Working Paper 3 : Decarbonisation of Heat: How Smart Local Energy Systems Can Contribute

Decarbonisation of heat is an immense challenge. Despite accounting for over a third of the UK’s carbon emissions, the sector has made little progress to date.

Successive governments have taken a predominantly centralised and top-down approach to tackling these challenges. However, the supply, demand, and storage of heat is inherently local. There are technical challenges on the demand and supply side, which make taking a whole-systems approach essential in the context of wider energy sector changes.

A smart local energy systems (SLES) approach could facilitate a transition to a zero-carbon heat sector that is faster, fairer, and more cost effective than current trajectories. However, the current policy and regulatory landscape means that SLES struggle to deliver their potential environmental, societal, and energy system benefits.

This report takes a systematic review approach to the policy and regulatory environment of heat decarbonisation. We identified five cross-cutting barriers that will need to be addressed regardless of the zero-carbon heat technology mix that is ultimately adopted. We explored how a smart local energy systems approach could address these barriers, and identified the strengths and missed opportunities in the UK Government’s Heat and Buildings Strategy.