GIB and Equitix commit £10m to expansion of Wick district heating scheme

The UK Green Investment Bank and Equitix commit £10m to the acquisition and expansion of Wick renewable energy plant and district heating network.

The scheme will undergo a major upgrade with the aim of connecting it to 150 new customers. The expansion of the project will reduce greenhouse gas emissions by an additional 3,000 tonnes of CO2 per year.

UK Green Investment Bank plc (GIB) and Equitix have today announced the £10m acquisition of Ignis Biomass Limited, the owner and operator of a 3.5 MW combined heat and power (CHP) plant and associated district heating scheme in the north of Scotland.

The network, located in Wick in Caithness, currently provides heat and power to the Pulteney Distillery and heat to local customers including Caithness General Hospital, Wick Assembly Rooms, residences owned by Cairn Housing Association and approximately 200 other domestic residences.

Plans are in place to upgrade the heating infrastructure at the plant and expand the district heating system with the aim of reaching an additional 150 customers by March 2017.

Plans are also in place for the implementation of at least four new smaller-scale stand-alone CHP systems for major heat users in and around Wick, typically in the care home sector, for whom connection to the existing network is not viable.

Due to Wick’s location in the far north of Scotland, heat is predominantly generated by heating oil or liquid petroleum gas (LPG) or via a local gas grid fuelled by liquefied natural gas tankered in by road.

The district heating network supplies heat from a biomass-fuelled plant direct to customers through a network of pipes, providing significant cost savings and environmental benefits.

By replacing oil and gas heating through the district heating network and generating renewable electricity from the CHP, the project will save an additional 3,000 tonnes CO2e (carbon dioxide equivalent) each year. This is the equivalent of removing 1,300 cars from the road for the life of the project.

The Equitix-managed fund Energy Savings Investments (ESI), in which GIB is a cornerstone investor, has committed £4.9m to the project. An additional £5.1m of private capital has been mobilised from the Equitix Energy Efficiency Fund (EEEF).

Regen Limited, which has acted as project manager to the network for the past four years, is contracted under a Project Development Agreement to help develop the project. Stirling-based facilities manager FES FM Ltd has been appointed to oversee the operations and maintenance of the network.

"This is welcome news of further investment and expansion of Wick renewable energy plant and district heating network. The continued growth of the network will significantly cut fuel bills for householders switching to the heat network.

The Scottish Government’s District Heating Loan Fund has helped support the Wick scheme in its early stages and helped householders and businesses, along with the local hospital, benefit from low carbon, affordable heat.

This announcement shows that there is a positive appetite for investment in district heating schemes and helps the Scottish Government to realise our ambition to increase the uptake of district heating in Scotland."

Fergus Ewing MSP
Energy Minister

"This project has the dual benefit of producing greener energy, saving thousands of tonnes of carbon dioxide each year, while also providing heat in a far more efficient and cost-effective way for customers in a remote part of Scotland. This is exactly the sort of scheme we need to see and is yet another contribution to creating a sustainable and affordable energy system for the UK."

Andrew Dunlop
Scotland Office Minister

"While the UK has made good progress in developing new renewable energy generation to decarbonise our electricity production, much, much more remains to be done to improve how we heat our homes and businesses more effectively and sustainably. The district heating project in Wick has already shown other parts of the UK how it can be done and I am pleased that GIB’s investment will play a key role in extending its reach."

Lord Smith of Kelvin
Chair, UK Green Investment Bank

"Closing this deal represents the first district heating scheme in our energy efficiency portfolio. We are pleased to invest in a project that will deliver long term environmental and economic benefits to the people and businesses in Wick. We look forward to further investing in the expansion of the scheme and through these investments will continue to do what we set out to do: creating a more sustainable UK."

Geoff Jackson
Chief Executive Officer, Equitix

About the project

Total GIB share of investment: £4.9m
Total capital mobilised: £10m
Co-investors: Equitix Energy Efficiency Fund (EEEF)
Expected completion: March 2017
Operator: FES
Developer: Regen