Tariff Calculations

Heat tariffs are often not correctly set and do not have an appropriate tariff structure. Often schemes do not recover initial costs through a connection fee and the operational costs through the tariff. Heat tariffs are often unfairly set with respect to usage and do not incentivise good performance. For New Build and Operational sites, FairHeat can provide:

  • Review current tariff structure and propose alternative approach based upon client requirements (recoup costs, profit margin, etc.) 
  • Develop and calculate standing charges for heat network to cover M&B charges, share of utility standing charges, administrative costs and bad debt provisions 
  • Develop and calculate availability charge for heat network (system O&M costs, heat losses, as required) 
  • Develop and calculate usage charge for heat network (variable kWh and/or variable m3 charges, as required) 

Many heat networks do not comply with the Heat Network Metering and Billing Regulations, which exposes Clients to fines associated with non-compliance. Key changes have recently arisen, which introduces building classes and a cost-effectiveness assessment for the installation of meters. Initial conducting of the cost effectiveness exercise is expected to be completed by 27th November 2021. Meters and/or Heat Cost Allocators (HCA) should be installed by 1st September 2022. FairHeat assists network operators to comply with the Heat Network and Billing Regulations by:

  • Metered or partially metered networks: Reviewing metering arrangements for a client’s heat network(s) to confirm if acceptable in accordance with regulations. 
  • Unmetered networks: Conducting a cost effectiveness exercise to determine if metering arrangements need to be reviewed (for notification purposes). 
  • For both: Developing scope of works for heat metering retrofit, support roll out and provide close out report (for notification purposes). 

Under the Heat Networks (Metering and Billing) Regulations 2014, all viable unmetered heat networks must carry out technical and cost-effective assessments for the installation of heat meters and heat cost allocators. The deadline for these assessments is November 2021 and all heat meters must be fitted by September 2022. FairHeat can support by classifying buildings, undertaking the assessment, and notifying the government to ensure that the heat networks are compliant.

Heat Networks provide the best opportunity for us to decarbonise buildings to meet our New Zero ambitions. However, often the design and build of Heat Networks haven’t delivered true performance levels to end customers. With CP12020 being an industry game changer, true performance levels can finally be designed, built, commissioned and verified through our FairHeat Certification and Assurance scheme. The FairHeat’s reputation as an industry leader

The Heat Trust is a voluntary organisation that aims to provide protection for heat network customers. Many heat network operators have, or a seeking to, join the Heat Trust to improve their customer service standards. FairHeat can provide guidance and support for organisations that are interested in joining the Heat Trust.

There is often a performance gap between the design intent and the actual performance observed, which can lead to higher operational costs and carbon emissions. In Nov 2020 the GLA have set out energy monitoring guidance to monitor and report against the “be seen” requirement. Local authorities will secure the reporting requirements through the S106 agreement in planning.
FairHeat:

  • Develop reporting requirements for heat networks to be applied by Local Authorities through planning 
  • Supports Clients, as planning applicants, to provide the metering plans that will enable energy performance reporting to be developed and implemented. 
  • Produce reports, for the developer at built stage, to confirm that metering installation is complete and correctly calibrated. 
  • Report, to the building owner in use-stage, on energy performance data annually for at least 5 years, including causes and mitigation measures for non-compliance with design performance.  

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