Heat Network Detailed Project Development Resource
HeatNetworkDetailedProjectDevelopmentResource:GuidanceonStrategicandCommercialCase Issue1.0|22July2016 HeatNetworkDetailedProjectDevelopmentResource:GuidanceonStrategicandCommercialCase ©Crowncopyright2016 This“GuidanceonStrategicandCommercialCaseforHeatNetworkDetailedProjectDevelopmentResource”isthepropertyoftheCrown,andhasbeenpreparedfortheDepartmentforBusiness,EnergyandIndustrialStrategy(DBEIS)foruseonlybylocalauthoritiesinEngland,WalesandNorthernIrelandasaguidanceonHeatNetworkDetailedProjectDevelopmenttosupportcompletionofaprojectBusinessCase.Thisguidanceisintendedtoconstitutegenericguidancetothoselocalauthoritiesonstrategic,governance,commercial,contractual,taxandinsuranceconsiderationsthatmayariseinthecontextofdevelopingdistrictheatingschemes.However,thisguidancedoesnotprovideadvice,orrecommendanyapproachordecisions,specifictoanyparticularprojectorcircumstance,andlocalauthoritiesmustobtaintheirownprofessionaladviceinrelationtoanyspecificproject,decisionsorcontracts.Thisguidancemaynotunderanycircumstancebereliedonbypersonsororganisationsotherthanlocalauthorities,andanysuchotherpersonsororganisationswhorelyonitdosoattheirownrisk.DBEISexcludes,tothefullestextentpermittedbylaw,anyliabilitywherethisguidanceisreliedonbypersonsororganisationsotherthanlocalauthoritiesorwherelocalauthoritiesrelyonitwithoutobtainingprofessionaladvice. ThisguidanceispublishedundertheOpenGovernmentLicence.Youmayre-usethisguidance(notincludinglogos)freeofchargeinanyformatormedium,underthetermsoftheOpenGovernmentLicence.Toviewthislicence,visitwww.nationalarchives.gov.uk/doc/open-government-licence/orwritetotheInformationPolicyTeam,TheNationalArchives,Kew,LondonTW94DU,oremail:psi@nationalarchives.gsi.gov.uk. Issue1.0|22July20162 DocumentVerification ProjectTitle HeatNetworkDetailedProjectDevelopmentResource JobNumber 247962-00 ReportTitle GuidanceonStrategicandCommercialCase FileReference 247962-00-04-07 Revision DatePreparedBy CheckedBy ApprovedBy Issue1.022July2016 Name AnnieGibbonsatal. ThomasBriault StephenCook SignatureNameSignatureNameSignature ImportantNote:Thisdocumentprovidesguidanceonlyanddoesnotconstituteengineering,financial,insurance,taxorlegaladvice.NoliabilityforanydecisionsbaseduponthisguidanceisacceptedbyeithertheauthorsofthisguidanceortheDepartmentforBusiness,EnergyandIndustrialStrategy.Independentprofessionaladviceshouldbesoughtforanyspecificproject. HeatNetworkDetailedProjectDevelopmentResource:GuidanceonStrategicandCommercialCase Contents ExecutiveSummary 1.Introduction 2.National&RegionalPolicies 3.HeatNetworkDrivers 4.RolesforHeatNetworks 5.DeliveryModels 6.TaxConsiderations 7.InsuranceConsiderations AppendixA:GlossaryofAbbreviationsandDefinedTermsAppendixB:NationalandLocalPolicies AppendixC:Drivers AppendixD:SuggestedroleselectionquestionsAppendixE:NotestoContractHeadsofTermsAppendixF:AdditionalTaxDetail 5 9 21 24 28 84 100 104 114 119 133 150 153 160 Issue1.0|22July20164 ExecutiveSummary ExecutiveSummary Thisdocumentprovidesguidanceonthecommercialandstrategicelementsofaheatnetworkprojecttosupportcompletionofaprojectbusinesscase. Theguidanceisintendedforlocalauthoritiesandheatnetworkdeveloperstosupporttheirinvestigationsandenableprogressionfromfeasibilitystagethroughtobusinesscasedelivery.Theguidancehasbeendraftedwithreferencetopolicy,legislationandregulationinEnglandandWales;howevermuchoftheguidanceislikelyalsotoberelevanttoprojectsinScotlandandNorthernIreland. TheguidancespecificallysupportstheHMTGreenBookFiveCasesBusinessModel(theFiveCasesModel),andthederivedDBEISBusinessCaseTemplate(DBEISBCT)thatfollowsthisstructure,butwillalsobeapplicableinotherinstances.TheFiveCasesModel(andsimilarlytheDBEISBCT)considerstheviabilityoftheprojectfromfiveperspectives: •Strategic •Economic •Commercial •Financial •Management Althoughallfiveelementsarerelevant,thisguideparticularlyfocusesontheStrategicandCommercialcases.Separateguidanceonotheraspectsofthebusinesscasefor heatnetworksisprovidedin: •GuidanceonEconomicandFinancialCaseforHeatNetworkDetailedProjectDevelopmentResource;and •GuidanceonPowers,PublicProcurementandStateAidforHeatNetworkDetailedProjectDevelopmentResource. StrategicCaseGuidance TheFiveCasesModelexplainsatChapter2: theStrategicCasedemonstratesthatthespendingproposalprovidesbusinesssynergyandstrategicfitandispredicateduponarobustandevidencebasedcaseforchange... Thisstrategiccaserequiresthespendingauthoritytodemonstratehowthespendingproposalfitsinrelationtonational,regionalandlocalpolicies,strategiesandplansandfurtherstherequiredoutcomes.(page11) ThisguidancesupportscompletionoftheStrategicCaseforaheatnetworkprojectbyproviding: •asummaryandreferencematrixofrelevantlegislation,policyandstrategy;and •guidanceonkeydriversfordeliveryofheatnetworks. Legislation,PolicyandStrategy TheguidanceoutlineskeyEuropean,UKandregional(Wales)legislation,policyandstrategywhicharerelevanttoheatnetworkinitiatives,forreferenceinthecourseofpreparingthestrategicaspectofabusinesscases. Thefullreviewoflegislation,policy
