Heat Network Efficiency Scheme (HNES)

Projects can apply to HNES for either revenue grant funding or capital grant funding:

• Revenue grants are to fund procurement or mobilisation of external third-party support to carry out optimisation studies. These studies will assess heat network projects to identify causes of sub-optimal performance and recommend costed intervention or improvement measures. The funding can provide up to 100% of eligible project costs for these types of grant applications. HNES will typically fund between £15,000 and £24,000 (incl. non-recoverable VAT if requested in the application form) for each revenue (Optimisation Study) application, depending on the scale of each project for which the application is made.
• Capital grants are to fund part of the delivery (installation) of eligible intervention/improvement measures. The funding can provide up to (but not including) 50% of eligible project costs for capital grant applications. There is no lower limit for capital grant funding bids; however, grant requests over £1 million will be subject to additional Subsidy Control Act checks.
• Applications can be for up to, but not including, £10 million.

Applications are awarded funding on a competitive basis. This means that even if an application meets all the eligibility criteria and scores well, there is no guarantee of a funding award. Funding will be allocated to maximise benefits and will prioritise projects which:

• provide value for money
• address customer detriment (prioritising projects with higher proportions of ‘residential customers in need’)
• address network operational performance (efficiency/ losses)
• deliver carbon emissions savings.