Guide shows business planning steps to provide financial returns on community heating

ENER-G Switch2 has published a new e-guide to business planning for  community heating providers to ensure they deliver a 'win-win' of affordable warmth for residents and reliable financial returns for investors.

The report examines the key issues faced by heat network providers and planners in the early design stages. It  covers how to plan, design, manage and demonstrate potential return on investment.

This includes the steps needed to accurately model estimated financial returns - taking into account all the costs involved throughout the project lifecycle and planning for every eventuality. Key considerations are covered, such as  energy profiling,  variable heat demand, operation and maintenance, fuel options, tariff setting and carbon saving calculations. 

Drawing on the new CIBSE Heat Networks Code of Practice, the guide includes information on how to model peak demand and annual consumption; plan heat distribution systems; and carry out risk and sensitivity analysis.

In the light of new metering regulations, which phase-out flat-rate charging by 2016, the guide also advises on setting fair heat tariffs and metering and payment options to ensure fair charges for both heavy and light heat users.

"Community heating is an affordable and lower carbon alternative to grid supplied gas and electricity, but striking the balance between affordability and investment return is difficult," said Kirsty Lambert, Director of community heating specialist ENER-G Switch2.

She explained: "There are many pitfalls, such as over specifying the network so that heat is wasted; failing to manage risk; or setting tariffs too high or too low. It's not enough to prove that your network is profitable under optimum conditions, you need to factor in future variations in cost and demand so that you can achieve a pay back on investment and charge residents fairly for their heat. Time spent on planning and proper modelling from the outset will prevent problems further down the line."

ENER-G Switch2 is one of the UK’s leading suppliers of  metering and billing technologies and services for community energy schemes - enabling residents to precisely monitor their energy consumption and pay only for what they use. This results in reduced energy consumption and impressive cost and carbon savings. 

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