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£320 Million Heat Networks Investment Project for England & Wale

Published: 19 October 2018 by KTN
  • energy

Delivering on its commitment to tackle energy costs using innovative, low carbon solutions, the government is launching a new initiative for homes and non-domestic consumers, including schools, hospitals and council buildings, to participate in a new heat networks scheme.

Heat networks supply energy from a central source to consumers, via a network of underground pipes carrying hot water. They can cover a large area or even an entire city, or be relatively local, supplying a small cluster of buildings. This avoids the need for individual boilers or electric heaters in every building.

The Heat Networks Investment Project (HNIP) is a major government project which will invest capital funding in heat network projects, through grants and loans. This is provided as ‘gap funding’ to grow the UK heat networks market and deliver the carbon savings required to meet the nation's future carbon reduction commitments.

The programme has an overall investment pot of £320 million of capital funding, to be awarded through grants of up to £5 million and corporate loans of between £25,000 and £10 million.

Investment costs eligible for support under the HNIP scheme include:

   - The building of new heat networks (generation, distribution and customer supply).
   - Development of existing heat networks including expansions, refurbishment or the interconnection of existing networks where additional carbon savings can be demonstrated (which can include refinancing or acquisitions).
   - Commercialisation phase and construction costs.
   - Works to access recoverable heat.
   - Costs for heat network infrastructure connected to the generation plant.

HNIP will offer grants and capital loans to both the public and private sectors in England and Wales, for networks serving two or more buildings. All HNIP funding mechanisms will be open to all applicant types - public, private and third sector, except central Government Departments. Supported heat networks must be located in England and/or Wales.

The launch of the scheme follows a six-month pilot into low-carbon heat networks, during which researchers concluded that projects supported by the full scheme could provide heat to around 5,000 domestic customers and 50 non-domestic buildings across nine networks.

Interested parties are now invited to register their interest in applying. Guidance materials are expected to be published in November 2018. The application process will launch in January 2019 under an open arrangement, whereby bids will be accepted on a continuous basis until the application period closes in December 2021.

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