Combined Heat & Power

Demand Side Services

Energy Efficiency

Heat Networks

Gateshead District Energy Scheme

The Gateshead District Energy Scheme supplies heat and power to domestic, public and commercial customers, from 4MW gas-fired CHP engines via a new three kilometre heat and ‘private-wire’ network. 

Gateshead District Energy Scheme | Visionary

Built to serve Gateshead town centre’s current and future energy needs for decades to come, the scheme sets the blueprint for next-generation district energy, integrating heat/power generation and distribution, with energy storage, whilst providing national grid services.

The scheme originated in 2010 from the Council's ambition to reduce energy costs and carbon emissions for Gateshead Town Centre. However, it has grown into a major infrastructure scheme that will underpin the future redevelopment of the Town Centre, stimulating inward investment and job creation, as well as becoming a significant trading opportunity to support the Council's financial position.  

What was the need

The project needs were many-fold:

  • Energy and carbon: Energy efficiency measures could go no further in reducing building costs and emissions, and required a larger scale low-carbon energy generation scheme.
  • New developers were constrained in providing sustainable, low-carbon development, due to lower land values, and build costs premium.The Council aimed to make it cheaper for developers to build low carbon.
  • Trading and commercialisation. Financial pressures continue to push Council to seek new trading opportunities, and local generation and supply offered opportunities to retain revenue from energy sales.
  • No private delivery model. Approaches from private district energy developers did not fully allow the Council to achieve its ambitions.

Techincal impact

  • Carbon reduction - the initial scheme will cut emissions by 2,900 tonnes per annum, which will further increase to 5,300 tonnes/yr once Phase 2 completes. Phase 3 will see this rise further to 6,100 tonnes per annum. This is maximised by including 250m3 of thermal storage, that allows 95% of the 10MW heat demand to be supplied from 4.2MWth of CHP engines.
  • Cost savings - customers are guaranteed discounts, starting from 10% on heat costs, and 5% on power costs.

The Council as scheme owner, has invested £18m in phase 1, using its own finances, with no capital grants or subsidies. As an invest to save scheme,it projects an eight per cent return over 40 years.


Innovation has been paramount, to deliver a ground-breaking and commercially viable scheme in a relatively small town centre, reliant on no public subsidy or grant, ahead of the next wave of district energy schemes.

Private wire has made this relatively small scheme commercial viable, opening up similar opportunities across the UK. Gateshead was the first public body to acquire existing HV assets from a District Network Operator to facilitate the connection of existing buildings to a private wire network.

With heat rejection plant and controls, the 4MW CHP engines can provide peak power generation, participate in Grid Services (e.g. STOR), and have enabled the scheme to become one of the first public energy networks to successfully win a 15 year Capacity Market contract, supported by Flexitricity.

The Council has contracted a 3MW of battery storage to be installed by July 2017, to provide peak power and triad avoidance for the network, whilst providing Grid Services (Frequencey Response) to National Grid, via Centrica.

To reduce disruption and time of heat network installation, the Council has secured £0.9m EU grant, to install the UK’s first plastic district heating trial, that can replicate temps and pressures of a steel system, aiming to stimulate a new supply chain, which could revolutionise heat network construction.

Social impact

Locally, users have been engaged since project feasibility with the promise of lower cost, lower carbon energy, and a dedicated project management team, to manage the complex task of network construction, and customer connection. Gateshead College, the Sage Gateshead, BALTIC Centre for Contemporary Art, Gateshead Housing Company and Gateshead Civic Centre are all customers. 

Community benefit has been required throughout construction. For example, the main contractor hosted site visits for Gateshead College and provided careers advice presentations to students. Students produced artwork for site hoardings and hosted an Energy Centre open day. 

Regionally, the scheme is attracting interest from all sectors; including local councils, universities and developers of residential, commercial and energy from waste schemes.

Nationally, the scheme has been closely followed by the Government, with information from the scheme going into many national sources.


The scheme was always designed to expand. The next key milestone is to demonstrate how existing commercial customers can be integrated technically and commercially into heat/power networks. Following, the model will be tested and proven for new developers, providing a working example of how district energy can actually reduce the development and operating cost on new, low-carbon development. And generation sources will continue to develop –having both heat and power networks, we can offer connections to energy generators, as well as consumers,offering combined grid connection / power purchase agreements to electrical generators. Discussions with local biogas producers have commenced.

Within 12 months, the scheme will also have tested and installed new plastic DH pipe technology, providing case studies and supply chain engagement, to hopefully kick start a new, innovative product to further support heat network expansion.

Difference to sector

  • Municipalisation of energy services is evident across the UK  and Gateshead in many ways has set the benchmark for what can be achieved through direct generation/distribution of both heat/power.
  • The application of private wire has broken new ground, testing new commercialrelationships with distributed network operators. It brings into question the effectiveness of current licencing and legislation around electricity distribution and supply.
  • Lastly, the scheme, with its integration tof all elements of energy proves the energy can be decentralised, and remain commercial viable, whilst still fully integrated with national networks.

2019 Case Study


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