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Case Study – Application for Low Carbon Transition Programme

Client Requirement Overview:

Buro Happold (technical advisors) engaged QMPF to assist in the delivery of an Investment Grade Business Case (“IGBC”) to Renfrewshire Council to support its application for Low Carbon Transition Programme (“LCITP”) funding for a planned district heating scheme near Glasgow Airport.

The proposed district heating scheme will utilise an ambient loop Water Source Heat Pump (“WSHP”) with heat supplied from Scottish Water’s Laighpark Waste Water Treatment Works and will be located in the Advanced Manufacturing Innovation District Scotland (”AMIDS”). The scheme will provide heat to two new innovation centres; the National Manufacturing Institute Scotland (“NMIS”) and the Medicines Manufacturing Innovation Centre with subsequent development anticipated to be phased thereafter until completion over the next 10 to 15 years. Future development of the site is envisaged to be market driven and include up to c.150,000 sqm of commercial floor space. The delivery of a district heating scheme at the AMIDS site will help to deliver the key objectives of AMIDS to “attract ambitious companies harnessing new technologies and accessing cutting edge research” by providing “a high-quality environment that supports healthy working, fosters collaboration and promotes sustainability”.

The first four phases of the scheme (including NMIS, MMICand future development at the AMIDS site) are expected to be built out by 2027 and have a capex value of c.£11m and the IGBC was developed on this basis.

QMPF Approach:

QMPF worked in close collaboration with the technical advisors (Buro Happold) to establish the base case for the scheme. QMPF was involved in discussions with Buro Happold to determine the most financially viable scheme, from a range of options, to present as the base case. This was an iterative process and involved the refinement of modelling assumptions including the inclusion of connection charges and an appropriate starting heat tariff. QMPF then developed a financial model around this base case which was used as the basis for the financial section of the IGBC. QMPF also ran several sensitivities on the base case and these were presented in the IGBC.

QMPF presented the key financial model outputs to the Council and illustrated the financial impact of the district heating scheme both on a project and wider Council level to ensure that the Council fully understood the financial implications of undertaking the scheme. QMPF highlighted the Council funding requirement and demonstrated the optimum approach to funding the project to ensure that the project delivered value for money for the Council. QMPF presented a range of sensitivities to the Council which assisted the Council in determining which phases of the wider scheme should be presented in the LCITP funding application and also allowed the Council to quantify the risk associated with various project assumptions.

 

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