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Turning up the Heat

The Government has recently announced a new £6 million grant funding programme that has been launched to help local authorities in England and Wales to develop new heating and cooling networks, and expand existing networks.  In order to be in with a chance of winning a share of the funding, local authorities will have to submit ambitious and innovative proposals to develop and deliver heat networks that draw their heat energy (as much as possible) from renewable, sustainable or recoverable sources.  These sources could include waste heat from industry, energy from waste plants and biomass combined heat and power.

About the fund

The fund will be managed by the Heat Networks Delivery Unit (HNDU) within the Department of Energy and Climate Change.  HNDU has been established to help local authorities in England and Wales to achieve urban decarbonisation, local growth, improved energy efficiency and reduced fuel poverty through increased use of heat networks.

The primary purpose of the grant funding is to help develop business plans that are sufficiently robust to attract a range of finance options, including commercial investment.  HNDU will favour those projects looking at more innovative heat sources, which will complement more traditional sources like gas combined heat and power.  The fund will meet two-thirds of the estimated eligible costs of specialist consultants used to develop technical proposals and financial evaluations and applicants will need to contribute the remaining third.

Launching the scheme, Energy and Climate Change Minister Greg Barker said, “This new grant funding programme builds on [earlier] successes by helping local authorities develop more commercially viable low carbon heat networks”.

Accessing the money

Local authorities interested in receiving money from the fund will be able to bid for funding.  The bidding process started on 20 September 2013 and continues for 18 months through a series of six bidding rounds.

The indicative timetable for the bidding rounds is as follows:


Bidding round Invite applications   Application deadline
2013/14 First Round 20 September 2013 15 November 2013
2013/14 Second Round 18 November 2013 24 January 2014
2014/15 First Round April 2014 End May 2014
2014/15 Second Round June 2014 End July 2014
2014/15 Third Round September 2014 End October 2014
2014/15 Fourth Round Mid November 2014 End January 2015

Bids will be assessed against transparent and robust criteria, which include the potential for commercial development, contribution towards low carbon and energy reduction objectives, compatibility with wider low carbon and growth agendas (where applicable) and a demonstrable commitment to robust project management and governance.

Where an application is submitted that is considered to have realistic commercial propositions, but falls short of the threshold for funding, the Department of Energy and Climate Change will offer advice to the relevant local authority on how to improve the applications within that or subsequent rounds.

Details on how to apply for the competition can be found on the Government’s Heat Network webpage.

How we can help

Walker Morris is one of the UK’s leading law firms advising on renewable energy projects, including heat networks, biomass schemes and energy from waste projects.  We have a team of experts in our Renewables, Energy and Resources Group advising on all aspects of project development, from site acquisition and planning, turbine supply, power purchase and grid connection through to decommissioning.  Members of the Group have been advising local authorities, developers, contractors, energy suppliers and funders for a number of years.  In particular, we are one of the leading advisers on municipal energy projects, advising councils on wind, solar and biomass schemes, and this standing has been enhanced by our appointment as the strategic legal partner of the Association of Public Sector Excellence (APSE) for renewables and energy efficiency.

This experience, and our relationship with APSE, means that we can advise you on business plans, structures, models and legal issues, as well as helping with your bidding application.

Turning up the heat