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To apply to the Heat Network Delivery Unit round 15 for
£100k (maximum available funds) to further support Detailed
Project Development for the Town Centre Heat Network. 

Reasons for the decision

Heat networks (HN) will play a
crucial role in decarbonising heat in buildings. HNs take heating,
cooling or hot water from a central source(s) and deliver it to a
variety of premises such as public buildings, shops, offices,
hospitals, universities, and homes. The Department for Energy
Security and Net Zero (DESNZ) have used research to establish a
target of around 20% of total heat supply from heat networks by
2050. They currently provide about 3%. DESNZ is further enabling
the development of HN infrastructure through a range of targeted
funding, policy and legislative support to de-risk projects and
attract investment.
In additional to national
significance, the Cheltenham Heat Network exploration is a key
action identified under the Power theme in the Gloucestershire
County Council (GCC) Climate Change strategy, in the Energy theme
segment of the Climate Leadership Gloucestershire (CLG) action plan
and the Cheltenham Borough Council (CBC) Climate Emergency Plan:
pathway to net zero. Although it is located in Cheltenham, it is
believed that the learning, industry engagement and feasibility
work will provide significant benefits across the county when
exploring future heat network potential at other sites.
Cheltenham was 1 of 28 towns
and cities in England to take part in the DESNZ led, HZ Zoning
Pilot Programme, which aimed to standardise national methodology,
and HN zones have been identified considering economic viability,
investment scale and returns, decarbonisation impact and
deliverability. This report was published 14th February
2025, in advance of this, a briefing session was held with the Heat
Network Industry Council (HNIC), which includes most of the major
private sector HN operators in the UK, effectively promoting the
opportunity for heat network development in the town amongst key
delivery and investor organisations.
In 2023-24, CBC was successful
in applying to the Heat Network Delivery Unit round 13 for over
£80k, to complete a detailed HN techno-economic feasibility
study, working with the consultants Greenfield Nordic (now
Granlund). This focused on two zonal-scale opportunities in the
Town Centre and Golden Valley areas of Cheltenham.
In 2024-25, CBC was successful
in receiving partial funding Heat Network Delivery Unit round 14
for £70k, to develop the town centre HN. This phase of works
is described as a Detailed Project Development ‘lite’
which took form as two workshops delivered to CBC leadership team,
SW net zero hub project manager and County Climate Change
Coordinator. The first workshop reviewed the key risks including
the location of the energy centre, securing critical consumers,
area of borough impacted, and development permissions. The second
workshop (delivered by the Carbon Trust) reviewed commercial
structuring and delivery model options, considering the role the
Council would take in the development process.
The next round of available
HNDU funding will enable the Council to continue exploring the
feasibility and deliverability of a Town Centre Heat Network, which
would supply buildings with low carbon heating within the borough.
This phase of works would produce detailed project development,
which will conclude whether the Heat Network development is a
possibility, resulting in the output needed to apply for capital
funding to the Green Heat Network Fund for construction or well
documenting reasoning for why this cannot
progress. 
If the bid is successful, the
next phase would fund:

-      
Establish an internal project
board, with representatives from all relevant service
areas

-      
Further mitigate key risks and
consider opportunities, key are:
energy centre location/approvals
conducting a de-steaming investigation of the Cheltenham General
Hospital,
inclusion of additional consumers
Extended stakeholder engagement and communications campaign to
resolve Memoranda of Understanding (MoU) / Heads of Terms (HoTs)
for consumers and other critical relationships and to maintain the
coalition of partners secured to date. 

-      
Refresh of Techno-Economic
modelling and viability sensitivities, especially in light of a
revised energy centre location

-      
Monitor and assess the impact of
emerging policy, regulation and funding issues, i.e. Heat Network
Zoning regulation (zone designation, zone coordination and
‘requirement to connect’), market controls and emerging
public funding solutions, e.g. GB Energy and National Wealth
Fund.

-      
Soft market testing with the
developer market, using this to inform views on project viability
and hence design, delivery model and funding, and, approaches to
procurement

-      
Facilitate delivery and funding
model decisions

-      
Continue to engage with Triple
Point, as operators of GHNF[1], regarding
the latest on funding allocations and key success
criteria

-      
Update risk review

-      
Legal guidance, including around
contracting and procurement issues

-      
Generate Outline Business
Case

-      
Allow the Council and CLG partners
to be fully informed and make a decision on how to support heat
networks in Cheltenham and exploration of heat networks across the
wider county

[1] GHNF – Green
Heat Network Fund The GHNF provides capital grant support for
commercialisation and construction of new low- and zero-carbon heat
networks.

Alternative options considered

It was considered whether a different organisation could progress
with the role of project lead, however it was decided that the
Council would proceed with the funding application to guarantee the
level of influence necessary for decision making.

Additional funding contributions are being explored from CLG, GCC
and CBC.