Wirral Council has announced plans to secure a private sector partner to develop a heat network in Birkenhead.
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 is part of the Birkenhead 2040 Regeneration Framework.
The council wants to tender on a concession basis in which the private sector partner will take most risk regarding the design, build, finance, operation and maintenance of the network. As network operator the private sector partner will be required to connect and supply heat to specified controlled buildings.
The area to be served by the BHN has been identified as a ‘priority district heating zone’ in Wirral’s Local Plan. The council said the project fits into the government’s ‘heat network zoning’, in which certain types of buildings in identified urban areas such as Birkenhead will connect to district heating The council envisages that once heat network zoning is in place, nearby eligible buildings will be mandated to connect the heat network under zoning ‘incumbency’ rules, further securing demand.
The project will be delivered through Wirral Council procuring an ESCo. It is anticipated that there will be a concession agreement between the Council and the ESCo which will provide the ESCo with the right to design, install, operate and maintain the network. As part of the concession agreement, the ESCo will take most of the risk and benefits from the building and running of the network. The ESCo will be required to source all capital funding for the project. Potential private sector partners will be required to set out their funding plan and the robustness and deliverability of this funding plan will be an important bidder evaluation measure.
The revenue derived over the 40 years of the network is estimated to be in the region of £200-£250 million.
The Council will not invest in the project, but will have a ‘Golden Share’ to allow it to exercise control in relation to a limited number of reserved matters including carbon intensity, reporting and tariffs. “).