Earlier this month, the Green Heat Network Fund (GHNF) announced the winners of its latest funding round, which included a new project by Old Park Royal Development Corporation (OPDC).
The public regeneration body received £36 million of the allocated £65 million to support its project which aims to use surplus energy from data centres to heat over 10,000 homes alongside 250,000m2 of commercial space in the London Boroughs of Ealing, Brent and Hammersmith and Fulham.
In total, the scheme is expected to supply 95GWh of heat across five phases between 2026 and 2024, as well as create 22,000 jobs.
Following the project’s funding success Current± sat down with David Lunts, chief executive of OPDC to learn how the project will operate, plans for future development and the scalability of the framework.
The logical approach
“Data centres are quite large buildings, that are very energy hungry and generate an awful lot of surplus heat, so it seems logical to think about recycling some of that heat so that these consumers of energy can do something to benefit our local community,” Lunts tells Current±.
The OPDC has had a number of new data centres either built or with planning applications approved over the past few years across the three boroughs it represents.
According to Lunts, the OPDC was keen to understand how the centres can contribute to its wider regeneration project, Old Oak West, which is a planned new development area around what will be Old Oak Common Station.
“It seemed like a very simple concept: don’t waste heat,” continued Lunts.
“If you need new heat supply, why not put the two together, and it’s a win-win. We were thinking about this at almost exactly the same time that the government was thinking about what it could do to help to accelerate projects that were going to demonstrate their commitment to a zero carbon future.”
With the introduction of the GHNF, OPDC decided to put together a proof of concept and a strategic business case, which Lunts said “looked very compelling,” as evidenced by the project’s successful bid.
According to Lunts, this project will be the first of its kind in the UK to utilises surplus heat from data centres to heat homes.
“I believe we are aware of two or three projects in Europe, but there’s certainly nothing in the UK at this scale that we are aware of,” Lunts tells Current±.
How the project works
According to Lunts the technology consists of a heat exchange plate that is fitted into the data centre, that then ferries the heat into a pipe network that works similarly to a district heating system – a “large part” of the £36 million GHNF funding will be allocated towards building this pipe network, including digging trenches and putting pipes in the ground, Lunts added.
The surplus heat can then run from the data centre, through the pipe networks to energy centres which can boost the heat as and when required. As the heat from data centres averages at around 25 degrees centigrade, weather conditions and time of year will dictate whether this boost from energy centres will be required.
Following this, the heat will be piped into building structures.
If the building is a block of flats, which in the OPDC’s area would be powered by a heat and energy centre in the building, the heat network will effectively go into the same system and an existing gas boiler will either be disconnected or left in reserve, in favour of the hot water that will be piped into the building.
“This will be an alternative to air source heat pumps, which should result in quite substantial savings [when low-carbon heat in new builds is mandated] because individual buildings won’t heat pumps. They’ll just they’ll just link into this new source of heat,” reveals Lunts.
According to Lunts, the ODPC estimates that carbon savings form the project are set to be “at least 90% over the counterfactual.”
Creating a commercially viable project
“In order to construct the heat network and get it operational, a lot more than £36 million will be required – it’s going to be much more expensive project. So the £36 million is effectively a gap fund to between what our business case says is the likely cost to make this commercial,” Lunts answered when asked how the funding will help the project.
With plans to market the project in the new year to find a specialist investment development and operational partner, the OPDC has identified that “contribution from the public purse” will be required to make the project commercially viable.
Therefore, the funding “makes good that gap” and can get the project to a point where it can be offered to the market in a commercially viable way.
A mutually beneficial project with opportunity for wide-scale use
The ODPC have a number of data centres in relatively close proximity in its areas, alongside a lot of new development activity, which Lunts calls “the perfect ingredients” to benefit both suppliers of energy (in this case data centres) and consumers.
“I’m sure there are other locations in the country with similar opportunities, perhaps not always at this scale. But it seems a bit of a no brainer when we know that energy demand is under severe pressure in this country,” adds Lunts.
“It’s a problem we had locally that the electrical grid is at capacity and therefore, if data centres are coming along and absorbing a lot of that capacity then at the very least, we ought to be recycling as much of the surplus energy as possible.”
Data centre operators will also see benefits as the project will allow them to fulfil their obligation to reduce carbon emissions in a way that is more “locally meaningful.”
There will also be a commercial arrangement with data centres, as the success of the project depends on it, however Lunts notes that the anticipation is that payments will be “realistic” in order to secure data centres’ interest, but “quite modest, as the project couldn’t succeed otherwise.
At this stage, these are just estimates however, and final decisions won’t be known until the project has gone through the procurement process and commercialised.
What are next steps for the project?
Having had business case approval which led to the successful grant application, the project’s next steps are to finalise the commercial case. This involves ensuring that the project is a marketable proposition, which Lunts assured the OPDC is “very confident” is the case.
Beyond this, the OPDC will look to procure an investment and development and operating partner. According to Lunts, this will likely take the form of a partnership or joint venture between the OPDC and a specialist developer or operator – a partner they will begin searching for next year.
“Our plan is to certainly have something up and running well within the current decade and I would hope it will be probably no more than four, maybe three or four years. That does all remain to be seen, but we’re not talking decades away, but closer to a few years away,” concludes Lunts.
