Recommendation 27

In a written submission to our inquiry, the Chartered Institute of Housing expressed concern that the social housing sector, which it said accounted for over half of all heat networks, would need clear guidance and support to prepare and respond to the new regulatory regime for heat networks, and that this represented a “considerable shift” for the sector. It added that almost all heat networks in the social housing sector were operated on a cost recovery basis, and “significant” costs of regulation and zoning would therefore be passed through to residents for them to remain viable. Its overall concern was that connecting customers to heat networks through the zoning process could increase running costs for residents relative to the gas systems they replace, with social housing residents having a much lower household income than other tenures.49 DESNZ explained that it was developing a regulatory framework to oversee heat networks through the Energy Act. It said the aim for this framework was to ensure fair pricing and quality of service that is already in place for gas and electricity customers. The NAO called for DESNZ to further consider how to ensure that people living in harder-to-decarbonise homes are not left behind or penalised unfairly.50 The role of hydrogen and gas networks