First Central Heating Company (FCHC) is a Special Purpose Vehicle (SPV) set up to deliver all of the energy infrastructure at the First Central, Park Royal development. This is a large regeneration project in North West London.
In 2015, Pinnacle Power, part of the Pinnacle Group, were bought in by the developers (Bellway, Redrow and Catalyst Housing) and Diageo on the commercial side to set up and run FCHC. The district heating network was not being used as the clients could not find an operator who could deliver the commercial terms the developers were seeking, to ensure that the residents received fair terms and the developers did not take undue risk.
The district heat network at FCHC has a 10MW plant room with a natural gas CHP (Combined Heat & Power) Unit soon to be commissioned. The system currently serves heat and hot water to 540 apartments in Phase 1 of the development. This will expand to include low cost, low carbon heat, hot water and power to the 540 apartments as well as a hotel and office blocks in Phase 2 of the development, which is ongoing.
- Delivery of energy strategy
- ESCO Services
- Billing and metering
- Resident liaison
- The project had stalled as the original supplier was trying to charge huge connection payments and requiring guarantees that could not be met.
- There was no collaboration with the developers.
- Proposed energy prices were too high for the residents.
- It was not clear if the system was going to be compliant with heat regulations.
To overcome these issues, Pinnacle Power created a structure which would allow FCHC to be set up for the benefit of the residents. We would run the company, manage the ESCO agreement, bill the residents, ensure that the system was operated and maintained properly and deliver a heat price in which the residents can be confident that they are getting a fair deal through our comparator against average gas prices.
- Pinnacle set up a special purpose vehicle which would then contract with the residents and the residential management companies.
- Pinnacle Power’s operations team to advise and develop a relationship with the design & build contractor with the aim to offer design support in Phase 2 of development.
- Delivered an energy strategy for the developers which can move and flex.
- Worked with the developers and the various legal teams to bring the project to financial close. This involved creating the full business plan, legal documents and shareholders agreement.
- Created, negotiated and delivered the plot connection agreements.
- Pinnacle also created and delivered all resident facing literature, explaining the structure of the company and who they were contracting with and how they were going to be billed.
- Set up and operate billing and metering systems, and working with the Estate Manco to collect revenues.
The board of FCHC now have an operating heating company, with happy residents and no legal or compliance issues.