would otherwise have been spent on foreign gas imports in the local economy, but also generates green jobs and encourages the expansion of symbiotic industrial havens that make use of waste to drive growth and innovation.
However, while there’s no shortage of supply, skyrocketing energy prices and inflation have driven many councils to slash their budgets and infrastructure spending. To unlock the economic and environmental benefits only heat highways can deliver, councils need a solution that incentivises heat network conversions while securing reliable, long-term income. The answer lies in replicating Denmark’s DHaaS model, which has dramatically reduced emissions and virtually eradicated fuel poverty.
The District Heat-as-a-Service (DHaaS) Model
DHaaS combines all the heat utility supply costs – HIU, installation, network connections, ongoing maintenance, and targeted servicing – into simple monthly payments spread over 20 years, the typical lifespan of a quality HIU. Through this model, households can replace their boiler with a HIU for no up-front cost (or purchase it outright, if desired), creating a flexible, hassle-free upgrade from natural gas. Once connected, each monthly payment typically comprises three main components: 1) a fixed green conversion subscription fee covering gas boiler to heat network conversion (trenching, pipes, and connections), 2) a fixed subscription fee covering hardware (HIU), efficiency monitoring and targeted servicing, and 3) a variable charge based on the amount of heat consumed.
Each HIU also includes a pre-installed smart energy meter, which facilitates date led management, offers system transparency, and allows network operators to automate billing. To further minimise heating costs, operators can also employ motivational tariffs that penalise energy waste while actively rewarding efficiency – uniting all users in a common goal.
DHaaS directly eliminates the growing costs and stress of owning a gas boiler. For example, while being at the mercy of volatile gas prices, users must also arrange a yearly gas safety check, decide when to replace their boiler, choose a brand and model, and produce up to £5,000 to pay for it – yet it is their problem alone if the heating goes down on Christmas day. Boilers also rigidly limit a home’s hot water and heating capacity, not to mention the gas and carbon monoxide emissions from combusting fossil fuels. Alternatively, while electric heat pumps are gaining interest, they require an investment of up to £20,000, and most UK dwellings lack the space needed to house such a system.
On the other hand, DHaaS offers complete peace of mind. HIUs are combustion-free, require no annual servicing, can last up to 20 years, and ensure reliable heating and hot water all year round. The service contract is typically connected to the dwelling but can be easily transferred to a new owner or paid out in full if desired.
Replicating Denmark’s Success
Heat utilities may still be new to the UK, but it’s been a cornerstone of Denmark’s efficient and sustainable energy system for almost 100 years. Today, around 70% of Danish households are connected to District Heat Networks – including 40,000 new gas to heat utility customer conversions in 2023 alone – and DHaaS has been fundamental to their national growth. According to Næstved, one of Denmark’s leading district heating companies, around 99% of its new customers now connect via the DHaaS model. Along with driving down heating costs, Denmark’s heat networks are remarkably green: around 75% of its district heating comes from renewable sources. By establishing heat utility companies supplied by low carbon and renewable heat, UK councils can use DHaaS to quickly convert entire streets – such as those with terraced housing – to affordable, hassle-free heating.
Our Chance to Beat Fuel Poverty for Good
With their ability to eliminate fuel poverty and our reliance on natural gas, heat utilities can become the backbone of a sustainable national heating system. By emulating Denmark’s DHaaS model, councils can deploy future-proof infrastructure that rewards users with lower costs, missions, and maintenance – all for a simple monthly payment. Heat utilities also form the building blocks of heat highways that can harvest commercial and industrial waste heat from across an entire region. This approach guarantees a diverse supply of renewable, low-cost heat and encourages commercial investment by creating sustainable revenue streams. For councils, solving the heating trilemma – affordability, sustainability, and security – starts with converting gas zones to district heat networks. With DHaaS, the UK can unlock a fast lane to Net Zero, where heating is not only cheaper and greener – it’s fairer for everyone.
