Publication - Strategy/plan

Clyde Mission: energy masterplan

Published: 13 Oct 2021
Directorate:
Economic Development Directorate
Part of:
Energy, Environment and climate change
ISBN:
9781802012941

This masterplan will support the strategic development of low carbon heat and energy infrastructure projects that align to the goals of the Clyde Mission. It aims to support the identification and development of a portfolio of heat and energy related investment opportunities in within the CM area.

Clyde Mission: energy masterplan
11 Short form risk register

11 Short form risk register

This section provides an overview of the risks that should be considered in delivery of the shortlisted options, including technical, commercial and procurement risk. The risk register will inform critical mitigation requirements for different risks to be reviewed during the Stage 2 feasibility studies.

DHNs require collaboration with multiple stakeholders which introduces complexity during development, from feasibility stage through to operation. This introduces inherent risks that need to be overcome, particularly surrounding ownership structures and heat supply regulations. The risks relating to developing a DHN have been identified and ranked based on their likelihood and potential impact to the progression of the scheme. Some risks are applicable to all the shortlisted projects.

The risks have been split into the following categories:

  • Technical
  • Business case
  • Planning Consents, Permitting and Environment
  • Stakeholders
  • Construction and procurement
  • Operation and maintenance.

11.1 Quantifying the risk

Scores are developed on a scale from 1 to 5.

  • 1 indicates an unlikely event, or a mild level of severity
  • 5 indicates a likely event, or a severe consequence of such an event

The risks are quantified based on their impact and probability of occurring. The impact of the risk is the outcome that may occur if the risk is not properly managed. Mitigating measures are suggested to reduce the impact and probability of each risk. Table 11.1 shows the matrix used to assess the risk. The product of impact and probability dictates the overall risk level and is presented both pre and post mitigation in Table 11.2.

Table 11.1. Risk ranking matrix
Risk ranking Probability
1 2 3 4 5
Impact 1 1 2 3 4 5
2 2 4 6 8 10
3 3 6 9 12 15
4 4 8 12 16 20
5 5 10 15 20 25
Table 11.2. Risk register
Item ref. Risk description Pre-mitigation Mitigation measure Lead by Post-mitigation
Impact 1-5 Probability 1-5 Risk level Impact 1-5 Probability 1-5 Risk level
1 Technical
1.1 Heat consumption estimates vary vs actual consumption. If heat loads do not materialise the scheme may become difficult to operate economically 4 3 12 Heat demand confidence level included in feasibility study. Demands are derived from existing building data where possible. Recommend locking non-council customers into long term contracts where possible (e.g. in planning agreements for new builds) Engineering Consultant / Project Sponsor(s) 3 2 6
1.2 Existing developments make like-for-like replacement of heating asset when the existing asset reaches its end of life, reducing the incentive for connection to DHN 4 2 8 Maintain communication with stakeholders identified in feasibility study to discuss alternative strategies in case of plant failure and update existing plant replacement strategies. Ensure the Project Sponsor is aware of any planned upgrades to building secondary systems to ensure DHN connection capability. Suggest deferring any replacements where possible and use funds for DHN connection. New development connections to be ensured through planning policy Project Sponsor(s) / Council 4 1 4
1.3 Heat load insufficient to justify running of LZC plant during the summer 4 3 12 Obtain hourly heat profiles where possible. Measure heat loads over long period of time for best possible design information. Provide large thermal store or heat pump modulation for lower summer loads Project Sponsor(s) 3 2 6
1.4 LZC technology availability - if the plant does not achieve the required availability it may impact running costs and carbon emissions. Significant plant failure may leave customers without heat 5 3 15 Transfer risk to operation and maintenance contractor via guaranteed minimum availability contract provisions and penalties. Back-up boilers (or alternative) provided for resilience and fuel flexibility Project Sponsor(s) 2 2 4
1.5 Large heat network distribution losses may lead to substantial loss in value if heat network is not adequately designed or insulated 3 2 6 Transfer risk to O&M contractor - specify high performance as per CP1 guidance and ensure detailed approval, inspection, testing, and acceptance process including penalties for under performance. Minimise route lengths where possible at the detailed design stage Project Sponsor(s) 3 1 3
1.6 Ground source heat potential not certain 5 2 10 Consult relevant literature as to ground conditions in the Clyde area (e.g. British Geological Survey maps and existing borehole data). A detailed ground survey is recommended once a suitable scheme is developed Engineering Consultant 3 2 6
1.7 River source heat potential not certain 5 2 10 Recent projects on the Clyde such as Queen's Quay WSHP project will assist in providing temperature data from the River Clyde and heat pump performance data Engineering Consultant 3 2 6
1.8 Lack of capacity to supply electricity required for heat pumps or natural gas for peaking boilers 4 3 12 Check utility plans to identify if there are power cables in the area near to EC locations. Get indicative connection quote from gas/power provider to suggest fee for connection. Connection cost allowance included in techno-economic model Engineering Consultant 4 2 8
2 Business case
2.1 Funding
2.1.1 Failure to identify funding sources adequate to meet the capital costs of the scheme. Scheme performance reliant on grant funding 5 3 15 Do not proceed if adequate funding cannot be secured Project Sponsor(s) 2 2 4
2.1.2 Lack of interest from commercial developers 5 3 15 Establish what IRR/ NPV values would attract commercial investment through soft market testing Engineering Consultant 4 2 8
2.2 Capital costs
2.2.1 Budget overspend due to poor cost controls 4 2 8 Undertake design reviews with relevant stakeholders. Consider appropriate procurement options which limit risk Project Sponsor(s) 2 2 4
2.2.2 Budget underestimated due to unforeseen issues 5 3 15 10% contingency added to cost estimates Project Sponsor(s) 4 2 8
2.2.3 Cost increases due to connection works at each property 5 3 15 Engage with planned developments to ensure secondary systems are connection ready to DHN. Cost of secondary system retrofit already estimated in CAPEX, however surveys of each connection required is needed for detailed costing Project Sponsor(s) 3 2 6
2.3 Revenues
2.3.1 Resulting cost of heat too high for residents 5 2 10 Tight control on scheme costs is required through detailed business case development Project Sponsor(s) 4 1 4
2.3.2 Information not forthcoming from potential heat consumers to include in the study 2 2 4 Metered data should be used where available. Schemes which rely on involvement from non-council consumers will be riskier Project Sponsor(s) 2 1 2
2.3.3 Changes to energy taxes could impose costs on the energy business 3 2 6 Any increase in tax will be transferred to customer - include change of law provision in heat contracts that adjusts charges to reflect new taxes Project Sponsor(s) 2 2 4
2.3.4 Occupancy risk - takes longer to build up heat demand than anticipated 3 2 6 Difficult to mitigate as dependent on housing market Project Sponsor(s) 3 2 6
3 Stakeholders
3.1 Stakeholders oppose street-works or propose onerous requirements 4 2 8 Project Sponsor(s) to manage interface through normal channels Project Sponsor(s) 3 2 6
3.2 Private developments not interested in connecting to DHN 5 3 15 Early engagement with developers, improved planning policy to include connection obligation. Ensure scheme is viable that is not reliant on developments who are not obliged to connect Project Sponsor(s) 3 2 6
3.3 Failure to gain potential consumer's support for the scheme 4 2 8 Structure proposal to make it attractive to residents and other potential customers. Ensure a communications plan is enacted for local consumers. Ensure customers are no worse off and bring savings where possible through the cost of heat Project Sponsor(s) 4 1 4
3.4 Council's lack of expertise to carry project forward 4 3 12 External project manager recommended to lead the scheme. DBOM can be contracted out Project Sponsor(s) 3 1 3
3.5 Low support from within council 5 3 15 Identify a "champion" from within council to take project forward and increase awareness. Council to manage ongoing discussions with Buro Happold input Project Sponsor(s) 4 2 8
3.6 Council's ability to invest in the 'leg work' in setting up a DHN 4 2 8 Involve relevant council internal departments from project outset to raise awareness of project. Apply for funding/support from relevant body. Council 2 2 4
3.7 Third party negotiations 4 3 12 Early stakeholder involvement in proposed schemes once identified. Discussions with third parties as to acceptable IRRs Project Sponsor(s) 3 2 6
3.8 South Clyde EfW not interested in supplying heat to the wider network 5 3 15 Early engagement to assess likelihood. This is a significant risk however there will be a considerable benefit to Fortum in supplying waste-heat from the EfW to nearby consumers. Council 5 2 10
4 Planning consents, permitting and environment
4.1 Failure to obtain planning permission for energy centre 5 2 10 Project Sponsor(s) to manage planning concerns going forward through engagement with local stakeholders and the planning team. Option to house ECs below ground, however this would incur increased civils cost – alternative locations to be considered Project Sponsor(s) 5 1 5
4.2 High noise levels from energy centre 4 3 12 Acoustic impact managed through using proven compliant heat pumps and noise insulating casing Project Sponsor(s) 3 2 6
4.3 High level of visual impact from energy centre 3 2 6 Flues from the gas boilers may cause concern in built-up areas. Long term energy centre façade concept to be created for communication to planning team to ensure clarity of the intent. Where possible, flues integrated into building development to reduce visual impacts Project Sponsor(s) 2 1 2
4.4 Planning permission required for heat network 3 2 6 Council to confirm whether permitted development rights cover installation of heating pipework in the public highways Council 2 2 4
4.5 Air quality issues increase cost or result in restriction on operation of energy centre 4 2 8 Air quality impact managed by ensuring flues extend to a higher level than the surrounding buildings. Early consultation with planning team advised. De-risk by installing high efficiency gas boilers in conjunction with LZC technologies Project Sponsor(s) 3 2 6
4.6 Failure to negotiate use of land for energy centre 4 3 12 Engagement with landowners Project Sponsor(s) 2 2 4
4.7 Failure to obtain planning permission for WSHP 5 3 15 Early engagement with the Scottish Environmental Protection Agency (SEPA) on acceptable discharge temperatures and flow rates Project Sponsor(s) 5 1 5
5 Construction and procurement
5.1 Asbestos present in existing plant rooms 3 3 9 Obtain Asbestos Register from stakeholders and council and factor into construction programme. Project Sponsor(s) 2 2 4
5.2 Contract choice inappropriate and prevents project aims from being delivered 5 3 15 Review contract choice as part of the development of the business case. Ensure wide engagement in bid process to attract range of contractors Project Sponsor(s) 4 2 8
5.3 Redevelopment time windows missed 4 4 16 Early and continued engagement with all major stakeholders identified to ensure they are aware of a potential project and potential to connect to a DEN. Promotion of work from within council so that future developers are aware of proposed scheme Council 4 3 12
6 Operation and maintenance
6.1 Heat delivery failure 5 4 20 Design resilience into system including redundancy for pumping, boilers etc. Make plans and procedures for emergency boiler hire for connection at building level. Project Sponsor(s) 3 1 3
6.2 Lack of clarity over the department within council who is responsible for operation and maintenance 3 2 6 Council to make a clear statement of responsibility as part of internal business case. Particularly important for schemes where energy is being supplied by third party (South Clyde EfW) Council 2 2 4
6.3 High losses in primary or secondary network negate cost savings and create inefficient system 4 3 12 Commissioning and ongoing monitoring conducted to ensure performance is achieved Project Sponsor(s) 3 2 6

Contact

Email: clydemission@gov.scot