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This year’s Heat and Decentralised Energy Conference is sponsored by E.ON and we are delighted to hear from them in this blog. The market is changing rapidly for energy retailers: how do they see their role and what does this mean for how they organise their business activities?

 

We as E.ON have a clear role and responsibility in making the future energy system work.

 

In the UK, E.ON supplies electricity and gas to five million homes and businesses, as well as providing heat to over 40,000 customers through our ever-growing district heating business. We’re one of the market leaders in providing decentralised, low carbon, community-based energy and heating networks, operating over 50 district heating schemes across the UK.  E.ON is committed to contributing to a better future by driving innovative projects together with developers, municipalities and politicians. This is what we promise to our customers: “let’s create a better tomorrow’. Technology is ready and we have the right capabilities and experiences of being a strong partner today to become an even stronger and more strategic partner in the future.

 

City Energy Solutions are a core part of E.ON’s future strategy and vision - ‘improving people’s lives’ -  which is the intelligent combination of our core businesses and products, including the fundamental integration of District Heating Networks.

 

Energy is the central lever in the planning of modern and sustainable cities and neighborhoods. More and more cities are committing themselves to ambitious climate targets: Berlin plans a CO2 reduction of 85 % by 2050, London is aspiring to 100 % by 2050 and Malmö aims to be CO2-free by 2020. At the same time, people's demands are growing: a high quality of life today means living sustainably and ecologically without sacrificing comfort.

 

We are already helping cities and municipalities to use their resources more efficiently, reduce energy consumption, find sustainable solutions and thus achieve ambitious climate targets.

 

Stefan Håkansson, Senior Vice President, City Energy Solutions and keynote speaker at this year’s Heat and Decentralised Energy Conference, explains: "Through the intelligent use of decentralised systems, be it combined heat and power generation, geothermal energy, heat pumps or LowEx networks, we ensure an efficient, sustainable and economical energy supply."

 

We are proud to be sponsoring the Heat and Decentralised Energy Conference this year and look forward to collaborating towards building more sustainable and efficient energy networks, creating tomorrow’s cities today.

 

Heat and Decentralised Energy will be held on Thursday 29 November in London. Delegate packages are still available: you can find details and book your place at http://heatconference.co.uk/booknow.

 

Heat and Decentralised Energy is hosted by the Association for Decentralised Energy and the Energy Institute, and sponsored by E.ON.

 

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By Ian Marchant FEI, President, Energy Institute


The simplest questions are usually the best. By many measures, heating accounts for around half our total energy use. The cost of that energy has gone up significantly in recent years. Less than 5% of our heating is from renewable sources.

We all know the problem, how to get the first two of these measures down and the third one up. So here's where the simple question comes. What is the one thing we should focus on?

It would be tempting to use this opportunity to lobby on the political environment and support mechanisms or to wax lyrically on new technologies but I don't believe that either of these important areas are the one big thing. So what is it? I believe it’s Behaviour. 

Let me explain. The reason why we don't insulate our homes or set our thermostats and time clocks correctly is behavioural or to put in bluntly, we can't be bothered.  The reason why district heating is so hard to get going in the UK is because we all want our own boilers in the corner of our house. The reason that biomethane struggles to make inroads is that we don't regard organic waste as a valuable fuel and just throw it away. The reason we don't install new technology such as heat pumps is because the old ways are easier. 

We don't need more engineers and lobbyists taking part in the heat debate we need behavioural economists, anthropologists, psychologists and socialists to work out how to get us off our backsides and actually do something.

 

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We’re delighted that Matthew Pencharz, Senior Advisor on Environment and Energy to Mayor of London Boris Johnson, will be joining us at Heat 2014. We took some time to catch up with him ahead of the event:

How did London go about placing heat as a specific issue in the energy policy debate?

London’s high use of public transport means that a great proportion of our CO2 emissions come from buildings; nearly 80 per cent, in fact. With expected decarbonisation of the electricity grid, the greatest impact in CO2 emissions is to be found in addressing buildings’ energy efficiency and the use of fossil fuels in heating.

Retrofitting these buildings is a priority for London. To maximise CO2 emissions reductions in the most cost-effective ways, the Mayor’s approach is to retrofit these buildings with energy efficiency and energy supply measures through programmes such as RE:NEW, RE:FIT and the decentralised energy programme of work.

Increasing concerns over the affordability and security of London’s energy supply have focussed attention on delivering an energy future for London with a triple bottom line: to be more secure, more affordable and lower carbon. Our research shows that placing heat at the centre will deliver the greatest benefits.

London has 32 Boroughs and the Corporation of London, a lot of stakeholders and Westminster watching on. How do you manage the dynamics between citywide policy and delivery, the national policy landscape and local delivery?

A major concern is the fall in national electricity generating capacity; we have an alarming lack of energy capacity headroom and therefore an unacceptably high risk of brownouts. This capacity crunch has been further exacerbated by the unplanned outages of a number of power stations and the intended closure of others.

The Mayor is doing all he can to increase the level of local generation that will take the stress off upstream generation, including initiatives such as Licence Lite (LL). LL is a junior electricity supply licence aimed at overcoming the cost and market barriers to distributed generators wanting to sell their power output at rates reflecting its true retail value. With Ofgem’s oversight, we intend to pilot the new licence that will allow local generators a better price for their electricity, which should help decentralised generators proliferate, further reducing stress on the national power system. He is also working hard to deliver smart systems in London to manage demand better and incentivise consumers – both commercial and domestic – to avoid the hours of peak demand.

London’s electricity distribution infrastructure has served the capital well. However, electricity demand is now increasing 1-4 per cent a year and a large number of the capital’s substations are, at times, at or near their maximum capacity. The current regulations severely limit strategic investment in electricity distribution infrastructure ahead of an immediate request for a connection. The Mayor is working with developers, the Government and Ofgem to investigate how the current regulations could be reformed to allow a much more strategic approach to investment in electricity distribution infrastructure while protecting consumers from any risk.

A lot has happened to deliver efficient, affordable, sustainable heat in London over recent years. How’s the market looking? 

The Mayor has a small development team that directs consultancy support to help others develop and deliver their larger-scale decentralised energy projects. The team has developed a DE project pipeline valued at over £300m, almost a third of which is expected to be brought to market by summer next year. The projects are characterised by their technical variety and disparate stakeholders. This points to the important role of the specialist energy development team in helping identify and structure projects with the stakeholders. Examples include

  • Supporting the London Borough of Camden to capture 2 MWth of unused heat from a new gas-turbine CHP installation at the Royal Free Hospital to heat their housing stock at Gospel Oak utilising a new heat network.
  • Supporting the London Boroughs of Enfield, Haringey and Waltham Forest establish a North London area-wide heat network. Enfield has established the Lee Valley Heat Network company that will initiate the start of the project based on heat from the Edmonton energy from waste project.
  • Supporting developers in the Vauxhall Nine Elms Battersea Opportunity Area to approach the ESCO market to invest in interconnecting heat network and provide heat supply services centred on the New US Embassy.

There’s some great work under way, but what are the ongoing challenges for London in terms of heat?

If London is to achieve its target of supplying a quarter of London’s energy from decentralised sources by 2025, then the supply of heat from CHP, waste heat and natural sources by means of heat networks will have an important role to play.

London’s complicated governance structure and the multiplicity of stakeholders mean that it is challenging for an individual private sector player to drive forward large-scale DE projects. We intend to use the planning, convening and influencing power of London’s public authorities, combined with expert support from the GLA, to drive forward market competitive projects, resulting in an energy supply for London which is more affordable, secure and lower carbon.

Finally, what are the key plans for the future? What should the heat industry know about what’s coming in London?

London is set to exceed its record level of population within months and risks losing its premier position unless a major programme of infrastructure investment is put in place.

The London Infrastructure Plan 2050 is the first attempt to set out the full range of infrastructure requirements for the capital over the next half century, during which time the population of London is forecast to increase by 37 per cent to more than 11 million people.

The plan builds on the Mayor’s campaign for greater fiscal devolution to cities allowing for investment in much-needed local infrastructure and boosting the whole of the UK’s economy. The Mayor believes that the model for investment set out in the plan could also be suitable for all of these cities, and others, providing a blueprint for how they might invest in locally-decided priority infrastructure needs.

Thanks to Matthew Pencharz for his contribution here. You can hear more from Matthew – particularly about the dynamics of cities operating in a national and local landscape – at Heat 2014 on Wednesday 5 November. To book your place now, visit www.heatconference.co.uk

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By Casey Cole, Guru Systems

Casey Cole is Managing Director of Guru Systems. He blogs on low carbon at carbonlimited.co.uk and tweets on @carbonltd.


 

Metering and billing (M&B) is often seen as a necessary but rather dull cog in the district heating machine. For many heat network operators, heat metering is nothing more than a tool for ensuring customers are billed for the heat they consume. But it’s far more important than that. Heat metering can be used to monitor network efficiency, which can spell life or death for district heating schemes. Unfortunately, getting this performance data out of heat meters isn’t always easy.

On most district heating networks, an internal or external M&B team will collect aggregate consumption data once a month and use it to generate bills. Aggregate consumption figures can be useful, but heat meters can tell us a lot more. In fact, they can tell us almost everything we need to know about the technical performance of district heating schemes, including flow rates and flow and return temperatures in each flat, on key network branches and within plant rooms. Armed with this information, network operators can pinpoint problems and inefficiencies, and ensure networks deliver “lean heat.”

Many landlords and energy services companies (ESCOs) already recognise the importance of high efficiencies and lean heat. For landlords, lean heat means providing value for money, especially to the fuel poor. For commercial ESCOs, it means delivering profit margins while maintaining reasonable prices. But without data on system performance neither aim can be achieved. Without good data, network operators are flying blind, with the potential for even small schemes to lose staggering amounts of money. A 100-home scheme we assisted recently had managed to lose £65k in 14 months, simply because their tariff had assumed a much better efficiency than was achieved in practice. They’d billed their residents every month according to aggregate consumption, but they hadn’t had access to performance data and so didn’t know their tariff was wrong.

While heat meters can provide essential data, most of it stays locked up in the meter because of antiquated data collection systems. Some operators rely on customers to provide their own meter readings or they send an operative to walk round sites with a radio receiver to collect readings from each meter. Most schemes use an M-bus system to collect data. Based on a 20-year old German standard, M-bus networks are designed for periodically collecting aggregate consumption data over a 2-wire bus. While these various methods have the benefit of simplicity, they’re not up to the job of providing real-time performance data to DH operators.

More intelligent methods of data collection are needed. One method is to connect ordinary heat meters to networked smart meters, as we’ve done with Octavia Housing and Insite Energy in Wembley. While these smart meters are usually part of a pay-as-you-go utility system for residents, the fact that they’re networked means we can use them to extract real-time performance data from the heat meters. This transforms the ordinary heat meters from unintelligent counters, simply totting up aggregate consumption, into the foundation of a hugely valuable performance monitoring system.

By also connecting the smart metering system to the heat and gas meters in the plant room, we can get a complete picture of plant and network efficiency. The operator can immediately see whether the network is providing lean heat, not just as monthly aggregates but hourly across the days, weeks and seasons. Moreover when technicians make changes, such as closing bypasses or tweaking controls, the effects on network efficiency are clearly visible. This allows operators to achieve higher efficiencies and, crucially, maintain them.

In the past, heat metering has been little more than a tool used by the M&B team to generate bills. But heat meters can do a lot more for us. By connecting heat meters to a more modern network, we can obtain invaluable performance data and ensure that we are delivering lean heat. 

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  • AP
    AP says #
    Heat networks can lLose upto 50% of the energy input ed to it therefore metering end demand consuption is key in driving network
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It has long been apparent that local authorities have a central role to play in the delivery of heat networks. But for many years, challenges around resources, capacity and funding meant that a lot of authorities simply couldn’t get started. The introduction of DECC’s Heat Networks Delivery Unit in September 2013 was supposed to change all that. We talked to John Saunders, Commercial Specialist within the Unit, about the difference it’s making, and what local authorities can expect when they call on the Unit for help.

It’s been a busy year for the Unit. What have you achieved so far?
In just a year, we have issued three rounds of funding, worth £7.1m, and we’re now working with 95 local authorities to support 130 heat network projects.

So what does your support enable authorities to do?
Simply put, the grant funding means that local authorities can buy in the expertise that they need.

But it’s the one-to-one support we provide that often makes the biggest difference. We can help people who may never have worked on heat networks before to become more intelligent clients, planning and structuring their projects so that the chances of success are increased. We can also help officers to clearly understand and communicate what they need from the experts that they commission.

Can you tell us about some of the projects you’re supporting?
There has clearly been a great deal of interest in our support and this has not been limited by geographies. HNDU has engaged with Local Authorities right the way across the country. An important aspect to highlight is that funding has not just been focused on the large urban areas; we’re working with some exciting schemes in rural parts of the country too.

A number of these projects are looking to take advantage of innovative heat sources. For example, Islington are looking at waste heat from an electricity substation, Birmingham from its canals, Allerdale from minewater, several from geothermal and Cardiff and Exeter from waste operations.

Whilst each project is different there are some aspects of the project which come up in all project. Questions around ownership, security of supply and guaranteed heat-take are normal. The idea of unbundling generation, transmission and distribution has been talked about for some time and remains attractive in theory. The creation of competition at the wholesale and retail end of a network is appealing and is a possible way both to future-proof in line with coming regulation and ensure that heat customers receive the best service at the most competitive price.

You’ve mentioned some innovative technologies there. What about more traditional technologies like gas?
We get asked about the role of gas CHP in heat networks a lot. Clearly a dependency on gas is less desirable than a lower carbon input fuel like those I’ve mentioned. But the HNDU has taken a technology agnostic stance when considering projects. A gas CHP can be the most viable way to get a network constructed and with a plant life of 15-20 years, there will inevitably be a time when the best available technology will come online.

So, how have local authorities responded to the challenge?
One of the most interest aspects of the work is seeing local authorities assess the role they wish to play in these projects. Some want to be strategic planners, some will be customers, but an increasing number are interested in taking an investment role in the network.

Many of the supported projects are at an early development stage but it is still worthwhile beginning to understand the appetite the Council has for certain roles and the benefits it hopes to see. Many of these benefits are common across projects; carbon savings, energy security, addressing fuel poverty and economic regeneration and it is important to understand which of these can be delivered through private, public or joint ownership and investment.

How is the industry dealing with all of this demand for expertise? It’s still a relatively small sector in the UK.
There has been concern from stakeholders – and from DECC – that the funding we’re providing might have a negative impact on the market, pushing up prices. So far, what we’re seeing is that increased demand has actually made the initial project stages more competitive. Some of this is undoubtedly due to the market taking a longer term view of projects – securing early stage engagement with the hope of increasing the chances of feasibility and design work later on. But there have also been a number of new entrants into the market, whether from overseas, through diversification or through the creation of new business partnerships.

So what next for HNDU and the heat networks sector?
We’re continuing to support our existing group of local authorities as they move through a range of activities, from high level heat mapping and masterplanning to detailed financial and contractual work. No matter what stage of project development a local authority is embarking upon, the aim for us remains the same: to support them to identify the most technically and economically viable heat networks and to help progress the development of these networks.

We’re not resting on our laurels. Round 4 of funding opens in October for six weeks and is another opportunity for DECC support of projects. Our team of HNDU technical and commercial specialists are happy to support and review draft applications before the Round 4 deadline.

We are hosting a series of roadshows for local authorities who might be interested in applying for funding – we’ll be in London on 6 October, Cambridge on 10 October and Leeds on 21 October. Local authorities can find out more and book a place here.


Thanks to John Saunders for telling us more about the work of the HNDU. We recommend heading to one of their workshops or coming to meet them at Heat 2014 on 5 November.

 

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