Imagine, a chilly winter morning in the UK. A letter from your heating provider falls through the letterbox saying that your bill has increased because global gas prices have gone up. You wrap up warm and go to work passing the Energy from Waste (EfW) plant that has heat to spare but does not share any of it with your home. Meanwhile, in Scandinavia, residents enjoy low bills and warmth from the district heating system powered by their own EfW plant. So, what's gone wrong in the UK? Why has the nation failed to connect the dots between waste and warmth, leaving its EfW plants to produce just electricity and not making use of the additional efficiency a heat scheme would bring?

In Sweden, Denmark, and Finland in particular, but also in some cities in France and Germany, district heating systems powered by waste incineration are common and have become a central component of sustainable urban infrastructure. Despite exemplars like Sheffield, Coventry and Nottingham - and pioneers like SELCHP that waited 20 years to get it’s CHP connected - the UK has not developed distributed heating systems to any significant scale using its EfW plants. The reason is not just geographical. It involves historical infrastructural decisions, political support, economics and public perception.

Let’s start with urban planning.  Scandinavian countries began investing in district heating systems during the mid-20th century, often in conjunction with post-war urban redevelopment. These systems were built into the urban fabric as the cities expanded, making it easier to install the necessary infrastructure. In contrast, the UK’s energy system evolved around a highly centralised model relying heavily on the national gas grid. With a tradition of coal fires, most homes being connected to the gas network and with cheap natural gas available from the North Sea, there was no appetite to retrofit or replace existing systems with heat networks that require significant upfront investment and long-term planning.

European governments have consistently supported district heating as part of a broader environmental and energy security strategy.  Strong policy frameworks, financial incentives, and clear regulatory support have encouraged municipalities and private companies to invest in local heat networks. For example, Sweden implemented a carbon tax as early as 1991, making fossil fuels less economically viable and district heating more competitive. Denmark imposed heat planning legislation requiring municipalities to evaluate district heating options and has an obligation on consumers to take the heat if a district network is available.

The UK, whilst recognising the potential of heat networks, has historically lacked consistent and robust policy support. That is not to say there has been no policy support, but it has been ineffective and sometimes simply inappropriate, not placing the support in the right place.

The fragmented nature of the UK’s energy market has also acted as a barrier. Heat networks require coordinated action between local authorities, private developers, utility companies, and consumers. In Europe, many district heating systems are municipally owned or operated by cooperatives, allowing for a more integrated and community-focused approach. By contrast, the UK's privatised and liberalised energy market caused incentives to be misaligned and failed to mobilise the capital needed for large-scale heat infrastructure projects. Moreover, the relatively low cost of North Sea gas, coupled with the easier to establish and guaranteed offtake for electricity generation made alternative heating solutions less economically attractive. Now that the UK’s gas fields are depleting, dependency on Norway increasing, and uncertainty over Russia, there is heightened energy security concern over the supply of gas. This, coupled with gas linked to global pricing and Net Zero embedded in law, the policy landscape has changed.

Policy support for district heating at a national level did not start in the UK until 2002 – years after our European neighbours - with the introduction of the Renewables Order (RO) and Renewable Obligation Certificates (ROCs), which gave a premium electricity offtake price to combustion EfW plants with CHP schemes for the renewable fraction of the waste - which for MSW was deemed to be 50%.

In 2011 the UK Government introduced the Renewable Heat Incentive (RHI). This scheme was designed to encourage the uptake of renewable heating technologies in domestic and non-domestic buildings, and while it was primarily aimed at biomass boilers, heat pumps, and solar thermal, it could be claimed by EfWs as well if they had a heat network.

In the following year the Environment Agency introduced into the permitting system a requirement for EfW plants to be “CHP ready”. “CHP-ready” requires EfWs to be designed and built with the capability to add heat recovery infrastructure in the future, even if it is not installed at the time of build and also includes the carrying out of a heat demand study.

In 2014, ROCs were replaced by Contracts for Difference (CfDs) with similar qualifying requirements and whilst combustion EfWs with CHP could apply, this technology category was later withdrawn.

The problem with these initiatives was that the incentive to develop the heat network was focused on the EfW plant and not on the heat network nor the heat users. Indeed, even more misplaced were both ROCs and CfDs where the incentive was on the electricity produced, not on the heat (although the latter did require the attached CHP scheme to be of “Good Quality” as defined by Ofgem). Whilst the RHI attempted to move attention to the heat production, the incentive still lay with the EfW plant.

Building and operating a heat network requires involvement from the local authority. It requires obtaining complex planning permissions, permits for road closures, easements, disruption, close engagement with the heat consumers and numerous contracts to ensure that they take the heat and pay for it. All of this is beyond the capability of most, if not all EfW operators working alone, and consequently, despite even the carrot of the RHI and the stick of being CHP ready, these incentives did little or nothing to encourage the growth of heat networks attached to EfW plants. CHP Ready remains, but the RHI programme was terminated in 2022.

Eventually the penny dropped and the powers that be realised the shortcomings of the previous incentive programmes and a new approach emerged. The Heat Networks Delivery Unit (HNDU) was formed in 2013 under the then Department for Energy and Climate Change (DECC) - the predecessor of DESNZ with the objective to support local authorities in England and Wales on the early-stage development of heat networks and to help address barriers such as capacity and capability. It was reported in 2024 that the HNDU has provided grant funding and guidance to over 300 projects across 188 local authorities, awarding a total of £37.8 million in support.

Of course, most of these are not related to EfW, but working with its delivery partner, Triple Point Heat Networks Investment Management administering the Green Heat Networks Fund (GHNF) and Heat Networks Investment Project (HNIP), there is no doubt that this change in approach has been pivotal in bringing forward waste fuelled district heating schemes, with facilities such as Leeds, Skelton Grange, Allington, and Cranbrook, Exeter being beneficiaries.

But the GHNF is now in its last funding round and both it and the HNIP will be closed by 2028. With the 2025 Spending Review at time of writing being imminent, and government departments fighting for their share of the budget cake, things do not look so bright for DESNZ. If funding support for district heating disappears, has the momentum that has been built up been sufficient to allow it to continue? At least some of the earlier barriers, such as recognition that local authorities must play a part, and the total disconnect between policy and the reality of heat network development, have been removed.

Let’s hope that EfWs producing heat as well as power can live on and thrive and that our imports from Scandinavian are not limited to ABBA and IKEA.