in December the ministry also cancelled progression of a village-scale hydrogen trial at Winlaton near Redcar, pictured.

Officials now believe the low carbon gas, in either its fossil-fuel-derived blue hue, or the cleaner green variety electrolysed with wind-generated electricity, may have a role to play in heat decarbonisation, but in slower time and in only ‘some’ locations.

D-ESNZ plans to take a final decision in 2026, after assessing evidence including from a neighbourhood-scale hydrogen trial in Fife and other studies across Europe.

Britain’s four main operators of gas networks have lobbied Whitehall hard for hydrogen to be viewed as a panacea, a high convenience, low cost replacement for methane-heavy, climate-wrecking ‘natural’ gas in Britain’s 30 million homes.

In October 2022, the then D-BEIS ministry invited the four to commit to operational trials, leading to mass deployment.  All four responded with business plans.

But the hydrogen drive had been opposed as impractical, manipulative and still polluting by advocates for electric heat.

One immediately welcomed Whitehall’s backtracking yesterday.  James Standley, chief technical officer of Truro-based Kensa, Britain’s only manufacturer of heat pumps, and a company part-owned by Octopus Energy,  said abandoning the village-scale trial was “further recognition that hydrogen has no major role to play in future home heating”.

“Every academic study on the issue, the economics and the physics demonstrates this”, Standley went on. “The government should now take the next logical step and rule out hydrogen heating for anything other than a small number of very specific cases.

Electrification, whether via heat pumps or heat networks, remains the best and quickest way to achieve clean heat while ensuring the best outcomes for consumers, Standley opined.

“The longer hydrogen remains part of the conversation”, the Kensa boss said, “the further the transition will be delayed, hampering the speed at which these already proven technologies are rolled out.”

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The pioneering low-carbon heat network, operated by Truro-based Kensa Utilities, uses underground boreholes and pipes to harness stored energy from the ground and feed it to a small ground-source heat pump in each home. This heat pump upgrades the heat to warm homes and heat water.

After a successful pilot, designed to prove the infrastructure’s effectiveness, five-year old Kensa Utilities hopes its system will eventually form an alternative to the UK’s existing gas network, contributing significantly to energy decarbonisation.

Kensa’s network is the first of its type to register with Heat Trust. The parties see it as paving the way for similar networks to join the consumer-protection scheme. They envisage it as as a possible template for future statutory regulation by Ofgem of the heat networks sector.

Similar to the regulations set for gas and electricity suppliers, the rules of Heat Trust’s scheme set minimum threshold standards, ensuring that customers of heat networks are guaranteed satisfactory service and protections by their heat suppliers.  Explicit criteria include fair treatment, support for vulnerable customers, transparent billing and communications, and access to the Energy Ombudsman if things go wrong.

With the government backing heat networks as a sustainable energy solution, and with formal regulation on the horizon, registration with Heat Trust not only protects consumers, the parties argue, but leads heat network suppliers towards improving their operations.

Heat Trust’s managing director Stephen Knight said: “The registration of the first ground-loop type heat network with Heat Trust is a significant milestone and signals wider adoption of vital consumer protections and service standards, creating a more trusted sector.

“Government research estimates that by 2050, 20% of the UK’s heat demand will be met by heat networks. As networks of this type become more widespread, Heat Trust registration ensures that customers remain front and centre in the industry’s journey to more sustainable heating sources.”

For Kensa Utilities, managing director Wouter Thijssen added:  “It is fantastic to be the first networked heat pump project registered with the Heat Trust with our Heat the Streets project.

“Achieving registration of this innovative heat network is a big step forward in demonstrating our commitment to delivering reliable and efficient heating infrastructure.

“This landmark project provides a blueprint for the decarbonisation of heating in the UK. Our model replicates the gas network with a pipe in the ground, a flat rate standing charge to consumers and a little white box in the house.

“Consumer protections and high service standards are crucial in the effective transition towards full implementation of these networks, so we are excited to lead the way for other networks to follow suit in becoming Heat Trust registered.”

Heat Trust is committed to registering more networks to its scheme during the lead-up to regulation, with the aim of ensuring consumer confidence in heat networks as an effective source of sustainable heating.

For more information on Heat Trust, visit: https://www.heattrust.org/

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Partnering in the investment are insurance giant Legal General and the pension fund of a south London borough, Wandsworth Council.

Today’s purchase is Britain’s biggest single investment yet made in ground sourced heat.  As many as 7,000 green jobs stand to be created this decade, the parties estimate.  Legal & General has held a 36% stake in the manufacturer since 2020.

Kensa believes today’s move can aid its ambition to install 50,000 ground source heat pumps a year by 2030.

Air source heat pumps have already benefitted from Octopus’ deep pockets.  Last year the firm bought Craigavon-based manufacturer Renewable Energy Devices.

Across air and ground varieties, UK government policy is to have heat pump installations running at 600,000 a year as early 2028.  But grants of £6,000 available to homeowners have failed to spark the market: installs were running at a mere 2 per 1,000 homes last year, according to one estimate from the European Heat Pump Association.  Fewer than 1,000 registered installers have not helped.

In February Octopus announced it was co-operating with grid operator UKPN, allowing pump technicians to sign off new fuse installations protecting the DNO’s network.

Octopus Energy Generation makes this investment as its first deal from its £500m Energy Transition Fund (OETF), currently raising capital from investors. The initiative includes a cornerstone investment from Wandsworth’s pension fund, assisting OETF in its support for companies rolling out decarbonising technologies such as low carbon transport, green hydrogen and e-fuels.

The arrangement includes finance provided by Kensa to house builders, housing associations and non-domestic customers for their ‘Networked Heat Pumps’ solution.  The manufacturer says this effectively creates a new renewable asset class, kick-starting a sector that could exceed £1 billion by 2030.

“The heat pump revolution is off to a flying start” commented Zoisa North-Bond, CEO of Octopus’ generation division.

“This deal is a huge milestone for our exciting new Energy Transition Fund, as we invest in ambitious companies rolling out tech to turbocharge the clean energy shift.”

Kensa Group CEO Dr Matthew Trewhella added: “This is a monumental moment for ground source heat pumps. This investment will help unlock Kensa’s vision of a mass transition to low carbon heating by replacing the gas grid with its 21st-century equivalent – an ambient temperature heat network.

“Our approach harnesses the power of investment capital funding infrastructure, reduces the strain on our electricity grid and enables a just transition – keeping heating costs low and addressing fuel poverty simultaneously”.

The investment is subject to regulatory approval and is expected to complete before October.

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