The department of energy and climate change (Decc) has launched a consultation to gauge how the £320m put aside for heat network development should be spent.
It is also trying to pick the best route towards a market framework that makes heat networks comparable with other utility asset classes such as electricity and gas distribution networks.
The aim is to enable heat networks to compete with such infrastructure for investment without subsidy by 2021. The Association for Decentralised Energy believes this is achievable. Director Tim Rotheray welcomed the consultation, which came as energy secretary Amber Rudd, said Decc would not walk away from its existing commitments post-Brexit vote.
Risk and reward
While some specialist infrastructure funds have appetite for heat network investment, others feel the returns are too low given that construction risk – with many moving parts – is relatively high. Additionally, demand-risk suppresses appetite because revenues depend on having a guaranteed heat offtaker for 40 or so years.
Decc aims to help alleviate some of those risks by helping to seed a project pipeline and de-risk the market to unlock private capital. It believes its £320m injection could bring in up to £2bn in finance.
To kick-start that market, the department proposes an initial pilot phase, where only local authorities/public sector sponsors and owner-operators can access funding. After the pilot is complete, the plan is to work findings into the next phase, which, subject to consultation, may open funding to a wider set of stakeholders, such as property developers and not for profit/community groups.
The consultation makes clear that funds can only be used for the heat networks, connections or heat sources themselves – while existing heat networks may be granted funds for refurbishment if they can prove efficiency gains.
The consultation also states that the funding may be used in conjunction with other support schemes such as the Renewable Heat Incentive (RHI) and ECO, provided there is no direct overlap with the former, i.e. the funding cannot go towards parts of the project that will be supported by RHI payments. Because ECO is a supplier obligation, it is not included as government support.
Decc now seeks view on how the funding mechanisms, eligibility, decision-making criteria and monitoring and evaluation should work. See the consultation here.
The Heat Report 2016 – free download
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We have been trying to enter into communication with DECC on how to improve existing and future heat transfer networks to explain how consistent 20% – 35% improvements in energy efficiency and reductions in energy consumption and tCOm3 emissions can be achieved through the better use of heat transfer but have constantly failed to gain traction. It raises the question is this DECC consultation a paper exercise? Comments about how we break this log jam are appreciated.
Think one should also consider minimising the need for heat transfer as applied to the heat network
serving the for City of Odense in Denmark population over 175,000.
Water in district heating condensers in their 300 plus MWe CHP flows directly through consumers radiators. Treated water so radiators last forever?
All done with clever static and differential pressure control.
Big saving on heat loss for whole system runs at least 5 C lower for flow and return.
Saving on electricity foregone “Mackay” to upgrade heat in CHP as its a Virtual Electric Heat Pump.
So both operate in line with “Carnot” and Second Law.
COP > 10 is high for heat from Odense power plant so superior to air and ground source heat pumps unless they also have access to heat to upgrade which is at 30C heat normally rejected in most steam turbines.
It can thus supply 5C or more lower temperature into system for same design temperature for radiators where a heat exchanger is installed between the radiators and the heat network.
Agree however improved heat transfer essential to improve efficiency of domestic hot water supply where heat exchange is essential will be interested in talking to you to how to improve this part of the system.
PS I also have a problem with DECC as some of their modelling follows he EU treats the heat as reducing emissions for electricity consumers when on my analysis only heat consumers can benefit.
Reason for BREXIT.
Correct fundamental method of modelling dome By DEFRA in SAP though some aspects of that need attention.
W R H Orchard MA(Oxon) MBA CEng FIMechE MCIBSE MIET FEI Orchard Partners London Ltd.