District heating schemes in London are being cancelled because the cost of installing pre-insulated pipes has rocketed

CityWest Homes has abandoned a plan to connect eight properties to the Pimlico District Heating Undertaking because the estimate from utilities contractors was £1.7m, 70% higher than expected.

John Green, building services manager for CityWest, said the price hikes were caused by the cost of the pipes and a lack of competition among installers. “There was competition for digging the trench, but not for the pipeline. The cost is restricting the growth of district heating.”

David Wickersham, a technical adviser at CityWest, said: “Our schemes have failed because we went outside the money we set aside and now we’re scrambling to get back on course.”

The scheme was to have linked to the government’s Whitehall district heating system, which heats 18 government offices.

I can understand the frustration about how competitive that market is

Dominic Bowers, Parsons Brinckerhoff

Meanwhile, Southwark council was looking to pay £2.5m to refit several kilometres of pipes to residential properties. The price they were quoted was £4m.

Bob Fiddik, energy strategy manager at the council, said prices had suddenly risen. Dominic Bowers, director of energy solutions at Parsons Brinckerhoff, said: “Bidders looking to the market are likely to get one or two bids. I can understand the frustration about how competitive the market is.”

He said competition would increase if government plans to increase the amount of properties on district heating networks were followed through.

London’s Climate Change Action Plan has a target of meeting 25% of the capital’s energy needs from decentralised sources by 2025.