07 Aug 2024

techUK responds to government’s proposals to incentivise heat export through the UK ETS

techUK has submitted its response to the Department for Energy Security and Net Zero (DESNZ) call for evidence on the inclusion of heat export and reuse in the UK Emissions Trading Scheme (UK ETS).

In the response, techUK welcomed the government's commitment to encourage heat export. While expressing the industry’s support, we highlighted that the low activity in this space within the data centre sector in the UK is largely due to the lack of infrastructure and other challenges, rather than a lack of profitability perception. Furthermore, we emphasised that the relevance of the UK ETS to most data centres is minimal as most operators opt out of the scheme as ultra-low emitters.

Despite the above considerations, we responded to the call for evidence on behalf of data centres that participate in the UK ETS. Some of the measures that we advocated for include:

Free allowances for data centres engaged in heat export activities to reduce the financial burden often associated with such projects, making them more economically viable.
Reduction of allowances for the use of heat produced specifically for export to provide a stronger incentive for heat network operators to decarbonise.
Calculating incentives based on the emissions reductions achieved by exporting the heat, as well as the cost savings from avoiding CAPEX in alternative heat generation plants. For data centres specifically, the mechanism should be adjusted to consider the emissions from back-up generators and the avoided emissions resulting from reduced cooling needs.
In the case of heat produced specifically for export, linking UK ETS incentives to the volume of emissions generated during heat production to encourage heat network operators to seek lower carbon heat sources.

Responses to the consultation will be used to inform the wider implementation of heat network zoning regulations. techUK will continue engaging with DESNZ on this topic and members will be updated about any developments.

techUK has recently published a report which examines the potential benefits and challenges of data centre heat export in the UK.