District heating can deliver
A fundamental re-engineering of UK heat generation, transmission and distribution is required to meet carbon reduction targets, for which greater government commitment is needed, says Andy King.
A great deal has been achieved so far in meeting the UK’s carbon reduction targets. We’re committed to cutting them to 80 per cent below 1990 levels by 2050 and they are already 42 per cent lower today than they were 27 years ago, despite GDP growing 67 per cent over the same period.
The bad news is that the reductions made so far are the result of relatively low-hanging fruit, chief among which is the decline in coal-fired power stations. In fact, almost all of the progress so far has come from changes to the way we generate electricity and the rollout of renewable technologies, such as wind and solar. Achieving the next 40 per cent will mean delivering significant changes in other areas, especially in industrial and domestic energy use and in transport – a point recognised by the government’s recently published Clean Growth Strategy.
There is also a clear need to transform the way we generate and distribute heat, and the argument for district heating is clear. According to the Digest of United Kingdom Energy Statistics (DUKES) 2017, domestic properties account for 30 per cent of total UK energy consumption, and around 80 per cent of this goes on providing hot water and space heating.
The current way this energy is being used is fundamentally inefficient. Even if the millions of ageing and highly inefficient boilers currently in use could be updated to the latest models, the fact remains that such small-scale heat production is an innately wasteful way of heating our homes. The efficiencies of scale available through district heating schemes mean fuel consumption can be cut significantly, lowering emissions and passing on a financial saving to end users. District energy schemes can reduce final bills for homeowners by 25 to 30 per cent, and help to tackle rising fuel poverty. Today, just 2 per cent of properties in the UK are on a heat network, compared with more than 90 per cent in some Nordic cities.
As well as tackling inefficiencies in the way we heat properties, district energy networks offer a way to address another pressing issue – industrial energy waste. Again, according to DUKES 2017, industrial processes account for 17 per cent of overall energy consumption in the UK and approximately three-quarters of this energy is used for heating.
Reclaiming waste energy efficiently in order to help meet domestic needs via district heating networks has the potential to dramatically improve the rates of return on investment for new district energy developments.
Establishing these networks will involve significant infrastructure investment, and the government has set up central teams to help councils with their district energy ambitions. For example, the Heat Networks Delivery Unit (HNDU) provides financial support to local authorities to undertake energy mapping/master planning and develop techno-economic feasibility studies – more than 200 have taken place or are underway. The Heat Networks Investment Project (HNIP) will make £320 million of funding available to support investment in district heating networks, and is expected to draw up to £2 billion of additional private investment over the next five years.
Clearly these represent positive steps and plans are already in place for hundreds of schemes around the country, particularly across higher education. However, when it comes to tackling the scale of challenge we face when it comes to emissions, this is something of a drop in the ocean.
Encouraging investor confidence is critical. This can only be achieved through robust planning, design and risk assessment, and thorough economic analysis at an early stage in projects.
Heat and power generation plants must also be matched to the anticipated energy load a scheme will carry, while the distribution system – including the main trunk supply and return pipework – must be proven adequate for the final load and installed at the outset.
For heat reclamation schemes in industry to take off, a robust incentive scheme with long-term commitments to offering a fair price for reclaimed energy would be revolutionary.
Given the scale of this challenge, the current government commitment is unlikely to be sufficient.
But despite the many challenges, there could be a silver lining. The energy supply industry is currently in a state of flux, with the big six suppliers losing market share to disruptive smaller players that have introduced intense price competition, reducing the potential profitability of the traditional energy supply model.
In light of this, the large energy companies are now looking to heat networks as a promising new market, given the high capital investment barriers to offering the service.
The onus is now on the government to improve its encouragement of the large-scale adoption of district heat networks. I believe that with the right level of public and private investment, together with greater collaboration between local government, developers and energy suppliers, the potential is there for the necessary large-scale reorganisation.
There are studies being done in the UK to identify ways to reduce the capital costs of heat networks, but we must capitalise on the skills, learning and experience of our Nordic neighbours to accelerate deployment in the UK in a cost-effective and environmentally conscious manner. The time to act is now.
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