District heating policy and market overview. Dr Barney McManigal Policy Manager
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1 District heating policy and market overview Dr Barney McManigal Policy Manager 14 June 2016
2 Agenda 1. About the ADE 2. District heating market 3. Government s role so far 4. DECC s Heat Networks Investment Project (HNIP): 320m 5. What next? ADE activities
3 About the ADE The voice for a cost effective efficient, low carbon, user-led energy system; a market in which decentralised energy can flourish Areas of focus: Combined heat and power District heating and cooling Demand side energy services CHP Demand side services District Heat
4 DISTRICT HEATING MARKET
5 District heating benefits Access a wider range of heat generation technologies Generate heat more efficiently, lowering energy costs Reduce labour and maintenance costs Reduce CO2 emissions Security of power supplies for growing communities Directly tackle fuel poverty and cold homes
6 Heat networks used across Europe
7 District heating in the UK Current: 405,000 dwellings ~4% heat demand Government ambition to grow to 14% of heat demand by 2030, where suitable District heat not the right solution in all places
8 Growth led by Housing Associations and Local Authorities Emerging Leicester City Council (Cofely DE) Newport City Homes Limited Manchester Media City (Cofely) Newcastle - Riverside Dean (Vital) Stoke (tbc) Association of Greater Manchester Authorities Established with growth potential Birmingham (Cofely) Nottingham (Enviroenergy) Shetland Heat, Energy and Power Southampton City Council (Cofely) Woking (Thameswey) Sheffield (Veolia & Eon) Milton Keynes (Thameswey) Aberdeen Heat & Power) London Olympic Park and Stratford City (Cofely) Southwark SELCHP (Veolia) Guildhall, Bastion House and London Central Markets (Eon) Pimlico District Heating Bloomsbury Heat & Power (Cofely) Kings Cross (Vital) Barkantine Heat and Power Greenwich Millennium Village (Eon) Bunhill (Islington BC) Shoreditch
9 GOVERNMENT S ROLE SO FAR
10 Heat Networks Delivery Unit (HNDU) Created in 2013 to develop the heat network pipeline in England and Wales Specialist guidance provided to LAs Heat-mapping, master-planning, feasibility studies, project development Over 11m funding feasibility and prebuild development has been allocated across 5 funding rounds Supporting 201 heat projects across 118 local authorities
11 Project life cycle
12 UK District Heating pipeline 45 HNDU-supported projects are now seeking up to 480m in capital investment (Heat Infrastructure Investment Pipeline) UK wide: 280 heat network projects ready for investment (up to 2 billion)
13 THE HEAT NETWORKS INVESTMENT PROJECT (HNIP)
14 Aims Short term Increase volume of heat networks Deliver carbon savings Build capability among local actors Long Term Support a self-sustaining heat network market
15 HNIP details Consultation this summer? First funding round expected in the Autumn First funding available in 2016/17 fiscal year, as early as March 2017
16 HNDU grant funding Possible capital support Confirmed areas of capital support HNDU guidance
17 Eligibility First funding round - who can apply? Sponsors and owner operators Tranche 1: Local Authorities and the public sector Tranche 2 (if applicable): Private sector and community What kinds of heat networks? New heat networks, expansions, refurbishments, interconnections, heating networks, cooling networks, heat networks that generate electricity Waste heat sources must already exist
18 Eligibility What kinds of heat networks? Connecting two or more buildings No technical or contractual impediment to future expansion or interconnection >50% renewable energy, 50% recovered heat, 75% CHP or 50% combination of avg. heat generated per annum Reduction in primary energy vs counterfactual Heat Networks (Metering and Billing) Regs 2014 CHPQA
19 Funding mechanisms Soft loans Grants Central Government equity stake Guarantees
20 Selection procedure Panel or auction? Scoring criteria Additionality Projects that would not have gone ahead without support Projects that are already commercially viable but with additional funding can achieve additional commercial or technical characteristics.
21 HNIP details Consultation this summer? First funding round is expected in the Autumn First funding available in 2016/17 fiscal year, as early as March 2017 Funding available through 2021 only No subsidy planned after this Parliament
22 ADE ACTIVITIES
23 Heat Network Code of Practice CIBSE and ADE developing minimum technical standards for heat networks Sets out obligations for all parts of supply chain Training and accreditation schemes planned. DECC supporting this programme with grant funding Publication in June 2015.
24 Heat Trust Voluntary heat customer protection scheme launched in November ,000 customers currently protected over 42 sites. Designed to ensure customers get comparable level of standard as on gas or electricity services Open to all customers with direct relationships with the heat supplier In 2016 Heat Trust will expand to schemes where heat is not sold directly to customers
25 Long-term policy for District Heating ADE Report, Levelling the Playing Field: Unlocking Heat Infrastructure Investment Extend the role of HDNU Address punitive business rates Demand Guarantee to attract low-cost capital investment
26 Thank
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