HOT|COOL NO. 2/2019 - "Smart Heating System Integration"


By Professor Janette Webb and Dr. Ruth Bush, Heat and the City, University of Edinburgh 1

HEAT PLANNING UNDER UNCERTAINTY In the context of uncertain UK heat decarbonisation policy, how can heat and energy efficiency strategies support DH development? Heat planning is an opportunity to facilitate DH today, as well as coordinating development to take advantage of future energy system changes. Heat planning means taking the wider context into account, including: local scale economies; continuing improvements to thermal efficiency of buildings; the potential role of other low carbon heat technologies (e.g. hydrogen or electrification), and plans for decarbonisation of other sectors including transport. Our research sought to understand how heat and energy efficiency strategies could identify DH zones both to facilitate low-regrets development now, and to maximise long-term benefits. We conducted an analysis to see what approach would maximise the heat demand connected to a network, given a particular cost threshold. We tested two different models for identifying areas – a zone density model and a cluster-density model - using Scottish Heat Map data zones. • The zone-density model targeted data zones with the highest heat density and ignored potential for inter- connections across neighbouring areas. This mirrors the relatively fragmented pattern of current UK DH development, although in current practice ‘prime sites’ are usually determined by organisational boundaries, such as buildings on a single public or commercial estate, rather than the data zone boundaries used in our analysis. • The cluster-density model anchored DH first by supplying large heat loads, and then builds out to serve smaller heat users nearby. This approach would require an obligation on building owners in a designated area to connect in order to secure an acceptable financial return for a developer.

District heating (DH) is recognised in UK Government Clean Growth Strategy and Scottish Government Energy Strategy as a ‘low-regrets’ contribution to low carbon heat for homes, businesses and public facilities. Heat networks are an energy efficient solution for buildings in, and close to, areas of high heat-density, and are a cost-effective means of using large scale ‘waste’ heat sources from water, air and industry. As a well-established infrastructure, development can proceed independently of future decisions about the UK gas grid, use of hydrogen, or electrification of heat: heat networks are adaptable to any heat sources. It is however challenging to finance new heat networks in the UK; 85% of households and an estimated 67% of non- residential buildings use gas-fired central heating, and gas is competitively priced. Despite policy commitment to DH as a low carbon heat solution, our research shows particular investment difficulties in three areas: • Uncertainty about heat loads and future heat policy makes it financially risky to develop future-proofed systems. This leads to small scale developments ‘cherry picking’ large heat users, in order to maximise financial returns and minimise payback times. Future expansion to capture the scale economies, and efficiencies, of city-wide systems is made harder. • Limited local government powers and resources for strategic heat and energy efficiency planning, particularly for retrofitting . Lack of a long term coordinated policy and regulatory framework at locality scale results in inconsistent and piecemeal action, missing opportunities for area-based planning to steer network inter-connections and expansion. • Lack of required technical standards and customer protection. Current planning powers compelling new developments to consider DH have not ensured high technical standards, and customer protection standards are variable. This has resulted in some inefficient systems and customer dissatisfaction.

1 We wish to acknowledge the contribution of Dr David Hawkey, former University of Edinburgh Heat and the City Research Fellow, to heat data modelling.


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