Notice

Stream 1, Phase 2: clarification questions, (updated 27 October 2022)

Updated 27 October 2022

Project management

1. The Phase 2A plan to be submitted in the application will potentially evolve significantly during the process, is there a review process with BEIS where reallocation of programme effort (and potentially costs) can be agreed if required by the project? (Added 27 October 2022)

Phase 2a delivery is limited to up to 1st January 2024, BEIS therefore do not anticipate significant changes to Phase 2 applications. It is expected that Phase 2 applications will be sufficiently detailed to ensure that any proposed changes requested by the project are minimal rather than wholesale changes. At its application stage, a project must not be reliant on future change requests to successfully deliver its project. It should be noted that all change requests are reviewed by BEIS, which, at its discretion can decide to accept or reject the proposed changes.

Applicants should note that following the point of contracting, there will be no possibility of increasing the contract price (for example, to accommodate additional project partners/sub-contractors), therefore all costs must be included within applicants’ Phase 2 application.

2. There is currently high uncertainty over the percentage uptake of the offer that is expected (with some key factors such as energy prices that will also change over the course of the project). At the point of the Phase 2 application how should we reflect this uncertainty, e.g. for Criterion 2a? (Added 27 October 2022)

This project will be run as an SBRI and one of the key aspects of an SBRI is that the lead organisation has the responsibility of managing costs based on the capped value of the SBRI agreement. Any cost overruns must be offset by savings made elsewhere within the project.

3. Page 19 of the Competition Guidance - “Projects are required to submit monthly written progress reports to their PMO, and to meet with them monthly to discuss project progress.” Currently only required to provide evidence and not a written report - is this different now for Phase 2 and requires a monthly report? (Added 27 October 2022)

Yes, this is a new requirement for Phase 2. This increase in reporting is deemed as proportional to the increase funding available for Phase 2 and the increase in complexity associated with delivery of Phase 2 projects.

4. Are projects required to have a DNO as part of their consortium at the Phase 2 application stage? (Added 27 October 2022)

No, projects are not required to have a Distribution Network Operator (DNO) as part of their consortium, however as per Assessment Criteria 2(c) projects are required to evidence their DNO is in support of the Phase 2 project, through a letter/statement of support. Projects should note that additional letters of support are required at their Stage Gate, as per Section G.5 of the Competition Guidance.

Project costs

5. Are BEIS assessing projects against the cost benchmark as described in the Heat Pump Ready Stream 1, Phase 1 Competition Guidance?

No, BEIS are no longer assessing projects against the cost benchmark. This has been removed from guidance and the Stream 1, Phase 2 competition guidance.

6. Why has BEIS capped the survey costs to a maximum of £400 per home?

BEIS-commissioned research (Cost of installing heating measures in domestic properties) and estimates that the average cost for a suitability survey and design for a typical 3-bedroom house is around £400, based on approximately 10% of the listed price of a HP.

7. Can projects include any additional costs, above the £400 eligible under the programme, as part of the overhead cost to the consumer?

Yes, where a project’s survey costs are greater than the £400 per home eligible under Heat Pump Ready, the project is required to source private funding to cover this additional cost. Private funding includes charging this as part of the costs to consumers. Projects, as part of Assessment Criteria 4 are required to demonstrate how their innovative methodology developed is sustainable beyond the life-time of the project, without public funding, which would include the cost of these to the consumer.

8. Is there a specific split of funding which should be applied to each Stage of Phase 2, or can each project determine how much to attribute to Phase 2a and 2b themselves?

BEIS have not specified a split between Phase 2a and Phase 2b funding. Projects may decide this split themselves, in line with evidencing value for money regarding innovation developed as part of their project and the number of heat pumps to be deployed in their Phase 2 project.

9. Can a project cover eligible costs above £9 million at their own cost or as in-kind support?

No, at the point of application, all eligible costs must be within the £9 million available for the project. Only ineligible costs can be funded in addition to the £9 million total eligible project costs. Applicants should note that as this project will be run as an SBRI and one of the key aspects of an SBRI is that the lead organisation has the responsibility of managing costs based on the capped value of the SBRI agreement. Any cost overruns must be offset by savings made elsewhere within the project.

10. Can a project cover ineligible costs above their total eligible project costs at their own cost or as in-kind support?

Yes, a project may fund ineligible costs, which do not form part of the £9 million total eligible project costs either through private financing, funding from their organisation or in-kind support.

11. The cost of surveys, as part of our methodology is greater than £400 per home. Can these costs be passed on to the consumer?

Yes, projects may pass on survey costs, above the £400 eligible from BEIS, to the consumer if that is part of the consumer offer / business model they are using.

12. £400 per survey is considered amongst the team to be too low. We are recommending a survey approach that incorporates Stream 2 project survey methodologies which exceed the £400 value and therefore request that BEIS reconsider the funding value of surveys. (Added 27 October 2022)

As set out in the Heat Pump Ready – Stream 1, Phase 2 Competition Guidance, eligible in-home survey and design costs are up to £400. Where projects require additional funding for their in-home survey and design costs, they must source these costs from other private funding sources.

13. Capital Costs. In the Finance form (PUBLISH_HPR_S1_P2_Finance_Form_V1) What do capital equipment costs cover, and how are these to be split out from the costs in the consumer cost estimate excel sheet (PUBLISH_HPR_S1_P2_Cost_to_Consumer_Calculator)? (Added 27 October 2022)

Within the ‘Project Finance Spreadsheet’ capital equipment costs cover one-off expenditures for significant fixed assets that will be used for or benefit the project throughout its duration, as well as after the project has concluded. Please note that capital costs do not include heat pump costs; therefore, no Phase 2b costs, associated with the installation of heat pumps – i.e. cost of heat pump, cost of insulation products etc. should be included in the ‘Capital Equipment’ tab as these are included within the ‘Cost to Consumer’ Calculator which feeds into the ‘Heat Pump Capital’ tab of the Project Finance spreadsheet. Likewise, labour costs which are included in the ‘Cost to Consumer’ calculator, must not be included in the ‘Labour’ tab of the Project Finance spreadsheet.

For example, the cost of the heat pump is to be included in the ‘Cost to the Consumer’ calculator, not as a capital item on the Capital Cost tab of the spreadsheet. Likewise, the cost of installation should be entered into the ‘Cost to Consumer’ spreadsheet, not the labour or sub-contracting tab of the ‘Project Finance’ spreadsheet.

Applicants must ensure there is no duplication of costs between those entered into the ‘Cost to Consumer’ calculator which then feeds into the ‘Heat Pump Capital Costs’ tab on the Project Finance Spreadsheet.

Should any projects have detailed questions ahead of application on where specific costs for their project should be included within the application or finance forms, please contact [email protected]. The answers to these questions will be shared with all applicants.

N.B. Reminder that any ineligible costs included anywhere other than the ‘ineligible costs’ tab of the Project Finance spreadsheets, post submission of application, will be highlighted and removed by BEIS prior to contracting.

Eligible costs

14. If BEIS is now contributing a flat rate of £5,000 (ASAP) or £6,000 (GSHP) why do projects still need to complete the cost calculator?

BEIS requires transparency and visibility across all costs which form project Phase 2 delivery. In completing the cost calculator, projects provide evidence to BEIS of the costs which BEIS are part-funding. The cost calculator information could potentially also help to inform future policy development.

15. Are projects able to use other funding towards the costs of the heat pump, energy efficiency measures etc?

Projects may choose to use other public or private funding for energy efficiency or other elements (such as solar PV) required by the consumer except the cost of the heat pump, its installation and on-going consumer protection and monitoring (where set out as part of the methodology). However, the costs of these additional measures to be funded through alternative (i.e. not Heat Pump Ready) funding should be identified in the list of ‘ineligible costs’ in the finance form. For the cost of the heat pump, its installation and on-going consumer protection and monitoring (where set out as part of the methodology) only private funding (i.e. consumer savings, private loan etc) may be used in addition to the BEIS Heat Pump Ready funding.

Applicants should note that no other public or private funding can be used to supplement any eligible costs to the project as set out in Section M of the competition guidance, being funded by Heat Pump Ready.

16. The project is aiming to use public funding (e.g. ECO funding) to fund the cost of insulation measures, do I still include these costs in the ‘cost to consumers’ calculator?

No, where public funding is being used to fund an element of the ‘cost to the consumer’, the relevant costs (i.e. those funded using other public funding, such as ECO) fall outside of the Heat Pump Ready programme and must not be entered into the ‘Cost to the Consumer’ calculator. Private funding (i.e. consumer savings, private loan etc) should be entered into the ‘cost to the consumers’ calculation. Where a project is reliant on additional public or private funding to deliver their Phase 2 project, the sources and risks associated with this funding should be detailed within their application in addition to being included in the ‘ineligible costs’ tab of the Project Finance Spreadsheet.

17. Can project teams use BUS funding to fund the cost of heat pumps?

No, project teams cannot use BUS funding towards the cost of heat pumps deployed under Heat Pump Ready Stream 1, Phase 2.

18. For the Heat Pump Ready Stream 1 funding towards the cost to the consumer, do projects have to evidence costs against each home, or does the funding go into ‘one pot’ which projects can use against all the homes?

BEIS will require evidence for the system design and cost associated with each home in which a heat pump is to be installed. It is this final system design cost which will be used to finalise Stream 1, Phase 2b funding.

19. Can HPR funding be used to off-set the cost of electricity?

No, cost of electricity is not an eligible as part of the ‘cost to consumers’ calculation.

20. A key part of our recruitment strategy is to use local “early adopters” as influencers to enhance engagement and recruitment.  We plan, therefore, to recruit 2 homes in each of our three target areas for an early install during phase 2a. We will conduct training with these users in how to become a heat pump champion and support them to produce social media content which will be shared with their local groups to support recruitment. We developed this strategy following a literature review, the session with Energy Systems Catapult and following our user focus groups.

The early adopters will get the same deal as the later adopters – so will pay the same for capital and install – as per the guidance for phase 2b installations, but we will include budget to train them to become local influencers.

How should we include these costs within the bid – as currently there is no option to include any install costs during phase 2a. The costs are relatively minor - £5k x 6, plus up to £400 per survey x 6. (Added 27 October 2022)

Up to £400 per home for survey costs is already eligible within Phase 2a – as set out in Section M.1.2 of the Heat Pump Ready Stream 1 – Phase 2 Competition Guidance. With regards to accessing installation costs (up to £5,000 per ASHP install or up to £6,000 per GSHP install) during the mobilisation phase; projects may carry out a small number of installations during Phase 2a and include this as an eligible cost of their consumer engagement, providing they justify any installations to be carried out during Phase 2a, including justification for the proposed number of early installations.

Applicants should note that any heat pump installations carried out during Phase 2a for the purpose of consumer engagement, would not contribute to the 25% density calculation – i.e. the 25% density target must be achieved with heat pumps installed during Phase2b.

21. The Phase 1 feasibility study is indicating the importance of other low carbon technologies to improve the consumer offer, however there has not been time to develop these sufficiently during Phase 1. Is it acceptable to develop additional/new elements of a consumer offer during Phase 2A (e.g. inclusion of solar PV)? (Added 27 October 2022)

Yes, projects may add additional costs to their ‘Cost to consumer’ calculator, for example where solar pv is identified to being of benefit to the consumer offer, ahead of their Phase 2 Stage Gate(s) however as a reminder, the BEIS funding associated with these costs will remain fixed (£5,000 per ASHP install and £6,000 per GSHP install), therefore this will be additional costs required from sources other than BEIS (i.e. consumer funded or other private or public funding).

Project teams are required to evidence their understanding of the cost to consumers as part of their Phase 2 application, Assessment Criteria 2(b) in order to demonstrate they have a viable and deliverable Phase 2 project.

22. Can BEIS please detail the options within phase 2 for funding for activities such as adapting flexible tariffs to suit different heat pump technologies, consumer types etc. Flexible tariffs are obviously not new business models, as would be developed under stream 2, and are commercially available. However, BEIS were very clear at the kick off meetings that funding could not go towards developing commercial products. We would appreciate more detail on whether a consortium feeding into the tailoring of a flexible tariff (or another comparable aspect of the solution) would be covered as eligible project costs and what the requirements might be on that. (Added 27 October 2022)

Eligible costs under Heat Pump Ready Stream 1 – Phase 2, does not include the development of flexible energy tariffs as this is the development of a new commercial product. Projects are eligible to include the costs of identifying, managing and delivering suitable tariffs for their consumers, based on products existing in the market. Feeding into the tailoring of a flexible tariff would be classed as contributing to the development of a new product and therefore classified as an ineligible cost. Projects may wish to share their learnings from consumer engagement for example, with energy providers, who may choose to develop new or amend existing tariffs independently from the Phase 2 project, which could be offered to consumers as part of Phase 2b deployment on a commercial basis.

23. Due to not having carried out any surveys or sign ups, it is unclear what insulation measures may be required and how the consumer may deal with these costs. It may be that they seek public funding or that they fund themselves through a loan or savings however at this stage we do not understand this element. Can you confirm that it is acceptable to not include this in the cost to consumer calculator at this stage? (Added 27 October 2022)

For the example provided in the question, as no alternative funding (public or private) has been identified, as it stands these costs will be borne by the consumer. The applicant should therefore include these within the ‘Cost to the consumer’ calculator. If alternative funding, i.e. through public funding and/or private loan etc had been identified, these costs would be included as part of the ‘Ineligible costs’ tab on the ‘Project Finance Spreadsheet’. Should alternative funding be identified and sourced, the ‘Cost to the consumer’ may be updated at the point of Stage Gate review.

24. How will the surveys (£400)/installs (£5k) be funded? Are project teams expected to front these costs or are projects able to receive these funds early for cashflow purposes? (Added 27 October 2022)

As with all eligible project costs, these costs will be paid in arrears upon successful delivery of the work packages and deliverables associated with the activity. This funding will be provided on receipt of invoice to BEIS from the project lead as long as evidence requirements associated with the invoice have been met.

Heat Pump Deployment

25. Should we focus on reaching high numbers which only give 5-10% density, or smaller numbers which give 25% density?

Projects are expected, as per the guidance, to be deploying heat pumps at high density. A project proposing deployment delivery at a significantly and unjustifiably reduced level compared with 25% density would not be eligible for Heat Pump Ready Stream 1 – Phase 2 funding. Projects may have identified through their Phase 1 activities that to deliver at high-density a more focused approach is required (involving a lower total number of heat pumps) – this is acceptable where clearly evidenced and justified.

26. Has BEIS removed the requirement for projects to deliver a significant increase in heat pump deployment?

Yes, BEIS has removed this requirement so that projects focus on deployment of heat pumps at high-density.

27. If I exceed the 25% density, but in exceeding the 25% the percentage split between the housing and building type changes so the percentage of social housing for example exceed the 30% limit, would Heat Pump Ready fund all those installs?

Heat Pump Ready will only fund projects which meet the housing/buildings type limits set out in the ‘Eligibility Criteria: Housing and Building Types’ section of the Heat Pump Ready, Stream 1 – Phase 2 Competition Guidance.

Projects may choose to explore alternative funding routes, for example the Social Housing Decarbonisation Fund for social housing or the Boiler Upgrade Scheme for owner-occupied or tenanted properties, for installs which exceed the limits, and are therefore not eligible for funding under Heat Pump Ready. However, Stream 1 Phase 2 delivery must remain the priority and focus for the project team, and any additional installs must not add cost to the Heat Pump Ready programme, or impact on the project’s ability to deliver it’s agreed Stream 1 Phase 2 deployment deliverables and objectives.

28. Will BEIS support access to BUS funding for HPR projects?

No. Any applications for BUS funding must go through the standard BUS application process and are subject to the BUS eligibility requirements. Further information about BUS can be found here.

29. If consumers outside the 25% density location hear about our scheme and would like to have a heat pump installed, can we use BUS funding to install a heat pump for that consumer?

Projects may choose to explore alternative funding routes, for example the Boiler Upgrade Scheme, to fund any installs which are in the direct location of the Stream 1 Phase 2 project but are not eligible for funding under Heat Pump Ready. However, Stream 1 Phase 2 delivery must remain the priority and focus for the project team, and any additional installs must not add cost to the Heat Pump Ready programme, or impact on the project’s ability to deliver it’s agreed Stream 1 Phase 2 deployment deliverables and objectives.

30. If a project team does end up installing a few homes outside their 25% density location using BUS funding, can these consumers still be included in learnings?

BEIS are exploring options on how additional homes, beyond the 25% density location could be involved in learnings. This will be communicated to Phase 2 projects early in their project delivery.

31. For non-domestic properties, is it just the number of physical heat pumps that counts towards the 30% limit, or does the installed capacity also factor? E.g. if 5kW heat pumps are installed in homes and a 20kW heat pump is installed in a non-domestic building, are these both treated as a single unit? (Added 27 October 2022)

Yes, it is the number of heat pumps which counts towards the ‘housing and building type’ percentage caps (set out in Section D.1.5 of the Heat Pump Ready – Stream 1, Phase 2 Competition Guidance) not the capacity of the heat pumps with the column heading being ‘as % of total heat pumps deployed in trial’.

32. Can the 25% high density KPI include heat pumps that are existing on the DNO network i.e. if we need 25 HP’s installed on a substation to meet the 25% but there are already 5 installed, can we target 20 HP’s instead of 25? (Added 27 October 2022)

Only new heat pump installs, funding through Heat Pump Ready, are eligible to count towards the 25% density requirements. In the example set out in this question, the project team would still require 25 heat pumps to be installed to meet their 25% density requirement.

33. Page 16 of the Competition Guidance - “Continued recruitment of consumers, which may occur in Phase 2b. These are the consumers recruited post Stage Gate, above the project minimum number set out in the project Stage Gate criteria, up to a maximum number set out in the Phase 2 application. All costs of consumer recruitment are considered to be a Phase 2a eligible cost.”

Please can you clarify that the application should confirm the following numbers.
1. Number for meeting 25% density – this will be the assessment for passing the stage gate
2. Target number where above the 25% density value that will be the basis of our total £5k per HP funding costs – this is not necessarily the “minimum to achieve cost” value that BEIS are requesting. This is the number that we believe we could achieve but are not committed to achieve. (Added 27 October 2022)

Project may have 3 different sets of numbers which they will provide BEIS through their application:
a) Number of homes which will meet the 25% density requirement. This is entered into the Stage Gate Section of the application.
b) Number of homes which they will require to sign-up in order to make their consumer offer financially viable. This is entered into the Stage Gate section of the application form.
c) Where project is aiming to deploy heat pumps at a greater density than 25% and maintain the ratio of Housing and building type, as set out in Section D.1.5 of Heat Pump Ready – Stream 1, Phase 2 Competition Guidance, BEIS will provide funding (as per Section M.1 of the Competition Guidance) for all heat pumps deployed. This number of homes is what the ‘Cost to Consumer’ Calculator number of homes should equate to and be fed into the ‘Heat Pump Capital Costs’ tab of the Project Finance Spreadsheet.

Projects are required to detail and evidence how they will achieve deployment in the above number of homes as part of their response to Assessment Criteria 2(a).

Project Teams

34. An organisation would like to be included on our application, but does not want to receive funding for their work, is this OK?

All work, for which costs which are eligible under Section M of the Heat Pump Ready, Stream 1 – Phase 2 Competition Guidance, must be included in the costs associated with the project. Eligible costs cannot total more than the total eligible project costs of £9 million. Where work is being carried out, for which costs would not be eligible under the programme, these costs can be funded through ‘in-kind’ support or additional funding by the project, beyond the £9m as these costs do not form part of the total eligible costs.

35. Within their Phase 2 application, can project teams change the technology, tools and/or finance models from the approach they proposed in their Phase 1 application?

Yes, during Phase 1 projects project teams may have identified more suitable technologies and tools for consumers in response to engagement activities etc. that projects have carried out. BEIS therefore recognises that projects may wish to deploy different tools and technologies to that proposed in Phase 1 applications.

36. Can a project be structured with partner organisations by governed through sub-contract opposed to collaboration agreements?

A project may structure themselves with partner organisations managed through sub-contracts opposed to collaboration agreement, however as part of the ‘Project Finance Spreadsheet’ projects must declare whether their sub-contractors are delivering ‘at cost price’ without profit included in their costs, or at ‘full commercial rate’ – justifying how this is in line with the procurement route of SBRI and delivers value for money to BEIS.

37. Can projects change their Lead Organisations between Phase 1 and Phase 2?

Where a project can clearly justify and evidence that a change in Lead Organisation supports the delivery of their Phase 2 project and the long-term delivery of the methodology, project may change their Lead Organisation. BEIS expects that where a new project lead is proposed, that this organisation would have been part of the original Phase 1 project and that the original Phase 1 lead would remain a partner on the projects Phase 2 application.

38. We would like to reserve the right to incorporate self-employed (sole traders/limited companies) suppliers for installs, surveys, etc. in the next phase but un-named suppliers at this stage due to our supply chain growth plans. We consider a large portion of the local supply chain (and potential supply chain) to be self-employed and our methodology is targeting increasing the local supply chain capacity. Please can you confirm that this is acceptable. (Added 27 October 2022)

Project teams may request additional project partners and/or subcontractors (which includes self-employed personal, sole traders and/or limited companies) throughout the delivery of their Phase 2 project, however BEIS does not guarantee to grant approval for this change. Project teams must ensure the successful delivery of their Phase 2 projects is not dependent on this approval being granted.

Where self-employed personal are to be included in applications, applicants must ensure that the correct costs, in terms of income tax and national insurance, associated with self-employed personnel are included in the application.

Applicants should note that following the point of contracting, there will be no possibility of increasing the contract price to accommodate additional project partners/sub-contractors, therefore all costs must be included within applicants Phase 2 application.

39. Lead Organisation. In the original project Phase 1 proposal, we presented a plan to form a Special Purpose Vehicle (SPV) to lead the Phase 2 work (mobilisation and deployment). During phase 1, the team has considered what would be the most practical approach for the group, and would like to use the SPV approach. Setting up the SPV is a task that fits well into the beginning of Phase 2.

Would it be acceptable to BEIS for one of the original project team organisations to act as the project leader at the outset of Phase 2, and then transfer the project leader role to the SPV once it is established? Once the SPV is holding the project leader role, that project team organisation would act as a subcontractor.

We assume that the non-profit aspect of the work applies only to the project leader, which would be the SPV in this case. We assume that subcontractors can charge a profit on their work, and that we will present the value of the work from a price perspective in the application for phase 2. (Added 27 October 2022)

Projects may request a change in Project Lead during their Phase 2 delivery; however there is no guarantee that BEIS will approve this change in Project Lead. Phase 2 applications must therefore not depend on a change in Project Lead to be successful project.

Project may request to add/remove project partners and/or subcontractors throughout the delivery of their Phase 2 delivery; however BEIS does not guarantee to approve any proposed changes in partners or key subcontractors. Phase 2 applications must therefore not depend on a change of project members for the successful delivery of their project.

With regards to sub-contractors being allowed to charge profit on their work, this is dependent on the scale and nature of their contribution to the project. It is expected that any organisation which is, for example, contributing directly and significantly to the delivery of one or more of the project aims; delivering key work packages; or developing innovations and/or IP would be joining the project as a Project Partner, managed through collaboration agreement with the project lead, or would be replicating the role and activities of a Project Partner but managed formally through a sub-contractor agreement. The Project Finance Form has specific questions within its ‘sub-contractor costs’ tab to support complete transparency of costs and to enable sub-contractors to disclose whether profit is included in their costs, and to justify the inclusion of any profit.

40. Suppliers and Installers. Can we add additional heat pump suppliers and installers to the project group for phase 2? (Added 27 October 2022)

Project teams may request additional project partners and/or subcontractors throughout the delivery of their Phase 2 project, however BEIS does not guarantee to approve such change requests. Project teams must ensure that the successful delivery of their Phase 2 projects is not dependent on this approval being granted.

Applicants should note that following the point of contracting, there will be no possibility of increasing the contract price to accommodate additional project partners/sub-contractors, therefore all costs must be included within the applicant’s Phase 2 application.

Phase 2 Stage Gates

41. If a project fails one of its Stage Gates, could it still proceed with deploying heat pumps using BUS funding?

Yes, should a Phase 2 project fail one of its Stage Gate, they may wish to continue with the installation of a heat pump using BUS funding. Please refer to Question 17 of this document for further information on accessing BUS funding.

42. In the event that only X% of phase 2a stage gates are met, we understand that BEIS will only release the phase 2b funding for the successful stage gates, can BEIS confirm that phase 2a funding will be unaffected by the portion of stage gates met? (Added 27 October 2022)

As set out in Section G.5 of the Heat Pump Ready – Stream 1, Phase 2 Competition Guidance, BEIS will not claw back any eligible costs incurred as part of Phase 2a delivery should a project fail its Stage Gate. Where a project fails its first of multiple Stage Gates, projects may continue Phase 2a activities to support the recruitment of consumers required in advance of subsequent Stage Gates, however BEIS may request a remediation plan to support the success of subsequent Stage Gates.

43. The guidance states that “Phase 2 will require up to 4 compulsory stage gates to be achieved within the first 12 months of phase … “ can BEIS confirm if this means that a maximum of 4 phase 2a stage gates are allowed? (Added 27 October 2022)

Yes, a project may choose to use up to a maximum of 4 Stage Gates. The application form will not allow more than 4 Stage Gates to be included in an application. Projects may wish to group multiples of their density category into a single Stage Gate to enable high numbers of heat pump to be deployed within their locations.

44. In the case that project proceeds to phase 2b before the deadline of January 2024, will this have an impact on the project’s access to funding for their phase 2a activities? (Added 27 October 2022)

The activities associated with Phase 2a are those which support the engagement and recruitment of the homes, and methodology specific training of installers, associated with the 25% density deployment. As such, BEIS does not expect any Phase 2a activities to occur once the final or only Phase 2 Stage Gate has been complete – independent of when this Stage Gate occurs.

As an example, BEIS would expect that the majority of Phase 2a activities associated with the development of innovation and methodology specific installer training would be complete in advance of consumer recruitment to meet the requirements of the projects’ first Stage Gate. Following the first Stage Gate, project activities may include minor refinements of their innovation, where learnings can be evidence, in addition to the activities associated with the recruitment of consumers to meet the remaining Stage Gates and where required to meet the demand, conducting of any additional methodology specific installers training.

Where projects have included within their Phase 2 application the deployment of heat pumps above 25% density, these will be eligible for funding through Heat Pump Ready. Where additional homes, beyond 25% density have not been included, the costs associated with these will not be covered by the Heat Pump Ready and therefore other funding sources, such as the Boiler Upgrade Scheme may be used for these installations.

Where applicants do not include additional homes, beyond the 25% density, they will not be eligible to carry out proactive consumer recruitment beyond their Stage Gate, as they will have recruited the number of homes set out in their application.

Unless projects have included within their application that they will reach a deployment number greater than 25% density, and therefore require post Stage Gate recruitment to reach these numbers, projects are required to complete all work associated with Phase 2a ahead of their Stage Gate however, they are not required to submit all invoices associated with Phase 2a delivery ahead of their Stage Gate – projects will be able to invoice for eligible cost incurred prior to the Stage Gate, after the Stage Gate has been completed. Applicants should refer to Question 33 of this guidance on how deployment above 25% density should be included within their application.

45. Stage Gates. In the guidance, the number of stage gates is restricted to 4. Where an area to achieve high density deployment of heat pumps (over 25%) is targeted for a cluster, such as a street on a feeder, is it possible to have a stage gate for each cluster, with a total of more than 4 stage gates? The reason we are asking is because we would like to see the uptake of 25% or more homes signing up for heat pumps; however, there are some uncertainties around final customer sign-up that we would like to mitigate. If we were able to have each cluster with a stage gate, this would help to mitigate the risk of low customer sign-up in some clusters. This could lead to successful signup of some clusters where community interest and buy-in is strong, and a stage-gate decision not to proceed with clusters where community interest does not result in the targeted 25% uptake. (Added 27 October 2022)

The maximum number of Stage Gates which a project can include within their Phase 2 application is 4. Projects must ensure that their project remains focused on high density deployment of heat pumps within a specific location, with an innovative targeted deployment methodology associated with that location, supported by innovation. Projects will be assessed as part of Assessment Criteria 2a on the justification and evidence which they provide to demonstrate they are able to deploy heat pumps in each of the locations within their application. Projects must be committed to the achieving the successful delivery of all Stage Gates submitted as part of their application. As detailed in Section G.5 of the Competition Guidance, applicants, if they wish, may group multiples of their density category into one stage gate.

46. Page 60 of the Competition Guidance - stage gates. When multiple stage gates were outlined in the webinar it was indicated that the projects could define how many stage gates they would like to apply for. The guidance now indicates that only “up to” four stage gates can be included. We would like to include a stage gate per distribution substation which will de-risk any potential consumer disappointment across multiple substations if the density target is not achieved in any of the single distribution substations. I.e. if a stage gate includes 5 distribution substations and 4 meet the density requirements but 1 doesn’t then 4 substations will not be eligible due to the stage gate assessment method. Please can you confirm if more than 4 stage gates are acceptable? (Added 27 October 2022)

Projects are eligible to submit applications which include up to 4 Stage Gate reviews. No additional Stage Gates are permitted. Project must focus on the targeted delivery of high-density heat pumps and evidence, through Assessment Criteria 2(a), the achievability of their target. Projects must be committed to deploying heat pumps in all locations set out in their Stage Gates. Project Stage Gates are not intended to allow a ‘long list’ of locations to be set out, with projects only actually expecting to deliver in some of their locations. Project must include within their application all eligible costs associated with the delivery of all their Stage Gates.

Stream 3 participation

47. Can another member of the project team attend Stream 3 events instead of the Project Lead?

No, unless in exceptional circumstances at the time of a specific event, it must be the named Project Lead set out in Phase 2 applications who attends all Stream 3 events. Project should take this into consideration when deciding their Project Lead at application stage.

48. Stream 3 Interaction – knowledge sharing and dissemination activities. Can subcontractors attend the stream 3 meetings as representatives from the lead organisation? The SPV, as the lead organisation, may wish to assign the responsibility to attend stream 3 meetings to one of the subcontractors. (Added 27 October 2022)

As per the Heat Pump Ready – Stream 1, Phase 2 Competition Guidance, it must be the person in the Project Lead role, as set out in your application form, who attends the Stream 3 meetings. This person must be a member of the Project Lead Organisation. A sub-contractor cannot represent the lead organisations at the Stream 3 meetings.

On occasions, additional invites to Stream 3 activities may be available. In this instance sub-contractors may attend, in addition to their Project Lead, however the cost associated with attended would not be eligible under Phase 2 and would need to be met by the Project Team

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