What happens when an aging legacy residential heat network reaches the end of life?

The following is an important and thought-provoking update from Lillington and Longmoore leaseholder Andrey Bulavin, who sits on the PDHU Resident Technical Working Group.

The UK has approximately 14,000 heat networks. Policy attention is focused on expanding the sector from the current 3% to 20% in heating and hot water provision by 2050. But the harder question, the one that current policy frameworks don't address, is what happens when an aging legacy residential network reaches the end of life?

For new-build networks, industry benchmarks suggest capital costs of around £1m per GWh of annual output. For legacy renewal, the cost structure is completely different. The dominant cost is not the energy centre or the primary underground pipework, it is secondary and tertiary replacement inside occupied residential buildings. This has no parallel in new-build projects and no place in any published benchmark.

At PDHU- the UK's oldest heat network, serving nearly 3,300 homes in central London - the proposed renewal costs approximately £5-7m per GWh on average 6x the industry benchmark. The reason is not an overpriced energy centre or primary network. It is approximately £150m of in-building works across occupied estates and blocks, equivalent to around £45,000 per property.

The alternative comparison with individual systems at £3,000-5,000 per property, with empirical bill data from residents who have already disconnected showing costs four times lower (gas) than the heat network tariff has never been formally required by any policy framework before a renewal decision is made.

This is the question the industry and regulators need to answer before the next legacy network reaches this point: at what secondary and tertiary replacement cost does renewal cease to be economically rational compared to decommissioning?

No benchmark, no GHNF guidance, no HNTAS standard currently requires that calculation to be made. PDHU suggests it urgently should.

We believe this is a conversation that the industry, policymakers, and regulators must engage with now — before more legacy networks reach this point.