The UK Government think they have part of the answer in the creation of a new fund designed to decarbonise heat in cities across the UK. The Government are committing £320m to unlock over £1bn of private investment in heat networks. The aim is for this investment to deliver three things:
- Heating that is secure and flexible enough to promote access to new technologies;
- Heating that is affordable and minimises the risk of fuel poverty; and,
- Heating that has a pathway to becoming a near zero-carbon supply with acceptable emissions in the short term.
Of course, the foundation to any zero-carbon retrofit is to improve the energy efficiency of existing assets. On the assumption that the market for energy efficiency continues to be encouraged and landlords/tenants enthusiastically improve their buildings, there remains the difficult final steps to get to zero-carbon. Building energy/emissions can be fundamentally split into two flavours: energy for heating and energy for power. And to have a truly zero-carbon building you need to have a zero-carbon source for both.
The energy for power section has been/is being dealt with through the decarbonisation of the electricity network, possibly the greatest success story in the UK energy landscape. Coal is now rarely used for electricity generation and, during the recent Bank Holiday weekend, solar power eclipsed gas power, if only for a few hours. Hopefully the trend will continue with the much anticipated 2019 Solar Strategy which will indicate the successor scheme to Feed-in-Tariffs.
The tricky part of the challenge is to find a zero (or even low) carbon source for heating. A building could always just connect to the electricity system and claim the carbon savings from the grid but there are the following issues:
- Will the electricity supply have spare capacity to provide the energy for heating as well as the energy for power and/or will the utility require reinforcement of the system to fulfil new demand at cost to the building owner/tenant? It’s unlikely that most properties will have enough spare capacity and seeking a new connection is likely to be a very costly initiative. A key part of the Government’s Clean Growth Strategy was that a decarbonised heat market at scale is cheapest with district heating.
- Will heating costs change during the lifetime of the equipment as incentive schemes finish in, say 7 years? At the moment there is no government successor scheme for the Renewable Heat Incentive and people benefitting from this may find themselves dealing with energy bill hikes of up to 50%. Will the price of electricity (and grid infrastructure!) remain stable as transport and other uses become electrified? A massive risk for the electrification of heating is whether already creaking infrastructure can cope with new demand without significant investment. The significant investment being required being passed on to consumers in higher bills with impacts on fuel poverty and social inequality.
Prompted by these risks/costs the Heat Network Investment Project seeks to deliver on the aspects that an electrically based system has limited opportunity to achieve, i.e. be more technically & economically flexible in the means of generating heat with the potential for distributed generation that will increase not decrease grid resilience.
- The government has indicated that the HNIP programme has the following goals:
- To create a sustainable supply chain of companies supporting the UK heat market;
- To create export opportunities for UK supply chain companies;
- To create opportunities for new entrants in the market; and,
- To create opportunities for investment in the UK by international heat networks companies.
Which all fits within last year’s Clean Growth Strategy and the target for up to one in four UK buildings being connected to a heat network by 2050. While we don’t know the full details of the new project funding information, schemes that received funding in the HNIP pilot were those that had the following characteristics:
- Projects that connected two or more buildings;
- Projects with no technical or contractual impediment to future expansion/ interconnection of the network;
- Projects with a heat source must be >50% renewable energy, 50% recovered heat, 75% CHP or 50% combination heat generated over the lifetime of the primary generation source;
- Projects that met Heat Networks (Metering and Billing) Regulations 2014;
- Projects that met Combined Heat & Power (CHP) Quality Assurance standards;
- Projects that signed up to the Heat Trust or equivalent consumer protection scheme.
So what does this mean for development projects and existing buildings trying to become zero-carbon through connection to a future or existing heat network?
Greengage recommends the following tasks be undertaken to adapt businesses and projects to the coming changes:
- REITs and corporate investors should be requiring that development and major refurbishment plans include for their buildings to enable district heating connection. The EPRA sBPR guidelines identify district heating energy use as a key performance indicator for corporate real estate reporting. It could be inferred that the higher incidence of district heating within a portfolio, the less climate change risk there is to the buildings and therefore the REITs. Greengage have been reviewing opportunities to connect to, and create, district heating schemes for over 10 years: a notable success being the connection of the new Clapham Park district heating scheme to provide heat to local schools.
- Design briefs & MEP specifications should include for systems that can be easily replaced by a district heating system. There are rumours that the next version of Part L of the Building Regulations will be more prescriptive to enable this to happen; designers can get ahead of the Regulations by adopting these standards now. New and existing buildings should therefore include, heating systems that have large flow and return temperature differences to promote the accessibility for district heating to replace current heating systems.
- Landlords, tenants and their agents should be familiarising themselves with the terms of district heating energy supply contracts, exemplified by the Heat Trust scheme & the Heat Networks Regulations, to understand this field. Unfamiliarity and resistance to change should not be a barrier to considering proposals that will deliver secure, clean and affordable energy.
Solving the heating issue is likely to be the largest challenge facing the creation of zero-carbon buildings. With the recommendations above the industry will be better placed to make the best of the opportunities that will arise to 2050 and ensure that buildings are not just zero-carbon but cheap to operate, fast to adapt to new technologies and resilient to infrastructure risks.