Heat networks delivery support
- Department for Business, Energy & Industrial Strategy
- Part of:
- Low carbon technologies and Low carbon energy
- First published:
- 10 March 2015
- Last updated:
- 30 August 2016, see all updates
Support and guidance for local authorities developing heat networks.
The benefit of heat networks
Heat networks can contribute to local authorities’ targets and aspirations for carbon emissions reduction, fuel poverty, cost reduction, regeneration, local jobs and growth. In turn, local authorities have a vital role in developing heat networks; as sponsor, pivotal heat customer, heat source, planning authority and relationship brokers.
Recognising the capacity and capability challenges which local authorities identified as barriers to heat network deployment in the UK, the Heat Network Delivery Unit (HNDU) was established by the Department of Energy and Climate Change to provide grant funding and guidance to local authorities in England and Wales. This honoured a commitment in ‘The future of heating: meeting the challenge’ (published in March 2013) to support local authorities exploring heat network opportunities.
The HNDU is staffed by experts, who have gained experience developing heat networks outside the civil service working on technical or commercial aspects of heat networks for consultancies or local authorities.
The HNDU support local authorities through the following stages:
|Commercialisation||Reasonable legal costs such as in relation to developing customer commercial agreements, heat supply contracts, necessary land purchase, land access arrangements, etc.; further development of tariff structure for customer contracts; further development of financial model and business case and associated commercial advice costs where necessary|
|Heat mapping||Area-wide exploration, identification and prioritisation of heat network project opportunities|
|Energy master planning||Area-wide exploration, identification and prioritisation of heat network project opportunities|
|Feasibility study||Project specific - An increasingly detailed investigation of the technical feasibility, design, financial modelling, business modelling, customer contractual arrangements and delivery approach, up to business case|
|Detailed project development||Project specific - An increasingly detailed investigation of the technical feasibility, design, financial modelling, business modelling, customer contractual arrangements and delivery approach, up to business case|
Local authorities apply for HNDU support through bidding rounds, of which there have been six to date. Successful applicants are published on the Heat Network Delivery Funding page.
All bids are reviewed by a panel of engineering, financial and commercial experts with significant experience in heat networks development. Grant funding of no more than 67% of eligible costs is provided to successful local authorities under section 31 of the Local Government Act. Eligible costs are defined as externally commissioned consultancy costs for heat network development work.
If successful, each local authority is supported by the team of specialists within the HNDU as well as an online collaboration site and face to face meetings.
For further information on the Heat Networks Delivery Unit, please email email@example.com
Success to date
Since its inception in September 2013 the Unit has awarded support to 200 unique projects across 131 local authorities including £14 million of grant funding.
As set out in Delivering UK Energy Investment: Networks released in January 2015, DECC analysis suggests the portfolio of HNDU projects alone could represent between £400 million to £800 million of capital investment opportunity over the next 10 years (on an assumption of 25% to 50% of current projects coming to fruition).
- Round 1 press notice January 2014: £2m awarded for local authority low carbon heat networks
- Round 2 press notice March 2014: Funding boost for low carbon heating
- Round 3 press notice Oct 2014: £9.4 million to boost low carbon heating
- Round 4 press notice March 2015: £3 million funding to boost low carbon heating
- Round 5 closed in November 2015 and allocated £1.5 million of funding
- Round 6 closed in May 2016 and allocated £2.8 million of funding
Heat network innovation competition
Nine innovative heat network projects are being tested across the UK as part of DECC’s Heat Network Small Business Research Initiative competition.
Related publications and tools
Published: 10 March 2015
Updated: 30 August 2016
- Updated with latest allocation rounds
- Updated to include information on the results of the 'Heat network innovation competition'.
- First published.