Estimating the cost-reduction impact of the Heat Network Investment Project on future heat networks'

Tender description

The Heat Networks Investment Project (HNIP) is a Department of Business, Energy and Industrial Strategy (BEIS) project to support the design and construction of heat networks in England and Wales between 2015/16 and 2020/21 and contribute to a self-sustaining heat networks market (one without direct Government subsidy) beyond that period. Part of delivering a self-sustaining market includes the need to ensure heat supplied from heat networks is cost-effective. Various studies, such as the Low Carbon Innovation Co-ordination Group's Heat Technology Innovation Needs Assessment (TINA), have identified that the costs of UK heat networks could be reduced from current levels. Cost reductions could be achieved through learning by R&D effects (innovation, including applied innovation), learning by doing effects (improved processes/productivity through repeated deployment) or economies of scale effects (delivering larger heat networks). BEIS would like to commission an assessment of the extent to which HNIP could drive such cost reductions. This is important for understanding HNIP's likely contribution to a sustainable market and for evaluating the Value for Money case of the project itself. The requirements of this Invitation to Tender (ITT) are: 1. to review and summarise the potential for cost reductions for UK heat networks (including heat source), and assess the proportion of these that could reasonably be delivered by HNIP deployment with associated uncertainties 2. to estimate the ensuing cost savings for England and Wales heat networks deployment in the 2020s and beyond (if feasible) arising from HNIP derived cost reductions with associated uncertainties 3. to indicate what alternative market interventions, if any, would be needed to deliver the cost reductions that are unlikely to be delivered by HNIP 4. to summarise the historic evidence for cost reductions through deployment of heat networks markets in other countries and assess the extent to which that informs the likely impact of HNIP deployment in the UK