Election Fever - Heat Networks. Is the temperature rising?

As election fever heats up, a theme coming through all the main parties is the energy agenda and what this may mean in the next Government term. 

As part of the energy efficiency agenda, the current Government has supported the development of Heat Networks and provided funding for Local Authorities to develop new projects.  Regardless of the outcome of the election, we think that Heat Networks are here to stay and they will be a growing feature of the UK's energy solution in future years.

We will be issuing a series of articles over forthcoming weeks which will cover some of the key legal and commercial issues for Heat Networks.

Introduction

For many Local Authorities the development of a Heat Network (or district heating, community heating, district energy or decentralised energy) project can be an important way to becoming more energy efficient, deliver low carbon energy, alleviate fuel poverty, save money and generate much needed revenue. 

Current Government is heavily promoting the development of Heat Networks.  The Heat Network Delivery Unit (HNDU) was created by DECC to provide grants and support to Local Authorities to help enable the development of Heat Network projects. Currently, 55 local authorities are receiving a share of £7 million of HNDU funding with grants ranging from around £16,000 to £263,000. 

This is clearly great news for all the Local Authorities involved as they can use the funding to help develop and shape these exciting projects. As part of the development and scoping phase, there are a number of key commercial and legal issues which need to be considered in order to deliver a successful Heat Network Project.  These include:-

•  Nature of the project – single development, area or region wide?
• The drivers and benefits for local authorities
• Identifying the right delivery structure
• The role of any private sector partner
• The creation of a project specific Energy Services Company (ESCo)
• Joint working with other public sector entities – e.g. NHS, Universities and Registered Providers
• Procurement and state aid
• Sources of the heat energy – e.g. gas, biomass, or waste heat
• Sizing the Heat Network and who owns all the assets
• Heat pricing and consumption risk
• Metering and billing issues
• Consumer issues, including the recent Which report
• Impact of future legislation and regulation;
• Availability of Government subsidies, such as the Renewable Heat Incentive
• Property issues, including the Landlord and Tenant Act

Our forthcoming articles will cover some of the above key issues.  If you or colleagues would like to receive these, then please register your interest by sending an email to lilly.drakoulakou@bevanbrittan.com   

This is in the run up to a Seminar we are delivering on Heat Networks in our London office on Tuesday 2 June 2015: Heat Networks – A toolkit for assembly.

Register here for the seminar