Triple Point Heat Networks Investment Management has awarded £14.6m as part of the Heat Networks Investment Project (HNIP) funding to the Octagon Project Energy Network (OPEN), a District Heat Network (DHN) project in Manchester.
The project is being undertaken by Manchester Energy Partnership Limited (MEPL), a joint venture between Manchester property development and energy specialist, Sustainable Energy Supplies Limited and Electricity North West (Construction and Maintenance) Ltd. The £30 million first phase of the project has been catalysed by funding from the Department of Business Energy and Industrial Strategy (BEIS) through the HNIP scheme, with additional investment coming from the project sponsors. Part of the BEIS funding has been received as a grant to assist with the commercialisation and pre-construction phase of the project, with the remaining investment in the form of a construction loan.
Ikigai, an independent net zero bankability advisor, supported the consortium on the grant application, stakeholder engagement, HNIP funding negotiation and is now assisting the sponsors to identify strategically-aligned institutional equity and debt investors for multiple phases of the project. Helena Anderson, co-founder of Ikigai, commenting on the award, said “This is a great example of the private sector working together with Government to catalyse investment into the energy transition and regional growth. Our approach balances affordability, security of supply and PF investor requirements with the necessity to achieve Net Zero in the medium term.”
Ken Hunnisett, head of Triple Point Heat Networks Investment Management added that “The HNIP team is incredibly excited to be supporting the MEPL team in their ambitions to deliver decarbonised heat right into the heart of Manchester. We have known for some while that the availability of private capital is one of the real-world constraints on the pace at which the UK can transition to net-zero, so it’s been a particular pleasure to work with Ikigai Capital on the development of a highly bankable, replicable precedent for investment in private sector-led district heating infrastructure.”
The consortium has been working for over 5 years with Manchester City Council and the Greater Manchester Combined Authority to create the OPEN DHN, to be anchored by offtake from Manchester Royal Infirmary NHS Hospital, and set to become one of the largest and most diverse decentralised energy networks in the UK. It will deliver decarbonised, lower cost heating and electricity to a variety of key Manchester stakeholders in the city’s strategic Southern Corridor. Construction works will commence in Autumn this year, with phase 1 to be commissioned in Q2 2022.
The project area, covering over 5 sq.km., is planned to include major off-takers such as the Manchester Royal Infirmary (the Manchester University NHS Foundation Trust), existing demand from the National Blood and Transplant Unit, the Central Manchester Renal Dialysis Unit and numerous bulk supply residential consumers, including student accommodation bed-spaces and 1000 social housing and private residential homes in the Plymouth Grove Village estate.
The initial energy centre site received planning approval in March 2021. It will generate c. 25MW of thermal output in phase 1 and ultimately up to c. 10MW electricity initially from combined heat and power (CHP) engines and boilers and be augmented by distributed solar PV and air source heat pumps, intended to increase in number over time. The energy centre is designed to enable accelerated switching hydrogen and the project sponsors are currently investigating local production options, as well as benefiting from Cadent’s intention to increase hydrogen blending in the grid to at least 20%.
Chairman of the MEPL Richard Everton said’ “I am delighted that the tenacity and single mindedness of the MEPL team has turned what was a personal “pipe-dream” into a financially viable and practical reality for the city of Manchester. Manchester is taking a strategic lead in achieving “Net Zero North West as the whole country now heads for net zero emissions by 2038.”