This guidance, commissioned by BEIS (now DESNZ, the Department for Energy Security and Net Zero), is a reference resource for heat network projects that are moving towards commercialisation.

The documents are structured around the first four cases of HMT’s ‘Five-Case Business Case Model’, which considers the viability of the project from five perspectives:

• strategic
• economic
• commercial
• financial
• management
• procurement and state aid.

Strategic and commercial guidance

This guidance supports completion of the Strategic Case and Commercial Case for a heat network project:

• Strategic Case: a summary and reference matrix of relevant legislation, policy and strategy, and guidance on key drivers for delivery of heat networks.
• Commercial Case:
• the different roles in the delivery of a heat network, and the risks and opportunities associated with each role
• typical contracts used to govern relationships between parties
• delivery models for heat networks, i.e. combinations of role allocations to different parties and the contracts that govern relationship between the parties; and tax and insurance implications for heat networks.

Heads of terms

15 contract heads of terms (HoTs) documents for use by local authorities as a starting point for developing bespoke agreements for particular heat network projects.

Economic and financial guidance

The journey through the development of a Financial Model, which underpins the commercial reality of the Outline Business Case (OBC): use to identify areas where commercial viability of a project can be improved, and where customer protection for the end user can be offered. Topics covered include:

• developing the Techno-Economic Model into the Financial Model
• heat pricing
• revenue streams and avoided costs – maximising opportunities.

Procurement and state aid

An examination of the public law factors that will govern a district heating scheme, with practical advice alongside the legal analysis. It provides case study examples and practical tips for managing the often complex, and occasionally over-lapping, public law issues that arise on a district heating scheme. Topics covered include:

• “powers”
• procurement law
• state aid.

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