Heat Network Efficiency Scheme (HNES)

The Heat Network Efficiency Scheme (HNES) is a funding program aimed at improving the performance of existing district heating or communal heating projects in England and Wales that are currently operating sub-optimally, causing poor outcomes for customers and operators.

Objectives:

• Reduce carbon emissions by enhancing heat network efficiency.
• Reduce customer detriment to improve consumer confidence, focusing on financially vulnerable residential customers.
• Prepare the heat network market for upcoming sector regulation and technical standards.

Target Beneficiaries:

• Public sector organizations (e.g., NHS Trusts, universities, government departments).
• Private sector companies registered and submitting annual accounts.
• Third sector organizations such as registered charities and community investment companies.
• Applicants must be legal entities responsible for operating or managing heat networks; consultants cannot apply on behalf of clients, and individuals are ineligible.

Funding Types:

• Revenue grants: Up to 100% of eligible costs to fund Optimisation Studies by third parties to identify causes of poor performance and recommend improvements.
• Capital grants: Up to but not including 50% of eligible costs to part-fund installation of approved intervention measures.

Eligible works include improvements in energy centers, primary/secondary distribution, and tertiary networks but exclude replacement of primary plant, tertiary pipework or heat emitters, and mandatory metering installations.

Application Process:

• Register an Expression of Interest by emailing hnes@gemserv.com with required information.
• Upon review, applicants receive access to an online portal to submit detailed applications for revenue or capital grants.
• Applications are assessed over several weeks, with decisions communicated and funding agreements issued.
• Applicants must comply with monitoring and reporting requirements and consent to publicity of grant details.

Key Features:

• Multi-round funding available from FY23/24 to FY27/28.
• Prioritization of projects supporting residential customers in financial need and those demonstrating significant performance improvements.
• Monitoring and evaluation to track benefits and project progress.
• Delivery partner: Gemserv, managing scheme operations on behalf of the Department for Energy Security and Net Zero.

The scheme supports heat network operators in enhancing efficiency, reducing costs for vulnerable customers, and preparing for future regulatory frameworks.

More detailed guidance and application documents are available on the official gov.uk and Gemserv websites.