Heat Network Efficiency Scheme (HNES)

Summary

The Heat Network Efficiency Scheme (HNES) provides funding to public, private and third sector applicants, to support improvements to existing district heating or communal heating projects in England and Wales that are operating sub-optimally and resulting in poor outcomes for customers and operators. Projects can apply to HNES for either revenue or capital grant funding: Revenue grants – grants to fund procurement or mobilisation of external third-party support to carry out Optimisation Studies. These studies will assess heat network projects to identify causes of sub-optimal performance and recommend costed intervention or improvement measures. Capital grants – grants to part-fund the delivery (installation) of eligible intervention/improvement measures.

Who can apply

HNES is open to applicants who are responsible for operating or managing existing district heat networks or communal heating systems in England and Wales. This includes: Public sector organisations including NHS Trusts, Universities and Other Government Departments. Private sector organisations that are registered companies and submit annual accounts. Third sector organisations such as registered charities, community investment companies and other such organisations that are officially registered and submit annual accounts. Successful applicants will be the recipients of grant funding and will be responsible for ensuring that grant funds are deployed in accordance with funding award, i.e. procuring or mobilising third-parties to deliver the funded activities. Applicants must be legal entities, with authority to sign-off investment decisions for the heat network they are responsible for and instruct delivery of funded works. Consultants cannot submit applications on behalf of their clients, but they can support in the development of the application form and supporting evidence. Individuals cannot apply to HNES. Potential applicants that are unsure whether their projects meet the HNES eligibility criteria should contact hnes@talan.com . Grant application assessment and award will prioritise projects which: Support a higher proportion of residential “customers in need” (as aligned with HNES Objective 2). For the purposes of HNES, this is defined as: “Dwellings supplied heat/energy by a heat network, in which a resident or residents are considered financially vulnerable and will therefore benefit significantly from reduced costs for heating or service improvements through HNES support. This includes any of the following categories (or equivalent) of status or accommodation type: social housing; low-income housing; customers in fuel poverty; extra care housing; low-income care homes and supported housing ”. Where applications do not include support for residential “customers in need”, or where this support (alongside evidence of how customer detriment will be improved) is not satisfactorily addressed, HNES reserves the right to reject the application. Deliver benefits which can demonstrate improvements to networks where baseline performance metrics are considered particularly poor, and/or can deliver a significant performance improvement over the baseline performance (as aligned with HNES Objective 1). Networks that do not support residential "customers in need”, including non-residential heat networks such as hospital or university campuses or those supplying commercial buildings, are still able to apply. However, applicants with a high proportion of residential “customers in need” will be prioritised. HNES will fund capital measures across the network categories outlines below, where the measures directly contribute to achieving the HNES objectives: Energy centre / plant room Primary / secondary distribution network Tertiary network Works that are not eligible include, but are not limited to, the replacement of primary plant; changes to or replacement of pipework or heat emitters within the tertiary network; and installation of meters and metering equipment where this is a requirement under the Heat Networks Metering and Billing Regulations.

Full details

The Heat Network Efficiency Scheme (HNES) provides funding to public, private and third sector applicants, to support improvements to existing district heating or communal heating projects in England and Wales that are operating sub-optimally and resulting in poor outcomes for customers and operators. Projects can apply to HNES for either revenue or capital grant funding: Revenue grants – grants to fund procurement or mobilisation of external third-party support to carry out Optimisation Studies. These studies will assess heat network projects to identify causes of sub-optimal performance and recommend costed intervention or improvement measures. Capital grants – grants to part-fund the delivery (installation) of eligible intervention/improvement measures. HNES is a multiple-funding-round grant support programme with funding expected to be deployed across FY23/24 to FY29/30. The final funding drawdown for funded works must be made in advance of the end of the financial year in which the funding has been allocated. HNES will advise projects of the final deadline to submit grant claims in each financial year, typically around early-March. HNES can provide: Up to (but not including) 50% of eligible project costs (incl. non-recoverable VAT if requested in the application form) for capital grant applications. Up to 100% of eligible project costs (incl. non-recoverable VAT if requested in the application form) for revenue (Optimisation Study) grant applications, and within the budget range as defined in this Guidance. HNES funding notification letters will be issued as soon as practicable and subject to all approvals being received. A condition of all funding awards is that applicants/projects will be required to fulfil monthly/quarterly Monitoring and Reporting requirements. This is to enable monitoring and evaluation of the benefits and impacts of HNES, as well as to understand how projects are progressing and identify any risks or issues. Successful applicants will also be required to give consent to the Department for Energy Security and Net Zero to publicise the grant value and details of their funded activities. This includes the development of a case study upon completion of the project.