UK: New scheme launched to encourage heat networks

The Heat Networks Investment Project (HNIP) was launched in October 2018, following a pilot scheme which ran from 2016 to 2017 and offered a total of £18.5m of funding to eight eligible projects. The aim of HNIP is to increase the number of heat networks being built.  

Heat networks are used extensively in some parts of the world but are uncommon in the UK. The Clean Growth Strategy’s illustrative 2050 pathways suggest a fifth of buildings could have the potential to access a low carbon district heating network by 2050.

The Department for Business, Energy and Industrial Strategy (BEIS) is working with an investment management firm alongside other technical, financial and legal firms as the delivery partner for the £350m HNIP scheme, which is set to last for three years.

HNIP, which supports a variety of technologies, will fund less than 50% of the capital expenditure incurred in the construction of the project. Projects will be funded in one of three ways:

  1. A grant up to £5 million
  2. A loan between £25,000 and £10 million
  3. A combination of grant and loan which complies with points 1 & 2 and doesn’t exceed a Gross Grant Equivalency of £5 million.

To be eligible for the HNIP, projects can:

  • Include heat supplied by multiple different heating and cooling sources.
  • Distribute thermal energy at any temperature and using any fluid, including ambient temperature networks.
  • Must not be communal heating, where a single heat source is used within a single multi-tenanted property.

More information on HNIP can be found here.

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