Heat networks

Heat networks, i.e. district heating and community heating, are set to play a key role in the UK’s journey to net zero.

The Climate Change Committee estimates that heat demand for heat networks will increase from 2% in 2022 to 18% by 2050.

Heat networks are long term commitments. Stakeholders need to undertake a careful assessment of risks and understand how these risks can be managed through the life of the project. This includes understanding the approach to maintenance, repairs and replacements, managing the introduction of new technologies, considering different approaches to pricing the supply of heat, the impact of future regulations and consumer protection requirements.

We act for the public sector, developers, operators and off-takers across the whole life of a heat network project.

We advise clients on a range of matters including:

subsidy control;
procurement routes to market;
design and build and operate and maintain arrangements (and their related disputes);
planning and wider property matters, such as wayleaves, easements and landlord consultation requirements;
connection and supply arrangements, as well as the sale or purchase of heat networks and the associated due diligence.

We are familiar with BEIS template documents, concession arrangements, New Engineering Contract (NEC) and FIDIC forms, and bespoke contracts.

We also have a unique understanding of the Heat Network Investment Project (HNIP), the Green Heat Network Fund (GNHF) and the BEIS Heat Investment Vehicle project (BHIVE) and how developers, operators, local authorities and housing associations can access these sources of funding to develop and deliver heat networks.

Experience

Advising a local authority on its outline business case (OBC) for a heat network. We advised on procurement routes to market, commercial structure and heads of terms for key contracts.
Advising an Energy Services Company (ESCo) on the construction of its network in England and developing the forms of connection agreement and supply agreements for the project. We have also advised ESCo on updates to its supply terms to consumers to ensure consistency with applicable laws and regulations.
Advising a bidder for a local authority heat network on a concessions basis. We developed the procurement strategy for the successful bidder and we undertook due diligence on the construction contracts, connection and supply agreement as well as planning and property matters to enable the successful bidder to value the network and submit their bid.