In November 2015, the Government announced that it was making available £320m of funding to support investment in heat networks over the next five years. This is expected to draw in up to £2 billion of additional capital investment and lead to the construction of hundreds of heat networks in England and Wales.
Our investment support aims to increase the volume of heat networks being built to deliver cost effective carbon savings, whilst protecting consumers and helping to create the conditions necessary for a self-sustaining heat network market to develop.
Following a public consultation  held in June – August 2016, the Government published a consultation response document  setting out the evidence received from the consultation and a summary of the decisions taken for the pilot scheme. The consultation response set out the following:
- A Pilot Scheme is being launched now for applications this autumn, with first payments to be made by 31 March 2017. The budget available for the Pilot Scheme is up to £39m, split across two financial years (2016/17 and 2017/18).
- The Pilot will consist of one single competitive funding round and will inform the design of the Main Scheme, which is expected to open in 2017 and run for four years.
- The Pilot Scheme is open to local authorities and other public sector bodies excluding central Government Departments, noting that there are some restrictions on the type of finance that some public sector organisations can accept.
- Applicants can apply for grants or loans.
- Any efficient heating and cooling networks in England and Wales – including those that also generate electricity – is eligible for support.
- Eligible costs include the construction, expansion, refurbishment and interconnection of heat networks, including works to access recoverable heat and upgrade of heating systems inside some existing properties as well as commercialisation phase costs (where they are capitalised).
- Multiple criteria will be used to score and rank applications with respect to their carbon savings, customer impact and social net present value.
There will be a two stage application process in the pilot. At pre-qualification, applicants will tell us what funding they are looking for and answer a set of questions to confirm the project is eligible. At full application, detailed project documentation will need to be provided, in order to assess project quality and to score the project against carbon saving, customer impact and social net present value criteria. Applications will be ranked against the benefits delivered and funding will be awarded to the projects with the best value for money within the available funding.
For more information, please read the applicant guidance document.
1 Heat Networks Investment Project Consultation Document, published 29 June 2016
2 Heat Networks Investment Project Consultation Government response, published 17 October 2016
3 Heat Networks Investment Project Full Application Guidance, updated 2 November 2016
4 Heat Networks Investment Project - Full Application Guidance Work Shop, updated 3 November 2016
5 General Input Template V 1.0, published 3 November 2016
6 Shadow Heat Model Guidance Document, published 3 November 2016
7 Shadow Heat Model Template V 2.1, published 3 November 2016
8 Draft Heads of Terms for the HNIP Funding Agreements, published 9 November 2016
9 Slides from input templates workshops held on 21st and 22nd November, published 22 November 2016
10 Cost benchmarking worked example, published 22 November 2016
11 Application process map, published 24 November 2016
12 Example gross grant equivalent calculator, published 24 November 2016