Some customers on UK heat networks pay way over the odds for their heat but because heat networks are natural monopolies there’s little they can do about it. Sure, we can introduce some direct competition on heat networks (for example by making it possible to switch out the metering and billing provider) but the opportunities are pretty limited.

While direct competition between suppliers is limited, it is possible to introduce virtual competition between suppliers by making the cost to customers transparent and available to everyone. In fact our best opportunity by far to apply competitive pressure in the heat market is to publish tariffs, including unit and standing charges, in a central, publicly available register.

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It is a truth universally acknowledged that there is a skills gap among heat network designers and that by filling this gap we will improve network performance. In other words, if we provide more training to engineers, heat networks will get better.

There’s no doubt that some heat networks are plagued by performance problems, costing customers too much and delivering poor quality of service. But can this be fixed with additional training for consultants? Are heat networks really so complicated that engineers already trained to master’s degree level can’t design them well?

In fact, the skills gap is a red herring and providing more training to engineers won’t help. Here’s why:

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Capital contributions, the payments made by ESCOs to developers in exchange for long-term concession agreements, are a hangover from the days when everyone thought onsite generation would be highly profitable.

We’ve since discovered that it isn’t as lucrative as expected. Nevertheless developers continue to demand these upfront payments, leading to higher standing charges, longer contracts and unhappy residents. Isn’t it time for the practice to stop?

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At Guru Systems, we’ve been trialing a way of coordinating our efforts to achieve our company objectives called OKRs (Objectives and Key Results).

We’re still fine-tuning, but our experiment over the last seven months has shown how hugely effective OKRs are in aligning our teams and staying focused on the important things. In this post, I’ll explain how they work and what we’ve learned along the way.

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Heat loss headaches

This blog was originally posted on networks.online.

Any heat network operator or customer will tell you that heat losses matter – a lot.

Losses that go unchecked can easily double the cost of heat on the network. But while everyone agrees it’s hugely important to limit losses, the way we talk about heat loss is all wrong. And heat network performance is suffering as a result.

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In 2016, the heat sector finally recognised the importance of performance data. Helped by companies like Guru, heat network operators began to obtain energy performance data from their networks.

The data sent shockwaves through the industry as many realised that their networks are not performing anything like what was promised, largely due to shortcomings in design and commissioning.

Using this information, the operators of these poorly performing networks could finally attach precise numbers to their long-held suspicions: that losses are high, that heat costs too much and that service can be unreliable. Of course, customers on bad networks already knew this from their own experiences of high bills, cooking corridors and intermittent heating and hot water.

As this awakening gathers pace, a key trend for 2017 will be the move towards quantified performance. Armed with clear requirements, clients will be more specific about what they want, and use measurement and verification to ensure they get it. ESCOs, having had their fingers burnt, will no longer be content to sample the performance on a limited number of dwellings before adopting a new network. Instead they will use performance data to verify that 100% of equipment in homes has been properly commissioned. In short, networks won’t be allowed to go into operation until they work as intended.

This change in approach will have huge implications for the industry.

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This post originally appeared on the CIBSE blog.

New buildings in the UK consume far more energy than intended by their designers – up to 10 times more according to an Innovate UK study. This performance gap doesn’t arise because we lack technology. Studies by the UKGBC and others conclude that it’s the result of failings throughout the project lifecycle, from concept to handover.

Performance gaps may arise because clients are unclear about what they want; project teams don’t understand the impact of their design choices; contractors substitute products and materials on the fly and then install them poorly; or quality assurance is lax, with employers’ agents either blind to the problems or willing to let shoddy work escape their net.

There’s no doubt about it – we’ve got trouble right here in the UK building industry. But innovation on its own won’t solve the problem. The Internet of Things isn’t coming to the rescue. Because the performance gap isn’t a technology problem – it’s a problem of people, information and accountability.

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In the previous post, I described the characteristics we’d want to see in a competitive heat market. In short, we want many heat networks of varying sizes to function as markets that are fast, efficient, accessible, cheap and decentralised. I also tried to show that simply copying the electricity market for heat is a bad idea.

So what model should we adopt? In this post, I propose a new model based on blockchains, the technical innovation that underpins cryptocurrencies like Bitcoin and Ether.


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In the previous post, I suggested that creating a competitive heat market could be the best way to deliver value for customers. This would involve breaking up heat network “verticals” into their constituent parts (generation, distribution and supply) with genuine competition in each segment.

Sounds lovely, but there are plenty of devils in the detail. For example, how do you match supply and demand across multiple parties in real time? What happens if a supplier requires more or less heat than they’ve contracted for? What if a generator puts more or less heat into the network than was planned?

To help us deal with these devils, could the electricity market serve as a model for heat?

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A few weeks ago, my business partner and I were walking to a meeting in Stratford when we realised we were surrounded by several heat networks (seven actually): each one standing alone, isolated from its neighbours, each dependent on its own small boilers or CHP, each its own tiny monopoly. Seven networks right next to each other, brazenly missing the opportunity to reduce cost and carbon by linking together.

Here he his, pointing them out:



The scene on that Stratford street corner highlights a failure of coordination on the part of planners and a lack of incentives to link small heat networks to each other and to larger-scale sources of low-carbon heat.

But what if we put it right? Imagine for a minute that we do stitch together groups of small networks, perhaps using the £320 BEIS funding to do it. Technically it might be straightforward, but what about commercial structure? What do you do with all those little monopolies?

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