CHP, district heating andthe role of decentralised energy in buildings

Jonathan GrahamPolicy Manager

8 October 2014

ABOUT THE CHPA

Putting the energy user at the centre

CHPA Mission statement

Our vision is for an energy system that is dictated by the consumers' needs rather than one that dictates to them, creating a more local, efficient and less costly energy system

Areas of focus:

Combined heat and power

Sustainable energy services

District heating and cooling

Energy Services

CHPDistrict Heat

A few of the CHPA members…

CURRENT AND FUTURE UK ENERGY SYSTEM

UK Final energy use

Heat (46%)

Transport (41%)

Lighting and Appliances (8%)

Oil derived fuels

Gas

Power

On-site generation helps manage costs

General Price Inflation Autogenerators Industrial Energy Users0%

20%

40%

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80%

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120%

140%

Industrial electricity price increases as % (2004-2011)

The need for smart systems

Now Future?

+5-9kW

+3-6kW

Our current energy market

Customers

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Supplier Push

Our future energy market

Customers

ESCo

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Supplier Push

Transmission Network

Distribution Network

VIP

VIP

VIP

VIP

VIP

VIP

Demand-Side Participation

Demand side approaches to energy

Fabric

Lighting

HVC & DHC

Pumps

M Motors

Controls

BehaviourO&M

Electricity

D3 services

• Demand reduction

• Demand response

• Decentralised generation

Supply-side

Demand-sidemeasures

THE ROLE OF CHP AND DISTRICT HEATING

Opportunity of energy inefficiency

Energy Flows in the Global

Electricity System

Source: IEA,CHP: Evaluating the Benefits of Greater Global Investment (2008).

2/3 of the fuel “we” use to produce power is wasted --

CHP can more than double this efficiency

Why is CHP more efficient?

CHP and security of supply

185kW CHP

1MW CHP

4.7MW CHP

£31,000539TCO2

£200,0001,200T

CO2

£300,0003,500T

CO2

CHP provides lower costs and CO2

Costs saved CO2 saved

CHP in the UK1,900 CHP schemes in UK, with 1,500 in commercial and services sector

At least £200m new investment last year

6.4% of electricity generation

70% is natural gas

Fast-growing <2MW CHP sector

Wholesale vs retail electricity price

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ElectricityGas

Gas CHP incentives

Genuine value

CPS relief for on-site power (April 2015)

CCL relief for on-site power and all fuel

Enhanced Capital Allowances

Feed-in tariff for <2kW CHP

Level playing field

CPS relief on fuel for heat generation

Business rates exemption

CHP heat treatment under EUETS

Embedded benefit

What is district heating?

District heating is technology neutral

Heat as part of an integrated energy system

District heating market

~50,000 dwellings on modern DH schemes

New build and retrofit planned projects will deliver a further 50-60,000 dwellings

Modern DH schemes

Block heating refurbishment

108 completed schemes: >50,000 dwellings & ~900,000m2 commercial

>50 schemes planned: ~50,000 dwellings and 350,000m2 commercial

CHPA Survey: Modern DH Schemes

377,000 dwellings in England on ‘district heating systems’ ≡ 2% of dwellings

Includes both large and building-level schemes

Potentials from Pöyry/AECOM for DECC (2009)3 to 8 million dwellings

15-26M m2 non-domestic floor space

Requires ‘de-risked’ cost of capital (3.5% SDR) and comprehensive application of carbon price

Universities

Completed: 32

Planned: 17

Hospitals

Completed: 64

Planned: 20+?

Campus Schemes

The growth of UK district heating

Established with growth potentialBirmingham (Cofely)

Nottingham (Enviroenergy)

Shetland Heat, Energy and Power

Southampton City Council (Cofely)

Woking (Thameswey)

Sheffield (Veolia & Eon)

Milton Keynes (Thameswey)

Aberdeen (Aberdeen Heat & Power)

Olympic Park and Stratford City (Cofely)

Barbican Arts Centre (Eon)

Guildhall, Bastion House and London Central Markets (Eon)

PDHU

Leicester City Council (Cofely DE)

Newport City Homes Limited

Manchester – Media City (Cofely)

Newcastle - Riverside Dean (Vital)

Stoke (tbc)

Association of Greater Manchester Authorities

London

Emerging

Bloomsbury Heat & Power (Cofely)

Whitehall (GPS/Cofely)

Dalston Sq (Eon)

Greenwich Millennium Village (Eon)

Bunhill (Islington BC)

Local Authority-led developmentEnergy master planning

Planning requirements

Public buildings and social housing

Brokering, procuring, operating, owning heat networks

ECO delivery

INDUSTRY INITIATIVES

Independent Heat Customer Protection scheme

Consultation now concluded

Voluntary scheme aims to launch by December 2014

Will set minimum standards for heat suppliers and customers

Customer service and reporting a fault or emergency

Joining and leaving procedures

Heat bill, heat charge calculations and heat charge comparator

Paying the heat bill and payment difficulties

Disconnection and re-connection process

Complaint handling and independent adjudication

Privacy policy and data protection

Heat Network Code of Practice

CIBSE and CHPA developing minimum technical standards for heat networks

Proposals currently out for consultation

Addressing issues related to the often too fragmented stages of delivery of a network

New small-scale CHP guidelines

CHP only provides benefits when it is installed and operated properly

Reputation risk to all parts of supply chain

Read and use CIBSE’s AM-12 Guidance

Energy audit to see if CHP right solution

Use reputable CHP supplier, with long-term O&M contract

Design properly to use CHP’s efficiency, low temperatures

Create a handover strategy with building users

5th November Heat 2014Hotel Russell, Russell Square, London

The UK's only heat-specific energy conference

Find out more at www.heatconference.co.uk

Further questions?

Thank you

Jonathan.graham@chpa.co.uk