Heat Networks Delivery Unit Learning and latest thinking. May 2014

Transcription

1 Heat Networks Delivery Unit Learning and latest thinking May 2014

2 Background In March 2013 The Future of Heating: Meeting the Challenge was published and identified 11 actions including: Setting up a Heat Networks Delivery Unit and making a development stream available ( 7m, available to support and assist local authorities over the next 18 months) The HNDU was formed in August 2013 and began to manage the allocation of, guidance and support to LAs

3 Why Local Authorities? The focus of the heat network is Local Authorities as they play a number of different roles Enabler Implementation of heat networks Investor Customer But whilst we re seeing applications from LAs they predominantly depend on multiple stakeholders to be successful

4 The Heat Networks Delivery Unit team VERONICA FRAWLEY Programme and Project Manager JOHN SAUNDERS Commercial Specialist DAVID WAGSTAFF Head of Heat Strategy and Policy STEPHEN BROOKS Investment Director ROBERT TUDWAY Commercial Specialist IN RECRUITMENT Technical Specialist A dedicated resource of people with industry experience has been put in place to support. KATE SARGANT SAIRA AYUB Programme and Project Support CHARLOTTE LARGE Technical Specialist GEORGE DOBSON Technical Specialist POST ON HOLD Project Finance NICKY BUTTERWORTH Policy Officer

5 The HNDU Offer Bids can include: Include initial works, such as heat mapping, energy master planning and feasibility work Preparation of a business case, commercial delivery options and project economics Financial and technical evaluation Development of governance structures for ongoing operation of heat networks HNDU Investment Mapping Pre- feasibility and masterplanning Feasibility Procurement of delivery mechanism Commercial development DECC

6 Typical project criteria Project applications should demonstrate: Credible prospects for commercial development Political and Chief Officer support from the LA Clear contribution of outputs and outcomes of support Compliance with the EU Directives Track record of delivering capital projects Development of a project structure: Evaluation, monitoring and governance of project

7 It s not just about the money Expert support and guidance Support and guidance to Local Authority project teams Improving skills & knowledge base Delivery focused Fund management ( 6m) Contribution (67%) towards the cost of external advice HNDU to assess applications on the basis that the project should be working towards an investable solution

8 Results so far Round 1 54 applications from 31 Local Authorities Approximately 1.95 million of grant Round 2 38 projects through 25 LAs supported Approximately 2.19 million of grant Bids were of a higher quality and asked for more than R1 Total grant to date = 4.12 million

9 Results so far Round 1 54 applications from 31 Local Authorities Approximately 1.95 million of grant Round 2 38 projects through 25 LAs supported Approximately 2.19 million of grant Bids were of a higher quality and asked for more than R1 Total grant to date = 4.12 million

10 Results so far Round 1 54 applications from 31 Local Authorities Approximately 1.95 million of grant Round 2 38 projects through 25 LAs supported Approximately 2.19 million of grant Bids were of a higher quality and asked for more than R1 Total grant to date = 4.12 million

11 Results so far Round 1 54 applications from 31 Local Authorities Approximately 1.95 million of grant Round 2 38 projects through 25 LAs supported Approximately 2.19 million of grant Bids were of a higher quality and asked for more than R1 Total grant to date = 4.12 million

12 What we re seeing The quality of bids have improved between R1 and R2 This is supported by an increase in projects supported from 70% to 90% The average amount requested in R1 was 52,460 increasing to 69,208 in R2 Much of the funded work is translating masterplanning into techno-economic feasibility LAs are submitting multiple projects to differentiate between project stages and the outcomes they are seeking A number of bids are being collated jointly or under umbrella bodies

13 What we re seeing There are fewer LAs looking to make a direct investment than anticipated There is demand for support for LAs who have previous experience of heat networks The level of demand for support and guidance from HNDU is higher than DECC planned for A key challenge is supplier diversity in the market and this is starting to happen (driven by LAs) Average cost of projects is remaining constant but less than 10 projects have gone to market so this could change Suppliers feedback is they re already cherry-picking and have suggested longer procurement windows (depending on complexity

14 The Future of HNDU The HNDU has and support until March 2015 but the work taking place now will have longer term impacts Inform future policy R3 05/14-06/14 R4 08/14-09/14 On-going HNDU project support Improved procurement standards Improved technical standards Shared learning R5 11/14-12/14 Lower project development costs Increased number of technically and economically viable heat networks delivered

15 Contact Details John Saunders Heat Networks Delivery Unit Department of Energy & Climate Change T: For more information go to: