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1 Investing in the UK’s heat infrastructure: Heat Networks Investing in the UK’s heat infrastructure: Heat Networks
1 InvestingintheUK’sheatinfrastructure:HeatNetworks
Investing in the UK’s heat infrastructure:
Heat Networks
2 InvestingintheUK’sheatinfrastructure:HeatNetworks
Contents
Heat networks in the UK 3
The opportunity 6
Identifying opportunities – Heat Infrastructure Investment Pipeline 6
Scale of the opportunity 7
Investment timeframes 12
Heat infrastructure investment opportunities 14
Heat infrastructure supply chain opportunities 16
Heat network components 16
Investing in the UK 21
Key features of the UK 21
Common heat network commercial structures and funding sources 23
Characteristics of commercially viable heat networks 25
Improving the climate for investment 28
Impacts of increased heat infrastructure deployment 30
Support for investors and supply chain 32
Further information 33
Frontcoverimagecredit:GatesheadEnergyCentreWSPParsonsBrinckerhoff
Forfurtherinformationpleasecontact:[email protected]
3 InvestingintheUK’sheatinfrastructure:HeatNetworks
Heat networks in the UK
BunhillHeatandPower,courtesyofIslingtonCouncil
Infrastructure is a vital part of many investment portfolios with business seeking new opportunities that deliver the stable, long-term returns characteristic of infrastructure projects. UK heat infrastructure is a significant and growing investment opportunity. Delivering the current pipeline of heat infrastructure projects will require up to £2 billion of capital investment over the next 10 years. This portfolio of heat networks will require investment from a range of funding sources not least heat network operators and third party financers, taking the form of equity, corporate loans or project finance. For the supply chain this pipeline also represents £3.2 to 6.4 billion of operations and maintenance contracts across the 40 year lifetime of these low-carbon energy infrastructure assets.
ThisguideseekstoraiseawarenessofthescaleofheatinfrastructuredevelopmentthatisunderwayintheUKcurrentlyandwillcometomarketinthenext10years.Throughthisdocument,Governmenthopestostartaconversationbetweenkeystakeholders(investors,supplychainandprojectsponsors)abouthowthemarketmightevolvetodeliverthestepchangeindeploymentlevelssuggestedbythepipelineofheatnetworkprojectsacrossEngland,ScotlandandWales.
Thiscombinedpipelineof280projectswillhaveacapitalrequirementof£2billionandwillbecommencingprocurementbetweennowand2025.Thisisonlythestartofthepipeline,however,withadditionalopportunitiesidentifiedbylocalauthorities(municipalities)atenergymasterplanningstage,thatmayproceedasthemarketevolves,andanumberofprojectsbeingdevelopedbywiderpublicsectorbodiesandcommunitygroupsaswellastheprivatesector.
GrantfundingandguidancefromcentralGovernmentanddevolvedadministrationsandsupportfromlocalgovernment,asprojectsponsorsbringingtogetherkeypartnerstoexploretheseopportunities,hasdevelopedasignificantpipelineofhighqualityinvestmentopportunitieswhosetrajectoryislikelytocontinueapace.SupportfromtheDepartmentofEnergy&ClimateChange(DECC)haslaidthegroundworkforinvestmentandsoughttoensurethatasuitablywiderangeofheatsources,commercialstructuresandfundingsourcesareexploredthroughdevelopment,tobringforwardasmanytechnicallyfeasibleandeconomicallyviableprojectsaspossible.Theseprojectsareoptimisedfortheirlocality,exploitingarangeofheatsourcesincludinglocalrecoveredorrenewableheatwheresuitable.Whentheseprojectscometomarketitislikelythattheywillmeetthetechnicalstandardsandcustomerprotectionsrecentlydevelopedbyindustry,furtherimprovingtheirattractivenessasaninvestmentopportunity.
4 InvestingintheUK’sheatinfrastructure:HeatNetworks
ThisguideintroducestheHeatInfrastructureInvestmentPipeline1developedforinvestorsandsupplychaincompanieswithapotentialinterestinthesignificantopportunitiespresentedbythefastdevelopingUKheatnetworkmarket.Keyprojectmetrics,suchascapexandpre-financinginternalratesofreturn(IRR),willberegularlypublishedforprojectopportunitiesinEnglandandWalesalongsidedetailsoftenderwebsites.ThiscomplementstheScottishheatnetworkprojectdirectory2.Thesetoolswillprovideanoverviewofthevolumeandtimingofprojectscomingtomarketandalsoprovideanoutlineofthenatureoftheseprojects,toaidinvestorandsupplychainbusinessdecisions.
AsthisHeatInfrastructureInvestmentPipelinegrowsandheatnetworkdeploymentratesincrease,thereisanopportunityforcurrentmarketparticipantstoexpandoperations,andfornewmarketplayerstoentertheUKheatnetworkmarket;includingthroughpartnershipsorjointventures.ThisgrowthmaybringaboutanevolutionoftheUK’sheatnetworkmarketoverthenext10years:–witheconomiesofscalerealised,cost-reducinginnovationdeployedandnewcommercialstructures,possiblycentredaroundaggregationorunbundlingofgenerationanddistribution,emerging.
This investment guide seeks to stimulate a conversation about how to create the heat networks market of the future.
1HeatInfrastructureInvestmentPipelinehttps://www.gov.uk/government/publications/energy-networks-in-the-uk-investment-opportunities
2Scottishheatnetworkopportunitieshttp://www.districtheatingscotland.com/hnp-projects-mapandhttp://www.districtheatingscotland.com/content/investment-heat-networks-scotland
5 InvestingintheUK’sheatinfrastructure:HeatNetworks
Customer supplyHeat Sources/Energy Centre Distribution
HeatStore
TOWN HALL
HeatStore
Energyfrom Waste
Water source
DataCentre
DeepGeothermal
Industry
Energy Centre
CHP Boiler
Heat Network diagram
Heat networksareadistributionsystemofinsulatedpipesthattakeheatfromacentralsourceanddeliverittoavarietyofdifferentcustomersthatcanincludepublicsectorbuildings,shopsandoffices,sportfacilities,universitiesandhomes.Theterm‘heatnetwork’hasbeenusedinthisguide,butmanynetworksalsogenerateelectricityandmayalsoprovidecooling.
Heatnetworkpipeinfrastructureistechnology-andfuel-agnosticandcanaccommodateawiderangeofheatsources.Networkscanutilisesingleormultiplesourcesofheat,controlledthrough‘energycentre(s)’,whichcanincludeconventionalboilersorCombinedHeatandPowerplants(CHPorcogeneration),butcananddoalsoincludelargesourcesoflow-carbonheatthatcannototherwisebeusedcosteffectivelyinindividualbuildings,suchasenergyfromwaste,deepgeothermalandindustrialwasteheatandawiderangeofwatersourcesandurbanrecoveredheat.
6 InvestingintheUK’sheatinfrastructure:HeatNetworks
The Opportunity
Identifying opportunities – Heat Infrastructure Investment Pipeline
DECChasbeenengagingwiththeinvestorandsupplychaincommunitytobetterunderstandwhatinformationisneededtomakedecisionsongrowingorstartingyouroperationsintheUK.Readilyavailable,credibleanduptodateinformationonthevolume,typeandtimingofprojectswereidentifiedascritical.
DECCisinauniquepositiontofacilitatecommunicationoftheseprojectmetricstoinvestorsasithassupporteddevelopmentof180heatnetworkprojectsacross115LocalAuthoritiesinEnglandandWales.Adatacollectionexercisehasbeeninitiated,gatheringarangeoftechnicalandfinancialoutputsfromconsultantreportscommissionedwithDECCfunding.AsubsetofthesekeymetricswillmakeupthepublicallyavailableHeatInfrastructureInvestmentPipeline,tobepublishedatregularintervals.
ForeachprojectthatwasawardeddevelopmentsupportfromDECCkeymetricswillbemadeavailable,subjecttoLocalAuthoritypermission,intheHeatInfrastructureInvestmentPipeline.Aseachheatnetworkprojectcompletesanewdevelopmentstage(masterplanning,feasibilityandthendetailedprojectdevelopment;outlinedonpage13)themetricsintheHeatInfrastructureInvestmentPipelinewillbeupdatedreadyforthenextpublicationdate.ThisdatawillhavebeenqualityassuredbyconsultantsandcheckedbyboththeLocalAuthorityandbyDECC.
TheHeatInfrastructureInvestmentPipelinewillprovidebestavailableinformationonindividualprojectsandwillbeavailablefordownloadedfromtheUKTIwebsite3.
3UKTIhttps://www.gov.uk/government/publications/energy-networks-in-the-uk-investment-opportunities
1. Projectname
2. Heatnetworksponsorcontactdetails
3. LocalAuthority
4. Currentstageofprojectdevelopment
5. Typeofproject(heat,cooling,electricity)
6. Primarydriver(costreduction,localeconomicregeneration,carbonreduction)
7. Anticipatedyearoffinancialclose
8. Anticipatedyearfirstcustomerssupplied
9. Heatgenerationtechnologies
10. Combinedsystemgenerationcapacity
11. Thermalstoresize
12. Totallengthofheatnetwork
13. Anticipatedheatdeliveredannually
14. Capexestimate
15. Unleveredequity/prefinancingIRR
16. ProjectlifeforunleveredequityIRR
17. Wouldthirdpartyinvestment(debtorequityfromentitynotinvolvedinheatnetworkoperation)beconsidered?
18. Tenderwebsitefordevelopmentstagecontracts
19. Tenderwebsitefordelivery
CourtesyofIslingtonCouncil
7 InvestingintheUK’sheatinfrastructure:HeatNetworks
Scale of the opportunity
With over 280 heat network projects at varying stages of development across the UK, there are significant investment and supply chain opportunities anticipated over the next 10 years; up to £2 billion of capital investment and lifetime operation and maintenance contracts of £3.2 to 6.4 billion.
ThepotentialcapitalinvestmentfiguressetoutbelowaremodelledonearlystagedescriptionsofheatnetworkambitionsprovidedbyLocalAuthoritieswhenapplyingforsupportfromDECC’sHeatNetworksDeliveryUnit.GenericassumptionsonnetworksizeandheatsourcewereusedwhereinformationwasnotyetavailableandinvestmentfiguresestimatedusingcostdatapublishedbyDECC4.ThemethodologyusedtomodeltheScottishheatnetworkopportunityissetoutinthe‘InvestmentinHeatNetworksinScotland’report5.
Whilstisitunlikelythattheexactsetofprojectscurrentlylistedinthecombinedpipelinewillachievetechnicallyfeasibleandeconomicallyviablesolutions
andnotstallduetoexternalobstacles,thereareotherprojectsthatcouldtaketheirplaceorexpandthepipeline.Masterplanningstudiescommonlyidentifyaminimumofthreepossibleheatnetworks,butsometimesthiscanbeasmanyasten.Inaddition,thereareotherpublicsectorbodiessuchashospitalsanduniversitiesdevelopingheatnetworksandnewbuildprojectsbeingdevelopedintheprivatesector.
Annualoperationandmaintenancecosts(opex)varyasapercentageofinitialcapitalinvestment(capex)dependingontheheatsourceandheatnetworksize.The‘AssessmentoftheCosts,Performance,andCharacteristicsofUKHeatNetworks’6whichgathereddatafromsevenexistingheatnetworksindicatedthatannualopex(excludingfuel)was8-10%ofcapex.AnecdotaltestingofthisproportionbyDECCsuggeststhat4-8%capexmaybeamoreaccuraterepresentationofawidervarietyofheatnetworks.Basedon£2billioncapexinvestment,thisrangecouldrepresent£80-160millionofoperationandmaintenancecontractsannually.Acrossa40-yearheatnetworklifetime,thissupplychainopportunitycouldbevaluedat£3.2to6.4billion.
Count of projects in
development
Potential capital investment
25% deployment rate
50% deployment rate
100% deployment rate
England and Wales projects supported by Heat Networks Delivery Unit1 180 £400 million £800 million £1.6 billion
Projects supported by Heat Network Partnership for Scotland2 103 £50 to £120 million £100 to £240 million £200 to £440 million
Total 283 £0.5 billion £2 billion
1Source:CalculationsunderpinningtheDeliveringUKEnergyInvestment:Networks2014report2Source:InvestmentinHeatNetworksinScotland
4Assessmentofthecosts,performanceandcharacteristicsofUKheatnetworkshttps://www.gov.uk/government/publications/assessment-of-the-costs-performance-and-characteristics-of-uk-heat-networks
5InvestmentinheatnetworksinScotlandhttp://www.districtheatingscotland.com/content/investment-heat-networks-scotland6Assessmentofthecosts,performanceandcharacteristicsofUKheatnetworkshttps://www.gov.uk/government/publications/assessment-
of-the-costs-performance-and-characteristics-of-uk-heat-networks
8 InvestingintheUK’sheatinfrastructure:HeatNetworks
EnglandandWales
TheworkofDECCoverthelasttwoyearshasestablishedbeyonddoubtthemassiveappetiteforLocalAuthorityinvolvementinheatnetworkprojects;£14.5millionoffundingintotheconsultancymarketforprojectdevelopment,115LocalAuthoritystakeholders(outofatotalof381authoritiesinEnglandandWales)supportingapipelineofnationallysignificantinfrastructure,and180projectsreceivingsupporttomakesuretheyaretechnicallyandeconomicallyoptimisedinadvanceofaninvestmentdecision.DECChasworkedwitheightofthenineCoreCities7,severalLocalEnterprisePartnerships8,dozensofthelargetownsandcitiesaswellassmallerruralandcommunity-sizedprojectsacrossEnglandandWales.
ThesuccessofDECCsofarhasbeentounlockthelatentambitionsofLocalAuthoritiesacrossEnglandandWales.LocalAuthoritiesarekeentobetterunderstandandquantifytheroleofheatnetworks,inthelocalareaandmanyoftheseLocalAuthoritieshaveambitionstotakearoleinthedeliveryofthesenetworksinordertorealisethefullrangeofbenefitstheycandeliver.
Thisportfoliohasadiverserangeofpotentialschemesrangingfrom£3to£4millionuptoprojectsinexcessof£40million.TheIRRfortheseprojectsvarybetween0and15%,butwiththemajoritysittingbetween5and9%.
Theseprojectsareworkingtosecureinitialphaseone‘anchor-load’customers(i.e.large,longterm,securecustomers,oftenpublicsector)attheearliestopportunity.Insomeprojects,theLocalAuthoritybringsheatdemandfromoffices,leisurecentres,schoolsorsocialhousing,butinotherprojectskey
heatnetworkcustomers,suchasotherpublicsectorbodies,areengagedinearlystagestofacilitateagreementofheadsoftermsforinvestmentcertainty.Whilstmanyoftheseschemesmaybebasedonpublicsectorclustersinitially,manyplantotakeadvantageofanypotentialprivatesectordemandopportunities,asthenetworkmatures.
Thetechnologyandfuelagnosticnatureofheatnetworkpipeinfrastructurehasresultedinanumber
LocalAuthoritiesawardedDECCdevelopmentsupportinHeatNetworksDeliveryUnitfundingrounds1-4.9
7TheCoreCitiesare:Birmingham,Bristol,Cardiff,Glasgow,Leeds,Liverpool,Manchester,Newcastle,Nottingham,Sheffield.Theiraimistopromotetheroleofthesecitiesindrivingeconomicgrowthandthecaseforcitydevolution.http://corecities.com/
8The39LocalEnterprisePartnershipsinEnglandbringtheprivateandpublicsectorstogethertodrivelocaleconomicgrowth.http://www.lepnetwork.net/
9DECCHeatNetworksDeliveryUnitfundingawardshttps://www.gov.uk/government/publications/heat-networks-funding-stream-application-and-guidance-pack
9 InvestingintheUK’sheatinfrastructure:HeatNetworks
ofinterestingheatsourcesbeingexploredacrosstheDECCportfolio;fromgas-CombinedHeatandPower(cogeneration),biomassincludingenergy-from-wasteandheatpumpsutilisingdeepgeothermal,minewater,industrialwasteheatandurbansourcesofrecoveredheat.Anticipatedgenerationcapacityvariesbetweenprojectswithmostsupplysolutionsrangingbetween1-5MWth(excludingenergy-from-waste~10MWth)withmanyprojectslookingatoptionsformultiplesupplysources.
Aswellasexploringasmanypotentialheatsourcesaspossibleandengaginganchorcustomersearly,LocalAuthoritiesarealsoexploringavarietyofcommercialstructuresandfundingsources.CentraltoLocalAuthoritydecisionsaroundthebalanceofpublicandprivatesectorinvolvementaretheLocalAuthoritystrategicaimsforthescheme,itsriskappetite,desiredlevelofcontroloverthescheme,theavailabilityofinternalfinanceandattractivenessofexternalfinance.
Infrastructure is a vital part of many investment portfolios.
CourtesyofVeolia
10 InvestingintheUK’sheatinfrastructure:HeatNetworks
Case study: Gateshead Town Centre District Energy Scheme
GatesheadTownCentreDistrictEnergySchemeisthefirstofitskindandscaleintheNorthEast.Havingbrokengroundinsummer2015,thenewDistrictEnergyCentreintheBalticBusinessQuarterwillhousetwo2MWgascombinedheatandpowerenginesandwillbeoperationalbyApril2016,withpublicandprivatesectorcustomersbeingfullyconnectedbyJune2016through3kmofheatandprivatewirenetwork.
The£18.5millionschemehasbeendesignedtoserve17buildings,includingGatesheadCivicCentre,severalpublicsectorpartnersandanumberoflargecommercialbuildings,hotelsandoffices.Theschemeisexpectedtohelpattractnewbusinessestothearea,thankstolowerenergypricesanditsgreencredentials.Localhomes,businessesandpublicorganisationswillalsobenefitfromlowerenergybillsandemissions.
TheprojecthasbeenfullyfinancedbyGatesheadCouncilwiththedesign,build,operationandmaintenancecontractsawardedtotheprivatesector.Theprojectwilldeliveran8%pre-financingIRRovera40-yearterm(thelifetimeofthepipeinfrastructure)withapositivecashflowfromyearone.Theschemeincomeisderivedfrombothpublicandprivatecontracts,with70%oftherevenuescomingfrompublicsectorconnections.Incomefromelectricitysaleshasalsobeenmaximisedandwillprovide75%oftheschemerevenue.
TheCouncilhasaspirationstoseemanyotherareasoftheboroughconnectedtosimilarschemesinthefuture.TheDistrictEnergyCentreandnetworkwillbeabletosupplytheenergyneedsofallthefuturedevelopmentplannedforthetowncentreandfeasibilityforfutureexpansionisunderway.
11 InvestingintheUK’sheatinfrastructure:HeatNetworks
Scotland
TheHeatNetworkPartnershipforScotland’sreportonheatnetworkinvestment10identifies103heatnetworkprojectscurrentlyindevelopment.Thisportfolioincludesarangeofprojectsincludinglarge-scaleintegratedheatnetworksinurbanareas,retrofittingsocialhousingdevelopments,particularlymulti-storeybuildings,publicbuildings,businessandindustry.Anumberofheatnetworkshavebeenbuiltorexpandedinrecentyears,forexampleinAberdeenandWick,withnewprojectsbasedaroundmajorurbanregeneration,oneofthelargestbeingtheCommonwealthGamesAthletes’VillageinGlasgow,whichbuiltincapacitytoallowittoexpandtonearbyhousingandcommercialdevelopments.Since2011theScottishDistrictHeatingLoanFund11hasprovidedover£8millionincapitaltoarangeofprojects,thelargestloantodatebeing£1milliontoAberdeenHeat&Power.TheFund’sportfolioincludesalargenumberofsmallscalerenewableheatnetworks,withloanstotalling£5millionacrossover30projects,demonstratingapotentiallysignificantinvestmentopportunityforawidelyreplicableheatnetworkmodel.
HeatNetworkPartnershipforScotlandProjectsmap.12
Masterplanning studies commonly identify a minimum of three possible heat networks, but sometimes this can be as many as ten.
10InvestmentinheatnetworksinScotlandhttp://www.districtheatingscotland.com/content/investment-heat-networks-scotland11ScottishGovernment’sdistrictheatingloanfundhttp://www.energysavingtrust.org.uk/district-heating-loan12HeatNetworkPartnershipforScotlandProjectsmaphttp://www.districtheatingscotland.com/hnp-projects-map
12 InvestingintheUK’sheatinfrastructure:HeatNetworks
BunhillHeatandPower,courtesyofIslingtonCouncil
Investment timeframes
Anassessmentofthedevelopmentstageaheatnetworkhasreachedanditslikelycomplexitycanbeusedtoprovideanestimateofwhentheprojectwillreachcommercialisationandwillthereforebeseekingfinanceandprocuringdelivery.
Whereastrategicarea-wideapproachistaken,thefirsttwodevelopmentstagesareundertakenbytheLocalAuthorityheatnetworksponsor.Heat mappingandenergy masterplanninglookarea-wideatcurrentandfutureheatdemandandheatsources,identifyarangeofheatnetworkopportunitiesandprioritisethesethroughatechno-economicanalysisthatcapturestheLocalAuthority’skeydrivers(predominantlyenergybillreductionand/orlocaleconomicregeneration).
Thenexttwostagesarefeasibilityanddetailed project development.Thesestagestakethemostpromisingsingleheatnetworkopportunityand,throughaseriesofiterations,examinethetechnical,financialandcontractualissuesinincreasinggranularity;asthesethreeaspectsareinter-dependant.
Shouldthelocalauthoritywishtobethemajorityshareholderintheheatnetworkabusinesscasewillbesubmittedforinternalapprovalrecommendingthecommercialstructure,fundingsourcesandprocurementstrategy.Shouldthelocalauthoritydecidethattheoptimalwaytodelivertheheatnetworkisthroughprivatesectorownershipandfunding,developmentstagesmaystopatfeasibilityandaCabinetorCommitteepaperorbusinesscasewillseekapprovalforthisrouteandtheinternalresourcesrequiredtoensuredelivery.
13 InvestingintheUK’sheatinfrastructure:HeatNetworks
Thecommercialisationphaseofprojectswillinvolvesecuringfinance,procuringdeliveryandnegotiatingfinalcontractswithanchor-loadcustomersandsuppliers.
Basedonthetimingsabove,itisexpectedthatasignificantnumberofthe280projectsinthecombinedpipelinewillreachcommercialisationinthenext10years.Aftertheinitialprospectidentifiedinmasterplanninghasbeenpursued,otheropportunitiescanoftenbedeveloped.Thishastwoimplicationsforinvestment.Inreality,thepipelineislargerthan280projectsandopportunitiescontainedwithinitmaybecomingtomarketoverthenext10yearsandbeyond.
ThefollowingdatawhichwillbeprovidedintheHeatInfrastructureInvestmentPipelinecanbeutilisedbyinvestorsandsupplychainwhenconsideringthetimingsofthepipelineofheatnetworkprojects:Currentstageofprojectdevelopment,(Anticipated)Yearoffinancialcloseand(Anticipated)Yearfirstcustomerssupplied.
Commercialisation Delivery
Single projectMultiple options
Heat Networks Delivery Unit support
Development
Detailed Project Development
Finance ProcureNegotiate contracts
Build, operate, maintain
Bus
ines
s ca
se
Fina
ncia
l clo
se
Dec
isio
n to
pro
ceed
Bre
ak g
roun
d
Sup
ply
firs
t cu
stom
er
“hea
t o
n”
2 months 2 months 6 months 6 months
1 m
onth
gap
Desig
n6
mon
ths
Build
14 m
onth
s
Com
mis
sion
3 m
onth
s
Exa
mpl
e
12 months
MasterplanningMapping Feasibility
Possible refinancing, acquisitions aggregation, unbundling
Exp
ansi
on, i
nter
conn
ecti
ng
seco
ndar
y m
arke
t
Operation+ 40 years
Heat Networks: Development to Delivery
14 InvestingintheUK’sheatinfrastructure:HeatNetworks
Heat infrastructure investment opportunities
Should an equivalent of the complete heat network project pipeline reach commercialisation, up to £2 billion of capital investment will be required. This presents opportunities for heat network operators, third party providers of corporate debt, project finance or equity, as illustrated below.
LocalAuthoritysponsoredheatnetworksfinancedontheLocalAuthority’sbalancesheetmayuseexistingbudgetcapacity,acorporateloanmaybetakenfromthePublicWorksLoanBoardorfromaprivatesectorinvestororaparticularcharacteristicoftheprojectmaybeeligibleforagrant,suchasfromtheEuropeanUnion.WhilstsomeLocalAuthoritiesdohaveavailablefinance,thereis,
however,increasingcompetitionforconstrainedpublicsectorbudgetswithotherspendingprioritiestakingprecedentoverheatnetworks.ForthoseLocalAuthoritiesthatdohaveanappetitetoinvestbutlacksufficientfunds,thereisanopportunityfortheprivatethirdpartyinvestorstoofferloanfundingagainstthecredentialsoftheLocalAuthority.
ForLocalAuthoritieswithnoappetitetoinvest,thereareopportunitiesfortheprivatesectorheatnetworkoperators.Inthesecircumstancestheheatnetworkmustalignwiththeprivatesector’sinvestmentstrategy,mustrepresentabetteropportunitythanotherpotentialinvestmentsandmeettheinvestmenthurdleratesandriskstrategyoftheheatnetworkoperator.Aswellasutilisingexistingbalancesheet,privatesectorheatnetworkoperatorsmayseekcorporateloanstofinancenetworkinvestment.
Investment opportunities
Finance sources
Local Authority (LA) existing budgetGrantsPrudential borrowing:- Public sector loan (PWLB)- Private loan
Corporate budgetCorporate loan
Third party investment options:Equity stakeProject finance (loan debt)
Own
LA LAOn balance sheet
Design / build /operate contract
LA & private
Heat network operator or third partyJoint venture
Special Purpose vehicle
privateOn balance sheet
of property developer or heat network
operator
Operate
LA
(Unusual)
private private private
(Often new build)
15 InvestingintheUK’sheatinfrastructure:HeatNetworks
Todate,thereislittleevidencethatprojectfinance,securingdebtbasedontheassetsandprojectedcashflowsoftheheatnetwork,hasbeenutilisedintheUK.Shouldappropriatelypricedoffersbecomeavailable,projectfinancemayinfuturebeutilisedbyheatnetworks.
Currently,equityinvestmentsaremadebytheheatnetworkowneroperator(i.e.theLocalAuthorityorprivatesectorheatnetworkoperator).Infuture,thirdpartyorganisationsnotinvolvedintheoperationoftheheatnetworkmaybeinterestedintakinganequitystake.
Oncetheheatnetworkhasbeenconstructedandhasoperatedforaninitialperiodoftime,theriskprofilewillreduceandcheaperfinancemaybeaccessedthroughrefinancing,orheatnetworksmaybeacquiredbyanotheroperatororinvestor.Asmallnumberofacquisitionshaveoccurredinrecentyears,butthissecondarymarketmaybecomemoreestablished.Considerationmaybegiventoheatnetworkaggregationortheunbundlingofheatsources(generation)anddistributionacknowledgingtheirdifferinglifetimesandrisk/returnprofiles.
Criticaltoanyinvestmentoffersforheatnetworksisrecognitionoftherevenueprofile.Heatnetworkscantakeuptofiveyearstobuild,dependingonlocation,scaleandcomplexity,andmayhavefurtherphasedbuildoutbeforefullcapacity,andthereforefull/incomepotential,isreached.Financethatalignsrepaymentswithprojectedincomeintheinitialyearscouldmakeasignificantdifferencetothesector.
ThefollowingdatathatwillbesetoutintheHeatInfrastructureInvestmentPipelinewillprovideinvestorswithanideaofthevolumeandtypesofprojectcomingforwards:Capexestimate,Unleveredequity/pre-financingIRR,ProjectlifeforunleveredequityIRRand‘Wouldthirdpartyinvestment(debtorequityfromentitynotinvolvedinheatnetworkoperation)beconsidered?’.
Delivering pipeline of 280 heat infrastructure projects currently in development will require £2 billion capital investment over next 10 yrs.
CourtesyofIslingtonCouncil
CourtesyofVeolia
16 InvestingintheUK’sheatinfrastructure:HeatNetworks
Heat infrastructure supply chain opportunities
The projects in development in England, Wales and Scotland have a combined capex of £2 billion which will be let as build contracts to the private sector supply chain alongside lifetime operation and maintenance contracts of £3.2 to 6.4 billion. This covers a wide variety of products and services.
Heat network components
Likeallenergysystems,heatnetworksarecomprisedofgeneration,distributionandcustomersupply.Thegenerationassetitselfmaybeunderthesameownershipasthedistributioninfrastructureandcustomerconnectionsormaybeownedbyathirdpartywithacontracttosupplyheat,suchasanenergy-from-wasteplant.
Heatsourcescanbesingleormultiple,withthesystemtakingamodularapproachutilisingpeakingplantfortimesofhighdemandandbackupplantformaintenance.Mostheatsourcelifetimesaresignificantlyshorterthanthepipeinfrastructure,allowingtheheatnetworktofurtherdecarboniseovertimethroughtheplannedassetreplacementprogram.
Buildings-sideheatingandhotwatersystemscanbepartoftheheatnetworkassets,ormayfallunderdifferentownershipandmanagement,butinmostcasesheatnetworkshaveheatinterfaceunitsatthebuildingconnectionand/orcustomerconnections.InlinewithEuropeanlegislation,allnewheatnetworksmustinstallheatmetersfornewbuildpropertiesandforexistingpropertiesundergoingmajorrenovations,butsubjecttoacostbenefitanalysisforexistingpropertiesnotundergoingamajorrenovation,sothatcustomerscanbechargedforconsumption(asopposedtoflatrateallocations)13.
Heatnetworksvaryincommercialcomplexitywiththesimplestschemes‘campusnetworks’withasingleentityascustomer,supplierandlandowner,thesenetworksaretypifiedbyhospitalsanduniversityheatnetworks.Morecomplexnetworks,typifiedby‘city-wideschemes’,mayincludeheatsourcesownedbyathirdparty,‘prosumers’(customersthatalsosupplyheattothenetwork)andavarietyofpublicandprivatesectorcustomers.Districtenergyschemesmaysupplyheatonlyormayalsoprovidecoolingand/orelectricity.
13Heatnetworkslegislationformeteringandbilling:complianceandguidancehttps://www.gov.uk/guidance/heat-networks
Current £3-6 billion heat network supply chain opportunities – operations and maintenance contracts over next 40 years.
17 InvestingintheUK’sheatinfrastructure:HeatNetworks
Engineering design consultants
Engineeringdesignconsultantsundertakeheatmapping,networkdesignandaresometimesretainedtosupervisetheinstallation,commissioningandoperationofheatnetworks.DECCandtheHeatNetworkPartnershipforScotlanddevelopmentfundinghasputasignificantamountofmoneyintothismarket.Asaresult,thesupplierbasehasexpandedandanumberofnewmarketentrantshavewoncontracts;eitherUKcompanieswithrelatedengineeringexperienceorheatnetworkspecialistsfromabroad.Inrecognitionofthegrowthinthismarketandthespecialistskillsrequiredtooptimisethewiderangeofheatnetworks,CIBSEandADEhaveestablishedaCodeofPractice14totrytobringaboutaconsistentqualityinthedesign,build,commissioningandoperationofheatnetworks.Thesestandardsarebeingreferencedintenderspecificationsandadoptedbyengineers.
Legal and financial consultants
ThereareanumberoflegalandfinancialconsultantswithexpertiseinheatnetworksintheUK.Thispoolofconsultantsisgrowing,withsomecompaniesoperatingnationallyandsomefocussingonspecificregionsoftheUK.ThispoolofconsultantsisamixofUKandinternationalorganisations.Itislikelythatthismarketwillmatureandsomestandardisationoccurwherecurrently,largelyduetothebespokenatureofheatnetworksandthelowdeploymentrates,learningsarenotbeingreadilytransferredacrossprojects.Strategicapproachestoheatnetworksacrossspecificgeographicareas,suchasinGreaterManchesterandGlasgow,shouldbringsynergiesacrossanumberofprojects,therebyreducingconsultantfees.
Heat network developers and operators
AsmallbutgrowingnumberofheatnetworkdevelopersandoperatorsareactiveintheUK.Thesecompaniesincludelargeutilitiesandsmallerheatnetworkspecialists.Thesecompaniesprovidearangeofdifferentrolesaloneandinpartnershipwitheachotherdependingonthecontractsoffered.Contractscanincludeanycombinationoffinance,design,build,operation,maintenance,metering,billingandcustomerservice.Theleadheatnetworkdeveloperoroperatorislikelytotakeonacoordinationroleandwillsubcontractcertainaspectstosomeofthespecialistorganisationsmentionedabove.
Energy centre building construction and pipework civil engineering
Heatnetworksconstructionandinstallationworksneedtobedeliveredbyspecialistcompanies.Amajorpartoftheinstallationofpipesistheexcavationoftrenches,backfillingandsurfacerestitution.Thisisastandardcivilengineeringactivityandthereisawell-establishedUKsupplier-base.Thecurrenttypicalapproachesare:constructionanddeliverybyaspecialistturnkeyorganisationorthroughaconstructioncompanymanagingandsubcontractingspecialistactivitiesoutsideofthestandardbuildingconstruction.LocalAuthoritiestypicallyusedesignandbuildcontractsandareusingincreasinglydetailedspecificationsandretainingclientengineersthroughoutthedesignandbuildprocess.Thereisincreasedinterestinmoretraditionalformsofprocurementwheredesignandbuildelementsareprocuredseparately.
14CharteredInstitutionofBuildingServicesEngineers(CIBSE)andAssociationforDecentralisedEnergy(ADE)HeatNetworks:CodeofPracticefortheUKhttp://www.cibse.org/knowledge/cibse-other-publications/cp1-heat-networks-code-of-practice-for-the-uk-new
18 InvestingintheUK’sheatinfrastructure:HeatNetworks
Distribution infrastructure – pipe manufacturing and installation
Networkedheatisdistributedprimarilyviahotwater,orsteam,throughpre-insulatedpolymerorsteelpipes.AlimitednumberofbrandssupplytheUKcurrently.
Steelpipes,whichhavealongerlifetimethanpolymer,commonlyhaveintegratedleakdetectionsystems.SteelpipesarenotyetmanufacturedintheUK,andtransportationfromabroadincreasesthepriceandleadtimes.Criticaltotheintegrityofsteelpipeinstallationisjointing.Thisisahighlyskilledactivitywhichisunder-developedintheUKandismuchindemand.Steelpipesarecommonlyusedfor
district-levelheatnetworkandpipeworkrunsinroadsandhighways.Plasticpolymerpipescanbeusedforshorterdistancesandcanoperateatavarietyoftemperaturesandpressures.Thesearelowercost,areflexibleandaresuppliedinlargerollsandinstallationissimplerthanforsteelpipes.
ThePotential&CostsofDistrictHeatingNetworks15reportidentifiedthatthecapitalcostsofheatnetworksintheUKare20%higherthaninmainlandEurope,asignificantproportionofwhichisthedistributioninfrastructure.Asdeploymentratesincrease,theUKshouldbenefitfromtheeconomiesofscalethathaveseenpricesfalloncontinentalEurope.
15ThepotentialandcostsofdistrictheatingnetworksPoyry/FaberMaunsellreport(2009)http://www.poyry.co.uk/news/potential-and-costs-district-heating-networks-report-decc-poyry-energy-consulting-and-faber-maunsell-aecom
QueenElizabethOlympicPark,courtesyofCofelyGDFSUEZ
19 InvestingintheUK’sheatinfrastructure:HeatNetworks
Generation (heating, cooling and electricity) plant
Heatgenerationplantandancillaryequipment,suchasboilersandCHP,arealsousedinbuildinglevelapplicationsaswellasheatnetworks,and,asaconsequence,isarelativelymaturemarket.However,newsourcesofheatarebecomingmoreprevalentandthemainstreamingofkittorecoverandupgradesourcesofindustrialandurbanheatcosteffectivelywillberequired.Thisbroadeningofheatsourceswillsupportthegrowingpipelineofheatnetworkprojectsandanincreaseinthenumberofmanufacturersandsuppliersofsuchhardwarewillexertadownwardpressureoncoststhroughacompetitivemarket.
Control systems
ControlsystemsforheatnetworksrangefrombuildingmanagementsystemstomorecomplexSCADAsystems,dependingonthescaleandthecomplexityofthesystem.Thereisscopetodevelopsmartersystemcontrolsandmetering,enhancingtheinterfacewiththecustomerandtheheatnetwork,andmaximisingopportunitiesforsmartsystemoptimisation.Theuseofsmartmeters,systemmonitoringandcontrolscouldalsobedevelopedtoimprovetheperformanceofnetworksthroughenablinglocaldiagnostics,andmaximisingthebenefitofheatnetworksthroughcontrolledandmanagedinterfaceofthegenerationequipment,thermalstorageanddemandswithotherenergynetworks,suchasthenationalgridandlocalelectricaldistributionnetworks.
Thermal storage
Efficientheat(andcooling)networkswillincorporateathermalstoretoflattentheheatdemandprofileandincreasegenerationutilisationrates.Thermalstoragecanalsofacilitatecontrolledoperationofheatgenerationassetstoreflectelectricitymarketpricesandcouldplayaroleinelectricitysystembalancing.Storagehashistoricallyutilisedhotwater,butinnovationexploringphasechangematerials,forexample,mayincreasetheimpactofthermalstorageinfuture.
Retail or customer interface
Theinterfacewiththecustomercommonlytakesplacethroughtheheatorhydraulicinterfaceunit(HIU).WhilstsomeHIU’saremanufacturedintheUK,mostareimportedandthereisanopportunityformoreUKmarketparticipants.
Variouscontrolssuchastimers,thermostatsandthermostaticradiatorvalves(TRV’s)arethesameasforstandardcentralheatingsystemsandthereisawell-developedsupplychain.
HeatmeteringandbillingregulationshavebeenintroducedtoimplementtherequirementsoftheEuropeanEnergyEfficiencyDirectiveintheUK.Allnewheatnetworksarerequiredtoinstallmetersandcontrolssothatcustomerscanmanagetheirheating.Therearealsorequirementstoprovidecustomerswithtransparentbillinginformation.Existingnetworkswithoutmetersmustundertakeacost-benefitanalysistodeterminewhetherheatmetersshouldbeinstalled.Insomeinstances,heatnetworkswithoutheatmetersmayuseheatcostallocatorsoraformulautilisingametric,suchasfloorspace,asawaytoassignvariableheatcharges.Heatmetersarespecifictoheatnetworksandthereareavarietyoftypesincludingprepayment,remoteandsmartheatmeters,butmostareimportedfromEurope.StandardsformeteringaccuracyaresetthroughtheMeasuringInstrumentsDirective.SomemetersareofferedaspartofaservicepackageofmeteringandrevenuecollectionbyUKoperators.
AsmallnumberofcompaniesintheUKareprovidingspecialistheatcustomerservice.Thiscanincludecontractmanagement,customerservices,meteringandbilling.
20 InvestingintheUK’sheatinfrastructure:HeatNetworks
HeatStore
TOWN HALL
HeatStore
Energyfrom Waste
Water source
DataCentre
DeepGeothermal
Industry
Energy Centre
CHP Boiler
Aswellasthemetricsthatindicateprojecttimings,thefollowingHeatInfrastructureInvestmentPipelinemetricswillbepublishedtoprovideahighlevelindicationoftheupcomingsupplychainopportunities:Heatgenerationtechnologies,Combinedsystemgenerationcapacity,Thermalstoresize,TotallengthofheatnetworkandAnticipatedheatdeliveredannually.
Investment opportunity
Capital investment
Heat Sources/Energy Centre
£1 billion
Distribution
£1 billion
Customer supply
£3.2 to 6.4 billion of operations and maintenance contracts across the 40 year lifetime of these low-carbon energy infrastructure assets
21 InvestingintheUK’sheatinfrastructure:HeatNetworks
Investing in the UK
Key features of the UK
Local authorities (municipalities)
HeatnetworksintheUKaresponsored(initiated)byeitherLocalAuthorities/municipalitiesorprivatepropertydevelopers.LocalAuthoritieshaveanumberofcriticalrolesinheatnetworksincludingfinancingoroperatingheatnetworks;providingcriticalinitial‘anchor-load’customers(forexamplecounciloffices,educationfacilities,socialhousing)orland,butalsoasacoordinator,ahonestbrokerbetweenkeystakeholders,andgivingplanningpermissionsandwayleaverightstositeheatnetworkspipesinroads.AstheowneroftheLocalPlananddecision-makersonplanningpermissions,LocalAuthoritiesarethereforeinstrumentalinhelpingtoshapeheatnetworks,includingthosedevelopedbytheprivatesectorandservingnewbuildproperties.
ThereareavarietyoftypesofLocalAuthoritiesintheUK.DefinedintheLocalGovernmentAct2003section33,theseincludecountycouncils,districtcouncils,boroughcouncils,citycouncils,Londonboroughs,metropolitanboroughsorunitaryauthoritiesandthislistalsonowincludescombinedauthorities.Unitarycouncilsaresingle-tier,asaremetropolitanboroughcouncils.CountycouncilssitabovedistrictorboroughcouncilsandtheGreaterLondonAuthoritysitsaboveLondonboroughcouncilsastop-tieradministrativebodies.Inthesetwo-tierscenariosresponsibilitiesaresplit.Combinedauthoritiesarevoluntarygroupingsoflocalauthoritieswhonegotiatetoundertakecertainfunctionsjointly,somedelegatedfromcentralGovernment.FiveCombinedAuthoritieshavebeensetupsofarinEngland;GreaterManchesterCombinedAuthoritybeingthefirstin2011,followedbySheffield,Leeds,LiverpoolandtheNorth-Eastin2014.
Countycouncils Unitaryauthorities Combinedauthorities
22 InvestingintheUK’sheatinfrastructure:HeatNetworks
Wheredistrictandboroughcouncilsbringdetailedknowledgeoftheirgeographicarea,relationshipswithkeystakeholdersandstrategicvision;unitarycouncils,top-tierandcombinedauthoritiesarenaturalaggregatorsworkingacrossalargerareaandcouldcoordinateprojectsacrosscouncilboundaries.LocalAuthoritiesandCombinedAuthoritieshaveincreasinglybeendevelopingtheirroleinlocaldeliveryofenergy,settingupenergycompaniesandseekingmorelocaldecisionmaking.
LocalAuthoritiesworkcloselywithconsultantsthroughthedevelopmentstagesofheatnetworksandrequiretheinputoftheirtechnical,financialandcontractualexpertise.Theylooktoconsultantstoworkwiththemtoassessthedifferentcommercialstructuresthroughwhichtheprojectcouldbedeliveredandhaveopenconversations(throughbestpracticeleanprocurement‘pre-marketengagementdays’)withtheinvestorandsupplychainmarkettoidentifywhichcommercialstructurescouldbestsupportthedesiredbenefitrealisation.Oncethishasbeencarriedout,theLocalAuthoritywillbeinagoodpositiontounderstandtheroleofprivatefinanceandappropriateprocurementroutes.WheretheLocalAuthorityintendstoowntheheatnetwork,duringcommercialisationtheLocalAuthoritywillrunacompetitivetenderingexerciseandsotheinteractionwithinvestorsandsupplychainislikelytobethroughaformalbiddingprocess.
Public procurement
PublicprocurementopportunitieswillbeadvertisedbyLocalAuthoritiesintheOfficialJournaloftheEuropeanUnion(OJEU)16andmustbeStateAidcompliant.Guidanceonpublicprocurementis
availableontheGovernmentwebsite17andspecificinformationregardingprocuringheatnetworksinScotlandisavailablefromtheHeatNetworkPartnershipforScotlandwebsite18.HMTreasuryguidanceforpublicsectorbodiesonhowtoappraiseproposalsbeforecommittingfundstoapolicy,programmeorprojectissetoutinthe‘GreenBook’19.FromApril2016,dependingoneligibility,heatnetworkscouldbeprocuredunderPublicContractsRegulations201520,UtilitiesContractsRegulations201621orConcessionContractsRegulations201622.
Other characteristics of the UK market
Aswellasanationalelectricitynetwork,theUKalsohasanationalgasnetwork.Thecounterfactualagainstwhichtheviabilityofaheatnetworkisassessedispredominantlyindividualgasboilersorelectricheating.Thisprovidesanumberofopportunitiesforheatnetworks:
• Usegasresourcesasefficientlyaspossiblethroughaheatnetwork
• Useheatsourcesthatwouldotherwisebewastedasunsuitableforbuildingscale
• Improveenergysecuritythroughdiversificationofsources
• Delayoravoidgasorelectricitygridreinforcement
• Approximately18%ofhomesarenotconnectedtothenationalgasgrid.Forthese4millionpropertiesheatingcanbeexpensiveasfuelhastobedeliveredbyroadornewconnectiontothegasgridiscostly.
16OfficialJournaloftheEuropeanUnion(OJEU)http://www.ojeu.eu/17Tenderingforpublicsectorcontractshttps://www.gov.uk/tendering-for-public-sector-contracts/overview18HeatNetworkPartnershipforScotlandprocurementguidancehttp://www.districtheatingscotland.com/content/procurement19HMTreasuryGreenBookhttps://www.gov.uk/government/publications/the-green-book-appraisal-and-evaluation-in-central-governentand
https://www.gov.uk/government/collections/the-green-book-supplementary-guidance20PublicContractsRegulations2015http://www.legislation.gov.uk/uksi/2015/102/pdfs/uksi_20150102_en.pdf21UtilitiesContractsRegulations2016https://www.gov.uk/government/consultations/transposing-the-eu-procurement-directives-utilities-
contracts-regulations22ConcessionContractsRegulations2016https://www.gov.uk/government/consultations/transposing-the-eu-procurement-directives-
concessions-contracts-regulations
23 InvestingintheUK’sheatinfrastructure:HeatNetworks
• TheUKhasahighproportionofoldhousingstockover50yearsoldwhichisnotbuilttomoderninsulationstandards.Someoftheseperiodpropertiesarehardtoinsulateduetopracticalities,costorconservationorders.Heatnetworksmaybethemosteffectivewayofdecarbonisingandreducingbillsfortheseproperties.
• Mostexistingpropertieshaveawetradiatorheatingsystemwhichcouldberetrofitforsupplybyaheatnetwork.Over1.6millionindividualboilersarereplacedintheUKeveryyearandthiscouldbeanappropriatetriggertojoinaheatnetwork.
• TheUKismoredenselypopulatedthanmanyEuropeancountries,withmanyurbanareasabletosupporteconomicallyviableheatnetworks.Urbanisationispredictedtocontinueandthisdensificationwillbringforwardadditionalheatnetworkopportunities.
Common heat network commercial structures and funding sources
Todate,heatnetworksintheUKhavecommonlyutilisedoneofthefollowingownershipmodels:
1. Local Authority ownership–theLocalAuthorityfinancesandownstheheatnetwork.Thenetworkcouldbeundertakenin-housebytheLocalAuthorityorthroughapublicsectorwhollyownedcompanyestablishedtomanagethenetwork(e.g.Arms-LengthManagementOrganisation,SpecialPurposeVehicle,LimitedLiabilityPartnership).AnumberoflocalAuthoritiesarecurrentlyexploringdevelopmentofmunicipalenergycompaniestodeliverarangeoflocalservicesincludingheatnetworks.TheLocalAuthoritymayutilisegrantfundingorraisemoneythroughprudentialborrowing;frompublicsourcessuchasthePublicWorksLoanBoardorcorporateloansfromprivatesources.Aheatnetworkoperatorwouldtypicallybeprocuredtooperatethenetworkundercontract.
Heatnetworkscanalsobedevelopedbyotherpartsofthepublicsector,suchashospitalsanduniversities.
2. Private ownership–mayarisefromaheatnetworkoriginatedbyaLocalAuthorityorbyaprivatepropertydeveloper.
a. Whereapropertydeveloperseekstomeetcarbonreductionplanningrequirements(whichcouldbeinformedbyLocalAuthoritymappingandmasterplanningwork)innewbuildpropertiesthroughaheatnetwork.Thepropertydevelopermayowntheheatnetworkbutlease,possiblythroughaconcession,thenetworklongtermtoaspecialistheatnetworkoperator,orawardvariousspecialistsubcontractsfordesign,build,operationandmaintenanceoftheheatnetwork.A‘developercontribution’maybemade,thisisapaymentfromtheheatnetworkdevelopertothepropertydeveloper.
b. ALocalAuthoritymayidentifyatechnicallyfeasibleandeconomicallyviableheatnetworkopportunity,butmaynothavetheavailablefinanceortheriskappetitetodeveloptheheatnetworkthemselves,inthesecircumstancestheheatnetworkopportunitycouldbedevelopedbyaprivatesectorheatnetworkoperator.
Thecapitalforprivatelyownedheatnetworksmayderivefromvariousprivatesectorsourcesincludingthedeveloper’sowncorporatebudgetthroughtomoneyraisedthroughcorporateloansorthebondmarket.
3. Public/Private–
a. Apublic(LocalAuthority)andprivatesectorjointventurewherebothpartiesholdanequitystake.Thiswouldrequiretheestablishmentofa‘SpecialPurposeVehicle’(SPV).Thefundingsourceslistedabovecouldbeutilisedtosecureeachparty’sequitystake,buttheLocalAuthoritycouldsecure
24 InvestingintheUK’sheatinfrastructure:HeatNetworks
anequitystakeonanon‑cashbasisthroughcontributionoflandfortheplantroom,guaranteedanchor‑loadcustomer,valueofconcessionagreementsorwayleaves.
b. Aprofit‑shareagreementthatrecognisesthenon‑cashcontributiontheLocalAuthorityhasmadetotheproject.
Thegraphbelowmapsthedifferinglevelsofcontrolandriskbalancedbetweenthepublicandprivatesectorforavarietyofheatnetworkcommercialstructures.
DetaileddescriptionsoftherangeofcommercialstructuresrepresentedinthediagrambelowaresetoutintheScottishFuturesTrust’sdocument,‘GuidanceonDeliveryStructuresforHeatNetworks’23.
Thereareawiderangeofcontractualarrangementsthatarisefromthecommonfunding/ownershipmodelscombiningelementsoffinance,design,build,operationandmaintenance,customerserviceandbilling.
23Scottish FuturesTrust:GuidanceonDeliveryStructuresforHeatNetworkshttp://www.districtheatingscotland.com/content/procurement
Public sectorcarries risk
Private sectorcarries risk
Private sector ownership with public sector facilitation
Public funding to incentivise private sector ownership
Public private joint venture with differing levels of ownership
Private sector invests in some elements of the network
Public sector led, use of private sector contractors
Entirely public sector funded, operated and owned
Private sector ownership with public sector customer
Who bears the risk
Who
has
Con
trol
Privatesectorcontrol
Publicsectorcontrol
Commercial structure options for heat networks
25 InvestingintheUK’sheatinfrastructure:HeatNetworks
Characteristics of commercially viable heat networks
Incommonwithmostinfrastructureinvestmentopportunities,heatnetworksdemonstratethefollowingcharacteristics:
• Stable and predictable cash flows: Duetoinelasticsteadydemandfortheproduct,infrastructuredeliversstableandpredictablecashflowstreams.
• Long-term predictable income streams:Longassetlifeof40+yearsandanaturalmonopolyleadtolong-termpredictableincomestreams.Operatingcostsarelowcomparedtotheinitialcapitalinvestment.
Heatnetworksalsohave:
• Expansion potential:Potentialforvalueenhancementthroughactivemanagementoftheassets.
Economicallyviableandcommerciallyinvestableheatnetworkswillexhibitsomeofthefollowingcharacteristics:
Characteristics Key factors/consideration for supply chain and investors
Size and returns • T ypicalheatnetworkcapex ranges between £4 and £40 millionintheUK,butinitialphasesarefrequentlyatthelowerendofthisrangeaskeyanchor-loadcustomersmustbesecuredforinitialbuild-out.
• Astrategicapproachtoheatnetworksiscommonwithphased build outplannedoveranumberofyearsasadditionalcustomersarecontracted.
• Long-term stable returnsareachievedwithanchor-loadcontracts(whichminimisedemandrisk).
Heat demand • Heatnetworkscanaccommodateavarietyofcustomers;however,individualdomesticconnectionsarelesscommon.Alarger, diverse, customer basewillprovideamorestableandrobustincomebase.
• Demand is usually aggregatedvia,forexample,largerheatuserssuchaslocalauthorities,sociallandlordsandhospitalsorprivatepropertymanagersofmulti-tenantedbuildings.
• ‘Anchor-loads’,theinitialaggregatedcustomerscontractedtodeliversufficientrevenueforphaseonebuildout,arecommonlysecuredfromthepublicsectororthroughcarbonreductionrequirementsofplanningpermissions.
• Integrated into long-term Local Authority infrastructure planning, demand is expected to grow over time,enablingthesystemtoexpandtotakeonadditionalheatloadsandothercost-effectivesourcesofheatovertime,includingintheprivatesector.Potentialforupsidebyactivebusinessdevelopmentandexpansion.
26 InvestingintheUK’sheatinfrastructure:HeatNetworks
Income and contracts
• L ong-term contractsareestablishedwithanchor-loadcustomers,commonlyover20yearsinduration,alignedwiththelonglifetimesoftheinfrastructure.
• Customerheattariffsarecommonlycomprisedofafixed‘standingcharge’andavariablecharge.Thestanding charge will be structured to cover the capex of the heat networkandvariablechargeswillcovertheopexandprofit.
• Customerheattariffsarecommonlyindex linkedtoprotectoperatingmargins.
• Contractualstructuresvaryandheatnetworkoperatorsmaybillendusersdirectlyormaysellbulkheattoanintermediary,suchasaLocalAuthority,propertymanagerorsupplycompany,whotakescredit riskandon-billsendusersstandingbehindthisrevenuesteamwiththeircredit.
• E lectricity salesarealsoacommonfeatureofheatnetworks,employingcombinedheatandpower.ElectricitycouldbeusedbyaLocalAuthorityheatnetworkoperatortoreducebills,couldbesoldbytheheatnetworkoperatortolocalcustomers(privatewire)orexportedtotheelectricitygrid.Additionalelectricitysystembalancingincome,suchastheShortTermOperatingReserve(STOR),mayalsobeaccessible.
• TheHeat Trust24hasbeenestablishedbyindustrytoprovideacommonstandardinthequalityandlevelofprotectionfordomesticendusercustomersonheatnetworks.
Technology • Heatnetworksareproven energy infrastructure systemswithover2,000networksoperatingintheUKandmanymoreacrossEurope.
• Likethenationalgasandelectricitygrid,theheatnetworkpipe infrastructure is technology-agnosticandcanaccommodatemultipleheatsources.Thisallowstheheatnetworktotakeheatfromthemostsuitable/cost-effectivelocalsources.
• F lexibility to change heat sources,whichshouldfurtherdecarbonisetheheatnetworksovertime,isimportantgiventhatthepipeinfrastructurehasalifetimeofover40years,longerthanmostheatsources,whicharetypically15to30years.Overthepipeinfrastructure’slonglifetime,arangeofheatsourcetechnologiesarelikelytomatureandbecomecosteffective.Infuture,anincreasingamountofwater-sourceandrecovered-heatsourcescouldbecommonplaceonheatnetworks.WhilstthesearenotyetwidelyexploitedintheUK,thereissignificantavailabilityofcanals,rivers,lakes,minewater,sewagesystems,datacentres,chillers,andindustrythatcanbeutilisedwithorwithoutaheatpump.
• T echnology innovationscanalsoprovidesignificantopportunityforcostreductionsinnetworks,suchaslowtemperaturenetworkswhichhavetheadvantageoflowermaintenancecostsandtheabilitytoincorporatelowertemperaturesourcesofrecoveredheat.
• Boilers,CombinedHeatandPower(CHP)andheatpumpsallhaveaproventrackrecordintheUK,withappropriatemanufacturers’performancewarrantees.
24HeatTrusthttp://www.heattrust.org/index.php
27 InvestingintheUK’sheatinfrastructure:HeatNetworks
Design, construction and operating contracts
• Incommonwithallinfrastructureprojects,maintainingdesign integrityagainstconstructioncostsanddeadlinescanbeaddressedthroughcarefulselectionandmanagementofprimarycontractorandsubcontracts.
• A ppropriate operations and maintenance regimescanreduceriskprofilesandmaintainreturns.Operationalcostsshouldbeminimisedwithappropriateplannedmaintenance,monitoring,leakdetectionandcontrolsystems.
• C ontract terms,takingelementsfromJCT(building)andNEC(civils)contractsareutilisedfordesign,buildandoperationofheatnetworks,providingeffectiveriskmanagement.
• TheCIBSEADECodeofPractice25setsoutminimum technical standardsrequiredthroughdesign,construction,commissioningandoperationtodeliveranefficientheatnetwork.
• Twokeyprinciplescombinetodeliveroptimum return on investment:avariedcustomerbase,forexampleresidentialandnon-residential,thatspreadheatdemandthroughthedayandthroughtheyearcombinedwithamodularapproachtoheatsourcesonthenetworki.e.baseloadrunningallyear+shoulderfromautumntospring+peakloadduringwinter,willallowmaximiseutilisationrates.
Procurement • MostprojectswherethereisasignificantLocalAuthorityrolewillbepublically procured.Thescopeofanypublicorprivateprocurementwillvary,dependingonthefunding/ownershipmodelselected.
• P ublic procurementopportunitieswillbeadvertisedintheOfficialJournaloftheEuropeanUnion(OJEU),althoughaprocurementframeworkisindevelopment(DEPA)toencouragestandardisationofapproachestothemarket.
• TheHeat Infrastructure Investment Pipelinedatabaseofopportunitieswillprovideclearsignpostingforinvestorsandsupplychain,butthestandardsetofmetricsanddefinitionswillenhancethequalityofdevelopmentstagestudies.
25CharteredInstitutionofBuildingServicesEngineers(CIBSE)andAssociationforDecentralisedEnergy(ADE)HeatNetworks:CodeofPracticefortheUKhttp://www.cibse.org/knowledge/cibse-other-publications/cp1-heat-networks-code-of-practice-for-the-uk-new
28 InvestingintheUK’sheatinfrastructure:HeatNetworks
Improving the climate for investment
Drivers
Heat networks are recognised nationally and internationally as a cost effective way of decarbonising heat in denser urban areas.
Atglobal level,UnitedNationsEnvironmentProgramme(UNEP)researchhasconcludedthatdistrictenergysystemshaveemergedasabestpracticeapproachforprovidingalocal,affordableandlow-carbonenergysupply,representingasignificantopportunityforcitiestomovetowardsclimate-resilient,resource-efficientandlow-carbonpathways26.
ThepotentialforheatnetworksisrecognisedinanumberofimportantEuropean Directivesthatflowintonationallegislationandpolicymaking.Forexample,the2012EnergyEfficiencyDirective27directsMemberStatestodeveloppoliciesupto2030todeliverthesociallycosteffectivepotentialforDistrictHeatingandCooling.Intheshorterterm,heatnetworksprovideacosteffectivemeanstomeetingtheminimumenergyperformancestandardssetoutinnationalBuildingRegulations,onapathtowardstheEUNearZeroEnergyBuildings(nZEB)requirementfrom202128.
IntheUK,thestatutorycarbontargetssetoutunderthe2008ClimateChangeActeffectivelyrequiressome21%to45%ofheatsupplytobuildingsneedstobelow-carbonby2030,withheatsupplyalmost
totallydecarbonisedby205029.Arangeofeconomicmodelshaveconcludedthatthereiscosteffectivepotentialforheatnetworkstosupplybetween14%and43%oftotalUKbuildingsheatby2050,particularlyindenserurbanareas30.Heatnetworkscurrentlysupply2%ofbuildingheatdemand(some9TWhperyear)31soacompoundgrowthrateofaround8%perannumwouldbeneededtoachieveeventhelowestendofthecosteffectivecarbonreductionpathways.ThiswouldhelpprovidetheeconomiesofscalethathavebenefittedthesectorincontinentalEurope,wherethecapitalcostofheatnetworkequipmentissome20%lowerthanintheUK32.
Atalocal level,thedriverstobuildlocalheatinfrastructureareasvariedastheheatnetworksthemselves,butcanbroadlybecategorisedas:energybillreduction,localeconomicregenerationorameanstomeetcarbonreductionrequirementsinnewbuilddevelopments.ThesedriversarelikelytocontinuetobecriticalasLocalAuthorities(municipalities)seektousetheirresourcesaseffectivelyaspossibleinordertobeabletodeliverabroadrangeoffrontlineservicestotheirresidents.
Asaresult,anumberofindustry-ledinitiativessupportedbyGovernmentareinplacetoreducecostsofdeployment,increaseefficiencyofsystemsandtoimproveconsumerprotectionsandthereforeattractivenessofthesectortonewcustomers.
26DistrictEnergyinCities:UnlockingthePotentialofEnergyEfficiencyandRenewableEnergy(2015)http://www.unep.org/energy/districtenergyincities
27NationalComprehensiveAssessment:Article14ofthe2012EnergyEfficiencyDirectiveobligatesmemberstatestoundertakeacostbenefitanalysistoidentifythesociallycosteffectivepotentialforCHPandDistrictHeating&Coolingandtodeveloppoliciesupto2030todeliverthispotential,includingbyencouragingtheuseofrecoveredwasteheatorrenewableheatandconnectionofheatsourcesandheatdemandstoDistrictHeatnetworkshttp://ec.europa.eu/energy/en/topics/energy-efficiency/energy-efficiency-directive
282010EUEnergyPerformanceofBuildingsDirectiverequiresallnewbuildingstobeNearZeroEnergyBuildings(nZEB)from2021andallexistingbuildingsundergoingmajorrenovationaretomeetminimum‘costoptimal’energyperformancerequirements,wherefeasible.http://www.epbd-ca.eu/themes/nearly-zero-energy
292011UKCarbonPlanhttps://www.gov.uk/government/publications/the-carbon-plan-reducing-greenhouse-gas-emissions--230March2013HeatStrategyTheFutureofHeating:MeetingtheChallengehttps://www.gov.uk/government/publications/the-future-of-
heating-meeting-the-challenge31March2013HeatStrategyTheFutureofHeating:MeetingtheChallengehttps://www.gov.uk/government/publications/the-future-of-
heating-meeting-the-challenge32ThepotentialandcostsofdistrictheatingnetworksPoyry/FaberMaunsellreport(2009)identifiedthatthecapitalcostofheatnetworksin
theUKare20%higherthaninmainlandEuropehttp://www.poyry.co.uk/news/potential-and-costs-district-heating-networks-report-decc-poyry-energy-consulting-and-faber-maunsell-aecom
29 InvestingintheUK’sheatinfrastructure:HeatNetworks
Promotinghightechnicalstandards
TheHeatNetworkCode of Practice33isanindustry-ledinitiativethatcomprisesasetoftechnicalstandardsdevelopedforusebyprojectsponsors,specifiersandengineersthroughheatnetworkdesign,construction,commissioningandoperation.TheCodeofPracticeaimstoensurehighqualityheatnetworksinstallationsthat:
• Deliverenergyefficiencyandenvironmentalbenefits;
• Provideagoodlevelofcustomerservice;and
• Promotelong-lastingheatnetworksinwhichcustomersandinvestorscanhaveconfidence.
TheCodewaslaunchedinJuly2015andissupportedbyatrainingandregistrationprogrammeforthosedeliveringprojectsundertheCode.
Improvingconsumerprotections
Heat Trust34isavoluntaryschemethatisbeingsetuptoestablishacommonstandardinthequalityandlevelofprotectionforcustomersonheatnetworks.Itsetsout,amongstotherthings,heatsupplierobligationsandperformancestandards,supportforvulnerablecustomersandintroducesanindependentdisputeresolutionservice.HeatTrusthasbeendevelopedwithindustry,consumergroups,nationalanddevolvedadministrations.Theschemewilllaunchinlate2015.
DistrictEnergyProcurementAgency
AmembershipbasedprocurementframeworkforLocalAuthoritiesiscurrentlyindevelopment.TheDistrictEnergyProcurementAgency(DEPA)willbenefitsuppliersandmanufacturersofdistrictenergygoodsandservicesbyactingasacompetentnegotiatingpartner,standardisingproceduresandthusreducingtheirtransactioncosts.ForcompanieswishingtojointheUKmarket,itwillprovideasinglepointofentry.
Promotinginnovationtolowerdeploymentcosts
Small Business Research Initiative (SBRI) Heat Networks Demonstrator:A£7millionheatnetworkinnovationanddemonstrationprogrammeisbeingmanagedbyDECCtostimulateinnovationthatwillbringdownheatnetworkscostsandimproveperformance35.
Thereisabroadrangeofinnovativeprojectsbeingsupported.Somearefocussedonimprovingnetworkefficiencybydevelopingsmartheatingcontrolstomanagedomesticdemandontheheatnetwork,toreducepeakloadordiagnosenetworkperformanceissues.Smarttechnologyisalsobeingusedtodevelopaheatnetworkmonitoringandbillingapplicationtomakethefullextentofmeteringdataopenlyavailabletooperators.
33CharteredInstitutionofBuildingServicesEngineers(CIBSE)andAssociationforDecentralisedEnergy(ADE)HeatNetworks:CodeofPracticefortheUKhttp://www.cibse.org/knowledge/cibse-other-publications/cp1-heat-networks-code-of-practice-for-the-uk-new
34HeatTrusthttp://www.heattrust.org/index.php35Costreducinginnovation-SBRIHeatNetworksDemonstratorhttps://sbri.innovateuk.org/competition-display-page/-/asset_publisher/
E809e7RZ5ZTz/content/heat-networks-demonstrator/1524978andhttps://www.gov.uk/guidance/innovation-funding-for-low-carbon-technologies-opportunities-for-bidders
30 InvestingintheUK’sheatinfrastructure:HeatNetworks
Attheotherendofthescale,anotherprojectaimstodeliverdeepgeothermalheatprojectsinunder12months.ThedemonstrationprojectwillbethefirstconnecteddeepgeothermalsinglewellsystemintheUKandthefirstdeepgeothermalheatprojectfor25years.Similarly,oneprojectwillseethefirstlarge-scalesolarthermalheatpumpbeingdeployedonaheatnetworkintheUK.
Smart Systems & Heat Programme (SS&H):ThisjointGovernmentandindustry-fundedprogramme,runbytheEnergyTechnologyInstitute(ETI),isdevelopingthemodelsandplansrequiredforasignificantsystem-leveldemonstrationtodecarboniseheatinginthreeLocalAuthorityareas,comprisingsome3,000to10,000properties36.
Impacts of increased heat infrastructure deployment
AsthisHeatInfrastructureInvestmentPipelinegrowsandheatnetworkdeploymentratesincrease,thereisanopportunityforcurrentmarketparticipantstoexpandoperations,butalsofornewmarketplayerstoentertheUKheatnetworkmarket;includingthroughpartnershipsorjointventures.ThisgrowthmaybringaboutanevolutionoftheUK’sheatnetworkmarketoverthenext10years:–witheconomiesofscalerealised,costreducinginnovationdeployedandnewcommercialstructures,possiblycentredaroundaggregationorunbundlingofgenerationanddistribution,emerging.
Feedback loop
Innovation
Deploying cost reducing
innovation
Reduced risk perception
Increased availability of appropriate
finance
Improved IRR =more networks
viable
Increased deployment
rates
36EnergyTechnologiesInstituteSmartSystems&Heat:Creatingfuture-proofandeconomiclocalheatingsolutionsfortheUKhttp://www.eti.co.uk/programme/smart-systems/
31 InvestingintheUK’sheatinfrastructure:HeatNetworks
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32 InvestingintheUK’sheatinfrastructure:HeatNetworks
Support for investors and supply chain
UKTrade&Investment(UKTI)
UKTIisthespecialistGovernmentdepartmentthatsupportsforeigncompaniesseekingtosetuporexpandintheUK.UKTIprovidesafullyintegratedadvisoryservice,deliveringthelatestbusinessintelligencethroughaglobalnetworkofcommercialteamsworldwide.UKTIworksinclosepartnershipwithinvestmentandeconomicdevelopmentagenciesinEngland,Scotland,WalesandNorthernIrelandtohelpoverseascompaniestomaximisetheirbusinessobjectivesintheUK.
EnquiriesforoverseascompanieslookingtosetupintheUK:
Email:[email protected]
Telephone:+44(0)2073335442
AssociationforDecentralisedEnergy(ADE)
TheAssociationforDecentralisedEnergy(ADE)istheleadingadvocateofanintegratedapproachtodeliveringenergyservicesfromdecentralisedenergysourcessuchascombinedheatandpoweranddistrictheatingandcooling.
AssociationforDecentralisedEnergy,6thFloor,10DeanFarrarStreet,London,SW1H0DX
Email:[email protected]
Telephone:+44(0)2030318740
www.theade.co.uk
TheHeatNetworkPartnershipforScotland
TheHeatNetworkPartnershipisacollaborationofagenciesinScotlandfocusedonthepromotionandsupportofDistrictHeatingschemesinScotland.Thiswebsiteoffersexperience,informationandkeycontactsthatwillhelpboostthegrowthofdistrictheating.
TheScottishprojectpipelineandinvestmentreportareavailableat:http://www.districtheatingscotland.com/content/investment-heat-networks-scotland
Procurementguidance:http://www.districtheatingscotland.com/content/procurement
Forfurtherinformation,visit:http://www.districtheatingscotland.com/form/contact-us-0
CreatingvaluefromstartupstocorporatesUKTIdevelopsbespokeprogrammesinsupportofeachsegmentoftheinwardinvestorvaluechain.
High Growth Potential
UKTI Services
Sirius Programme
Global Entrepreneurs Programme
Access to networks and the entrepreneur ecosystem
International trade (export) advice
UK Product offer
Seed Enterprise Investment Scheme
Enterprise Investment Scheme
R&D Tax Credit/Corporate Tax Relief
Catapult Centres
Medium and Large
UKTI Services
Relationship management
International trade (export) advice
Sector Trade & Investment Organisations
Access to industry networks and sector ecosystems
UK Product offer
Enterprise Investment Scheme
R&D Tax Credit/Corporate Tax Relief
Enterprise Zones
Catapult Centres
Innovation Gateway
Institutional Investors
UKTI Services
Relationship management
Regeneration Investment Organisation/online platform
Infrastructure and regeneration pitch books
Infrastructure and regeneration pipelines
UK Product offer
Regeneration Investment Plan
UK Infrastructure Guarantee
Enterprise Zones
National Infrastructure Plan
Innovation Gateway
33 InvestingintheUK’sheatinfrastructure:HeatNetworks
UKGreenInvestmentBank(GIB)
TheUKGreenInvestmentBankinvestsinspecificareasofthelowcarboneconomywithaspecificmandatetosupportthecreationofmarketsandtocrowdinotherformsofcapital.Thisspecificallyincludesheatnetworks.GIB’scapitalishighlyflexible,beingabletobedeployedasdebt,equityormezzanineintoprojectswithchallengingstructuringissues.Projectscanbefinancedovera30yeartermandrepaymentssculptedtofitrevenueprojections.FinancingavailablefromGIBrangesfrom£1millionto£100million.TheGIBteamincludes,equity,debt,projectfinanceandprojectdevelopment/technicalspecialistsabletoaddressanyissuewithrespecttothecommercialandfinancialstructuringofaheatnetworkproject.
Enquiriesshouldbeaddressedto:
IainWatson,Director–EnergyEfficiencyEmail:[email protected]:+44(0)3301232136,+44(0)7802447082
AlinaGheorghiu-CurrieEmail:[email protected]:+44(0)3301233042,+44(0)7557089756
Further information
Planning
England
• NationalPlanningPolicyFrameworkforEnglandhttps://www.gov.uk/government/publications/national-planning-policy-framework--2
• PlanningPracticeGuidanceforEnglandhttp://planningguidance.planningportal.gov.uk
Scotland
• NationalPlanningFrameworkforScotlandhttp://www.gov.scot/Topics/Built-Environment/planning/National-Planning-Framework
• ScottishPlanningPolicyhttp://www.gov.scot/Topics/Built-Environment/planning/Policy
• Planningandheatonlineguidancehttp://www.gov.scot/Topics/Built-Environment/planning/Policy/Subject-Policies/low-carbon-place/Heat-Electricity
34 InvestingintheUK’sheatinfrastructure:HeatNetworks
Wales
• PlanningWaleshttp://gov.wales/topics/planning/?lang=en
Combined heat and power Quality Assurance (CHPQA)• CombinedHeat&PowerQualityAssuranceProgramme
https://www.gov.uk/guidance/combined-heat-power-quality-assurance-programme
Renewable Heat Incentive• Non-domesticRenewableHeatIncentive(RHI)DECC
https://www.gov.uk/non-domestic-renewable-heat-incentive
• Non-DomesticRenewableHeatIncentive(RHI)Ofgemhttps://www.ofgem.gov.uk/environmental-programmes/non-domestic-renewable-heat-incentive-rhi
EU ETS – Large heat networks• EuropeanUnionEmissionsTradingSystem(EUETS)Union
Registryhttps://www.gov.uk/guidance/eu-ets-carbon-markets
• ParticipatingintheEUETShttps://www.gov.uk/guidance/participating-in-the-eu-ets
Energy Company Obligation (ECO)• EnergyCompanyObligation(ECO)https://www.ofgem.gov.uk/
environmental-programmes/energy-company-obligation-eco
• EnergyCompanyObligation(ECO2):MeasuresTablehttps://www.ofgem.gov.uk/publications-and-updates/energy-company-obligation-eco2-measures-table
District Heating Connections Lifetime in years
Biomass boiler (Upgrade) 30
Gas/oil boiler (Upgrade) 25
CHP (Upgrade) 25
Energy from Waste (Upgrade) 25
Ground Source Heat Pump (Upgrade) 20
Air Source Heat Pump (Upgrade) 15
Heat network pipe infrastructure (New Connection All generator types)
40
35 InvestingintheUK’sheatinfrastructure:HeatNetworks
Heat Network (Metering and Billing) Regulations 2014: guidance to compliance and enforcement of the legislation• https://www.gov.uk/guidance/heat-networks
BSRIA UK District Energy 2013 market intelligence report• https://www.bsria.co.uk/market-intelligence/market-
reports/publication/uk-district-energy-2013/
Assessment of the costs, performance and characteristics of UK heat networks• https://www.gov.uk/government/publications/assessment-
of-the-costs-performance-and-characteristics-of-uk-heat-networks
CIBSE/ADE Heat Networks: Code of Practice for the UK• http://www.cibse.org/Knowledge/CIBSE-other-publications/
CP1-Heat-Networks-Code-of-Practice-for-the-UK
Heat Trust: independent heat customer protection scheme• http://www.heattrust.org/index.php
Delivering UK Energy Investment: Networks 2014• https://www.gov.uk/government/publications/delivering-
uk-energy-investment-networks-2014
Heat maps• Englandhttp://tools.decc.gov.uk/nationalheatmap/
• WatersourceheatmapforEnglandhttps://www.gov.uk/government/publications/water-source-heat-map
• Scotlandwww.gov.scot/heatmap
For more information, please contact the DECC Email:[email protected]@decc.gsi.gov.uk
36 InvestingintheUK’sheatinfrastructure:HeatNetworks
gov.uk/decc
DECCTheDepartmentofEnergy&ClimateChange(DECC)workstomakesuretheUKhassecure,clean,affordableenergysuppliesandpromoteinternationalactiontomitigateclimatechange.
DisclaimerWhereaseveryefforthasbeenmadetoensurethattheinformationinthisdocumentisaccurateDepartmentofEnergy&ClimateChangeacceptliabilityforanyerrors,omissionsormisleadingstatements,andnowarrantyisgivenorresponsibilityacceptedastothestandingofanyindividual,firm,companyorotherorganisationmentioned.
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Youmayre-usethisinformationfreeofchargeinanyformatormedium,strictlyinaccordancewiththetermsoftheOpenGovernmentLicence.Toviewthislicence,visit:
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