Iona Heat Network Multi-faceted technical support to a trailblazing island-based low carbon heat project

Iona harbour

What was the aim of the work? 

Following a hiatus caused by external factors, including the Covid pandemic, the Iona Heat Network project was revived in 2021. The developer, a community energy organisation, required targeted technical support to progress various elements of the project to a stage where funding applications could be made. This required the business case to be updated and expanded, enabling the organisation’s Board to approve the immediate project development plan. 

 

What was the outcome? 

Fundamental changes to the funding landscape, the scheme’s anticipated revenue streams and the construction sector’s interaction with the wider economy forced a wide-ranging rethink of the project business model. A re-worked financial model was established as viable, although the project’s deliverability was found to be strongly conditional on factors that are difficult for the developer to control (inflation of construction material and labour costs; market concentration and competition within the pool of potential main contractors, changing funding opportunities). A holistic gap analysis and revised project risk register provided an understanding of what elements of deliverability could be managed, and how. This fed into a project plan which sought to address gaps in the technical design and project definition and to implement a risk-informed procurement and contracting strategy. 

 

What did Natural Power do to get this result? 

Natural Power started by mapping the project ‘universe’ in order that all dimensions of the project – strategic, technical, relational – could be systematically assessed. We reviewed information available across hundreds of documents, drawings and spreadsheets in order to evaluate the completeness of more than 40 project elements. To update the funder-compliant financial model, we developed: a new heat sales tariff proposition and justification; new capital cost and operating cost estimates; research supporting our assumptions regarding future (2040) heat pump replacement costs. The delivery team were able to take advantage of Natural Power’s multidisciplinary activities and staff base to access knowledge on specific topics that informed our cost estimates and risk assessments. Throughout this work, we maintained collaborative dialogue with the community organisation, prospective funders and the specialists from CARES who were supporting the project technical review process.  

 

"Natural Power’s work on the Iona Heat Network project has been outstanding, consistently demonstrating an exceptional range of technical and generic (e.g. communication) skills, combined with deep insight and problem solving that’s both creative and rigorous. Everyone involved, including policy makers and funders, has expressed how impressed they’ve been with the very high standard of Natural Power’s input." 

Shiona Ruhemann Projects Lead, Iona Energy Ltd