Delivering Heat Networks Understanding the challenge

District heating networks are a key component These challenges and complexities are best of a future low carbon . They will addressed by bringing together engineering, provide the means to capture and distribute planning, finance and regulatory expertise into heat from a diverse mix of primary as well as an integrated project delivery unit. secondary heat sources to serve homes and businesses. Development of district heating Arup’s multidisciplinary approach to district networks at scale across the capital over the heating project delivery underpins our work next ten years is therefore essential for London in London and across the UK. We support to meet the Mayor’s target of meeting 25% public and private sector clients from early of London’s energy needs from decentralised stage resource assessments and policy advice sources by 2025. through to scheme design, business case and procurement. We work closely with clients at Thanks to previous mayoral programmes such each stage to scope the opportunities, analyse as the London Heat Map and Decentralised the fundamentals and develop practicable Energy Masterplanning (DEMaP), the solutions for bankable projects. challenge today is no longer knowing where the opportunities lie; it is understanding how to deliver them in the face of multiple barriers, including: -- long investment horizons; -- limited windows of opportunity; -- an opaque regulatory framework; -- a stigma of poorly performing schemes in the past; and -- limited experience among local authorities and developers.

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 practical experience 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 resource assessments -- Combined heat and power -- Energy and low carbon policy -- District heating and cooling -- Heat mapping -- Low temperature heat networks -- Techno-economic modelling -- Energy from waste -- Detailed feasibility studies -- boilers and CHP systems -- Detailed design -- Lake loop cooling -- Financial modelling -- Ground source heat pumps -- Commercial structuring -- Geothermal energy systems -- Heat and power purchase agreements -- Air source heat pumps -- Customer protection schemes -- Micro-grids -- Risk assessment and allocation -- Energy storage -- Procurement strategy -- Contract specifications -- Procurement management

3 Project stages

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

Capacity building Development of tools

We deliver informal training and ongoing At the start of projects, a standard techno- support to staff within project sponsor economic modelling tool can be developed organisations. For example, by working to enable the team to generate efficient and through project sponsors rather than taking consistent results at the energy masterplanning direct responsibility for project delivery, the stage. We also develop more detailed energy DEPDU service has delivered significant network modelling tools to support more informal training benefits to Council and other complex and detailed project analysis. public sector energy, planning and housing staff across London. Guidance

Research We authored the recently published London Heat Network Manual. The Manual is intended to The team has undertaken focused research to support the industry by providing authoritative address key technical and commercial challenges guidance, building on user feedback from which arise on projects. Examples include the previous version of the manual including identifying funding sources and financing technical design principles and concepts for options for district heating investments; the physical infrastructure of a heat network; modelling the potential use of “Licence Lite” to contract and procurement; tariff structures increase revenue from CHP sales; the and customer service standards; and metering price of heat; and the potential for low carbon arrangements. heat networks using alternative heat sources and low temperature networks.

4 Lee Valley Heat Network, Enfield

The Lee Valley Heat Network is London’s satellite heat network projects. We provided a largest heat network development project. The wide variety of technical and financial support project encompasses a strategic heat network provided to Enfield including the completion connecting more than 5,000 homes in Enfield of wider vision mapping and support in the with heat recovered from the Enfield EcoPark development of the business plan for the Energy from Waste . scheme. The satellite projects include the Alma Estate project utilising heat recovered from a Arup has completed a series of design lake loop to supply the housing estate; analysis and feasibility studies, capex assessment, of a potential steam connection from Kedco to route proving studies, route optimisation Coca-Cola Enterprises; and a biomass boiler led investigations and financial modelling for the development at New Avenue Estate. scheme, the connected sites and a number of

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5 Projects

UK-wide London

AP Salads, Europa Nurseries, Kent DEPDU Programme, London We were appointed as Client’s We support the GLA as part of Through our engagement, we are 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. We 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. largest horticultural growers.

Distributed Energy, Knowsley We undertook a techno-economic assessment for developing distributed energy infrastructure in “The London Development Agency has the form of energy centres and heat established thought leadership in London network(s) to provide commercially viable low and zero carbon energy on decentralised energy and Arup has in 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. Our role on the project continued through to the delivery to deliver our requirements.” phase as we became the client’s Peter North, Head of Project Delivery - Environment, GLA project manager and technical advisor through the subsequent DBO contract procurement.

6 Kings Cross Central CHP and Power Station (GPS) Energy Strategy, London As part of a range of options to We worked on the procurement decarbonise its electricity supply, of independent electricity and Transport for London (TfL) are district heating networks for exploring the redevelopment of the Kings Cross development, GPS, which is an oil and gas-fired including a central plant with CHP power station operated by TfL as a and renewable energy sources. back-up electricity source for the We completed an appraisal London Underground. The first of energy options, developed Arup study specified and evaluated the reference scheme design, the energy and cost parameters of produced procurement and contract a district heating main to facilitate documentation and acted as the transfer of heat generated within Client’s Engineer. Our innovative the existing GPS building to the approach led the client to keep us . We are involved during the tender process, also working on a second study leading the technical aspects of evaluating the potential for a new the tender evaluation and Energy GPS to support a low carbon Services Company partner district heating system, and for selection process. lower carbon options for continuing operation of the existing GPS. Goldsmiths College, We worked closely with the GLA’s RE:FIT project delivery unit to bring a project to market for Goldsmiths College which combined procuring a series of building improvement measures with provision of a new heat network. The role included the use of Arup-developed performance specification for the design, build, operation and maintenance of the network. We 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