The Energy Transition | Green Heat Networks, CfD updates and small-scale space-based solar

This week we look at Green Heat Network Fund Round 11, Contracts for Difference Allocation Round 8 Supply Chain Plan guidance, and the feasibility report on small-scale space-based solar.

Green Heat Network Fund Round 11 opens for applications 

The Department for Energy Security and Net Zero (DESNZ) has announced that Round 11 of the Green Heat Network Fund (GHNF) is open for applications until 11:59pm on 1 May 2026.

The GHNF is available to organisations in the public, private and third sectors in England. It provides capital grant funding to subsidise and support the development of decarbonised heat by:

• commercialising and constructing new low-carbon heat networks; and
• retrofitting and expanding existing heat networks.

The GHNF funds up to (but not including) 50% of a project's total combined commercialisation and construction costs. View further guidance on the application process.

This latest round of applications follows the government's recent announcements aimed at bolstering heat network development – including that the GHNF would continue to provide capital support to heat network projects until at least 2029/30, with up to £195 million per year being made available to unlock private investment.

DESNZ publishes guidance on Supply Chain Plan for Contracts for Difference Allocation Round 8 

DESNZ has published guidance outlining the Supply Chain Plan criteria for the Contracts for Difference (CfD) Allocation Round (AR) 8. This update follows the government's response to its consultation on reforms to the CfD Clean Industry Bonus, expanding its scope to onshore wind.

For solar (and now also onshore wind) stations generating at least 300MW, approval of a Supply Chain Plan from the secretary of state for Energy Security and Net Zero will be a pre-condition to qualifying for CfD AR8. Successful CfD AR8 applicants will then be monitored on an ongoing basis to verify fulfilment of their Supply Chain Plan commitments. A statement from the secretary of state that the project has successfully passed its Supply Chain Plan Implementation Assessment will then be required for the fulfilment of one of the project's Operational Conditions Precedent under the CfD.

Supply Chain Plan applications may be submitted for either a single CfD unit, or multiple CfD units (for example, where the portfolio will utilise similar supply chains and is situated within the same geographical location) in certain circumstances. While approval of the Supply Chain Plan is a condition for participation in CfD AR8, the substance of the plan will not affect the AR8 assessment criteria themselves.

UK government publishes small-scale space-based solar feasibility report 

The government has published findings from a report into the feasibility of deploying small-scale space-based solar (SSSBS).  

The study builds on the findings of a previous study on the cost-benefit analysis of space-based solar power which assessed the "required investments, associated costs and risks and expected strategic, environmental, economic and societal benefits of adding this space-based energy source to the European energy mix to meet Net Zero carbon by 2050". That study found that without first de-risking, full scale space-based solar would face the challenges of any nascent technology requiring significant upfront investment.  

The latest study concludes that despite significant initial costs, an environment of investment opportunity and support could be created to enable SSSBS to become a viable source of power by 2040. The levelised cost of electricity (LCOE – a standard measure of the average cost of generating power over a plant's lifetime) from early SSSBS would be between £355/MWh and £595/MWh (with around 50% of this cost coming from launching it). The report suggests that the LCOE could fall to between £87/MWh and £129/MWh by 2040, at which point delivery could reach 980GWh per year.  

SSSBS support could also de-risk and unlock opportunities for future larger scale space-based solar. A combination of public and private sector support will be needed to help industry resolve and overcome technical barriers.

This article was written with the assistance of Adam Budd, Yasmine Jauffur, and Oliver Derham, trainee solicitors.