JV for low carbon heat delivery in UK

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UK gas network operator SGN and energy generator Vital Energi are forming a JV to develop, own and operate low and zero-carbon heat networks.

The 50-50 joint venture will create an Energy Services Company (ESCO) to provide low carbon infrastructure to SGN’s existing land portfolio in Scotland and the south of England.

This includes delivery of heat to developments planned by its property arm, SGN Place, and the local vicinities where there is a demand for low carbon heat.

Heat networks form an important part of the UK’s and other countries’ low carbon future with their decarbonisation potential.

The UK’s heat network market has been estimated to require approximately £30 billion ($42 billion) of investment by 2050 to meet the government’s net-zero targets. The suggestion is that the country should target 20% of UK heat demand through low carbon heat networks by 2050.

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The objective of the new JV is to establish solutions across strategically located sites, including redundant sites owned by SGN and others to be developed over time through Vital’s existing market presence supplying new and existing residential, industrial and commercial facilities.

Development activity is already underway for two projects in Scotland and the South East, with another 20 in the pipeline.

“We’re looking to develop alternative heat solutions alongside our core gas distribution business and expand into the growing district heating market, recognising the future of heat is likely to include a mix of technological solutions and energy sources,” says SGN’s Director of Commercial Services and Investments Marcus Hunt.

“Heat networks are likely to play an increasing role in the delivery of UK heat in the context of net zero. The creation of this joint venture enables us to build a presence in this emerging market, delivering new heat infrastructure and supporting decarbonisation.”

The complementary skill sets of the two organisations are anticipated to offer a compelling proposition for developers, commercial and industrial users and public sector bodies seeking low carbon heat solutions, according to a statement.