Greetings to all our readers. You have not heard from us for some time. We have necessarily been focused on other matters. But now return in strength with this issue and a workshop on heat network project commercialisation in London on 4th February. We hope you will be able to attend. Meanwhile a lot has happened within our sector. Below I endeavour offer some perspective over the last six months.
The Government’s 2017 Clean Growth Strategy (CGS) posits three long term pathways for illustrative purposes on how the UK can achieve the 80% decarbonisation target by 2050. These are:
I believe that uncertainty over which pathway we will follow has created something of a paralysis in certain sectors, such as spatial development control (planning), for fear of being locked into the wrong one. However, examination of the detail laid out in the CGS appendix (p152) shows that under all pathways there will be a substantial role for heat networks. Each assumes that one in five (17%) of homes will be connected to a heat network with up to a quarter (24%) of non-industrial business and public buildings under the hydrogen pathway. Therefore local planning policy should strongly support the development of heat networks where there is sufficient density to support them.
Given the uncertainty over which pathway will win out the advocates – or likely beneficiaries – of each pathway have been jockeying in support of their cause. Earlier last year a UKERC report on research by the University of Exeter on the role of incumbency in the energy market found that the most vociferous supporters of the hydrogen pathway were in fact the gas network companies and manufacturers of gas appliances such as boilers.
Such supporters must be disappointed by the the Committee on Climate Change (CCC) latest report on ‘Hydrogen in a low carbon economy’. In carefully chosen words the Government’s statutory advisers lauded the hydrogen option as credible but dependent on early Government support. At the same it dismissed ‘silver bullet’ solutions and sees hydrogen as only playing a role, primarily in meeting peak load, in a mixed pathway involving low carbon power generation, hybrid heat pumps, and electrified transport. Damningly it sees a role for only a partial re-purposing of the gas grid in areas where electrification is not possible or hugely expensive.
Eerily this brings us back to Figure 7 (p78) in DECC’s ‘Future of Heating’ (2013) that set out the Government’s view of a strategic framework for low carbon heat in buildings over time. It has taken five and a half years to get from one to the other. But that was very much a ‘finger in the air’ and we now have the evidence base detailed in the CCC report. To speed things up the CCC now call for the Government to commit to producing a low carbon heat strategy within three years. This is bringing forward that decision gate by four years compared to the CCC’s earlier report on heat policy in 2016.
The difficulty for a mixed pathway is that most, if not all, energy technologies are location specific. At least Figure 7 of the ‘Future of Heating’ said where they should be deployed – heat pumps in rural areas, heat networks in dense urban areas and hybrid gas boiler/heat pumps in suburban areas. Without some form of direction these technologies are left to fight for market share in our liberalised energy market where consumer choice is paramount. This will not achieve the optimum carbon outcome within the thirty odd years left to hit the 80% target. It will require Government intervention. So says CCC Chief Executive Chris Stark. It will be hard and politically fraught for politicians to overturn the 30 year old consensus on the liberalised energy market. But the scale of the challenge we face“require(s) answers that the market unfettered will not deliver”.
The Government has already been chipping away at the liberalised energy market. Energy regulator Ofgem announced that from 1st January 2019 a price cap will be imposed on gas and electricity bills paid by customers into the market. In October BEIS in partnership with Triple Point Investment Management finally launched the long awaited £320m Heat Network Investment Project (see ‘Spotlight’ section below). This is market intervention to help a nascent industry counteract the incumbency power of the gas industry (see previous quoted UKERC report) in securing a sustainable foothold in the heat market.
The question is – does it need to go a lot further? In July the Competition & Markets Authority (CMA) published its report into its seven month study of the heat market. Although it found that on average heat network customers paid £100 less per annum than non-heat network customers and enjoyed comparable levels of satisfaction it nevertheless called for the industry to be regulated. Responding to the CMA as well as the ADE Heat Networks Industry Task Force report (Jan 2018) BEIS has recently issued a consultation on a proposed market framework for heat networks to provide customer protection and secure investment to sustain the necessary growth in the sector (see below).
The document considers a number of possible inventions that the industry and market cannot deliver on their own. The primary risk for heat network development is demand risk. BEIS has teased out three elements of demand risk:
Whilst the first and last are concerns, the primary problem is connection risk. Namely, why should an investor pour £millions into the ground in the form of heat pipes without any guarantee that building owners will connect and thereby provide a revenue stream to fund that investment?
The document considers two alternatives. Firstly the ‘demand assurance’ guarantee suggested by the ADE Task Force by which a guarantor, presumably the Government as they own the carbon target, pays the developer to cover any initial shortfall in revenue until the slack picks up and the full predicted load is connected. Whilst baldly stating that this proposal is “a very substantial intervention in the market”, BEIS rightly says that this needs more careful consideration. The ADE Taskforce suggests that in return that the developer would sign up to provide to a minimum of customer protection as well as carrying design and construction risk. Well, in the main developers already manage design and construction risk and should not all networks be meeting a minimum of customer protection? But two more substantial concerns are, firstly, would this encourage development of over-sized and poorly specified projects knowing that someone else is going to underwrite any revenue shortfall? Secondly, who is going to pay for this insurance? The way insurance generally works is that the insured party pays but that cost is spread across multiple premium payments over time. Will this just put up the cost of delivery when we really need to going in the other direction? As with other insurance products this could be mitigated by spreading the cost over a wider pool of ‘heat consumers’ as possible, including gas and electric heat customers. After all the CMA is recommending that Ofgem take on responsibility for regulating heat networks and maybe they need to move away for a focus on fuels to one that focuses on the delivered service. That is what people really want.
The second alternative is some form of heat zoning following the work of the Scottish Government on Local Heat & Energy Efficiency Strategies (LHEES). This proposes that local authorities should be tasked with collection of local heat consumption data as evidence to underpin the development of a local Heat & Energy Efficiency Strategy. Where this determined that there was sufficient heat density to support a heat network it could be designated as a district heating zone and exclusive concessions could be tendered to pre-licensed heat network operators to develop over a set period. In the first consultation a longstop power was suggested for local authorities to ‘obligate connection’ where it could be found to be in the long term interest of the building owner. Such an obligation has underpinned the successful development of heat networks in Scandinavian countries and will effectively deal with connection risk. However, this obligation was omitted from the second consultation of LHEES. Possibly it is not legally permissible to direct private building owners to connect. Although I understand that the option to oblige public building owners to connect is still in play.
Separately, the Mayor of London has published a Zero Carbon London Plan. This maps out what London needs to do to stay within the 1.5oC necessary to meet the IPPC targets and broadly follows the pathways set out in the Government’s Green Growth Strategy (quoted earlier). A supporting report tracks through the potential zero carbon energy systems and considers different packages of policy intervention – low, medium and high – necessary to support their delivery. Heat zoning is recognised for its success in Gothenburg, Paris and other reference cities and included in all policy package levels. However an obligation on buildings to connect, and then only at the time of heating system replacement and where economic and feasible, is only considered for the high intervention package (P19). This is because it is “difficult to justify and implement in a free market”.
This represents the hard and difficult decisions that CCC CEO Chris Stark poses for politicians. The CCC’s report on the hydrogen option also reported that the public do not understand the need to move away from fossil fuelled (gas) systems. How can politicians create the space for those decisions if voters do not support them? And can we afford to wait another five and half years to make them?
Finally, after ten years of collaboration our friend and colleague Dr David Hawkey has left the University of Edinburgh to join Ofgem. Thanks to Dave for his inspiration, incisive critiques and good comradeship over a decade and I wish him well for the future.
A Happy and Industrious New Year to you all!!
PS Don’t forget to check on the Vanguards Commercialisation Workshop on 4 February: details below in the Events Section.
Heat decarbonisation: overview of current evidence base An overview of key issues identified by the government review of options for achieving long term heat decarbonisation (BEIS) 18 December 2018
Government has reviewed the evidence base on options for achieving long term heat decarbonisation. This report provides an overview of the key issues arising from our review and seeks to:
The review confirmed we need:
We welcome your views on:
Please send your views to us at firstname.lastname@example.org by 22 February 2019.
Apply for Heat Networks Investment Project (HNIP) funding (BEIS) 21 December 2018
This guidance explains the application process:
Scheme opening 2019
The scheme opens for applications in 2019: a specific date will be announced in early January 2019. Sign up for updates on the scheme opening and other announcements: Triple Point Heat Networks Investment Management – Contact page
Please read all documents carefully before submitting an application.
Download the application form from the Triple Point Heat Networks website, complete it and send to email@example.com.
if you have a question about your application or if you want to share comments or feedback on the design of the scheme or improvements: firstname.lastname@example.org. Triple Point Heat Networks Investment Management and BEIS will continuously review and evaluate the scheme so we can improve its design and effectiveness.
Eligible applications will be batched for assessment. The first funding is likely to be awarded from April 2019.
Heat networks: developing a market framework (BEIS) 7 December 2018
The government priorities for a long-term market framework that will drive investment in heat networks, ensure consumers are adequately protected and support decarbonisation.
Heat accounts for nearly half of the UK’s energy use and a third of greenhouse gas emissions. The Clean Growth Strategy sets out a significant role for heat networks as a low-regrets component of meeting our legally binding decarbonisation commitments. This requires a major increase in growth rates and investment in the UK heat network market, supported by effective consumer protection measures.
This document sets out:
It responds to:
We aim to consult on policy options for the framework in summer 2019, but in the interim we would like to hear your views as we develop the heat networks market framework.
Respond to the questions in the document by 25 January 2019: online here or by email email@example.com or write to: Heat Networks Team, Department for Business, Energy and Industrial Strategy, 1 Victoria Street, London. SW1H 0ET.
District Heat Networks in the UK: Potential, Barriers and Opportunities (ETI) 12 November 2018
Energy Systems Catapult has identified a range of options for reducing the capital costs of rolling out low carbon heat networks across the UK, laid out in a report for the Energy Technologies Institute.
District heating, where all buildings within an area share a single heat source, has the potential to play a far greater role in the UK energy system. However, work must be done to help heat networks evolve. If fully exploited, nearly half of all heat demand could be met by heat networks.
Capital costs are the main barrier to progress in this area. However, we believe these proposals could reduce capital costs by up to 40%, rendering heat networks more attractive than other forms of low carbon heat provision.
Eight cost-saving route maps
We have suggested eight ‘route maps’ designed to cut costs for district heating network deployment in the UK.
Two of the plant’s chimneys will be used to release the vapour from the energy production process. The vapour will ordinarily be invisible, but test runs before its opening next year will be coloured red and blue. Another of the power station’s chimneys will be fitted with an elevator and a viewing platform, while the fourth has not been given a new purpose.
“This energy centre will be a hugely important part of the new neighbourhood town centre at Battersea Power Station, supplying energy not only to its own community but potentially to other local residents nearby,” Gary Edwards, from Battersea Power Station Development Company, said.
Newcastle City Council has entered into a pioneering new venture to develop district energy schemes across the city, starting at Newcastle Helix.
Working in partnership with ENGIE, the leading energy, services and regeneration specialist, the city will benefit from a number of these schemes over the next 40 years. This will provide businesses and residential properties with cost-effective and low carbon energy. The first of these schemes is the £20million District Energy Centre on Newcastle Helix. Construction is well underway with work due for completion in Autumn 2019.
GB half-hourly domestic heat demand was estimated from monitored data. Peak heat demand is 170 GW, around 40% lower than previously thought. Maximum ramp rate is 60 GW/h, around 50% lower than previously thought. Electrification of domestic heating therefore less problematic than assumed.
District heating (DH) price is simulated using a dynamic pricing model. Waste heat to DH from medium and large DCs provide positive NPV with high probability.
This paper will demonstrate two district energy management optimisation strategies; one that optimises district heat generation from a multi-vector energy centre and a second that directly controls building demand via the heating set point temperature in addition to the heat generation
It was announced yesterday that the £250 million Queen’s Quay regeneration project in Clydebank is set to have Scotland’s first large-scale water source heat pump scheme to connect to a district heating network.
Fortum has developed artificial intelligence to optimise the district heating system and its operations; this will enable the flexible district heating system of the future. AI predicts the heat demand of our customers, steers the usage of storages and guides the control room in the optimal utilisation of assets. In practice, already now, this often also means the prioritisation of carbon-neutral production. AI has already been implemented in Fortum’s district heating systems in Finland, the Baltic countries, Poland and Norway.
The £250m Queen’s Quay regeneration project in Clydebank is set to be the site of one of The UK’s most exciting energy projects, creating Scotland’s first of its kind large-scale water source heat pump scheme to connect to a district heating network which will be delivered by Vital Energi.
Solihull Council needs to determine whether the conditions below ground are right to serve a local heat network. This will require a trial bore hole to be dug so that experts can measure the water flows. A vehicle-mounted drilling rig will be set up in the park, with the equipment delving to depths of up to 270 metres.
The works will get underway on January 7 and are set to last four weeks. The council has insisted the impact on Tudor Grange’s car parking will be minimal.
Programme Guidance: (sections 1.2, 2.3) to state correctly the eligibility of a site for the IHRS programme and where applicants can find updated information on available funding in each assessment window.
Vital Energi will deliver a £2.3m energy scheme for The West Works, Redrow’s latest development in Southall. Vital will be taking a phased installation approach to grow the solution in line with Redrow’s construction plans. Vital will be providing the design, supply and installation services for the scheme, which consists of a 185kW CHP engine, three 533kW gas boilers, two 8,000 litre thermal stores, low temperature hot water system and 280m of district heating. Vital will also be responsible for supplying the heat interface units for the development which consists of 313 new homes, alongside commercial units.
CHPQA Standard Issue 7 replaces Issue 6. Having reviewed responses to the Call for Evidence, the results of analysis and reviewed performance across Europe, the government is concerned that the energy efficiency requirements set out in Issue 6 of Guidance Note 44 (GN44) are no longer sufficient to ensure that only good quality CHP receives CfD support. In response to this, there was a government consultation and response to proposed amendments to the Contracts for Difference (CfD) scheme. The changes have resulted in the overall efficiency of dedicated biomass with combined heat and power (CHP) and energy from waste with CHP schemes, required to qualify for a CfD being increased in the third allocation round. As a result, a revised version of Guidance Note 44 (GN44) has been issued (Issue 7) to which the Standard refers. In this update of the Standard (Issue 7) these references are updated but with no changes to the Standard formulae.
Work to redevelop Plymouth’s derelict Civic Centre has reached an important next stage as developers and the city council press ahead with a new heating system using energy from deep underground. A trial borehole was drilled up to 100m deep outside the city centre building in October to investigate whether a geothermal scheme was viable. Now the city council is going ahead with more work costing hundreds of thousands of pounds after approving the business case for the project.
The Civic Centre District Energy scheme is designed to capture warmth from underground to provide a system of heat and cooling for the building, which is due to be turned into flats.
…However a Competition and Markets Authority (CMA) investigation earlier this year found that lack of regulation for heat networks means their customers enjoy less protection than those using other energy services. A paper issued by the Department for Business, Energy and Industrial Strategy (BEIS) on Friday (7 December) accepts the CMA’s view that there are “good reasons” for Ofgem to take on regulation of district heating. It says “Ofgem has extensive relevant experience to draw on from regulating the companies which run the gas and electricity networks.
Presentations at CHPQA workshop and seminar for 2018. The CHPQA Programme held two events in Oxfordshire and one in Edinburgh, for existing and potential owners and operators of CHP. A workshop was held in the morning and seminar in the afternoon of each day.
Report investigating the feasibility of installing different types of electric heating in rural off-gas grid dwellings.
This report includes findings from a research project commissioned by BEIS into the experiences of consumers and operators of heat networks. The research, conducted by the Centre for Sustainable Energy, involved interviews and focus groups with heat network consumers, alongside interviews with operators of heat networks.
The findings supplement the Heat Networks Consumer Survey: consumer experiences on heat networks and other heating systems that was published in December 2017.
We will develop a comprehensive policy framework to support this transition, building on the progress made by the Renewable Heat Incentive (RHI). We will continue to support market growth, backed by standards. We propose to consult in 2019 on regulations, skills and training, and Part L of the Building Regulations for England.
As part of its wider research into heat decarbonisation, BEIS commissioned Ecofys to explore the evidence on technical potential, costs and greenhouse gas emissions of biomass heat supply chains to 2050. The review considered the following major sources of evidence:
Work to construct West Dunbartonshire Council’s new high-tech heating system in Clydebank has officially begun. The £15 million project, which is part of the regeneration of the former John Brown Shipyard, will see the area’s homes, businesses and some public buildings heated by water taken from the Clyde.
District heat networks could meet 50% of the UK’s heat demand and save the UK economy £3bn, according to a report. ‘District Heat Networks in the UK: Potential, Barriers and Opportunities’, which was written by the Energy Technologies Institute (ETI), identifies eight ‘cost-saving’ route maps for heat network deployment in the UK which were developed as an outcome of its Heat Infrastructure Development project led by AECOM.
A heat metering and billing framework for use by local authorities and housing associations that is designed to help grow the heat network market and ensure customer protection has been created by Fife Council.
The framework gives local authorities and housing associations access to three suppliers capable of providing a range of services – Switch2 Energy, Pinnacle Power and Vital Energi.
This paper considers the initial stages of designing a district heating network, the energy mapping in the local area, using a case study of Darley Dale, England. Energy mapping techniques are used to estimate the local area energy demand, a basis on which the district heating network design will rely on. The areas in the case study that are found to be profitable for possible district heating and where the rest of the district heating design work should focus on are Matlock, Bakewell and Darley Dale.
The paper presents and discusses the final output of the international co-operative work in the framework of the International Energy Agency (IEA), the District Heating and Cooling including Combined Heat and Power (DHC|CHP) Annex TS1. The material collected and summarized in the recently published guidebook  show that low temperature district heating is a key enabling technology to increase the integration of renewable and waste energy for heating and cooling.
This paper explores empirical heat consumption from smart meter data in different types of dwellings in the UK and the role of heat pumps and district heating for different types of dwellings on different scales. This study investigates heat pumps in individual households versus district heating networks through a levelised cost model, to present their comparative environmental and economic advantages.
The aim of this study is to develop a model capable of predicting the behavior of a district heating substation, including being able to distinguish datasets from well performing substations from datasets containing faults.
In this paper, we use a heat density map (HDM) and a plot ratio map to propose a GIS-based method for determining potential DH areas with specific focus on district heating (DH) grid costs.
While the clean energy transition is often dominated by variable renewable electricity sources such as solar PV and wind power for power production, the future focus needs also to better include the heating sector, as most of the final energy use is in the form of thermal energy.
“Erneuerbare Energien Cluster” projects show metropolitan region’s role in energy transition. One of the biggest power-to-heat facilities in Germany began operating Sunday (December 16, 2018) in Hamburg’s Karolinenviertel. The “Karoline” electric boiler indicates the potential of sector coupling. Wind power can be converted into heat and fed into the district-heating network. The electric boiler, operated by Vattenfall, also secures the heat supply in particularly cold weather or when other supply systems malfunction. The plant has a capacity of around 45 megawatts and can supply 13,500 apartments with environment-friendly heat.
The geothermal heat produced by the deep well up to 7,000 to 8,000 meters to be drilled at Tampere, Finland will replace fossil fuels equivalent to the heating requirements of around 1,000 homes. One deep well will also require significantly less space above ground than traditional shallow geothermal wells. Heat can be stored in the deep well during the cooling season, which will improve the deep well’s efficiency ratio during the heating season.
Former fuel-oil storage caves in the Helsinki bedrock will store hot water heated in the processes of the Helsinki energy company Helen, to be used for district heating from 2021 onwards. The hot-water lakes will be the newest energy storage facility in Helsinki and complement underground cold-water lakes used to cool the city. The man-made caves, now being converted from oil to water storage, are located in the Mustikkamaa recreational island of Helsinki. The caves will be filled with 260,000m3(70 million gallons) of domestic water, which will be kept at maximum 90 °C (194 °F) through a district heating connection from Helen’s heat production processes to the island.
During a lecture entitled “District Heating as an Effective Tool for Improving Air Quality” at the conference’s Polish pavilion, an expert in the field, Jacek Szymczak, said Poland needed to tackle the problem of old and inefficient stoves in many homes, one of the main causes of smog in the country. The 24th Conference of the Parties to the United Nations Framework Convention on Climate Change, also known as COP24, officially opened in Katowice on December 3 and runs until Friday.
District heating systems for Dublin, hybrid trains, an electric car charging network and more efficient public lighting are among the flagship projects awarded €77m this morning in the first round of funding under the Climate Action Fund.
The seven projects [include…]
Of the six facilities being built in the Nordic data center hub, only Facebook has plans to connect its data center in Odense to a local district heating system, feeding the country’s renewable supplies by replacing the fossil fuels normally required.
The company recently announced that it would be building a second data center in Esbjerg, though it didn’t say whether it would include a heat reuse system.
Others, such as Apple, have chosen remote locations requiring costly new infrastructure to connect to district heating systems – making this unlikely, but not impossible, according to Social Democrats MP and energy rapporteur, Jens Joel.
Traditionally, district Heating and Cooling (DHC) networks distribute energy from a centralized generation plant to a number of remote customers. As such, actual DHC systems are affected by relevant heat losses and unexplored integration potential of different available energy sources into the network. FLEXYNETS will develop, demonstrate and deploy a new generation of intelligent DHC networks that reduce energy transportation losses by working at “neutral” (15-20°C) temperature levels. Reversible heat pumps will be used to exchange heat with the DHC network on the demand side, providing the necessary cooling and heating for the buildings.
Ongoing research activities at TU Darmstadt aim at improving the energy efficiency of its Campus “Lichtwiese”.
Choosing a commercial structure for your heat network can feel daunting. How do you evaluate the different commercial structures to make sure you get the best fit for your organisation and your network? How do you strike a balance between risk, complexity and the cost of capital?
The UK District Energy Vanguards Network is hosting a free one-day workshop in London on Monday 4th February 2019 that will help local authorities to consider these questions and other aspects of choosing commercial structures for heat network projects. Whether you’re completing a feasibility study or working through the business case for your network, this session can help you to consider the options that are available and the financing and procurement opportunities associated with them.
The day will comprise:
9.15am – Site Visit: Somers Town heat network, hosted by Camden Council (numbers limited)
10.00am – Arrivals and refreshments
10.30am – The Road to Commercialisation: workshop begins
4.30pm – Workshop concludes
5.00pm – Stay with us for drinks!
The day promises to be interactive and engaging, with discussions, debate and the opportunity to network with local authority peers and learn from your collective experience. The event has been made possible by our lead sponsor SSE and our further sponsors Logstor, SWEP and Switch2.
The event is free to attend for local authorities and other public sector organisations. If you are representing a commercial organisation and wish to attend, you will need to provide written authorisation that you are attending on behalf of a public sector organisation.
If you would like any further details, please contact Liz Warren, SE2 Ltd, on 020 8469 1333 or email firstname.lastname@example.org.
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