Community and Rene
ewable Ene
ergy
me Pro
oject Deve
elopm
ment Toolkit
T
t
Scchem
Modu
Heat Pump
P
ule
To
oolkit Sttructure
e
The CARES toolkkit is intended to be used
d as a referen
nce by Comm
munity Group
ps of all kind
ds, uding communities and ccommunity b
based busineesses. This m
module is one
e part of a seeries inclu
of documents fo
orming the CARES Toolkitt and is desiggned to coveer all sizes of project, d source heat pumps which serve mu
ultiple buildin
ngs, provide heating and
d although ground
plexity may rrequire more
e detailed evaluation than coolling or have a similar deggree of comp
smaaller, heating only projectts. o be of particular interesst to those re
eading this m
module are: Otheer modules tthat may also
 Establish
hing a Comm
munity Group
p  Project FFinance  Procurement  Securingg the Site  Planningg  Grid Con
nnection  Renewable Heat Incentive Thiss toolkit build
ds on the wo
ork completeed for the Sco
ottish Government’s Com
mmunity and
d Renewable Enerrgy Scheme ((CARES) by Local Energy Scotland and
d Ricardo‐AEEA. Mo
odule Structure
e
Thiss module is sttructured in three parts tto act as a gu
uide and refe
erence document for mmunity Groups in the deevelopment of a heat pump project iin Scotland.
Com
w Projject Overview
A brrief introducttion to the tyypical ways tto develop a heat pump project and sstep by step sum
mmary. Projject Steps, Phases and Breakpoints
A more detailed look at each
h stage of a p
project, show
wing a logicaal progression
n with defineed breaak points. Furtther Informaation Appropriate linkks, definitions and references to otheer informatio
on, collated ffor quick refeerence. Developed by Riicardo‐AEA Revision 3
1 Project ov
verview
w
Overview orr activitie
es
Thiss module desscribes the progression o
of a typical heeat pump baased project. It assumes that yourr Communityy Group or ru
ural businesss is already in place. Info
ormation abo
out how to form a neew Communiity Group is iincluded in the separate Establishingg a Community Group mod
dule. Thee toolkit also assumes thaat no grant o
or other deveelopment support is in place. In reality the loan supportt offered by CARES to fun
nd the high rrisk elements of a projecct prior to Finaancial Close m
may change tthe order in which work is undertake
en. Similarlyy, some sourcces of project fundin
ng such as REEIF may invo
olve earlier in
nteraction with the funde
er than is indiccated below. More inforrmation on tthis can be fo
ound in the P
Project Finan
nce module. As m
mentioned prreviously, it sshould be reecognised thaat a heat pum
mp based co
ommunity project may be d
different to aa communityy energy project based on electrical eenergy geneerating techn
nologies. Th
here are seveeral reasons for this: 
Heat pumps generatte heat ratheer than electtricity; 
They pro
oduce low grrade heat wh
hich require changes to tthe existing h
heating systeem prior to the installation of the heeat pump; an
nd 
Heat pumps require the input off electrical en
nergy. The p
payback of th
he system is depende
ent upon thee efficiency o
of the system
m known as tthe coefficien
nt of perform
mance (COP) w
which determ
mines how m
much electriccity is used to provide the heat req
quired. An installation maay also require an upgrad
de to the ele
ectricity supp
ply. For tthis reason, the usual ap
pproach to prroject develo
opment baseed on the pro
ocurement o
of a single generatorr to produce income to p
pay the cost o
of loan finance and to make a profit may be leess amenable to heat pu
ump systems. It is more llikely that a h
heat pump w
will be used tto redu
uce the operrating costs o
of a building.. Tablle 1: Overvie
ew of activities. The table below sum
mmarises a lo
ogical progreession for thee deveeloping of a heat pump p
project Develo
oping the idea
Step 1 Deveelop the vision Aggree why you w
want to undertaake the project and define you
ur key ob
bjectives. Step 2 Seek advice Id
dentify similar o
organisations th
hat have develo
oped heat pump
p syystems and use their insight an
nd experience tto plan your pro
oject. Step 3 Communicate Co
ommunicate with the local community to exp
plain the projecct to exxplain your plan
ns. Step 4 Technology selectio
on In
nvestigate the d
different heat pump technologgies and determ
mine w
which may be su
uitable for your site. Developed by Riicardo‐AEA Revision 3
1 to 4 months Phase 1 2 Is there a re
eason to develop? Phase 2 Evaluaate the project
Break pointt 1 High level assesssment of the feaasibility of a he
eat pump for yo
our site. Co
ontact suppliers to get an indication of costs and savings. Step 6 Estab
blish an entity Esstablish your Co
ommunity Grou
up as a formallyy constituted bo
ody or leegal entity. A bu
usiness may choose to operate under the business naame. Step 7 Secure the site(s) Obtain legal agreeements for thee use of the site
e where the heat pump syystem is to be in
nstalled and wh
here the heat iss going to be deelivered in
ncluding any agrreements for billing for heat. Step 8 Confirm grid connection Ch
heck if the electricity connectiion to your site is sufficient to supply th
he heat pump to
o be used. Use the heat pump
p capacity deterrmined in
n initial scoping.. A new or upgrraded electricityy connection m
may be reequired. Step 9 Pre‐P
Planning Consu
ultation Meet with the lo
M
ocal planning reepresentatives aand discuss you
ur prroject, their relevant policies aand any require
ements they maay place on
n an application
n. Can the challenges be overccome? Break pointt 2 1 to 4 months Step 5 Initiaal scoping Developed by Riicardo‐AEA Revision 3
3 Step 11 Confirm capital cost and incom
me Obtain accurate capital costs, p
projections of RHI income and op
perating cost saavings from sup
ppliers. Step 12 Finan
ncial viability ch
heck Co
onfirm the projject remains fin
nancially viable.. The CARES too
olkit Finance Model can be populateed used with mo
ore detailed figgures. Step 13 Secure pre‐planningg funds Id
dentify funding options to supp
port ongoing deevelopment of the prroject through tto a planning decision. Step 14 Plann
ning application Prrepare and submit a Planning Application forr the project. Fo
or large orr complex systeems it may be n
necessary to usee paid consultants and prrepare a varietyy of reports, surveys and visuaalisations Step 15 Grid notification Notify the Distrib
bution Networkk Operator of your intention to
o co
onnect a heat p
pump to the eleectricity grid. Step 16 Identtify funding sou
urces In
nvestigate routees to achieve caapital funding. TThe most appro
opriate sh
hould be selecte
ed at this pointt as this will influence some future acctivities Step 17 Deveelop full financiial model Co
omplete a busin
ness plan and d
detailed financial appraisal witth full prroject costs and
d projected pro
oject lifetime incomes to take tto po
otential funders Conffirm consents, grid and financcial viability Phase 4 Getting Financial Close
e Break Pointt 3 Step 10 Fix th
he project scop
pe Co
onfirm which building or build
dings are to be h
heated, finalisee the size off heat pump an
nd what works aare going to be undertaken to the exxisting heating system. Preparre scopes of wo
orks for each ele
ement of th
he project. Agre
ee the arrangem
ments for operaating the system
m in
ncluding who is responsible forr applying for R
RHI payments (iff ap
pplicable). Step 18 Identtify and contacct supp
pliers With consents an
W
nd agreements in place the co
ontracts for ground loop exxcavation/drillin
ng, the heat pu
ump supply, con
nnection to heaating syystem, and maintenance conttracts can be formalised and prrogrammed Step 19 Secure bridge fundss Id
dentify if further funding is req
quired (usually ffor deposits) prrior to Financial Close. Step 20 Finan
ncial close Th
his is the point at which the fu
under releases tthe money and the prroject can be co
onstructed. Can the prroject be funde
ed? Break pointt 4 6 to 18 months Develo
op the project
0 to 12 months Phase 3 Developed by Riicardo‐AEA Revision 3
4 Completting the project Seecure any addittional capital fu
unding and repaay development loans w
where required.
Step 22 Consstruction Affter financial close, confirm all orders and arrrangements forr the deelivery, installattion and comm
missioning of the
e system. Step 23 Applyy for RHI Once the system
m has been commissioned, RHI can be applied
d for. Step 24 Notiffy water authority Notify the waterr authority of an
ny new installattion which has been co
onnected to the
e mains water ssupply. Step 25 Operration En
nsure managem
ment is in place for the life of tthe project for co
ollecting and distributing incom
me and meeting operating, fin
nancial an
nd other liabilitties. Step 23 Deco
ommissioning Heat pump projeects must plan ffor safe removaal of the heat p
pump at th
he end of the prroductive life (w
which can be up
p to 25 years) 1 – 3 months Step 21 Repaay other funds Up to 25 years Phase 5 Developed by Riicardo‐AEA Revision 3
5 Process guidanc
g
ce
Ph
hase 1 –
Iniitial viab
bility as
ssessment
Ste
ep 1. Deve
elop the v
vision
The first step in developing aa heat pump
p project is to
o decide whyy it is being u
undertaken aand iden
ntify its key o
objectives. Exxamples of such drivers include: 
To reducce the cost o
of heat for a building or ffacility 
To gain income from
m the Govern
nment Renew
wable Heat Incentive (RH
HI) for use wiithin the Com
mmunity or ru
ural businesss 
To reducce carbon em
missions. It is important th
hat you fully understand and record these drivers so that pro
oject viabilityy and outccomes can bee tested against your objjectives. See the separatee Renewable
e Heat Incen
ntive Module
e for more deetails about the RHI. Ste
ep 2. Seek
k advice
Heat pump systeem developm
ments have b
been undertaaken by com
mmunity grou
ups across Scottland. The exxperience of these organisations can be useful in planning your project. CAR
RES and other organisatio
ons maintain case studiess to assist in identifying ssuitable grou
ups to approach to ggain their inssight. Seekking this inpu
ut from the o
outset can help to identify what has worked welll elsewhere, whaat issues havee been encountered and
d how they caan be overco
ome through
h careful plan
nning. Early liaison with your local CARES Develop
pment Office
er can highligght opportunitties for know
wledge transffer between community organisation
ns and organise learning journeys. Theey will be able to identifyy and promo
ote connections to the mosst suitable sim
milar schemees in order to
o facilitate le
earning opportu
unities based
d on the experiences of o
other groupss such as you
urs. Ste
ep 3. Com
mmunicate
The success of any community project reelies upon th
he support off the commu
unity and earrly conssultation can
n address anyy questions eearly and demonstrate the benefits tthat a heat pum
mp system caan offer. It alsso allows you to becomee aware of an
nd deal with any misinformation being generaated. m the very sttart of the prroject you m
must establish
h clear comm
munication w
within the wh
hole From
of th
he community hosting th
he project an
nd other stakkeholders. Developed by Riicardo‐AEA Revision 3
6 Heat Pump systeems tend to have relativeely minimal vvisual intrusion once insttalled but expeerience show
ws that this ccommunicatiion must be open and ho
onest about w
what is being plan
nned and mu
ust include go
ood opportu
unities to receive and respond to feed
dback. Ste
ep 4. Tech
hnology selection
s
Gro
ound Sourc
ce Heat pu
ump techno
ologies
A heeat pump collects heat frrom one source and supp
plies it to ano
other at a higgher temperature. Th
here are a nu
umber of diffferent types of heat pum
mps each with
h their own advaantages, disaadvantages aand costs. Th
his module fo
ocuses on ground sourcee heat pumpss Grou
und source h
heat pumps eextract heat from the gro
ound using aa system of p
pipework. Th
he lenggth of pipewo
ork required depends up
pon the ground type. The
ere are two w
ways in which this can be instaalled: 
A netwo
ork of horizontal trenches of around 1.5m, in gen
neral you willl require at leeast 2.5 timees the total flloor area of yyour buildingg. The area rrequired will depend upo
on the grou
und type and
d how much heat your bu
uilding needss over the yeear. 
A number of boreho
oles usually o
of at least 10
00m each. Th
hese require less ground area but are more expenssive to installl. A typical h
house will req
quire at leasst 3 of these boreholes at a cost o
of around £5
5,000 each (d
depending upon ground type and location). Heat pumps can
n also distribu
ute the heat within the b
building in a number of w
ways: 
Using a water based
d heat emitteer system succh as radiato
ors or under floor heatingg (known as a wet system). 
Directly to air (air to
o air heat pum
mps) these tend to be su
uitable for sm
mall installatiion only. 
Heat pumps can also
o be a single (packaged) unit that con
ntains the whole refrigeraation system
m or a spilt syystem which has a separaate unit that extracts thee heat (ussually outsidee or in a plan
nt room) and
d in internal u
unit that sup
pplies the heat to the build
ding. These aare connecte
ed by refrigeration pipew
work. The Heat Pump Handbook p
provides info
ormation abo
out the requirements of each tech
hnology. Site
e Suitabilityy
Once it is undersstood how d
different type
es of heat pu
umps work, cconsideration
n should be giveen to what is possible on a given site, taking into aaccount any specific issues which wo
ould influ
uence the fin
nal selection of which tecchnology to u
use and the d
design of thee system. These inclu
ude: 
The peak heat load ((in kWh): this determines what size o
of heat pump
p would be required
d to heat thee building. It is determineed by calculating the heating Developed by Riicardo‐AEA Revision 3
7 requirem
ment of the b
building at an agreed extternal design
n temperaturre. This temperaature must b
be specific to the site bein
ng considereed as there iss significant variation
n in climate b
between diffferent areas of Scotland.. For example a heating system iin Aviemore should be de
esigned at a significantlyy lower exterrnal temperaature than a syystem at a co
oastal locatio
on or in soutthern Scotlan
nd. This is paarticularly vittal when air source heaat pumps are
e being used as the outpu
ut of the heaat pump ofteen gets low
wer as the tem
mperature o
of the air com
ming into thee system decreases. 
The totaal heat load ((in kWhth) fo
or the year should be dettermined. Fo
or an existingg site it is posssible to use ffuel bills. 
The totaal heat load aand the peakk heat load are both used
d to determine the size the ground lloop system as the system large enough to extract the maxim
mum amountt of heat req
quired at anyy point in tim
me and to enssure the totaal amount off heat extracted by the heat pump in
n a year is rep
plenished. 
The grou
und area req
quired for ho
orizontal tren
nches will allo
ow you to asssess if you h
have sufficien
nt ground areea. 
The num
mber of boreholes required to meet tthe load will allow you to
o assess wheether you have
e sufficient sspace and wh
hether the p
project is goin
ng to be with
hin the capital you can source. It is possible to h
heat domesttic hot waterr using a heatt pump. An aassessment sshould be maade of th
he alteration
ns that would
d be required
d and the likely benefit. FFor sites with
h low or intermittent dom
mestic hot w
water demand, it may be more cost effective for tthe heat pum
mp to provide heating only and use anotherr source for h
hot water such as an insttantaneous heatter. The interface beetween the h
heat pump an
nd the heating controls m
must be desiigned to ensure efficcient operation and the ccomfort of th
he occupantss of the build
ding. It is imp
portant to iden
ntify the own
ners of sites aand make an
n initial appro
oach to conffirm their willlingness to: 
Be involved in your p
project in ge
eneral terms and to do so
o for a long p
period; and 
Allow ph
hysical and leegal access tto the site to
o install collecctors, deliver, install and
d maintain
n the heat pu
ump which m
may involve resolving inssurance issue
es. Grou
und source h
heat pumps ccan often bee installed insside a buildin
ng and as such are unlikeely to reequire plann
ning permissiion. In all casses consideraation has to be given to m
minimising vvisual intru
usion and no
oise. Coe
efficient of performan
nce
Efficciency of a heeat pump system is referrred to as the Coefficientt of Performaance (COP). This is th
he ratio of: 
The units of heat pu
ump suppliess (in kWh) Developed by Riicardo‐AEA Revision 3
8 to 
The units of electriccity required used by thee heat pump (in kWh) The COP should be as high as possible. C
COPs for systems can be b
between 2 (vvery poor) an
nd 5 (excceptionally go
ood). This means that a rreally well peerforming syystem can co
ost half as mu
uch to ru
un as a poorly performin
ng one. In ord
der to achievve a high COP all elements of the systems must bee designed and installed correctly. In particular, tthe lower heating flow temperature, the greater thee efficiency. The water temperature at w
which the heaating system operates wiill determine
e the efficien
ncy of yo
our heat pum
mp, which w
will have a verry significantt impact on tthe cost of ru
unning it. It is likely that acchieving a higher COP wiill be more expensive in tthe first instaance but cheaaper overall. In buildingss with a veryy high heat lo
oad, such as older housess, it may nott be posssible to reduce the flow ttemperaturee of the radiaators below 5
50°C which, provided thee rest of the system was desiggned well wo
ould result in a COP of no
o higher than
n about 3.4. mportant that the factorss influencing the COP aree understood
d early in a project and th
he It im
quottations provided by supp
pliers are corrrectly assesssed in order that the systtem purchassed is ass efficient as possible and
d the costs o
of both installing and running the systtem are corrrectly anticip
pated. Sta
age 5. Inittial scoping
Thiss step comprises the initiaal feasibility investigations for the prroject, fundin
ng for which migh
ht be availab
ble through ccommunity ggrants or loans. The initial viabiliity assessmeent should include: 
The saviings reduced
d fuel cost fro
om using a h
heat pump co
ompared to aa boiler or electric heating; 
An estim
mate of the R
RHI to be gen
nerated; 
The costt of installatiion; 
The costts of the mod
difications to
o be made to
o the existingg heat distrib
bution system
m, such as installing larrger radiatorss or a new co
ontrol system
m; and 
The coeffficient of peerformance ((COP) used to determinee the runningg cost of the heat pump sh
hould be bassed upon thee heat pump supplying th
he same tem
mperature thaat the heatt emitters arre designed tto operate att. The lower the temperaature that th
he heat pum
mp system ccan deliver to
o the heat em
mitters, the h
higher the effficiency will be but the more the cost of alteratiions are likely to be. Supp
pliers of heat pump systeems are ofteen happy to p
provide indiccative costs aand an initial asseessment of siite suitabilityy for free, ho
owever speciialist input su
uch as geological inveestigations w
would tend to
o incur costs.. Developed by Riicardo‐AEA Revision 3
9 Heat pumps are likely to req
quire relativeely modest in
nvestment du
uring the devvelopment proccess compareed to other rrenewable te
echnologies. There are instances wh
here specialisst pred
diction mode
elling is required which m
may incur a ccost, howeveer in most cases the heat pum
mp supplier w
will be able to
o offer adequate modelling services at low or no cost as partt of their supply servvice. Brreak poiint 1 – Is
s there a reaso
on to de
evelop?
As aa result the d
developmentt process in P
Phase 1 is to: 1. Identify potential sittes for heat p
pump develo
opment that are: nd can be seccured for a lo
ong period (p
potentially 25 years). a. Available an
b. Accessible fo
or collector iinstallation aand maintenance. c. Amenable to
o feed into the existing h
heating systeem and capable of physiccal connection. d. Likely to havve a good energy yield e. having accesss to enough
h land f.
Unlikely to ccause unacce
eptable impaacts on local people g. Potentially aable to gain p
planning perrmission (where required
d). 2. Confirm that the inccome is potentially high eenough to be
e attractive
3. Take an option on, o
or otherwise secure acceess to sites w
which meet th
he above criteria. If these criteria ccannot be m
met then the project shou
uld be stoppeed at this staage. oing project developmen
nt, Therre are two acctions that aare useful thrroughout thee entire ongo
whicch you may cchoose to staart now. 1) Investment Ready prepaaration – CA
ARES have de
eveloped a tool for recording the progress in d
developing yyour projectt and storingg all the supp
porting docu
umentation iin a secure, onlin
ne site. CARES can assistt in setting this up. 2) Project Deve
elopment pllan – a proje
ect developm
ment plan de
etailing key ttasks, responsibilitties and sche
edule for completion can help you m
meet the imp
portant deadlines th
hat influence
e the successs of your pro
oject. CARESS has produced a template plan which ccan be down
nloaded. Developed by Riicardo‐AEA Revision 3
10 Ph
hase 2 –
Ev
valuate the
t projject
Up tto this point little if any ffinancial inve
estment has been requireed to develo
op the projecct, with
h almost all input being that of time. From this point on costss may be incurred in advaance of any ccapital draw down from a finance pro
ovider (‘financial close’). This makess it esseential that yo
ou are confid
dent that thee project you
u propose is vviable. CAR
RES is one potential sourcce of develop
pment loan ffunding, makking it imporrtant to makee conttact with CARES at this sttage in the d
developmentt process. Sta
age 6. Esttablish an
n entity
In order for the project to prrogress, yourr Communityy Group musst be constitu
uted within aan appropriate form
mally constittuted body or legal frameework. This is to ensure that from th
he outsset you have the capacityy to raise finance, receivee grants, app
ply for RHI, receive and distrribute incom
me from the o
operating project, pay bills and take o
out insurancce. It is also important that tthe form of tthe formally constituted body or legaal entity prottects individu
ual mem
mbers of the Communityy Group from
m personal liaabilities for aany financial shortfall or otheer redress. Simiilarly for com
mmunity baseed businessees it is imporrtant that any liability inssurance and the cond
ditions of bank finance allow diversiffication into renewable e
energy generration so that this activity is co
overed. Module contaains more infformation on
n establishingg The Establishingg a Community Group M
the legal entity. his point you
u will also neeed to develo
op a proper p
project plan and allocatee responsibiliities At th
to in
ndividuals. Ste
ep 7. Secu
ure the siite(s)
As the site or sites and their associated h
heat loads arre the key to
o viability and
d is the focuss for all th
hat comes next, it is important that yyou secure access to them in some w
way. In addittion, if an
ny boreholes or excavatio
ons are required or if collectors are to be installed in bodies o
of wateer then acceess to install tthese must b
be secured. Depending o
on the site an
nd who owns it this may requiree some form of legal agreeement and under some circumstancces may invo
olve paym
ment of som
me kind of ren
ntal fee by yo
ou to the sitee owner. Once the above framework is in place th
hen the site(ss) must be seecured if app
propriate, or the agreeement from
m individual ccommunity m
members to ccollaborate o
obtained. Co
ommonly thiis requ
uires you to eenter into a binding agre
eement with the site own
ner that guarrantees that the project will be viable for at leeast as long as any loan aand ideally for the duration of the RH
HI agreeement. Developed by Riicardo‐AEA Revision 3
11 Ste
ep 8. Confirm grid connectiion
Prior to installing a heat pum
mp it is necesssary to notiffy the Distrib
bution Network Operator (DNO). This allow
ws them to eensure the electricity con
nnection is capable of supporting thee heatt pump and tthat it will no
ot affect the wider electrricity grid. In so
ome instance
es it will be n
necessary to increase thee capacity off the electricity connectio
on or makke changes to
o the local ellectricity grid
d such as upggrade a transsformer. Nottifying the elecctricity company at an early stage will ensure you
u are aware o
of any costs w
which you m
may incu
ur and can take them into
o account in your financial plans. Ste
ep 9. Pre-planning consulta
ation
Earlyy engagement with the local planning departmen
nt is essentiaal to minimisse planning rrisk and wasted costts. An open d
discussion with the plann
ning authoritty will give a clearer pictu
ure as to
o the potential to gain co
onsent. There are no guaarantees, butt projects takken through to the next phase o
of development should b
be reasonably confident tthat there is a prospect o
of plan
nning consen
nt for the pro
oject, at the sscale intendeed. Conservation areeas, Sites of Special Scien
ntific Interesst (SSSIs), National Scenicc Areas (NSA
As and National Parks all have sspecific planning restrictions associatted with them which must be in
nvestigated and taken in
nto account. Mosst planning authorities haave publisheed Planning P
Policy Guidan
nce coveringg heat pump projects. Many Planning Departments also welcomee early inform
mal discussio
ons with deveelopers of large scale sch
hemes aboutt their plans. If externallyy located heat pump systems have beeen proposed
d or built in tthe area, thee planning au
uthority web
b site will con
ntain detaails of the plaanning appliccation, the o
objections an
nd any restricctions on the
e developmeent of heat pumps. This can be a valuable so
ource of locaal informatio
on. odule provid
des additionaal guidance aand should aalso be referrred to. The Planning Mo
Brreak Poiint 2 – Can
C the challen
nges be
e overco
ome?
A fraank and impartial assessment of the project shou
uld be carried out against the main challenges:  Is the sitte tenure seccure?  Is it a viaable project??  Are the local residen
nts aware of the develop
pment?  Is there potential to get planningg consent at the scale an
nticipated? If the potential rremains, then the project can be takeen to Phase 3. Developed by Riicardo‐AEA Revision 3
12 Ph
hase 3 -
De
evelop the
t project
Ste
ep 10. Fix
x the proje
ect scope
e
It is likely that yo
ou now havee an outline o
of the projecct scope follo
owing the iniitial viability.. The system now neeeds to be dessigned more accurately to allow costss obtained. TThis process shou
uld this inclu
ude determin
ning the follo
owing by calcculation: 
Total an
nnual thermaal load of thee building (kW
Whth) 
Peak loaad of the building (kWth)) 
Size of h
heat pump reequired (kWtth) 
Area of ground requ
uired for any heat collectors and their locations fiinalised. 
The incrrease in heatt emitter cap
pacity requireed (e.g. radiaators) to achieve the dessired flow tem
mperature. TThis will require the calcu
ulation of thee heating req
quirement off each roo
om, taking in
nto account aany fabric im
mprovementss and determ
mining the sizze of radiatorr required. It is often foun
nd in doing tthis process tthat any exissting radiators are significantly oversized in which case onlyy modest increases in size may be required
d. It is important att this stage tto ensure thaat all works rrequired havve been identified and speccified so thatt a completee and workingg system will result. Partticular attenttion should b
be paid
d to the interrface betweeen systems. It is at this stage
e that design costs may b
be incurred, p
particularly o
on larger systems that requ
uire thermal modelling o
of the building or borehole systems. Input of a suiitably qualified and experienced
d engineer m
may be requirred to ensure that your p
project scopee is com
mprehensive and that all p
parts of the systems are compatible. Ste
ep 11. Confirm Cap
pital costt and inco
ome
Cap
pital Cost
A go
ood market ffor heat pum
mps and associated equip
pment and seervices existss. This mean
ns thatt the best sou
urce of estim
mates on cap
pital costs is ffrom system suppliers th
hrough a proccess of co
ompetitive tendering. Th
his will certaainly be possible if the sizze, location aand operatio
onal paraameters of th
he project arre known. It is importantt to ensure tthat the tend
der documen
nt is draffted with suffficient techn
nical detail to
o ensure thatt the system
ms quoted forr are com
mparable, thaat they will in
nterface with
h the building’s systems aand that thee resulting system will be as efficient ass possible thee project sco
ope developeed earlier sho
ould include thesse details butt, as stated p
previously, in
nput from a ssuitably qualified and experienced engiineer may bee required. FFurther information on developing an
n Invitation tto Tender is available in the P
Procuremen
nt Module. Developed by Riicardo‐AEA Revision 3
13 You will need to
o confirm if p
planning perm
mission is req
quired, if you
u have not done so alreaady. All ccosts associated with thee application should be co
onfirmed inccluding all fees, costs of prep
paring the drrawings requ
uired in the aapplication and any plann
ning consultaation requireed. You should also confirm if th
he electrical connection iis sufficient aand any costs associate w
with it beeing upgradeed, systems o
over about 15kW may require a threee phase electrical supplyy. The DNO can telll you if grid upgrade is reequired for it to support the heat pump(s) propo
osed, provvide a cost fo
or an upgrad
de and inform
m you of the likely timesccale. The Grid Toolkit provvides more in
nformation aand informattion about how to contacct your DNO, connection
n stan
ndards, etc. At eeach heat pum
mp location it is also a go
ood idea to gget an electrrician to conffirm that thee internal wiring iss suitable to supply the h
heat pump th
hat will be co
onnected to it. For example a neew sub distrib
bution board
d may be req
quired besidee where the heat pump iis to be instaalled for w
which a quottation would
d need to be sought from
m an electrician. It is impo
ortant to con
nfirm with
h the supplieer of the heatt pump whatt works theyy include for in their quottation and what theyy require to b
be completed in advance
e. Inco
ome
Therre are two fo
orms of income: 1) Savings in the fuel th
hat would haave been purrchased. ue of the Govvernment’s R
RHI 2) The valu
The total annuall heat output of the systeem is used to
o calculate b
both of the above. To calculate the savvings in runn
ning the syste
em the total annual heatting consump
ption must b
be divid
ded by the anticipated avverage COP tto obtain thee units of eleectricity that the heat pump is exxpected to co
onsume. Thee cost of this electricity should be sub
btracted from
m the existin
ng or alternative fuel ssource (e.g. fuel oil). Systtems that arre MCS comp
pliant will have projections of the total annual consumptio
on provided iin the quotattion. The Renewable Heat Incenttive Module should be reeferred to wh
hen assessing the incomee thatt the system will generate. Ste
ep 12. Fin
nancial via
ability ch
heck
A more detailed review of project viability is recomm
mended at th
his stage. Model can be
e populated w
with capital ccosts, RHI inccome and fu
uel The CARES toolkkit Finance M
costt savings. Thiss viability cheeck should bee considered
d along with any other ke
ey constraintts from your discussions with
h suppliers an
nd the planning departm
ment. Ste
ep 13. Sec
cure pre-planning funds
Fund
ding will now
w need to bee sought for ttaking the prroject througgh the next sstages of deveelopment. It should be noted that prrogression th
hrough this p
phase with grrant funding can Developed by Riicardo‐AEA Revision 3
14 put income from
m governmen
nt incentivess at risk. Mosst developerss secure fund
ding through
h loan
ns or private finance to ensure the income potenttial from thee solar therm
mal developm
ment is maintained. Ste
ep 13. Pla
anning ap
pplication
n
It is important to
o submit a planning application as so
oon as you haave sufficien
nt informatio
on. Is an im
mportant first step as no
o project will reach Financial Close wiithout these permissionss. Som
me planning aauthorities have develop
ped local Plan
nning Policy Guidance wh
hich describees whaat they expecct developers of heat pum
mp projects as part of th
he planning p
process. This will iden
ntify what is required as p
part of the p
planning application and the costs of submitting aa plan
nning applicaation. This planning application can b
be submitted
d by the Community Grou
up itsellf, or for morre complex aapplications tthrough the use of a plan
nning consulltant. Further information is avvailable in th
he CARES too
olkit Planningg module. Ste
ep 14. Griid notifica
ation
The Distribution Network Op
perator mustt be notified of your inteention to con
nnect a heat pum
mp to the electricity grid. You will require details o
of the heat p
pump system
m to be installed and the system w
which it repllaces (if any). This notificcation can on
nly be provid
ded once you
u know
w exactly wh
hat model off heat pump is to be instaalled. Ste
ep 15: Ide
entify fund
ding sources
Once the project has been confirmed to be potentially financiallyy viable it is e
essential to address how it iss to be fundeed. The separate Pro
oject Finance Module gives guidancee on the typees of traditio
onal finance tthat mayy be availablee and potenttial sources o
of that financce. Therre are a rangge of financee options, eacch of which h
has differentt attributes aand requ
uirements. TThese includee traditional bank loan fiinance and eestablishmen
nt of a co‐
operative (via th
he sales of sh
hares). Restrricting traditional fundingg options. Th
he relatively mod
dest cost of individual heeat pumps may make fun
nding by com
mmunity mem
mbers achiievable, espeecially if indivvidual ‘packaaged’ financiing options aare made avaailable. Considerations tthat will influ
uence the ch
hoice of finan
nce route incclude: 
The app
petite for riskk and reward
d; 
The ability to find a sshare of the capital cost;; 
The ability to managge the develo
opment and operation off the projectt; and 
The poteential to iden
ntify a ‘packaaged’ finance arrangeme
ent that indivvidual commun
nity memberrs can accesss to fund theeir own syste
em. Each
h form of fun
nding will have specific attributes (intterest rates, target invesstment typess and loan
n conditions). Early discu
ussion with the funders w
will establish if your projeect matches the Developed by Riicardo‐AEA Revision 3
15 fund
der’s criteria. Changing aa project to m
meet fundingg criteria maay be justifiab
ble, but caree shou
uld be taken not to impaair the core re
easons for developing th
he project. Ste
ep 16: Dev
velop full financia
al model
The financial viability of any project depeends on com
mparing the ccost of borro
owing the mo
oney requ
uired to buy the solar colllectors and associated eequipment an
nd pay the cost of instaallation (including changes to the hosts heating ssystems and controls) witth the incom
me from
m the system
m (including ssavings) after operating ccosts. The installation costs can incclude: 
The purcchase of the heat pump, buffer tankss and the balance of plan
nt 
Excavatiion for groun
nd loop or drrilling of boreeholes and their connecttion to the heat pump 
The installation of th
he heat pump and associiated equipm
ment 
Connecttion to the heating system
m or systems to be supp
plied by the h
heat pump an
nd any alterations requ
uired, such ass installing new radiatorss. 
Installing control sysstems 
Heat meetering for RHI purposes or for billingg 
Costs asssociated witth any changges to electriccity connection 
Civil works such as in
ncreasing sizze of plant ro
ooms. 
Any other works req
quired to form
m a complette and working system The CARES toolkkit Finance M
Model is availlable to dow
wnload and usse to compleete a detailed
d financial appraissal of your prroject and th
he CARES too
olkit Finance Model guidaance document provvides indicative costs takken from a nu
umber of diffferent marke
et studies. In order to comp
plete the finaancial appraisal as accuraately as posssible, the cap
pital costs sh
hould be d
defined as acccurately as p
possible. It iss important tto have quottations for all work and n
not simp
ply use estim
mates. For gro
ound sourcee heat pump systems thiss may mean carrying out inveestigations off the ground conditions ssuch as drilling of test bo
oreholes or thermal mod
delling. Opeerational costts such as maintenance, ground rentt and insuran
nce must be d
determined and otheer ongoing exxpenditure ssuch as comm
munity beneefit paymentss must be accounted for.. A deetailed calculation of the heating requirements of the buildings to be servved will deteermine how much heat the heat pum
mp will produ
uce. This musst be calculated in order that the potential inccome from R
RHI can be deetermined, h
however this cannot be d
determined w
with totaal accuracy an
nd is always subject to w
weather fluctuations or ch
hanges to ho
ow the buildings Developed by Riicardo‐AEA Revision 3
16 are o
operated. It is also necesssary to calcu
ulate the Seaasonal Performance Facttor which is tto be anticipated. m such an asssessment th
he long term energy yield
d and electriccity consump
ption can be From
pred
dicted. A po
otential lender will also w
want to see aa full businesss plan for th
he duration o
of operation of the heat pump installation w
with a detaile
ed cash flow and balancee sheet that iincludes repaayment of loans provided
d. The CARESS toolkit Finaance Model p
provides thiss facility and morre detail on tthis is covereed in the Projject Finance module and
d the CARES ttoolkit Finance Mod
del guidancee. Brreak poiint 3 – Confirm
C
m consen
nts, grid
d and fiinanciall
via
ability
The outcome fro
om Phase 3 o
of the develo
opment proccess should sshow that all the followin
ng are in place: 
Planningg consent graanted; 
Energy yyield predicted; 
Income predicted; 
Permission to conneect the heat p
pump to thee electricity ggrid; 
Financiaal viability co
onfirmed; and
d 
Fundingg options inveestigated. If co
onsents are in
n place and tthe project aappears finan
ncially viablee, then the project can proggress to Phasse 4. If at this stage the sscheme lookss unviable it should be sttopped, or ree‐
designed. Developed by Riicardo‐AEA Revision 3
17 Ph
hase 4 Getting
G
Financiial Clos
se
Ste
ep 17. Ide
entify and
d contact suppliers
s
The process of finalising suppliers of equ
uipment and services will need to be completed. It is good
d practice to
o seek compeetitive tendeers for all services, and it is recommended a consstruction phaase project m
manager be aappointed in
n the same w
way if not alreeady in placee. A heeat pump pro
oject may bee completed by one contractor or maade up of sevveral conttractors, typically the insstallation of tthe heat pum
mp and the b
balance of plant within th
he plan
nt room, such
h as buffer taanks, hot waater cylinderss, pumps and
d heat pump
p controls wo
ould all b
be completed
d by one con
ntractor. It is sometimes necessary to
o employ a seeparate conttractor to co
omplete boreehole drillingg or excavatio
ons for groun
nd loops as w
well as any ccivil works required ssuch as consstruction of aa new plant rroom or base
e for a pre‐faabricated energy centtre. It is important to
o consider no
ot only the ccapital cost o
of the heat pump but also
o the cost off colleectors, modifications to eexisting heatting systems, warranty provided, pro
ojected operaating perfformance (in
ncluding COP
P), annual maaintenance costs and anyy manual inteervention requ
uired such ass manual reaadings of heaat meters forr billing purp
poses. Ste
ep 18. Sec
cure bridge funds
Supp
pliers of key pieces of eq
quipment succh as the heaat pumps or buffer tankss may requiree depo
osits to secu
ure their delivvery. The lon
ng lead time on these ite
ems needs to
o be considerred, ofteen requiring ffurther funds to be securred, prior to Financial Clo
ose. It is important to deveelop a cash fflow, to anticcipate the neeed for fundiing. The CAR
RES toolkit Prroject Plan is a good
d place to start. Ste
ep 19: Fin
nancial close
Morre detail on ffinancing pro
ojects is given in the Project Finance module. It sh
hould now bee possible to secure yourr chosen finaance. You wiill need to saatisfy the finaance provviders’ proceess of due dilligence and p
provide moree detailed an
nalysis of esttimated systeem perfformance. H
However you should have
e gathered th
his by now by following tthe process outlined in this TToolkit. Brreak poiint 4 – Can
C the projectt be fun
nded?
Thiss phase of wo
ork is about making the rrequired app
plications to achieve the required perm
mits and permissions to m
move the project to financial close, w
when the cap
pital needed to consstruct the prroject is made available.
Developed by Riicardo‐AEA Revision 3
18 Ph
hase 5 -
Co
ompletin
ng the project
p
Ste
ep 20. Rep
pay otherr funds
Any debt that is due for repaayment shou
uld be paid b
back (with intterest) at this point. Development loans (where aapplicable) aare set up to be repaid att Financial Close. The deb
bt provvided by the funders sho
ould include p
provision forr this repaym
ment. Ste
ep 21: Constructio
on
Once all the permissions and
d agreementts that you need are in pllace then financial close can be aachieved. At this point in
nstallation caan commence and the thermal collecctors installed and connected. It is good prractice to appoint an app
propriately qualified persson to overseee instaallation and commissioning to ensuree that the prroject perforrms to speciffication. Thiss is espeecially imporrtant for largger projects.
CDM applicattion
If yo
our project iss longer than
n 30 days or iinvolves morre than 500 p
person days of constructtion work, the Health
h and Safety Executive (H
HSE) have to be notified.
ontractor or heat pump ssupplier mayy manage this for Your appointed project manager, civil co
you,, but as the cclient, you neeed to: 
Check co
ompetence aand resource
es of all appo
ointees; 
Ensure tthere are suitable managgement arran
ngements fo
or the projectt welfare facilitiess; 
Allow su
ufficient timee and resources for all staages; and 
Provide pre‐construction inform
mation to designers and contractors.
Thiss is ultimatelyy your responsibility und
der the CDM regulations. Com
mmissionin
ng
It is essential thaat a heat pum
mp is properrly commissio
oned in line with the manufacturers’’ guid
dance docum
ments. It is paarticularly im
mportant to b
be aware of:

That the
e flow tempeerature of the heating sysstem matchees in the perrformance estimate
es provided by the manu
ufacturer; 
That the
e ground loop system is ccorrectly flusshed and pre
essure tested
d in line with the MCS req
quirements; 
That the
e antifreeze llevel in the gground loop has been tessted and found to be sufficien
nt for your site; Developed by Riicardo‐AEA Revision 3
19 
That all pipework in the plant room and in th
he building h
has been flusshed then pressuree tested and found to be
e free from leeaks; 
The freq
quency and d
duration of leegionella cyccles is in line with your orrganisations procedu
ures. Ste
ep 22. Apply for RH
HI
Afteer the system
m has been co
ommissioned
d the RHI application can
n be completted. Your equipment supp
plier will be aable to guidee you through
h this processs and will offten complette the application ffor you. Morre informatio
on is available in the Renewable Heat Incentive Mod
dule. Ste
ep 23. Nottify waterr authoritty
If yo
ou have conn
nected new ffittings to thee mains wateer system, su
uch as a new
w pressurised
d hot wateer cylinder o
or plate heat exchanger, tthen it will b
be necessary to inform Sccottish Wateer. Ste
ep 22: Op
peration
It is important to
o ensure that proper management iss in place for the operatin
ng life of thee heatt pump systeem to overseee the processs of collecting RHI paym
ments, that th
he system is corrrectly maintaained and thaat all on‐goin
ng operatingg costs and financial and other liabilitties are met (where appropriate). ppointed wh
ho will be ressponsible forr who is train
ning A reesponsible peerson also neeeds to be ap
in ho
ow to use th
he HP and ho
ow to avoid aabusing it. It is importantt that the perrformance of the heatt pumps are regularly mo
onitored as large fluctuations or low output migh
ht indicate a tech
hnical probleems and this in turn will rreduce incom
me, leading to reduced financial returrns. The income from
m the projectt will need to
o be manageed carefully. Any provide
er of loan finance may exp
pect there to be cash held
d to cover fixxed costs succh as interesst and loan repaayments and
d O&M contrracts. Only after these co
osts have been met can tthe project distrribute any reemaining income. The Establishingg a Community Group m
module provid
des further gguidance on dispersing any inco
ome generateed for the co
ommunity grroup. Dep
pending on how your project is constiituted, you m
may be respo
onsible for de
ecommission
ning at th
he end of thee project, ho
owever that iis defined. TThis may also
o include the removal of colleectors and re
einstate the site. The cossts of these w
works should
d be identifieed at an earlly stagge so that adequate finan
ncial provisio
on can be maade. Ste
ep 23. Dec
commiss
sioning
The removal and
d disposal off the heat pu
ump system w
will need to be allowed ffor. The heatt pum
mp may contaain refrigerant gases whiich are coverred by F Gas regulations governing how the heat pump m
must be disp
posed of. Developed by Riicardo‐AEA Revision 3
20 Therre may be so
ome scrap vaalue in the eq
quipment, bu
ut this is unlikely to coveer the entire cost of decommission
ning. So the project shou
uld set aside income to b
build up a fun
nd to cover deco
ommissionin
ng costs. Developed by Riicardo‐AEA Revision 3
21 Fu
urther In
nformation
Hea
at Pump context
The Shared Com
mmunity Own
nership of Reenewable Energy System
ms provides in
nformation tto supp
port local communities through the ccommunity b
benefit proceess. It publishes the beneefits thatt local comm
munities havee received through renew
wable energyy projects– seee http://sco
o‐
es.u
uk/index.htm
ml Ste
ep 1.

Develop the Visio
on
The Energy Saving Trust has pub
blished resultts from heat pump field ttrials that includess useful inforrmation that may help yo
ou when devveloping your project: https://w
www.gov.ukk/governmen
nt/uploads/ssystem/uploaads/attachm
ment_data/fille/4
8327/50
045‐heat‐pum
mp‐field‐trials.pdf Ste
ep 2. Seek
k advice
 List of CAARES Develoopment Officcers: http://localenergysccotland.org//contact‐
us/regio
onal‐contactss/
Ste
ep 3. Com
mmunicate
Therre are a rangge of guidancce documentts available ffor engaging with the com
mmunity: 
The Scotttish Commu
unity Develop
pment Centrre (SCDC) has developed a useful on‐‐line resourcee to support community developmen
nt and comm
munication: http://w
www.scdc.orgg.uk/ 
Scottish Governmen
nt has producced a ‘how to
o’ guide: http://w
www.scotland
d.gov.uk/Top
pics/People//engage/How
wToGuide 
The Hom
me and Comm
munities Ageency (HCA) h
has also deve
eloped a Com
mmunity Engagem
ment Toolkit: http://www
w.homesand
dcommunitiees.co.uk/com
mmunity‐
engagem
ment‐toolkit??page_id=&p
page=1 Ste
ep 4. Tech
hnology selection
s

CARES H
Heat Pump H
Handbook: htttp://www.lo
ocalenergysccotland.org/rresources‐
advice/rrenewables‐h
handbook/

CARES P
Planning Mod
dule: http://localenergysscotland.org//resources‐aadvice/cares‐‐
toolkit/p
planning/ The MCS Heat Emitter tool ggives guidancce on how flo
ow temperattures and a b
building’s heatting requirem
ment relate tto the size off radiators reequired and The MCS Heeat Emitter G
Guide desccribes the relationship beetween COP and the dessign of radiattor systems

http://w
www.microgeenerationcerrtification.orrg/admin/documents/MIIS%203005%
%20S
upplemeentary%20In
nformation%202%20‐%20
0Heat%20Em
mitter%20Gu
uide%20v2.0.pdf Developed by Riicardo‐AEA Revision 3
22 
SNH havve a web bassed mapping tool that will show somee of the relevvant land designattions: http:///gateway.snh.gov.uk/siteelink/index.jsp) Sta
age 5. Inittial scoping

Heat pump calculato
ors are availaable online w
which will pro
ovide an initial indication
n of how much heat will be generateed: http://w
www.heatpum
mps.co.uk/h
heatpumpcalculator.htmll 
The Ground Source H
Heat Pump A
Assocition prrovides lists o
of installers and guidance documents: http://w
www.gshp.orrg.uk/ 
The Microgeneration
n Certificiatio
on scheme in
nstaller guidance can be a useful resourcee in what neeeds to be considered wh
hen designingg heat pump
p system: http://w
www.microgeenerationcerrtification.orrg/admin/documents/MIIS%203005%
%20Is
sue%203
3%200%20H
Heat%20Pum
mp%20System
ms%202011.0
09.05.pdf 
The MCSS Ground Loo
okup tables can be used as a guide o
on how much
h ground is required
d for a heat p
pump: http://w
www.microgeenerationcerrtification.orrg/images/M
MIS_3005_Supplementaryy_Inf
ormation_1_‐_MCS__022_‐_Grou
und_loop_sizzing_tables__2011‐09‐02__v1.0.pdf 
Guidancce on preventing spread o
of legionella: http://www
w.hse.gov.ukk/legionnairees/ 
“Design
n of low‐temperature dom
mestic heating systems –– a guide forr system designerrs and installers”, 2013, BRE Trust pu
ublication FB59: www.breebookshop.ccom 
Environm
mental good
d practice guide for groun
nd source he
eating and co
ooling. GEHO03
311BTPA‐E‐E. Published b
by Environment Agency 2
2011: www.eenvironmentt‐
agency.ggov.uk 
MCS 001
1‐ MCS – Installer certificcation schem
me documentt. Available ffrom: http://w
www.microgeenerationcerrtification.orrg/images/M
MCS%20001%
%20‐
%20Issu
ue%202.4%20
0Installer%20Certificatio
on%20Schem
me%20Requirrements.pdf 
MCS guiidance on systems of up to 70kWth: http://w
www.microgeenerationcerrtification.orrg/images/M
MCS%2070kW
Wth%20Appliicati
on%20G
Guidance%20
0v1.0%20‐%2
202014.05.14%20‐%20FIINAL.pdf RHI Income

Ofgem R
RHI website h
has details o
of tariffs, regu
ulations and how to apply and : https://w
www.ofgem.gov.uk/environmental‐p
programmess/non‐domesstic‐renewab
ble‐
heat‐inccentive‐rhi

CARES R
Renewable Heat Incentive
e Module: http://w
www.localeneergyscotland
d.org/resources‐advice/ccares‐toolkit//renewable‐‐
heat‐inccentive/ Developed by Riicardo‐AEA Revision 3
23 Sta
age 6. Esttablish an
n entity

Establish
hing a Comm
munity Group
p Module: htttp://localenergyscotland
d.org/resourrces‐
advice/ccares‐toolkit//establishingg‐a‐commun
nity‐group/ 
A template project p
plan can be d
downloaded from: http://w
www.localenergyscotland
d.org/projecttplan Ste
ep 11. Fin
nancial via
ability ch
heck

CARES P
Procurementt Module http://localeneergyscotland..org/resourcces‐advice/caares‐
toolkit/p
procurementt/. 
Grid Too
olkit http://w
www.localenergyscotland
d.org/resourrces‐advice/ccares‐
toolkit/ggrid‐connecttion/ 
Renewable Heat Incentive Modu
ule http://ww
ww.localenergyscotland..org/resources‐
advice/ccares‐toolkit//renewable‐‐heat‐incentiive/ Ste
ep 15: Ide
entify fund
ding sources

Project FFinance Mod
dule http://lo
ocalenergysccotland.org/resources‐ad
dvice/cares‐
toolkit/p
project‐finan
nce/ Ste
ep 19: Fin
nancial close

Project FFinance Mod
dule http://lo
ocalenergysccotland.org/resources‐ad
dvice/cares‐
toolkit/p
project‐finan
nce/ Ste
ep 22: Op
peration

Establish
hing a comm
munity group module: htttp://localeneergyscotland.org/resourcces‐
advice/ccares‐toolkit//establishingg‐a‐commun
nity‐group/ Developed by Riicardo‐AEA Revision 3
24 Commission
ned by the Sccottish Government and Energy Savving Trust. Produced byy Local Energgy Scotland aand Ricardo‐A
AEA Ltd © Que
een’s Printer for SScotland 2009, 20
010, 2011, 2012
This do
ocument wass last updateed March 201
15 Developed by Riicardo‐AEA Revision 3
25