Heat Network Business Case Development resource: Economic and Financial Case

Through DECC’s Heat Networks Delivery Unit (HNDU) and our work with local authorities during the early stages of their heat network development projects, a need was identified for a specialised package of guidance that will help address some of the more bespoke and complex financial, commercial and delivery considerations during business case development.

DECC wishes to appoint a contractor to develop financial guidance reports for local authorities and heat network developers, to fully understand the financial components of heat network projects. This resource will contribute to guidance which will consider various components of heat network projects, which support the HMT Five Case business model.

HNDU have already undertaken a high-level Literature Review, and have scoped-out the financial aspects that HNDU consider appropriate and relevant to local authorities and developers, and are worth investigating in more detail.

The contractor is expected to (but is not limited to) refine the list of existing literature available, identify and undertake analysis of key economic and financial components to the heat network business case, and develop publishable written guidance on these topics to enable local authorities and developers to develop robust business cases.

The expected outputs are guidance documents relating to the following four areas: • Work Package F1. Management of the Risks Associated with Techno-Economic Modelling. • Work Package F2. Pricing from the Customer Perspective. • Work Package F3. Revenue Streams & Avoided Costs – Maximising Opportunities. • Work Package F4. Optimism Bias in Specific Relation to Heat Networks.

The project is subject to challenging timeframes, and the contract is expected to be completed by 25 March 2016.