District Heating Local knowledge, global expertise Understanding the challenge

In the UK, electricity is typically generated We can support clients through all stages of at large power stations remote from the areas decentralised energy infrastructure project they supply. The remote location limits the development – from policy development, heat possibility for heat to be recovered and used, mapping and capacity building, feasibility whilst the long transmission distances result and techno-economic modelling to detailed in further energy losses. Arup has a team of design, financial modelling, commercial specialists working in the decentralised energy structuring, procurement and contract advice market, facilitating energy generation and and procurement management. distribution systems to supply heat via district heating and electricity via grid or private Arup is providing innovative solutions to the wire closer to the locations where energy challenges of changing legislation, zero carbon is consumed. homes and a decreasing grid carbon intensity. Our team also draws on Arup’s wider building Our team of district heating specialists help expertise to identify and develop integrated a wide variety of clients develop low to zero and optimised solutions for our clients’ needs. carbon district heating solutions. Our largest engagement saw us appointed by the GLA to support its Decentralised Energy for programme to provide technical expertise to develop and bring decentralised energy projects to market. The programme is a major contributor to the Mayor’s target of supplying 25% of London’s energy from decentralised sources by 2025.

2 Understanding the challenge Delivering solutions

The unique working philosophy at Arup – Through our global knowledge management founded on flexibility, transparency and systems, we are able to harness ideas and ability to deliver – is ideally suited to precedent from projects worldwide. delivering district heating and distributed energy projects. These projects incorporate Our district heating team has so far a wide range of skills available within undertaken around 80 separate engagements Arup, including engineering, planning, across key groupings of energy finance, commercialisation, environmental masterplanning, feasibility studies, business and planning, project management and case and commercialisation, procurement, stakeholder engagement. capacity building, research and guidance.

Specialist Skills Technology

-- Energy policy -- Combined heat and power (CHP) -- Pre-feasibility studies -- District heating -- Detailed feasibility -- Waste heat -- Route proving -- Low temperature heat -- Capex assessments -- Biomass boilers -- Financial modelling -- Biomass CHP -- Techno-economic modelling -- Lake loop cooling -- Financial model review -- Ground source heat pumps -- Detailed design -- Air source heat pumps -- Specification -- Commercial structuring -- Risk assessment and allocation -- Production of procurement documentation -- Technical advice to contract development

3 Project stages

Procurement: We offer advice on procurement strategy and support through all stages of contractor procurement (PQQ, performance specification, Financing: We offer FSA tender evaluation etc.). registered financial modellers and accounts that can insure Examples: Brent South Kilburn, our DH solutions provide a Camden Euston Road commercial return.

Policy Procurement Financing Development

At all stages of a project we build Heat Business capacity, deliver research and guidance, and Mapping Plan develop tools to support delivery.

Energy Commercial Business Feasibility Studies Masterplanning Strategy Case

Energy masterplanning: We Commercial strategy: We Feasibility studies: Our detailed Business case and define short (kick start) and combine pre feasibility studies, analysis of specific network commercialisation: We provide longer term opportunities planning, procurement and opportunities identified in detailed financial cash flow for district energy network ownership options. energy masterplans includes modelling of defined projects, development based on analysis energy supply optioneering advice on pricing strategies of building energy demands Examples: Olympic Park, for connection agreements; and available supplies, LVHN, Nine Elms (CHP, biomass, heat pumps risk assessment and advice testing clusters and network etc.), pipe network route on commercial structures; and configurations and determining engineering assessments support to sponsors in drafting energy centre sizing. Analysis (identifying pinch points and business case reports for board is both technical and obstructions), energy centre / cabinet approval. economic; outputs expressed design, scheme phasing, in MW capacity, length of pipe Example: Lee Valley Heat funding options and investment Network network and Net Present Value cash flow analysis. (NPV) of investment. Example: Power Examples: Sutton Hackbridge, Station. Waltham Forest Wood Street, Ealing Southall and Camden Euston Station area.

4 Throughout a project

Capacity building Development of tools We deliver informal training and ongoing support At the start of the project, a standard techno-economic to staff within project sponsor organisation. By modelling tool was developed to enable the team to working through project sponsors rather than taking generate efficient and consistent results at the energy direct responsibility for project delivery, the DEPDU masterplanning stage. A more detailed energy network service has delivered significant informal training modelling tool was later developed to support more benefits to Council and other public sector energy, complex and detailed project analysis. planning and housing staff across London. Guidance Research Arup authored the recently issued London Heat Network The team has undertaken focused research to address Manual. The Manual is intended to support the industry key technical and commercial challenges which arise by providing authoritative guidance, building on user on projects. Examples include identifying funding feedback from the previous version of the manual sources and financing options for district heating including technical design principles and concepts for investments; modelling the potential use of “Licence the physical infrastructure of a heat network; contract Lite” to increase revenue from CHP electricity sales; and procurement; tariff structures and customer service the price of heat; and the potential for low carbon standards; and metering arrangements. heat networks using alternative heat sources and low temperature networks.

5 Projects

UK-wide London

AP Salads, Europa Nurseries, Kent DEPDU Programme, London We were appointed as Client’s Arup supports the GLA as part of Through our engagement Arup is Engineer by P3P Partners to provide the Decentralised Energy Project considering the alternative structures technical and commercial advice on Delivery Unit (DEPDU), which and approaches to the delivery of all aspects of design, installation, aims to facilitate over £95m of DE projects, providing innovative commissioning and operation of distributed energy projects. Arup solutions in a variety of different this distributed energy project, provided assistance during the contexts. This includes the costs, which comprised the construction prospecting and project framework benefits and the risks associated and development of a new energy stages of the projects, and continues with full public, private or a mixture centre. We were able to provide an to provide support through to of ownership. Arup’s analysis is innovative solution that not only the feasibility, procurement and allowing DEPDU to establish the provided heat and power but captured commercialisation processes. most appropriate commercial models and used CO2 for one of the UK’s for these projects and to identify largest horticultural growers. common elements in SPV delivery structure for DE. Distributed Energy, Knowsley We undertook a techno-economic assessment for developing distributed energy infrastructure in the form of “The London Development Agency has energy centres and heat network(s) established thought leadership in London to provide commercially viable low and zero carbon energy in on decentralised energy and Arup has Knowsley Business Park and Knowsley Industrial Park (KIP) - played a fundamental role in shaping that one of Europe’s largest industrial thinking. We wouldn’t have developed our parks. The project involves market testing of the KIP commercial case current strategic vision without Arup. They (also produced by Arup) resulting in excellent early signs of interest from understand our business, know what we potential strategic partners in the want and have adapted their people and business of delivering design, build, finance, operate and maintain service skills to integrate with and support our team offerings. We provided an invaluable service to the client and became a to deliver our requirements.” trusted advisor retained to provide Peter North, Head of Project Delivery - Environment, GLA project management and technical services to support the procurement of the planning, design, construction, commissioning, operation and maintenance of heat networks.

6 Kings Cross Central CHP and Lee Valley Heat Network, Enfield Greenwich (GPS) Energy Strategy, London The Lee Valley Heat Network is As part of a range of options to Arup worked on the procurement London’s largest heat network decarbonise its electricity supply, of independent electricity and development project. The project Transport for London (TfL) are district heating networks for encompasses a strategic heat exploring the redevelopment of the Kings Cross development, network connecting more than GPS, which is an oil and gas-fired including a central plant with CHP 5,000 homes in Enfield with heat power station operated by TfL as a and renewable energy sources. recovered from the Enfield EcoPark back-up electricity source for the We completed an appraisal Energy from Waste power station. London Underground. The first of energy options, developed Arup has completed a series of Arup study specified and evaluated the reference scheme design, design and feasibility studies, capex the energy and cost parameters of produced procurement and contract assessment, route proving studies, a district heating main to facilitate documentation and acted as the route optimisation investigations and transfer of heat generated within Client’s Engineer. Our innovative financial modelling for the scheme, the existing GPS building to the approach led the client to keep us the connected sites and a number of . Arup is involved during the tender process, satellite heat network projects. We also working on a second study leading the technical aspects of provided a wide variety of technical evaluating the potential for a new the tender evaluation and Energy and financial support provided to GPS to support a low carbon Services Company partner Enfield including the completion of district heating system, and for selection process. wider vision mapping and support lower carbon options for continuing in the development of the business operation of the existing GPS. Goldsmiths College, Lewisham plan for the scheme. The satellite We worked closely with the GLA’s projects include the Alma Estate RE:FIT project delivery unit to bring project utilising heat recovered from a project to market for Goldsmiths a lake loop to supply the housing College which combined procuring estate; analysis of a potential steam a series of building improvement connection from Kedco to Coca- measures with provision of a new Cola Enterprises; and a biomass heat network. The role included the boiler led development at New use of Arup-developed performance Avenue Estate. specification for the design, build, operation and maintenance of the network. Arup became a trusted part of the team and provided procurement assistance to the College in subsequently interviewing shortlisted tenderers and selecting a preferred contractor to undertake the district heating improvement works.

7 For more information please contact:

Paula Kirk t +44 20 7636 1531 d +44 20 7755 2907 e [email protected]

Thomas Briault t +44 20 7636 1531 d +44 20 7755 2561 e [email protected]

Arup 13 Fitzroy Street London W1T 4BQ United Kingdom t +44 20 7636 1531 www.arup.com