Helping Heat Network Projects Apply for Funding

1st May 2018

In the last year our energy team has supported universities, NHS trusts, and councils in applying for government funding for six different heat network projects which have the potential to result in long term financial savings and significantly lower carbon emissions.

The UK government launched the Heat Network Investment Project (HNIP) in 2015 making £320 million of funding available to public and private sector organisations interested in investing in heat network projects, those which promote energy efficiency by distributing heat generated from a centralized location.

Although grants and loans are available, the HNIP pilot scheme highlighted that sourcing and securing funding was time-consuming and challenging for institutions that are unfamiliar with the process – only nine of the 29 applicants were successful in the pilot. As experts in the low-carbon energy sector since 2001, and with the ability to develop the supporting documents necessary to secure funding, our consultants have been working with forward-thinking organisations and supporting them to secure funding and make projects a reality.

In recent work, we have supported the University of Reading to prepare for the launch of the full HNIP scheme, scheduled to go live in autumn 2018. The University is investigating options for two heat network projects: a site surface water source heat pump (Greenlands Henley Business School) and the extension of an existing gas combined heat and power (CHP) system (Whiteknights main campus). On behalf of the university we carried out:

  • HNIP eligibility requirement review – covering themes such as organisation type and ownership rights, commercial structure of the heat network, funding requirements and additionality tests.
  • Project financing options – identifying potential investment structures, associated contractual structures, delivery models, key investor requirements and investor appetite.
  • Gap analysis – weighing the evidence base supporting the projects against HNIP eligibility and financing requirements to identify any gaps and show where further detailed work was required before submitting an application and approaching investors.

The university expects its surface water source heat pump to result in a nine year payback compared to business as usual, with an internal rate of return of around 9.5% and carbon savings of 263 tonnes per year. The innovative projects also created corporate social responsibility and marketing opportunities, the university has received a ‘1st award class’ in the People and Planet’s University League, in which it scored 100% for its efforts on carbon reduction.

Eunomia Consultant Laura Williams said:

“It’s great to see the University of Reading lead the way in a sector with large populations, numerous – often old – buildings, and high heat demand. I hope others follow suit, especially since The Higher Education Funding Council for England (HEFCE) carbon reduction strategy commits all UK universities to delivering a 43% reduction in carbon emissions by 2020.

“There’s a huge opportunity here for local authorities and NHS Trusts too. We’ve worked with Blackburn with Darwen Council alongside Centre for Sustainable Energy and Amec Foster Wheeler to coordinate the completion of a Heat Network Delivery Unit (HNDU) -funding secured in this instance covers 67% of the project cost.”

Image by Andrew Smith, courtesy of Wikimedia Commons