Development & Funding Partner to develop the Birkenhead Heat Network

Tender description

The project comprises development of a new heat network serving a mix of buildings including new build residential, existing residential, new build commercial and existing commercial. The project forms an integral part of Birkenhead 2040 Regeneration Framework; one of the biggest brownfield redevelopment sites in the UK. This regeneration of Birkenhead will take place across nine areas providing 21,000 new homes and almost 1,000,000 square metres of employment space over the next 20 years. The area to be served by the network has been identified as a 'priority district heating zone' in Wirral's Local Plan. It will make a significant contribution to reducing the carbon impact of new / existing development in the Borough and provide opportunities to residents and businesses for lower cost heating. The project is well-aligned with regional policy objectives and initiatives. It also fits into the Government's introduction of 'heat network zoning', which, through implementation, will mandate certain types of buildings in identified urban areas such as Birkenhead to connect to district heating within a prescribed timeframe. It is envisaged that, once heat networking zoning is in place, the Birkenhead Heat Network could benefit from zoning 'incumbency' rules - meaning that nearby eligible buildings will be mandated to connect, further securing demand. The Council and Development Partner will enter into a Development Agreement under which the Development Partner will further develop its proposals for the heat network. The Development Agreement sets out a number of requirements which the project must meet in order to proceed into an approvals gateway process. If the project proceeds beyond the development period (i.e. is "approved" as part of the approvals gateway process), the Council and Development Partner will become shareholders in the ESCo, albeit that the Council's shareholding will be limited to a "Golden Share". The ESCo will be the supplier of heat to a number of public and private sector bodies (including the Council) under separate heat connection and supply agreements. The Council will not be investing in the project. The Golden Share will simply allow the Council to exercise control in relation to a limited number of reserved matters including carbon intensity, reporting and tariffs. The ESCo will be required to source all capital funding for the project. The ESCo partner will be appointed in perpetuity. The revenue derived over the first 40 years of the network is estimated to be in the region of £200 million (excluding VAT) / £240 million (including VAT) - £250 million (excluding VAT) / £300 million (including VAT). This includes all phases and connected buildings in the core scheme and allowing for further expansion with the wider geographic area. The estimated value cannot be guaranteed. As part of the operation and expansion of the project, a range of customers in the Birkenhead area may seek to use the heat network, including a mix of public sector and private sector entities. It is intended that this project will be available to those other entities. Those entities may include: Sixth form colleges Central government departments (responsible for local offices) Higher education organisations NHS Primary Care bodies Pursuant to Section 51 of the Procurement Act 2023, the Council must allow a minimum of eight working days, starting the day this contract award notice is published and the award of the contract.