Sunderland in City Council starts procurement on £130M heat network

Sunderland City Council wants proposals from economic operators for a large low-carbon heat network in Sunderland city centre area. The £130M project includes the opportunity to provide heat to large initial anchor load customers, including Sunderland Royal Hospital and potentially other buildings owned and occupied by the NHS trust; buildings on the University of Sunderland’s City Campus; Gentoo Group’s social housing blocks; Sunderland City Hall; and other public sector buildings. The network may be expanded elsewhere in the city in the future.
The council says it plans an innovative contractual structure and it expects to shortlist four bidders. Following completion of the procurement process, the Council will enter into a joint development agreement with the selected energy service company (ESCO).
The forms of connection and supply agreements with each anchor load customer will be agreed between the ESCO and anchor load customers during the commercialisation phase
The JDA approach is effectively a form of two stage procurement. Following conclusion of the procurement process the Council and the ESCO will enter into the joint development agreement. Following conclusion of the commercialisation phase (and subject to a final investment decision being approved by both parties) the ESCO will enter into the connection and supply agreements with the other anchor load customers.
The procurement has been structured so as to ensure that the Council and other public sector customers identified as the anchor load customers are able to enter into the delivery contracts without a further procurement process being undertaken.

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