I’ve been working on plans for District Heating in Leeds for around 10 years. Aside from small local schemes the first tangible result was the Leeds Recycling and Energy Recovery Facility (RERF). The primary purpose was to deal with municipal waste, but we took the opportunity through procurement to ensure it was able to provide the heating for a District Heating scheme, by including a grid control valve on the steam turbine, so we could bleed heat off in future.
It took around 3 years with support from DECC (The Department of Energy and Climate Change – as was), HNDU (the Heat Network Development Unit), consultants, local stakeholders and a huge amount of internal work to identify a potentially investable project. It then took a further 2 years to procure, contract and secure investment, and a further 18 months of construction of Leeds PIPES by Vital Energi.
- Now Leeds PIPES is a £35m investment in 2 energy centres, over 16.5km pipework, 1440 flats and 2 commercial connections.
- It has an initial heat load of 15GWh, with the potential to grow to over 100GWh.
- It is financed by ERDF (European Regional Development Fund), LGF (Local Growth Fund) with a £10m investment from the council’s HRA (Housing Revenue Account) and a further investment of £17m in the network by Leeds City Council itself.
This leads to the question – why would the council invest £17m during austerity?
It can be convincingly argued that it saves CO2, improves air quality, tackles fuel poverty and supports clean new developments. It also completes a commitment to use our waste to keep vulnerable people warm. However, despite all of these clear benefits, £17m can still be considered a relatively risky investment for a cash-strapped council. The simple answer to the question of why the council would fund this project is that no-one else will. The risk profile and low returns mean that private finance will not be willing to make this kind of investment.
We believe strongly that cities must go low carbon and a critical part of this is to decarbonise heat. This was a once in a generation opportunity, without local authority investment, this would have been missed. It is local authorities who are able to take a longer view and invest in projects with long-term benefits. It is the City Council which has a responsibility for the people of Leeds, valuing the reduction in fuel poverty and the improved quality of life. And it is local authorities who have the levers: we run highways, local planning, housing, economic development – and we are trusted and long term. In short, local authorities have advantages that no private company can match.
The issue is that in order to achieve the huge potential for benefits from heat networks private investment is required. Our strategy is to grow the network in two more main phases, city centre this year, Southbank within 3 years, and then when we have a trading history and a pipeline of future customers seek private finance. Only at this point will the network be de-risked sufficiently to attract low cost finance. We are taking risks and do not want to cash-in too early. Government seems to be at a heat crossroads: they are still technology agnostic, not wanting to pick winners, but we know that we can’t hit future carbon commitments with gas. The electric vehicle revolution has started, placing more demand on the grid and so action must be taken now. New nuclear is beset with problems and so my advice to government would be to control the controllable: learn from Scandinavia and choose district heating for cities using the below criteria:
- Use planning powers to create DH zones
- Encourage private/public municipal energy companies
- Invest capital to make these grow
- View the Heat Network Implementation Programme as the start, not the end – it’s welcome but the potential is far bigger than HNIP can possibly deliver.