Heat Networks Relief (Non-Domestic Rates)

Heat networks supply thermal energy from a central source to consumers, through a network of pipes. They vary considerably in their scale and use - from a common heating system in a building with multiple occupiers, to large standalone networks providing heat or power to many customers and buildings across a large area. 

The Welsh Government is providing 100% relief to non-domestic premises if, for the 12 months beginning with the day concerned, it appears to the local authority that the thermal energy supplied by the heat network will be generated from a low-carbon source.

The precise terms and conditions of the relief have been set by Welsh Government and more detailed guidance can be found on: Non-Domestic Rates – Heat Networks Relief (Business Wales) (opens new window)

Eligibility conditions

A 'hereditament' is a single unit of rateable property. A rates bill is issued for each hereditament.

A hereditament is eligible for the relief if it is wholly or mainly used as a heat network which supplies thermal energy generated from a low-carbon source.

Welsh Government requires that we (the council) must be satisfied that these eligibility conditions have been met before we apply the relief. This means that an application for the relief is required from the ratepayer, which will include a declaration to confirm that they meet the low-carbon condition. Supporting evidence may also be needed.

Welsh Government anticipate that operators of eligible heat networks will be able to understand and reliably evidence that they meet this definition. 

Welsh Government also requires that ratepayers renew their declaration annually in order for the relief to continue to be allowed.

Wholly or mainly used as a heat network

For the purposes of the relief, a heat network is a facility which supplies thermal energy from a central source to consumers, through a network of pipes, for the purposes of space heating, space cooling or domestic hot water. Networks wholly or mainly providing heat for a different purpose (such as an industrial process) are not eligible.

The hereditament as a whole must meet this definition. Heat networks relief is not available for part of a hereditament. Many heat networks form part of the services to a property used for a wider purpose and do not have a standalone rating assessment. Such properties are not eligible for the relief.

Heat networks which are run as separate businesses and constitute a non-domestic hereditament in their own right are eligible for the relief.

Generated from a low-carbon source

A low carbon source is a source of which at least:

• 50% is renewable heat
• 50% is waste heat
• 75% is cogenerated heat
• 75% is a combination of renewable, waste or cogenerated heat

Renewable heat - is thermal energy mainly or exclusively from:

• biomass
• biofuels
• biogas
• fuel cells
• photovoltaics 
• water (including waves and tides)
• wind
• solar
• geothermal
• heat from air, wind or the ground

Waste heat - is thermal energy unavoidably generated as a by-product of another process which would have no use other than for the purposes of a heat network. This may include heat generated through the incineration of waste. Hereditaments which are primarily used for the incineration of waste would not, however, meet the condition of being wholly or mainly used as a heat network.

Cogenerated heat - is thermal energy which is produced at the same time and in the same process as electrical or mechanical energy. It could be produced from combined heat and power sources, but the hereditament would also have to be wholly or mainly used as a heat network. For example, hereditaments used primarily for the purpose of generating and selling electricity, with cogeneration of thermal energy as a by-product, would not meet that condition.

This definition of a low-carbon source is based on parameters which the Welsh Government understands are widely recognised within the heat networks sector and is used for other purposes (for example the Heat Networks Investment Project). It is, therefore, expected that operators of eligible heat networks will be able to understand and reliably evidence that they meet this definition.

For what period will the relief apply?

The relief is in place from 1 April 2024 and will be available up to and including 31 March 2035.

This means that where a hereditament meets the eligibility conditions from a date on or after 1 April 2024, and continues to do so, the ratepayer will be entitled to 100% relief from the amount of business rates (non-domestic rates) due from that date until 31 March 2035.  

Heat networks relief will be applied before any other full or partial relief a ratepayer may be eligible for, with the exception of improvement relief.

Application for heat networks relief

You will need:

1. Your non-domestic rates (business rates) account reference
2. Evidence that the heat produced in the hereditament satisfies the definition of a 'low-carbon source' in a form that can be uploaded

Apply for Heat Networks Relief Apply for Heat Networks Relief