The first project to be delivered under the ESCo will be a low carbon district heating network supplying the new Shawfair town in the north of the council area on the outskirts of Edinburgh.

Zero Waste contractor FCC Environment, which operates Edinburgh and Midlothian councils’ energy from waste facility (EfW) near Millerhill, will supply low carbon heat to the district heat network. The EfW is fuelled by residual waste collected by Midlothian, Edinburgh and East Lothian councils.

The district heating network, which is also among key projects covered by a landmark sustainable growth agreement (SGA), signed by Midlothian Council, the Scottish Environment Protection Agency (SEPA) and local developer Shawfair LLP, is expected to save over 2,000 tonnes of CO2 per year, the equivalent of taking 1,200 cars off the road.

Midlothian Council will also sign a 40-year agreement with the ESCo to supply heat to the new public buildings to be built at the new Shawfair town. The new company will negotiate final contracts with its main initial partners, FCC Environment and Shawfair LLP. FCC will supply the low carbon heat and Shawfair LLP will facilitate the connections to new domestic and commercial developments in the town.

This first project will involve an initial capital investment of circa £20 million and benefit from up to £7.3m from the Scottish Government’s Low Carbon Infrastructure Transformation Programme (LCITP), which is part-funded by the European Regional Development Fund. The council also benefits from a close working relationship on the project from the Scottish Futures Trust, a core LCITP partner.

Over its lifetime, ESCo projects to the value of over £100m are anticipated. Future ESCo projects will include potentially expanding the district heating network into areas of East Lothian and City of Edinburgh, creating a network similar in scale to those delivered by Vattenfall, the Swedish state-owned energy firm, in major European cities, such as Amsterdam. The network will bring the latest in heat network technology to Scotland, deployed as a low temperature network.

Low temperature heat networks operate efficiently so that they can reduce the temperature of the heat supply down to approximately 50°C. This low temperature operation makes it easier to incorporate heat pumps, which will operate more efficiently at lower temperatures. When compared to older heat networks and traditional gas heating systems, low temperature heat systems are cheaper to operate and maintain.

These networks can also be adapted to take heat from many sources, such as sewage works and data centres. Midlothian Council and Vattenfall are also working with the Coal Authority to investigate the potential for capturing heat from mine water at the former Monktonhall Colliery for heat storage and supply.

Midlothian Council’s cabinet member for economic development, Councillor Russell Imrie, said: “Today is a milestone in our commitment to delivering green energy projects to benefit local communities and businesses while helping us achieve our council ambition of becoming carbon neutral by 2030.

“We’re looking forward to working with Vattenfall, including on our first project with Shawfair LLP and FCC Environment.”

Eoghan Maguire, director for Scotland and North UK at Vattenfall Heat UK, said: “Vattenfall’s aim is to enable a life free from fossil fuels within one generation, something we cannot do alone. To make this happen, we are working with organisations like Midlothian Council to decarbonise the heat sector, the single biggest contributor to UK carbon emissions.

“This exciting Joint Venture with Midlothian Council is a platform for further growth in low-carbon energy in Scotland and the UK. The innovative Shawfair development will bring low carbon heat network technology to Scotland, building on Vattenfall’s experience in constructing and operating some of Europe’s fastest growing heat networks.”

Dr Paul Moseley, associate director at the Scottish Futures Trust, said: “The launch of Midlothian Energy represents a major step towards decarbonising heat supplies to buildings in the area. The use of a joint venture is an innovative approach to delivering heat networks in Scotland and plays to the strengths of the public and private sector partners. I look forward to continuing to work with Midlothian Council and Vattenfall to help the ESCo achieve the best possible outcomes for the people and businesses of Midlothian.”

Nick Waugh, a director of Shawfair LLP, said: “Our vision for Shawfair is centred on landscape, community and sustainability.  Today’s announcement reinforces our commitment to a zero-carbon future and will support the entire fabric of this emerging community.  We very much look forward to working with ESCo to deliver this innovative district heating network.”