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To sign the Memorandum of Understanding
between Cheltenham Borough Council and Department of Energy
Security and Net Zero accepting £100,000 of funds from the
Heat Network Delivery Unit round 15 bid. The total contract value
is £130,000, comprising £100,000 HNDU grant funding and
£30,000 existing approved funding from Climate Leadership
Gloucestershire, Gloucestershire County Council and Cheltenham
Borough Council. To direct award and enter a contract with the
Carbon Trust to deliver detail project development for the Town
Centre Heat Network.

Reasons for the decision

It is a requirement to sign the Memorandum of
Understanding to accept the funds from central government. To
enable the Council to deliver on the detailed project development
phase of the Town Centre Heat Network project it is necessary to
enter into a contract with a third party to provide technical
expertise consultancy services. Given delivery milestones set by
central government, undertaking a competitive tender would likely
prevent meeting required deadlines, presenting a material risk of
grant withdrawal. The Crown Commercial Service Demand Management
& Renewables framework permits direct award whereby justified
by time constraints and specification fit. A direct award is
therefore proposed due to the March 2026 draft output deadline and
the Carbon Trust’s demonstrable experience delivering heat
network detailed project development. Failure to progress risks
loss of external funding, reputational impact, and delay to the
council’s preparedness for future statutory heat network
zoning regulation.

This decision notice provides the relevant authority to direct
award the total £130,000 to the Carbon Trust utilising the
Crown Commercial Service Demand Management & Renewables
Framework.

Background information:
Heat networks will play a crucial role in decarbonising heat in
buildings. Heat networks 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 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.

Heat network development supports the council’s
carbon-neutral ambitions and contributes to national heat
decarbonisation pathways under the Energy Act 2023.

Alternative options considered

The Council considered not accepting the funds
due to constraints surrounding project delivery and internal
resource however this was rejected due to the highly competitive
nature of the funds, strong political and regional support, and to
ensure continued project momentum. Since the receipt of a
successful bid, a Climate and Decarbonisation Manager has been
appointed to assist with provided strategic oversight of this
project. The Council also explored different procurement frameworks
however draft outputs need to be submitted to central government at
the end of March 2026, therefore direct award is necessary for
project continuity and delivery.