Dynamic purchasing system for heat networks
The Department for Business, Energy and Industrial Strategy (BEIS) with Triple Point Heat Networks Investment Management – their delivery partner for the £320m Heat Network Investment Project (HNIP) – has introduced a Dynamic Purchasing System (DPS) for heat networks.
The BEIS Heat Investment Vehicle (BHIVE) will allow public bodies, including NHS Bodies and local authorities, to access funds and funding-related services for heat network projects from a portfolio of potential funders.
BHIVE is open to all public bodies looking to finance a heat network including, financing the expansion of a new or existing network or facilitating the sale of part, or all, of an investment in a mature heat network.
To meet the UK’s legally binding commitment to net zero by 2050 in the most cost-effective manner, heat networks will need to provide 17-24% of the UK’s heat (currently just 2%). Achieving this objective requires the development of a self-sustaining market with a sufficient volume of strategic, low carbon heat networks which are economically attractive without direct Government subsidy.
Development at this scale cannot be afforded by public funds alone. The Institute for Public Policy Research has estimated that up to £22 billion of private investment capital needs to be levered in if the sector is to fulfil its potential.
At the same time, institutional investors are seeking high class infrastructure assets with good quality counterparties and predictable long-term revenues underpinned by strong environmental, social and governance (ESG) principles.
Funding providers can apply to join BHIVE at any time by expressing their interest in funding heat networks; demonstrating their access to funds and their capability to deliver the associated services to execute funding. Finance options available will include equity finance and asset finance.
HNIP was launched in 2019 to kick-start the market and has to date awarded £125 million to successful schemes across England and Wales.
BHIVE will further support the work that has already been achieved by HNIP in ensuring a sustainable market which is not only economically attractive to investors but supports job creation and environmental benefits.
Watch an elemental talks session on this topic: