The second scenario includes:

• Kirkwall Council Headquarters
• Papdale Primary School
• White Street (14 houses)
• Future council building

In this case, there are two main factors that had to been taken into consideration: the price of electricity bought and the price of heat sold to the customers (14 private residences within White Street).

Again, to assess the financial viability of the second scenario a capital and operational cost were calculated. Our calculations obtained the following values:

• Total Capital cost: £1,215,981
• Total Operational cost: £19,456

In order to obtain these values, the overall cost of the district heating network was divided into two main areas: capital and operational costs, followed by creating a breakdown of the costs associated with both catergories.

It can be observed in the following tables that the price of the thermal storage has increased considerably from the previous scenario, bringing up the overall capital cost of the system. However, the pipe network is still the main driver in this area.

Similar to the first scenario, the operational costs represent a small percentage of the total capital cost in this scenario.

For this scenario in order for the project to be financially viable, it would be necessary to buy electricity at 3p/kWh and sell heat to customers at 6p/kWh. In this case the payback period would be 10 years. However, it is possible that electricity could not be purchased at this price. Again, it is reliant on the negotiation between the council and the energy company.

A more reasonable option would be to buy electricity at 5p/kWh and sell heat to the customers at 6p/kWh. With this combination the payback period would be approximetely 15 years.

The internal rate of return for this scenario after this payback period increments are as shown below:

• 2028: 1%
• 2029: 3%
• 2030: 4%