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It is set to become one of the largest and most diverse decentralised energy networks in the UK and will deliver decarbonised, lower cost heating and electricity to a variety of stakeholders.
A district heat network (DHN) project in Manchester that aims to create jobs, reduce carbon, and help deliver a net-zero city by 2035 has been awarded £14.6m.
The Octagon Project Energy Network (Open) received the backing from Triple Point Heat Networks Investment Management as part of the UK government Heat Networks Investment Project (HNIP) funding.
The project is being undertaken by Manchester Energy Partnership Limited (MEPL), a joint venture between Manchester property development and energy specialist, Sustainable Energy Supplies and Electricity North West (Construction and Maintenance).
The £30m 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.
The consortium has been working for five 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, reportedly, set to become one of the largest and most diverse decentralised energy networks in the UK.
“This is a great example of the private sector working together with government to catalyse investment into the energy transition and regional growth”
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 one to be commissioned in the second quarter of 2022.
The project area, covering five square kilometres, is planned to include other major off-takers such as 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 1,000 social housing and private residential homes in the Plymouth Grove Village estate.
Ikigai, an independent net zero bankability advisor, supported the consortium on the grant application, stakeholder engagement, HNIP funding negotiation and is assisting the sponsors to identify strategically aligned institutional equity and debt investors for multiple phases of the project.
“This is a great example of the private sector working together with government to catalyse investment into the energy transition and regional growth,” said Helena Anderson, co-founder of Ikigai.
“Our approach balances affordability, security of supply and PF investor requirements with the necessity to achieve net zero in the medium term.”
“Manchester is taking a strategic lead in achieving Net Zero North West as the whole country now heads for net zero emissions by 2038”
The initial energy centre site received planning approval in March 2021. It will generate 25MW of thermal output in phase one and ultimately up to 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 investigating local production options.
“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,” added Richard Everton, chairman of MEPL.
“Manchester is taking a strategic lead in achieving Net Zero North West (UK’s first low carbon industrial cluster by 2030) as the whole country now heads for net zero emissions by 2038.”
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