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Spotlight on Heat Networks, with John Saunders from DECC

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It has long been apparent that local authorities have a central role to play in the delivery of heat networks. But for many years, challenges around resources, capacity and funding meant that a lot of authorities simply couldn’t get started. The introduction of DECC’s Heat Networks Delivery Unit in September 2013 was supposed to change all that. We talked to John Saunders, Commercial Specialist within the Unit, about the difference it’s making, and what local authorities can expect when they call on the Unit for help.

It’s been a busy year for the Unit. What have you achieved so far?
In just a year, we have issued three rounds of funding, worth £7.1m, and we’re now working with 95 local authorities to support 130 heat network projects.

So what does your support enable authorities to do?
Simply put, the grant funding means that local authorities can buy in the expertise that they need.

But it’s the one-to-one support we provide that often makes the biggest difference. We can help people who may never have worked on heat networks before to become more intelligent clients, planning and structuring their projects so that the chances of success are increased. We can also help officers to clearly understand and communicate what they need from the experts that they commission.

Can you tell us about some of the projects you’re supporting?
There has clearly been a great deal of interest in our support and this has not been limited by geographies. HNDU has engaged with Local Authorities right the way across the country. An important aspect to highlight is that funding has not just been focused on the large urban areas; we’re working with some exciting schemes in rural parts of the country too.

A number of these projects are looking to take advantage of innovative heat sources. For example, Islington are looking at waste heat from an electricity substation, Birmingham from its canals, Allerdale from minewater, several from geothermal and Cardiff and Exeter from waste operations.

Whilst each project is different there are some aspects of the project which come up in all project. Questions around ownership, security of supply and guaranteed heat-take are normal. The idea of unbundling generation, transmission and distribution has been talked about for some time and remains attractive in theory. The creation of competition at the wholesale and retail end of a network is appealing and is a possible way both to future-proof in line with coming regulation and ensure that heat customers receive the best service at the most competitive price.

You’ve mentioned some innovative technologies there. What about more traditional technologies like gas?
We get asked about the role of gas CHP in heat networks a lot. Clearly a dependency on gas is less desirable than a lower carbon input fuel like those I’ve mentioned. But the HNDU has taken a technology agnostic stance when considering projects. A gas CHP can be the most viable way to get a network constructed and with a plant life of 15-20 years, there will inevitably be a time when the best available technology will come online.

So, how have local authorities responded to the challenge?
One of the most interest aspects of the work is seeing local authorities assess the role they wish to play in these projects. Some want to be strategic planners, some will be customers, but an increasing number are interested in taking an investment role in the network.

Many of the supported projects are at an early development stage but it is still worthwhile beginning to understand the appetite the Council has for certain roles and the benefits it hopes to see. Many of these benefits are common across projects; carbon savings, energy security, addressing fuel poverty and economic regeneration and it is important to understand which of these can be delivered through private, public or joint ownership and investment.

How is the industry dealing with all of this demand for expertise? It’s still a relatively small sector in the UK.
There has been concern from stakeholders – and from DECC – that the funding we’re providing might have a negative impact on the market, pushing up prices. So far, what we’re seeing is that increased demand has actually made the initial project stages more competitive. Some of this is undoubtedly due to the market taking a longer term view of projects – securing early stage engagement with the hope of increasing the chances of feasibility and design work later on. But there have also been a number of new entrants into the market, whether from overseas, through diversification or through the creation of new business partnerships.

So what next for HNDU and the heat networks sector?
We’re continuing to support our existing group of local authorities as they move through a range of activities, from high level heat mapping and masterplanning to detailed financial and contractual work. No matter what stage of project development a local authority is embarking upon, the aim for us remains the same: to support them to identify the most technically and economically viable heat networks and to help progress the development of these networks.

We’re not resting on our laurels. Round 4 of funding opens in October for six weeks and is another opportunity for DECC support of projects. Our team of HNDU technical and commercial specialists are happy to support and review draft applications before the Round 4 deadline.

We are hosting a series of roadshows for local authorities who might be interested in applying for funding – we’ll be in London on 6 October, Cambridge on 10 October and Leeds on 21 October. Local authorities can find out more and book a place here.


Thanks to John Saunders for telling us more about the work of the HNDU. We recommend heading to one of their workshops or coming to meet them at Heat 2014 on 5 November.

 

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