Hull City Council – District Heating Project

QMPF was re-engaged by Kingston Upon Hull City Council to provide financial modelling support for the Hull City Centre district heat network and to prepare the financial section of the final business case (“FBC”). The FBC and financial model were developed to assist the Council obtain final approvals and funding arrangements alongside its £14m grant from the Green Heat Network Fund.

The scheme is designed to offtake heat from air source heat pumps, with the remainder being satisfied using gas back-up boilers. Consideration was also given to the ability for the project to receive bulk heat supply from a local energy from waste facility. The project will provide heat to multiple offtaker groups including existing Council buildings and new developments, private residential buildings, Hull College and other public sector buildings.

QMPF worked with the appointed technical and commercial advisors, Arup and Peak Earth, to lead on the delivery of a detailed base case financial model which considered the corporate structure, financing, working capital and tax for the project company. We conducted extensive sensitivity analysis to establish the robustness of the scheme to factors such as funding arrangements, fluctuations in energy import prices, energy demand, changes to costs (capex and opex) and macroeconomic variables. Detailed financial analysis was performed to allow the Council to assess alternative funding arrangements including loan funding from PWLB or National Wealth Fund.  QMPF used the outputs from the analysis to develop the finance case which formed part of the Council’s Full Business Case and supported its associated approval process for the project.

Graeme Smith – Business Partner, Corporate Finance, Kingston upon Hull City Council said:

“We were very impressed with the speed of advice QMPF provided, and their ability to deal with financial, commercial and technical queries is excellent. The financial model and finance case were developed in a clear and robust manner, whilst meeting tight deadlines set.

Their work has been invaluable to us taking forward to achieve Council approval for the project, whilst providing additional support on potential funding options.

The speed of advice, and the ability to deal with queries in a very timely manner is excellent, & the firm provide super value for money!”