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This week in our #Heat13 blog, Paul Woods from AECOM asks are we getting the best value for money from green subsidies?

If all subsidies were given at the same rate – i.e. a fixed sum per tonne of CO2 saved and for the same period of time then we could reasonably expect that the market would deliver the most cost-effective solutions. But the proliferation of ROcS, FiTs and RHI have left us with a huge range of effective costs to save a tonne of CO2.

A minimum figure of around £100/tonne is seen for onshore wind (and a similar level has been agreed for new nuclear albeit for 35 years) but solar PV is around £200/tonne and heat pumps receive over £400/tonne.

Bizarrely, gas-fired CHP receives nothing except at a domestic scale where there is a relatively high subsidy of £500/tonne (stirling engine type).As gas-fired CHP is the most common supplier of heat for district heating (DH) it is unsurprising that DH still supplies only 2% of our heat market.

So what kind of incentive could work? 

Whilst an incentive for gas-fired CHP would be welcomed it may be better to incentivise DH through a DH Incentive that would make payments retrospectively on an annual basis according to the amount of CO2 saved. This would encourage DH operators to develop lower CO2 forms of heat production and design efficient networks. In return for the DHI they would have an obligation to provide data on their scheme on energy and CO2 emissions which would be made publicly available to aid designers and policy makers.

An RHI set at £100/tonne could be sufficient to convert marginal projects into standalone projects financed by the private sector. However a higher figure could easily be justified when compared to other technologies which compete with DH such as domestic air-source heat pumps. Is there any reason why gas-fired CHP and DH should not receive the same level of incentive as heat pumps?”


Paul is Technical Director of District Energy and Sustainability at AECOM. 

Paul's recent presentation on a district heating incentive can be viewed here

 

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So at last, we have a decision on nuclear.  There will be some that think this is excellent and others the contrary.  But what does it mean for district heating?  Does it confirm the view that as far as DECC is concerned the future for heating remains an all-electric one with a heat pump in every home?

Well, the problem with current forms of low carbon generation is that they are either inflexible or intermittent and the more we have, the greater the need for flexibility.  Today flexibility is mostly provided by coal and oil plant but with much of this gone by 2020, it will need to come from elsewhere.  We’ll still have our pumped storage and interconnectors and of course there’ll be plenty of CCGTs to prop up the system.  Then there is demand side participation which should have a major role to play. However, its commercialisation into a viable and an attractive option that offers value to customers has some way to go.  To make matters worse heat demand is very peaky with large variations throughout the year and within day.  This is in itself will increase the need for flexibility.

So what can district heating do?  Well firstly it offers huge potential for flexibility. Tanks the size of our old gasometers, a feature of most towns and cities until a few years ago, can store vast quantities of water very cheaply.  With heating provided by very large electric heat pumps, for example, heat load be can be rapidly adjusted to support the system as well as smoothing out variations in heat demand.  Thermal CHP plant can also provide flexibility by varying heat production thereby increasing or reducing electricity production.  And finally, in the future with a well- developed heat network serving a sizeable load, there is no reason why nuclear could not also provide heat as well as electricity, although I doubt it features prominently in EDF Energy’s plans at present!

So is nuclear the end for heat networks?  I don’t think so. It may actually help.


 

Robert Sansom is a Researcher at Imperial College London funded by UK Energy Research Centre.

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The vast majority of British homes have central heating which comprises a boiler with radiators. This has become the system of choice due to a combination of factors, which include the British climate and our housing stock.

Most new heating systems are distress purchases. Your boiler breaks down so you call someone out to repair it only to find out you need a new one. The priority then is to get it done quickly and for the least money. At this time you are totally dependent upon the trusted expert – the installer – and will normally go with their recommendation. For any policy to succeed it must be deployable through this market model.

If you try to get the consumer to buy something different, from someone different and at a much higher cost then you will struggle to effect any worthwhile change. It has to be easy to do, hassle-free, easy to understand and cost effective.

Calor has seen the impact of successful policy interventions, such as the boiler scrappage scheme and mandating condensing boilers, on energy consumption. In the past 10 years our average central heating customer has reduced their fuel usage by over 20% on a weather adjusted basis. The same has happened to natural gas demand in urban areas and we believe this decline is set to continue.

The priority has to be to maintain this downward trend and the good news is that gas technology still has an enormous amount to offer. For example, two thirds of properties still have older non-condensing boilers and therefore still have significant savings available. We are also seeing a raft of exciting new technologies coming on to the market which will further accelerate the decline in energy consumption and carbon emissions and can be used in off gas grid areas as well. These include Flue Gas Heat Recovery, mCHP (micro combined heat and power) and Gas Absorption Heat Pumps – a renewable gas technology.  Repeatedly, carbon reduction methods have been applied without any sensible cost benefit analysis.

So gas technology still has a way to travel and offers the best value for money for both the bill and tax payer.

Low carbon industrial policy

The UK is the largest gas boiler market in Europe and has a huge domestic industry with sector leading companies based here in Britain employing many thousands of people, plus the more than 100,000 heating installers working in peoples’ homes.

Policies which directly support these established British manufacturing and service industries will have the greatest beneficial impact on the economy at large and have the best chance of success. We saw this at first hand with the boiler scrappage scheme which gave a boost to both British manufacturing and the order books of British installers, plus had the added benefit of substantially reducing energy consumption and carbon emissions.

For a policy to work it needs to work with the market rather than try and buck it!


 

Paul Blacklock is Head of Strategy and Corporate Affairs for Calor Gas Ltd

Since 1935 Calor has supplied LPG to homes and businesses to some of the most remote parts of the country.

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As large energy suppliers announce household gas prices will go up by around 8%, just days after Ed Miliband’s price freeze promise, it is questionable as to whether regulated competition adequately protects customers and delivers value for money.

 A small but growing number of customers have their heat demand met by suppliers not covered by the gas or electricity regulations, with no role for Ofgem or the Energy Ombudsman in customer protection. In the UK, 97% of householders currently heat their homes and water through individual gas boilers, but around 2% of demand, is now served by heat networks. Heat networks (also called district heating) deliver heat from a local energy centre through a system of insulated pipes to homes and businesses. With radiators and thermostats heat network customers have the same experience as they would have with an individual solution, but with the advantage of not needing to purchase, maintain or insure a gas boiler or electric heaters. 

Recent estimates forecast investment in heat networks of about £500m in the coming years, which could mean that 14% of heating and hot water needs will be met by heat networks by 2030. This investment is likely to attract new suppliers and it is therefore a useful point at which to consider how to ensure that heat customers, who cannot switch suppliers, will receive appropriate standards of service and protection. With a one-in one-out approach to regulation established by this Government’s red tape challenge, is there an alternative to statutory protection for heat customers?

The district heating industry has been working with consumer representatives since 2012 and has drawn up proposals for a form of self-regulation. The Independent Heat Customer Protection Scheme proposals, launched for consultation last week, set out quality standards that suppliers must attain across all aspects of their domestic and micro-business heat supply agreements and supports this with proposals for an independent adjudication service; dispute resolution at no cost to the customer.

Price and price transparency are key concerns for all energy consumers. Under the Independent Heat Customer Protection Scheme proposals suppliers must provide customers with transparent heat charge calculations, indicate how prices might change in the future and provide an industry-wide heat charge comparator. The comparator would illustrate, for the heat network customer’s demand, what their costs would have been if they had a gas boiler or electric storage heater. The proposals also specify that suppliers must have alternative arrangements in place to ensure that customers continue to receive heat in the event that the supplier fails.

The consultation seeks views on whether these heat customer protection proposals are appropriate for a fledgling industry and whether they go far enough in terms of customer protection. Will the proposals help reduce perceived risks in the minds of heat network investors, thereby reducing the cost of capital? And will this, in turn, help to secure affordable heat for future network customers, putting consumers at the heart of the energy system, and delivering a better deal than state regulated electricity and gas markets?

Join us at Heat 2013 to have your say or submit your views through the consultation; open until 29 November. 

 


Nicola is the Policy and Development Manager at the Combined Heat and Power Association. The CHPA convenes meetings and provides secretariat to the Independent Heat Customer Protection Scheme. 

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Posted by on in Heat 2014

I spotted in the news yesterday that Glasgow’s subway system (affectionately known by Glaswegians as ‘Clockwork Orange’ for the fetching colour of its trains) plans to install water-source heat pumps to capture the heat from the water leaking into the tunnels, and then heat the subway stations and nearby buildings.

This is a great example of the low-cost, low-carbon heat opportunities that exist all around us. A detailed University of Southampton study found 5% of UK heat demand could be met from power stations’ wasted energy, while across Europe industrial sites could provide enough waste heat to meet 80% of total UK heat demand.

Subways, industrial sites, power stations, all of these have heat available to share, and yet to date we have done a remarkably poor job in taking advantage of the opportunity.

In an integrated energy system, waste heat could be supplied to a community heat network for local homes, public and commercial buildings at low cost and zero carbon. So if this is such a good opportunity, and there is so much waste heat available, why are we not doing more of it?

The challenge is linking and coordinating heat with local demand. Because transporting heat over long distances is so difficult, heat generation and demand have to be sited close to one another. Industrial sites and power stations are historically located far away from household and commercial heat demand. Counter-intuitively, the Environment Agency’s requirement that  power stations must recover their heat when cost-effective can incentivise them to site far away from local heat demands.

Even when a waste heat resource is located near the demand, it is difficult for us to change our normal way of doing things. Recovering waste heat requires partnerships which do not naturally or currently exist between industry, local authorities, and housing developers. I have heard of cases where housing developers installed individual gas boilers rather than access available nearly-free waste heat from a local industrial site because it appeared the less commercially risky solution.

It is through local leaders linking opportunities that we can begin to draw together our waste heat resource with our heat needs. When local leaders become a driving force, then the results can be very positive.

It was London’s Southwark Council which led on an agreement with Veolia Environmental Services to use the heat from the local energy from waste plant in a £7 million heat network for five local estates. And Islington Council could source the heat for its planned expansion of its Bunhill heat network  from a London Underground tube tunnel vent. In Stoke, the council wants to heat its city centre using heat from the local ceramic sector together with geothermal water from disused mines.

That is not to say there is not a role for the UK government. DECC announced in the recent Heat Strategy that it is assessing the technical and economic potential for the use of waste heat, and when the Renewable Heat Incentive is reviewed in 2014 there could be support waste heat recovery. The UK’s Heat Map will also be important to link heat opportunities. Incentives for heat generation and demand users to cluster would give industry and businesses access to lower energy costs, but the Government recognises the positive benefits of clustering , there are no policies to help bring it about.

Capturing heat in the Glasgow subway system is a good start, but the journey to access the UK’s supply of zero carbon, low cost waste heat is just getting moving. 


Jonathan Graham is the Policy Manager at the Combined Heat and Power Association.

Join us in our Delivering Growth : The Power of Partnership session at Heat 2013 to discuss the points raised in Jonathan's article and see how industry, local government, and householders can collaborate to capture the waste heat opportunity.

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Posted by on in Heat 2014

The gaps in our renewable heat infrastructure are known but we are not sure whether we have a solution for them.

One gap is how to make use of the large amounts of untapped heat produced from water treatment plants, heat from the air, or heat from the ground to keep us comfortable in our homes and workplaces.

According to the recent Greater London Authority study, in 2010 the ‘...total amount of heat available in London from secondary sources is equivalent to...76% of London’s total heat demand’. Over 60% of the heat delivered from these secondary sources could be achieved by using ground source and air source heat pumps, and the heat collected from water treatment plants.

The heat pump industry in this country is, understandably, largely focused on installing systems into social housing projects where the carbon reduction requirements and the need to help tenants stay out of fuel poverty are driving the business.

Outside of social housing, the challenge for heat pump manufacturers is to educate an army of installers in how to correctly install heat pumps into homes. The test for the UK government, if they are to meet their carbon emissions targets, is to provide a good enough incentive to the 26 million households to invest in having energy efficient technology installed.

Our continental neighbours, meanwhile, have been much more ambitious with their heat pump projects to keep their citizens comfortable. In Switzerland, 75% of new-build family homes have a heat pump installed.

Motivating UK householders to install heat pumps is a big challenge, but using heat pumps in district heating schemes is another approach which the country has been slow to adopt.

District heating schemes using heat pumps are common in Denmark. But, in Drammen, Norway, they have taken network heating a step further. 6,000 households are being heated by extracting heat from a nearby fjord using heat pump technology developed by Glasgow-based Company, Star Refrigeration.

The combination of rising fossil fuel prices, the need for investment in infrastructure in the UK to boost the UK economy, and our basic need to keep warm offers an opportunity to rethink how we use the abundant heat in our existing environment to provide us with comfort in our homes.

By thinking ambitiously about how we can use heat pumps in the UK, householders will have more comfort for less money and the economy will get a long term boost by delivering renewable heat.


Join us in our power of integration session at Heat 2013 to discuss the points raised in Will's article and see how heat pumps can play a bigger role in an integrated energy system.  


Will Hawkins is the Online Editor of Heat Pumps Today, and writes about the developments in the burgeoning UK heat pumps industry and the challenges it faces as it moves into the mainstream of renewable energy technology. Particular topics of interest are district heating and community energy projects. 

Heat Pumps Today is the UKs only magazine focused on the heat pump industry in the UK. Published quarterly and online daily, the Heat Pumps Today helps installers, contractors and specifiers keep up to date with latest technology, news, legislation and industry matters.

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Last month’s appointment of Stephen Brooks as Investment Director of the Department for Energy and Climate Change’s (DECC) new Heat Network Delivery Unit (HNDU) marks an important step towards tackling the challenges that face local authorities and developers seeking to develop district heating networks.

Brook’s appointment comes on the back of DECC’s strategy paper on heat, which identified heat networks as a cost effective solution to providing affordable, low carbon heat in urban areas. Heat networks (also called district heating) take hot water from a local ‘energy centre’ through a network of insulated pipes to homes and businesses. Heat networks are usually more efficient compared to many smaller heat units in each building.

The new unit is designed to support local authorities assessing the opportunity for heat networks by providing funding and expertise in the feasibility stages to bring potential projects to a stage of credible commercial development.   

Following the success of pioneering schemes such as Brook’s own Sheffield Heat and Power (he was a founding member) interest around the country is high, with many councils looking to heat networks to help vulnerable householders afford to keep warm whilst reducing emissions.

Having worked on numerous district heating projects during his time as managing director at Ignus Renewable, Brooks is well placed to help councils deliver local energy projects and move towards the potential of up to 20% of the UK’s homes connecting to heat networks.     

But with just 2 years to allocate the £6 million fund, the biggest challenge his team will face is delivering real results quickly. The first round of bidding is already open and it is now over to Brooks and his team to demonstrate the enormous potential that continued investment in heat networks could deliver.

To hear how HNDU will turn the Government’s heat policy strategy in to shovel ready projects, join us and Stephen Brooks at Heat 2013.


Claire Wych is the Communications Officer for the Combined Heat and Power Association. 

 

 

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The British public is increasingly concerned about the cost of heating their home this winter.

A survey commissioned by the BBC showed that 38% of people are worrying about how they will pay for their heating bills this year, with 25% saying that they had endured ‘unacceptably cold’ homes due to rising heating bills in the past year. 

Which? Consumer Tracker recorded that worries about energy bills topped the polls again this month, with 79% expressing their concern.  

Whilst consumer concern about how our energy system can keep heating costs affordable is growing, the centre of the debate continues in the opposite direction with a focus on the electricity market and the regulator. Just last week, MPs in the House of Commons debated the increases in the average household energy bill and the financial challenges for consumers, but the vast majority of discussion focussed on electricity which accounts for about a quarter of a typical household's energy needs.

The debate among MPs saw little discussion regarding heat and how consumers' needs will be met in a low carbon energy future.

With half of the UK's energy use coming from heat, debate on this issue must become front and centre.

Heat 2013 provides the opportunity to explore these questions and give space to the heat debate. In the first session of the conference we’ll be considering the consumer’s perspective. Is improving switching between suppliers sufficient to deliver affordable heat for consumers, or do we need to do more to address the worries they are currently expressing?

And, against a backdrop of rising concern about how we can access to affordable heat, can we create consumer demand for a transition to low-carbon heat supply?

We hope you will join us at Heat 2013 to debate, learn and inform.


Tim Rotheray is the Director of the Combined Heat and Power Association, read his biography here

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The UK’s only heat-specific energy conference

Accounting for half of UK energy demand, affordable heat is vital for industry and householders alike. Heat is too often the Cinderella of the energy debate, but its central role makes it a key consideration if we are to meet our decarbonisation commitments.

Now is its second year, Heat 2013 has been established as the place to debate and explore all aspects of heat.

Organised by the Energy Institute and CHPA, Heat 2013 will bring together, Government policy makers and industry leaders from DECC, National Grid, the Green Investment Bank, Mitsubishi Electric and E.ON, These thought leaders, will explore how we can deliver on the potential for affordable, low carbon heat set out in the Government’s 2013 Heat Strategy.

Join us on Wednesday 27th November as we consider four major themes:

  • How do we put consumers at the centre of the low carbon heat transformation?
  • How can we ensure affordable heat for industry, businesses and householders?
  • How can we achieve vital heat infrastructure investment? What do investors need?
  • What benefits are available by bringing local and central government, industry and householders together in partnerships?

Come, debate, learn and inform. Book your tickets here

Join the conversation on Twitter:  @CHPA_UK  @EnergyInstitute   #Heat13

 


Claire Wych is the Communications Officer for the Combined Heat and Power Association. 

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