The following questions are provided as a prompt for local authorities considering whether to take on each of the defined roles for a heat network. As explained in the body of this guidance, there are no hard rules to determine which party should or must take on each role. It will depend on the circumstances of the project and the respective drivers, resources, and risk appetites of the parties involved.

For those reasons, the questions below do not come with pre-defined answers, but instead area meant to prompt a discussions and decision-making process by a local authority.

D1 Promotion role

• D1.1 Does the local authority have an interest in the delivery of a heat network project?
• D1.2 Is there an alternate party who could fulfil this role, such as a private developer, or community interest company?
• D1.3 Will the scheme connect to vulnerable customers?
• D1.4 Does the local authority have other particular drivers for being involved in heat network delivery?
• D1.5 Does the local authority have the skills and resources required to undertake the role?
• D1.6 What are the prospects of success?
• D1.7 Is there a material reputational risk?

D2 Customer role

• D2.1 Does the local authority have a sufficient portfolio of anchor heat loads in an area to catalyse a heat network?
• D2.2 Will the heat network provide the local authority with a source of low-cost heat?
• D2.3 Can a fair and reasonable heat sale agreement be agreed with the heat supplier?
• D2.4 What changes may occur to the customer’s needs over time?
• D2.5 Is the supplier capable of delivering the heat services for the entire contract term?

D3 Governance role

• D3.1 Does the local authority have a vested interest in the governance of the scheme?
• D3.2 Could the presence of the local authority in the role of governance provide investors, contractors, or customers with confidence in the network?
• D3.3 Are vulnerable customers present that need protection?
• D3.4 When taking on the governance of a heat network, are there sufficient contractual levers in place for the governing parties to effect change?
• D3.5 How, when taking on the governance role, can a local authority keep its responsibility within limits?

D4 Regulation role

• D4.1 Are there vulnerable customers that the local authority wishes to protect, which it cannot do due to limited other involvement in the scheme?
• D4.2 Will the presence of the local authority in the role of regulation provide customers with confidence?
• D4.3 Does the local authority have the capacity to undertake the role of regulation on a heat network scheme?
• D4.4 Is the local authority already undertaking a significant number of other roles?

D5 Funding role

• D5.1 Is the scheme viable without the local authority providing finance to the project?
• D5.2 Is the local authority interested in making a return on investment?
• D5.3 Has the local authority made a realistic assessment of the risks of funding the heat network?
• D5.4 How is the local authority managing its state aid risk?

D6 Asset ownership

• D6.1 Will the local authority be able to secure a long-term and viable income associated with the operation of heat network assets?
• D6.2 Will the presence of a local authority as asset owner be a catalyst for the development of a heat network?
• D6.3 What are the operational costs associate with the ownership of an asset?
• D6.4 What are the contractual risks associated with the ownership of an asset?
• D6.5 What are the tax implications of owning a heat network asset?

D7 Development of property

• D7.1 Does the local authority own property that could be developed and benefit from a heat network?
• D7.2 Does the local authority wish to control the development programme and roll-out of the heat network to serve the development?
• D7.3 Is the roll-out of the heat network co-ordinated with the development programme?
• D7.4 How can land ownership provide a demand guarantee?

D8 Land ownership

• D8.1 What conditions can be imposed on a sale or grant of a lease, licence, or easement to encourage heat networks?
• D8.2 How can a land owner ensure that stipulating connection to a heat network does not adversely affect land value?
• D8.3 Are there any potential ransom strips on the route of the proposed network?

D9 Landlordship

• D9.1 How can landlordship provide a demand guarantee?
• D9.2 Will the Landlord and Tenant Act allow me to recover my costs?

D10 Installation

• D10.1 Does the local authority need to retain close control over the installation process?
• D10.2 Does the local authority have specialist design expertise in house, or does it have plans to develop such a capability?
• D10.3 Where does design risk lie?
• D10.4 What are the construction risks?
• D10.5 Does the local authority have the resources or funds to enable suitable monitoring and enforcement of a works contract?

D11 Operation

• D11.1 Does the local authority have the capability and resources to undertake the operator role?
• D11.2 Will the local authority own, or have an ownership interest, in the assets?
• D11.3 Is the heat network of a size and complexity which requires specialist engineering capabilities?
• D11.4 What if key operational staff leave the employment of the local authority?
• D11.5 Is the local authority’s reputation at risk if the system breaks down or is chronically unreliable?

D12 Sale of heat

• D12.1 Is securing revenue streams a major driver for the local authority?
• D12.2 Is the local authority already in a position of selling heat or other energy services to customers?
• D12.3 Does the local authority have a relationship with the proposed customers?
• D12.4 Are there other opportunities for revenue besides heat sales?
• D12.5 How sensitive is the business case to bad debt risk?
• D12.6 How confident are you in future heat demands?

D13 Supplier of last resort

• D13.1 Does the local authority have responsibility for at least some of the scheme’s customers by another route, e.g., landlord responsibility for tenants?
• D13.2 Does the local authority have a political stake, or reputational interest, in the long-term success of the scheme?
• D13.3 Does the local authority have the organisational resources to implement a supplier role takeover at short notice?
• D13.4 Are contractual provisions in place to enable the local authority to step in to the supplier role, or could they be put in place?