Innovative, Low Carbon Projects in North East Secure HNIP Funding

£6.7 million of funding has been awarded to proposed heat network schemes in the North East of England today through the Government’s £320 million Heat Networks Investment Project (HNIP).

Seaham Garden Village and Newcastle University are among the schemes to have been awarded funding through HNIP, which has now awarded over £125 million in its six quarterly funding rounds to date. Five further rounds remain before the scheme closes in autumn next year.

This is the second time the scheme has awarded funding to the North East this calendar year, marking another step forward towards reducing emissions in the region. Previously, £5.9 million of HNIP funding had been secured by Gateshead District Energy Scheme, which will use energy from abandoned mine workings to provide heat to buildings and over a thousand homes.

Today’s announcement means the total potential capex of schemes within the North East is now more than £30 million. The funding represents an important step towards reducing emissions in the region. The current pipeline value for heat networks is almost £2 billion, with the North East and Tees Valley representing an area of high potential. There is significant opportunity to utilise natural resources and deploy low carbon heat technologies in the region and more announcements are expected to follow. 

Energy Minister Kwasi Kwarteng said: 

“Our Ten Point Plan demonstrates how we are planning a bold and innovative approach to the way we heat our homes and workplaces, as part of reaching our target for net zero carbon emissions by 2050.

“These new heat networks in Seaham Garden Village and Newcastle, backed by Government funding, show how action in communities is vital towards helping the UK cut emissions and build back greener.”

The North East’s strengths and opportunities in the sector are built from a long-established heritage in energy, engineering, and manufacturing industries. Inward investors can fit into an established ecosystem, supporting growth and strengths in the supply chain. The investment announced today will help to safeguard existing jobs and create new opportunities for further growth.

Heat networks in the North East were recently selected as part of the Government’s High Potential Opportunities Programme (HPO), which selects opportunities to promote to foreign investors and drive investment into the UK’s regions and nations. Over 20 potential heat network schemes have so far been identified, with an estimated total value of around £280 million. The full Heat Networks HPO investment proposition is expected to be launched in early 2021.

Andrew Clark, Energy Programme Lead at the North East LEP, said:

“The North East is leading the UK across Green Industrial Revolution agenda, and low carbon heat sectors are a crucial part of this transformational economic opportunity. We are hugely excited to be working with partners to position the region as the UK’s first low carbon heat cluster through the HPO programme, and the significant funding awarded to North East projects, including for pioneering next generation technologies such as mine energy, demonstrates the opportunities here for industry and the region’s critical role in UK Clean Growth.”

Durham County Council has been awarded a grant of £3.8 million to support the proposed commercialisation and construction of their innovative, low carbon heat network. The scheme utilises geothermal heat from former coal mines and distributes it to Seaham Garden Village – one of 19 developments to be awarded garden village status by the Government in the summer of 2019. The heat network is forecast to be built out over a number of phases supplying over 1,500 homes, a school, and a health centre with affordable low carbon heat. This project will therefore support the creation of green jobs over its development whilst also reducing emissions from across these connections.

Cllr Kevin Shaw, Durham County Council’s Cabinet member for strategic housing and assets, said:

“The development of a proposed mine water district heating network to supply low carbon heat to new residents is an exciting project. It will offer a wide range of benefits, including residents accessing renewable and affordable warmth in their homes, and it will create new jobs and will help the council progress towards being carbon neutral by 2050. It is a fitting legacy to the mine workers who toiled in the coal seams that produced the coal that powered the Industrial Revolution that those same seams could now help power the Green Revolution in the future. This project is an excellent opportunity for County Durham and one that the council is excited to facilitate and enable.”

This exciting project will further demonstrate the commercial viability of an approach which can be replicated across very many of our coalfields, upon which a quarter of the UK population live and work. The water in the mines is heated by geological processes providing a stable, perpetually renewing, zero-carbon heat resource that can be transferred to a pipe network using a heat exchanger and distributed to nearby homes and businesses. The Coal Authority estimates that there is enough heat stored within the mine workings to heat the buildings that overlie them.

Newcastle University has been awarded a loan of £2.9 million for their campus heat network. The funding will support the construction of a network extension and the upgrade of an energy centre on their city campus. The project will include new pipework from an existing energy centre to serve a new development on the campus and also supply heat to some existing properties. Last year, Newcastle University established a new Centre for Energy to unify efforts across industry, policy, and academia in an effort to bring about a transition to clean, affordable energy and new ways of thinking about energy systems. A drive for emissions reduction is reflected in the University’s approach to heating its buildings; the project will replace the current gas boilers with a new liquid biofuel combined heat and power plant (CHP) which will deliver substantial carbon savings across the site.

Matt Dunlop, Head of Sustainability at Newcastle University said:

“It is fantastic to receive HNIP support for this major heat decarbonisation project on our Newcastle campus, and we look forward to delivering this and many more carbon reduction projects in pursuit of our Net-Zero Carbon target”.

With their large populations, numerous – often old – buildings, and high heat demand, campus universities are especially well placed to benefit from the installation of heat networks. With students increasingly demanding universities to raise their sustainability ambitions, heat networks provide an attractive solution to tackling heat decarbonisation across an entire campus site and beyond. Moreover, extending a heat network outside the university grounds can help to strengthen ties with the local community by connecting to local businesses and residential properties.

In November 2020, Newcastle became one of only four cities in the UK and 88 globally to achieve the top ‘A-grade’ by the Carbon Disclosure Project (CDP).  A Net-Zero Task Force has been established in the City and Newcastle University is working with partners across Newcastle including the City Council and local NHS Trust, to explore and develop further opportunities for heat networks in the City.

Heat networks are a key part of the Government’s plan for decarbonising heat. The 10 Point Plan published last week highlighted the role for green finance with ambitious commitments backed by government funding. This coincided with our Annual Investor Engagement Conference, during which the opportunities to invest in the North East were emphasised by our guest speakers with references to the significant pipeline of opportunities there.

Ken Hunnisett, Project Director at Triple Point Heat Networks Investment Management, said

Our announcement today signifies genuine levelling-up and is a key step on the path to net zero. We are pleased to have awarded almost £20 million of funding to projects in the North East with many more in our pipeline. The two schemes announced today are important HNIP milestones as they represent the first university to receive funding and the second supported mine energy project.”

For more information about Heat Networks in the North East visit Energy Catalyst North East

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