🔍 DataBlast UK Intelligence

Heat Network Efficiency Scheme Round 10 - Critical UK Funding Milestone

Executive Context: £77 Million Transformation Programme at Deadline

The Heat Network Efficiency Scheme (HNES) Round 10 applications closed on September 19, 2025, representing a pivotal moment for UK district heating optimization. This £77 million programme, spanning from 2023-24 to 2027-28, targets the transformation of underperforming heat networks across England and Wales.

[cite author="UK Government HNES Programme" source="GOV.UK, September 2025"]Round 10 applications opened on 4 August 2025 and closed on 19 September 2025. Access to the HNES online portal should have been requested no later than Friday 5 September 2025[/cite]

The significance of this deadline cannot be overstated for heat network operators. With energy costs remaining volatile and decarbonization targets looming, the HNES represents one of the largest dedicated funding streams for existing network improvements:

[cite author="Department for Energy Security and Net Zero" source="HNES Guidance, September 2025"]The Heat Network Efficiency Scheme provides funding to public, private and third sector applicants in England and Wales to support improvements to existing district heating or communal heating projects that are operating sub-optimally and resulting in poor outcomes for customers and operators[/cite]

Funding Structure: Two-Tier Support System

Revenue Grants for Optimization Studies:

[cite author="HNES Programme Guidelines" source="GOV.UK, August 2025"]HNES will typically fund between £15,000 and £24,000 (including non-recoverable VAT) per project for revenue grant funding applications, depending on the scale of each project. Up to 100% of eligible project costs for Optimisation Studies[/cite]

This 100% funding for optimization studies removes the financial barrier for operators to understand their system inefficiencies. The studies identify specific intervention measures, providing a roadmap for capital improvements.

Capital Grants for Implementation:

[cite author="HNES Programme Guidelines" source="GOV.UK, August 2025"]Up to £75 million available from financial year 2023-24 to 2027-28 for capital grants. Funding available up to but not including 50% of eligible project costs for the delivery and installation of eligible intervention and improvement measures[/cite]

Data-Driven Optimization Focus

The HNES explicitly prioritizes data-driven approaches to network optimization. Modern heat networks generate vast amounts of operational data, but many UK systems lack the analytical capabilities to leverage this information:

[cite author="HNES Technical Requirements" source="GOV.UK, September 2025"]Optimisation Studies must assess heat network projects, identify causes of sub-optimal performance, and recommend costed intervention measures. Studies should include analysis of operational data, hydraulic modeling, and temperature optimization strategies[/cite]

Case Study: Hackney Council's Success Model

[cite author="HNES Case Studies" source="GOV.UK, 2025"]Hackney Council received £41,000 for Optimisation Studies, identifying 18 efficiency measures that would save £3,000 annually and reduce carbon emissions by 676 tonnes over 20 years[/cite]

This represents a carbon reduction cost of just £60 per tonne over the project lifetime - significantly below most decarbonization alternatives. The Hackney example demonstrates how relatively small optimization investments can yield substantial long-term benefits.

Future Application Windows

[cite author="HNES Programme Schedule" source="GOV.UK, September 2025"]Round 11 is expected to open 1 December 2025 and close on 6 February 2026. Round 12 is expected to open in March 2026 and close in May 2026. Round 13 is expected to open in August 2026 and close in October 2026[/cite]

The quarterly application windows through 2026 provide multiple opportunities for operators who missed the September 19 deadline. However, with finite funding available, early applications typically have better success rates.

Implications for Data Management Leaders

For CDOs and CTOs in the energy sector, the HNES represents more than just funding - it's a mandate for digital transformation in heat networks. The emphasis on data-driven optimization studies signals the government's recognition that network efficiency is fundamentally a data problem.

Organizations that can demonstrate sophisticated data analytics capabilities, particularly those implementing AI-driven optimization or digital twin technologies, are likely to see higher funding success rates and better project outcomes. The 50% capital grant structure means operators must still secure matching funding, making the business case for investment critical.

Data Center Waste Heat Recovery Transforming UK District Heating

The Heat-Data Nexus: UK's Innovative Approach

The UK is pioneering a revolutionary approach to district heating by tapping into the massive waste heat generated by data centers. With data centers consuming approximately 3% of global electricity and converting most of it to heat, this represents a significant untapped resource:

[cite author="Department for Energy Security and Net Zero" source="GOV.UK, November 2023"]Thousands of homes to be kept warm by waste heat from computer data centres in UK first. The UK is getting its first district heat network powered by waste heat from a data center[/cite]

Old Oak and Park Royal: UK's First Implementation

[cite author="Old Oak & Park Royal Development Corporation" source="Project Announcement, 2025"]The plan is to provide heating to 9,000 new homes and businesses in the Old Oak and Park Royal area of London, along with existing buildings including Central Middlesex Hospital. The waste heat will be sourced from nearby data centers, including Vantage's two local campuses[/cite]

The financial structure of this project demonstrates the scale of private investment flowing into waste heat recovery:

[cite author="Hemiko Investment Statement" source="Industry Report, 2025"]Funding for the project comes largely from Hemiko, which will invest £63 million in the first phases, growing to around £600 million by 2040. The project has also received a £1.7 million contribution from the Mayor of London's Local Energy Accelerator programme[/cite]

This 1:37 ratio of public to private funding shows how government seed funding can unlock substantial private capital for infrastructure projects.

Technical Implementation: The Engineering Challenge

Data centers typically operate at relatively low temperatures (25-35°C), requiring innovative heat pump technology to boost temperatures for district heating:

[cite author="Queen Mary University Case Study" source="QMUL, 2024"]Waste heat from the Tier 2 data centre is now being repurposed using a multi-stage heat recovery process to transform waste heat into water temperatures of 65-75°C, suitable for district heating distribution[/cite]

National Rollout: Beyond London

Birmingham Tyseley Network:
[cite author="DESNZ Funding Announcement" source="GOV.UK, 2025"]The government is backing a Hemiko scheme in Birmingham's Tyseley Heat Network, which will take heat from a 2.5MW data center, providing 16.2 GWh a year to heat 21 buildings[/cite]

North Crawley Network:
[cite author="Green Heat Network Fund" source="GOV.UK, 2025"]The North Crawley Heat Network will utilize waste heat from Gatwick Airport and a data center in Manor Royal, aiming to provide 46GWh of power to homes, with construction starting in 2026 and operation by 2027[/cite]

Carbon Impact: Measurable Environmental Benefits

[cite author="Queen Mary University Sustainability Report" source="QMUL, 2024"]The project is estimated to reduce the university's Scope 1 emissions by 625 tonnes of CO2e annually, with a net annual reduction of circa 553 tonnes when accounting for a modest increase in electricity-related emissions[/cite]

Extrapolating this to the planned UK-wide implementations:

[cite author="DESNZ Analysis" source="Government Projection, 2025"]Other projects to reuse waste heat from data centers for district heating are planned for Leeds, Plymouth, Bristol, Stockport and Sheffield, with the help of £5.8 million in government funding. Combined, these could reduce carbon emissions by over 50,000 tonnes annually[/cite]

European Context: UK Following Nordic Success

[cite author="Industry Analysis" source="DatacenterDynamics, 2025"]District heating from data centers is already a well-established practice across Europe, with the Nordic regions in particular at the forefront. Stockholm Data Parks is a notable example where each facility is linked to the city's district heating network[/cite]

The UK is learning from these implementations but adapting to local conditions:

[cite author="Comparative Study" source="Energy Research, 2025"]In Germany, new data centers are required to make their waste heat available to local heating networks. The UK is taking a more incentive-based approach with funding programmes rather than mandates[/cite]

Investment and Business Model Innovation

The financial models emerging around data center heat recovery are creating new revenue streams:

[cite author="Deep Green Business Model" source="Company Statement, 2025"]Deep Green, best known for using heat from its data centers to warm swimming pools, is working with the Paddington Village District Energy Network in Liverpool to decarbonize its heating network, replacing gas with heat pump systems drawing waste heat[/cite]

Future Outlook: The 2027 Horizon

With multiple projects scheduled to come online by 2027, the UK is positioning itself as a leader in data center heat recovery:

[cite author="Durham University Innovation" source="University Announcement, 2025"]Durham University is looking to heat its buildings by reusing heat from its 1.5MW data center, and could use old mining tunnels under the university campus to store heat[/cite]

This innovative use of geological thermal storage could solve the temporal mismatch between heat generation and demand, a critical challenge for district heating systems.

AI Digital Twins Revolutionizing Heat Network Management

The €28 Million Vote of Confidence

Gradyent's successful €28 million Series B funding round in April 2025 signals strong investor confidence in AI-driven optimization for district heating:

[cite author="Tech.eu" source="April 2, 2025"]Digital twin platform Gradyent has secured €28 million Series B in an oversubscribed growth funding round, bringing the company's funding to over €39 million. The funds will be used to expand Gradyent's Digital Twin Platform, grow its team, and accelerate global growth[/cite]

TU Delft: A Decade-Long Commitment to AI Optimization

[cite author="Gradyent Press Release" source="Company Announcement, 2025"]TU Delft signed a 10-year agreement with Gradyent to install a Digital Twin of its heating system, providing end-to-end autopilot capabilities, paving the way for faster decarbonisation and real-time optimisation of the entire system[/cite]

The scope of TU Delft's implementation demonstrates enterprise-scale deployment:

[cite author="TU Delft Sustainability Report" source="University Publication, 2025"]TU Delft, the oldest and largest public technical institution in the Netherlands, aims to establish a CO2-neutral, circular, and climate-adaptive campus by 2030. The Digital Twin creates a real-time digital copy of TU Delft's heating system, providing continuous visibility into production, all pipes, each substation, and individual user[/cite]

Technical Architecture: Physics Meets AI

[cite author="Gradyent Technical Overview" source="Company Documentation, 2025"]Gradyent's real-time Digital Twin Platform creates a digital copy of the complete grid that runs in real-time, combining geographical, weather and sensor data with physics-based models and AI. The platform brings real-time optimisation and system-level visibility to district heating and industrial steam networks[/cite]

The hybrid approach of physics-based modeling with AI overcomes limitations of pure machine learning:

[cite author="Gradyent Innovation Award" source="Maintenance Next Trade Fair, April 2025"]During the Maintenance Next trade fair in April, Gradyent received the Innovation Award, highlighting both the technological maturity of the solutions and the impact of their digital twin platform combining physical modelling with AI[/cite]

Quantified Benefits: Beyond Theoretical Gains

[cite author="Gradyent Performance Metrics" source="Company Report, 2025"]Energy providers can use Gradyent's technology to optimise performance, reduce CO₂ emissions by up to 10 per cent, lower operational costs, and save up to 20 per cent of capital expenditures[/cite]

Real-world implementations are exceeding projections:

[cite author="Helen Energy Case Study" source="Gradyent Customer Story, 2025"]Helen, one of Europe's largest energy companies, is implementing Gradyent's Digital Twin to optimise demand management. The insights provided by the Digital Twin's offline analysis helped Helen close one of its coal plants, reducing total CO₂ emissions from Helsinki's heat production by up to 40 per cent[/cite]

Industrial Applications: Shell Partnership

[cite author="Gradyent Industrial Division" source="Partnership Announcement, 2025"]Gradyent is driving transformation in industrial heating grids – partnering with Shell to pilot a Digital Twin of its steam grid at the Shell Energy and Chemicals Park in Rotterdam[/cite]

This Shell partnership demonstrates applicability beyond residential heating to industrial process heat, a much larger energy market.

The Autopilot Revolution

[cite author="TU Delft Implementation" source="Gradyent Case Study, 2025"]Gradyent's linked cloud platform collects data from the system and, based on this data combined with its own physical models, advises customers on the optimal operation of their systems, providing insight beyond what sensors can measure and allowing reduction of heat production without compromising comfort[/cite]

The concept of "autopilot" for heating systems represents a paradigm shift:

[cite author="Gradyent Technical Lead" source="Industry Interview, 2025"]Full end-to-end autopilot allows for optimal temperature control, production dispatch, and demand response. The system can predict heat demand 48 hours ahead with 95% accuracy, enabling proactive optimization rather than reactive control[/cite]

European Expansion: 35 Cities and Counting

[cite author="Gradyent Market Presence" source="Company Overview, 2025"]The company partners with leading energy companies in over 35 cities across Europe, including Veolia, Shell, Helen, and many more. Gradyent is partnering with Veolia to build Digital Twins that optimise source and network operations in Łódź and Poznań[/cite]

UK Market Implications

While specific UK deployments weren't announced, the technology's relevance to UK heat networks is clear:

[cite author="Industry Analysis" source="Market Research, September 2025"]With the UK's Heat Network Efficiency Scheme requiring detailed optimization studies and the government's push for data-driven improvements, platforms like Gradyent's represent the type of technology that could help UK networks achieve their efficiency targets[/cite]

The £77 million HNES funding could accelerate UK adoption of similar digital twin technologies, particularly given the 100% funding available for optimization studies that could include digital twin implementation planning.