Policy and Insight

• UK currently lagging behind European peers, with heat networks accounting for less than 3% of heat demand.
• Households could save up to £22,000 over 25 years with EfW-powered heat.
• EfW plants already showing strong potential with industrial heat offtake partnerships.
• Urgent policy and regulatory changes needed to realise the potential of EfW heat networks.

25 September, London – The UK has a significant opportunity to accelerate its journey towards meeting its net zero targets through energy from waste-powered (EfW) heat networks[*], according to a new report by economic consultancy NERA, commissioned by the Environmental Services Association (ESA) and Resource Recovery UK (RRUK).

The new report underscores the potential value of heat networks for decarbonising homes and businesses, supporting the nation’s legally binding climate goals, and lowering household energy bills.

Heat networks currently account for less than 3% of the UK’s heat demand, compared to significantly higher rates in other European countries. The Government has set a goal of expanding this to around 20% by 2050, but the report warns that to achieve this, and begin to catch up with international peers, there is a clear need for policies to incentivise investment.

The report outlines a clear policy and regulatory opportunity: by harnessing heat produced by EfW facilities, the UK can fuel low-cost and low-carbon heat networks, reducing greenhouse gas emissions and delivering broad economic and social benefits.

Key findings from the report include:

• Untapped potential: Heat networks are currently underutilised in the UK, serving less than 3% of the heat demand. In contrast, countries like Denmark and Sweden have market penetration rates of 64% and 53%, respectively. To reach its 2050 target of around 20%, the UK must accelerate its adoption of this vital technology.
• Economic and social benefits: EfW-powered heat networks could save households up to £22,000 over a 25-year period, compared to traditional heating methods like gas boilers and low carbon alternatives such as heat pumps. These networks also offer significant reductions in carbon emissions by minimising the use of gas in homes, which in turn improves air quality. This approach benefits both high-density urban areas and less densely populated regions. Additionally, with the UK being a net gas importer – much of which is used for heating – transitioning to domestic heat sources through EfW networks could help reduce reliance on fossil fuels.
• Regulatory and market reform: The report provides a robust case for swift action from the UK Government and energy regulator Ofgem to implement policies that incentivise investment in heat networks. This includes establishing effective regulation and introducing mechanisms to ensure a continuous and reliable supply of heat from EfW plants.
• Coordination and incentives: The report suggests creating incentive schemes that encourage better coordination among stakeholders involved in the production, distribution, and consumption of EfW heat. By addressing the existing ‘first-mover disadvantage’, these incentives could unlock the vast potential of heat networks.

Working with partners, ESA and RRUK members are already investing in projects to supply heat to nearby homes and businesses and ensure this valuable by-product is not wasted. For example:

• At Runcorn, Viridor's EfW facility supplied 470 GWh of heat in 2022. At Trident Park EfW, Viridor is developing heat offtake for a potential 15.75 MW supply to the Cardiff Heat Network. They are also actively developing Carbon Capture and Storage (CCS) at Runcorn, with plans to expand CCS across the fleet.

• The Kemsley facility exports heat to a nearby paper mill, and enfinium is assessing the scalability of heat offtake for local networks. They are also developing CCS projects, including a potential £800 million investment at Ferrybridge, which could capture 1.2 million tonnes of CO2 annually.
• Encyclis's Earls Gate EfW facility, operational since 2024, delivers 33 MW of heat to neighbouring industries. They are expanding district heating capabilities at other sites and have secured government funding for heat networks at Rookery South. Encyclis is also pioneering CCS technology with a lead emitter project within the DESNZ cluster sequencing programme at Protos.
• Cory plans to supply heat to 21,000 homes in Bexley and Greenwich from its Riverside 1 and Riverside 2 EfW facilities, which will also incorporate CCS technology. The company is also exploring the use of thermal batteries to transport waste heat via river, including a potential project to supply low carbon heat to 3,000 homes in central London.

The report concludes that with the right regulatory framework and policy support, the UK has a unique opportunity to ensure the full potential of the UK’s EfW plants can be realised through further projects of this kind.

Jacob Hayler, Executive Director of ESA said: “This report underscores the critical role that energy from waste can play in the UK’s decarbonisation efforts, making the best use of the heat produced and advancing us towards a circular economy. EfW-powered heat networks represent a significant opportunity to not only cut carbon emissions but also to drive innovation and efficiency across the sector.”

Owen Michaelson, Chair of RRUK and CEO of Encyclis said: “The findings of this report reveal a significant and largely untapped opportunity for the UK to advance towards its net zero targets, with energy from waste playing a pivotal role in developing scalable heat networks. This approach promises not only to reduce carbon emissions but also to deliver substantial cost savings to households. The potential is immense, and with coordinated effort between policymakers and industry, we can fully realise these benefits."

-ENDS-

About the ESA and RRUK

The Environmental Services Association (ESA) is the trade association representing the organisations leading the United Kingdom’s drive towards a more circular economy. It is the collective voice of the UK’s leading recycling and waste treatment service providers, who provide essential waste services to millions of people across the UK every day. Working with our members, drawing upon their depth of expertise and experience, the ESA helps to ensure that policy, regulation and operations represent best practice and deliver the best triple-bottom line outcomes – protecting people and the planet while supporting investment in a vibrant, competitive and sustainable sector. For further details please visit www.esauk.org.

Media contact, ESA Press Office: 020 7591 3214, Email: b-johnson@esauk.org.

Resource Recovery UK (RRUK) is the leading alliance for UK energy from waste (EfW) operators, with our members – Cory, Encyclis, enfinium, and Viridor – representing the majority of the sector. Through advocacy, education, and collaboration, RRUK’s purpose is to promote the role of EfW in the UK’s circular economy and its contribution to a sustainable, decarbonised future for communities across the UK. RRUK strives to highlight EfW as strategically important national infrastructure that maximises resource efficiency, and to play a key role in the national conversation around sustainable waste management and the part EfW plays in achieving a zero-carbon future. RRUK is affiliate of the ESA, which represents the UK’s broader resources and waste management industry.

For media inquiries, please contact: resourcerecoveryuk@headlandconsultancy.com

About NERA

NERA Economic Consulting is a global leader in applying economic and financial principles to complex business, legal, and regulatory challenges. Since 1961, NERA has provided expert analysis and testimony to top law firms, corporations, and governments worldwide. Known for integrity and innovation, NERA’s work shapes policy and strategy across key industries and markets.

About the research

The ESA and RRUK commissioned NERA to explore the potential of heat networks in accelerating the UK’s decarbonisation efforts. The report focuses on how EfW facilities can leverage the steam and heat generated during waste processing to power low-cost, low-carbon heat networks. The report covers:

• The current market for heat networks and the role of EfW.
• The evolving regulatory landscape for heat networks in the UK.
• Cost competitiveness of EfW-powered heat networks compared to alternatives.
• The broader economic, societal, and community benefits of EfW heat offtake.

[*] EfW facilities produce heat from the combustion process, which is used to convert waste into electricity for the national grid. This heat can be used to supply heat networks, otherwise known as district heating.

As the UK works towards meeting its 2050 net zero target and build a circular economy, there is work to be done to ensure we decarbonise the economy quickly, while making the best use of existing resources and capitalising on the multitude of sustainable growth, jobs and investment opportunities. As the leading alliance for UK energy-from-waste (EfW) operators, we believe our sector has a unique role in making this a reality.