Blog: 10 from 10 - Key Learnings from a Decade of Heat Network Projects
At the Net Zero Scotland conference in March 2024 we presented our top 10 ‘key learnings’ relevant to the public sector from Ener-Vate’s last decade in business.
For those that missed it, here’s the top 10 count-down…in reverse order of course!
10. HNs are technically and commercially challenging large scale infrastructure projects with typical development phases spanning 4-7 years and 40+ year operating commitments. If you are not used to owning or managing such assets you need to be thinking and planning for a long-term, strategic commitment.
9. If you are considering becoming a local, regulated utility supplier take time to understand your options and the implications on your organisation – do not dive in. You need to identify the right delivery model with the optimal risk-reward profile to suit your organisation. You also need to understand the overheads for running this business and the level of internal capacity you need to meet delivery of these services. There are examples of public sector bodies owning and operating large heat networks with a relatively small in-house team if you decide to out-source much of its operational management and customer interfaces.
8. If you are considering a partnership with a 3rd party (for example through a Joint Venture) ensure you fully appreciate their commercial position. What are their key ambitions? What long-term value do they offer you? How much additional capacity will they provide? Are they likely to commit to meeting your project drivers? How can you ensure they do?
7. Identify all your key stakeholders early, map their roles and engage with them at multiple levels. HNs need strategic planning. You can’t afford to have lots of stakeholders across the local area all pulling in different directions with different agendas.
6. Keep a close eye on the evolving HN landscape - new funding opportunities, evolving technical standards, policy updates, regulation changes etc. These are all key drivers that could impact positively or negatively on your project plans and they are likely to be in flux for the next decade.
5. Understand the value you bring to table. For example local authorities bring a permitting and planning control role, they own land and building assets, they have access to huge customer base, they can access funding and low cost finance, they can dilute an overtly commercial perception and most importantly they are able to ensure value is appropriately distributed.
4. Define and prioritise your key project drivers. There are lots of key drivers for developing HNs – what are yours? Examples include moving to Net Zero building assets, reducing fuel poverty, improving air quality, generating financial returns, legislative compliance or meeting climate targets. But you need to prioritise which drivers are key to your project.
3. Your commercial model is a key resource that defines whether your project is viable and investable. It should underpin most decisions over the lifecycle of a project. It should be developed early, then revised and improved regularly throughout the project lifecycle in line with stakeholder expectations and project variations.
2. It is highly unlikely a single supplier can offer you all the expertise you need to develop a HN project. You are likely to need a multi-disciplinary team of specialists to cover all key areas - commercial, technical, legal, financial and customer awareness/engagement. In early stages of projects there can be a tendency to focus on technical issues at the expense of organisational and commercial ones – resist this.
1. Know thy customer - think about your customers early in the process. How much data have you collected about their heating and cooling demands? Who and where are your major heat suppliers? Who are the key anchor loads? What drivers do they have to decarbonise? How price sensitive are they likely to be? Some customers have strong drivers to move to greener heating, most customers want competitive prices. Successful schemes like Leeds PIPES have become highly attractive to customers by being price competitive. What is your pricing model and how are you going to ensure prices are market competitive?
From our decade-long journey in heat network projects, it's clear that the path to sustainable infrastructure is paved with invaluable lessons. From strategic long-term commitments to understanding stakeholders and prioritising project drivers, each learning has shaped our approach and guided our success.
As we embark on our next chapter, we invite you to reflect on these key takeaways and consider how they can inform your own decisions around Heat Networks.
To delve deeper into these insights and explore how Ener-Vate can support your journey towards low carbon energy solutions, reach out to our team today.