Delivering cleaner air, carbon savings and lower costs for property owners with heat pumps

Transcription

1 Delivering cleaner air, carbon savings and lower costs for property owners with heat pumps 1

2 Executive summary Using heat pumps rather than gas boilers and traditional air conditioning chillers can cut commercial building ventilation costs by a quarter and provide a golden opportunity to improve city air quality. This conclusion is based on WSP s energy modelling and auditing of 600 buildings in Europe, Asia, Canada and the USA and covers offices, retail centres, warehouses and airports. Heat pumps run on the same principle as fridges and freezers. They exchange heat between the inside and outside of buildings, providing heating in winter, and cooling in summer. They are particularly useful because one heat pump can provide heating and cooling, thereby offering a simpler way to improve the building environment. The business case is compelling. Costs are coming down fast and, using real-life data, we have shown that over a lifetime, heat pumps are now 25% cheaper than the conventional gas boilers and chillers used to heat/cool commercial buildings. Beyond the cost benefits, heat pumps play a major role in improving city air quality. Current air-quality policies focus almost exclusively on urban traffic, with nitrogen oxides being the major cause for concern. As gas boilers account for up to 40% of city nitrogen oxide (NO x ) emissions, clean air targets will be more achievable when heat pumps progressively replace existing boilers and are installed in new buildings. Heat pumps are also highly energy efficient and can reduce carbon emissions by up to 70% compared to gas boilers (using average European grid emission factors). This will become even more important as climate change increases air conditioning demand. Using more efficient, low carbon ways to heat and cool buildings becomes essential if cities are to meet their own greenhouse gas reduction targets. Heat pumps are therefore an attractive proposition and are already gaining wider uptake across Europe. In line with our Future Ready programme, which focuses on understanding megatrends and developing innovative designs in the built and natural environment, we see the transition to heat pumps by 2030 as a key part of a wider trend to all-electric cities. We make four recommendations to speed up the transition. 1. Heat pumps should be a central feature of city air quality and decarbonisation strategies; 2. Building Regulations and city Supplementary Planning Guidance, where this exists, should direct the use of heat pumps for new commercial buildings, and where existing gas systems are to be replaced. This overcomes the challenge of heat pumps being more expensive to install, despite the big savings realised during operation and also the inevitable inertia of installing new technologies over more established programmes. 3. A programme is needed to give designers and contractors the skills to specify, install and maintain heat pumps effectively and to give customers the confidence in the standard of workmanship. 4. Cities need to have confidence that their electricity networks have the capacity for the long-term move to all-electric buildings and transport. 2 3

3 Introduction Controllable and reliable heating and cooling of commercial buildings are essential for occupier comfort and can have a beneficial effect on rental and sale value. Heating, ventilation and air conditioning (HVAC) systems also represent a major component of new build or refurbishment costs and contribute significantly to annual running expenditures. In Europe, the heating and cooling of buildings currently contributes around one quarter of total EU-28 carbon emissions (a). More than 80% of heating and cooling is still generated from fossil fuels. Furthermore, almost half of boilers in Europe were installed more than 25 years ago and have a typical efficiency of just 60% (b). However, this state of affairs cannot continue as the Paris Agreement aims to limit the increase in global average temperatures to well below 2 C and will therefore require significant cuts in national carbon emissions by 2050 (c). Recent developments in renewable energy, energy storage, and heating and cooling technologies offer great potential to address both the cost and carbon aspects of building heating and cooling systems. For example, the recently published European roadmap on heating and cooling highlights the important role of heat pumps (b) but provides limited analysis on the benefits. This paper reviews the lifetime costs, carbon footprint and NO x emissions from the use of five major heating and cooling technologies used in commercial buildings today: air source heat pumps ground source heat pumps gas boilers biomass boilers electric chillers Our work is based on energy modelling and auditing of 600 buildings in Europe, Asia, Canada and the USA and covers offices, retail centres, warehouses and airports. We combine this with analyses of energy price trends, climate targets and technology provider benchmark data. This work shows that, in most cases, heat pumps provide the lowest lifetime costs for heating and cooling of new and refurbished buildings. We also show that heat pumps provide a low-carbon alternative to gas, particularly so when coupled with a renewable power source, and are also a major potential solution to poor air quality in cities. In line with our Future Ready programme, which focuses on understanding megatrends and developing innovative designs in the built and natural environment, we see the transition to heat pumps by 2030 as a key part of a wider trend to all-electric cities. (d) Heat pumps provide a more efficient way to heat and cool buildings How do heat pumps work? Using non-technical language, heat pumps can be compared to domestic refrigerators in the way they work. A refrigerant is passed between the outside and inside of a building and in doing so it transfers heat energy between one and the other. In a domestic fridge, heat energy is drawn from the interior of the fridge and released into the room. How does this happen? The refrigerant changes state between being a gas and a liquid. In its liquid state, it is very cold and can absorb heat from its surroundings even taking heat from air as low as -15 o C. When it changes state into a gas, it releases the energy it absorbed as a liquid. By circulating the refrigerant in a sealed system of pipework, the refrigerant can be compressed from being a gas into a liquid or allowed to expand back into a gas to suit the environment it is being used in. In a domestic fridge, the refrigerant evaporates as it passes through the interior, absorbing any heat energy. The low-pressure gas is then compressed, and high pressure gas is sent to the condenser coils on the back of the fridge. At these high pressures, the gas condenses at room temperature, releasing the energy into the room, and the low pressure gas then passes through an expansion valve and back to the evaporator. A fridge can therefore be thought of as an air source heat pump (ASHP) working in a chilling mode, where the whole building is the inside of the fridge. Heat pumps can both heat and cool buildings Heat pumps in buildings can have dual operation: in winter, the liquid refrigerant absorbs heat from outside and releases it inside. In summer, the system is reversed to absorb heat energy from inside and conveys it to the outside. So one item of equipment can both heat and cool a building, thereby reducing capital and maintenance costs. In contrast, a standard electric chiller only provides cooling, while a boiler only provides heating and requires a separate supply of gas, wood, coal or oil. What types of heat pump are there? Ground source heat pumps (GSHP) use the stable temperature below ground to provide the heat source and usually require refrigerant pipework to be buried or lowered into a borehole to work. Alternatively, water source heat pumps (WSHP) use a body of water, such as a lake or river and can also provide a relatively stable temperature for heat transfer. Air source heat pumps (ASHP) rely on the heat energy within the external air. Heat pumps work best if a building is well insulated In the same way that a fridge only works if the door is kept closed, heat pumps work best if the building is relatively well insulated and sealed. They work best with controlled ventilation, so large openable windows or old leaky buildings can reduce their efficiency considerably. In contrast to conventional heating systems where large amounts of energy are initially required to raise temperatures, heat pumps deliver a more gradual heat output and maintain a steady stable temperature. Consequently the associated air handling units, heat emitters such as radiators or underfloor heating need to have large surface areas and will run at a lower temperature when compared to traditional heating systems. With some modest HVAC design changes, heat pumps can easily be integrated into new build or refurbishment projects. 4 5

4 Heat pump costs are now lower than typical building heating and cooling systems Three main costs The three main costs associated with running a heating and cooling system in a building are: Initial purchase and installation costs; Running costs especially the cost of electricity, gas and other fuels; and, Maintenance. Fuel costs are by far the most significant part of the whole-life costs of installing and running a heating system. In the future, a fourth cost namely carbon price, may also be included for technologies burning fossil fuels. Our research shows that, on a whole-life basis and even with no government incentives to support low-carbon heat uptake, heat pumps are around 25% cheaper to install and operate than conventional building heating and cooling systems. If incentives for renewable heat or other government subsidies are accounted for, such as in the UK and Germany, then the lifetime cost savings of heat pumps are further enhanced. For example, in the UK, the renewable heat incentive is guaranteed for 20 years and puts the lifetime cost of heat pumps significantly below those of gas boilers. Levelled cost ( pence/kwh heating & cooling) Gas boiler & chiller Air source heat pump Biomass boiler & chiller Ground source heat pump Even without incentives, heat pumps are already a lower cost option 5.0 No Incentive With RHI Heat pumps are economic where electricity price is no more than four times the gas price As technology improves heat pumps become even more attractive LIFETIME COST ( PENCE/KWH) Heating & Cooling Technology (1) Gas boiler & chiller Biomass boiler & chiller Lifetime costs without incentive ( pence/ kwh) (2) Air source heat pump Ground source heat pump Lifetime costs with UK RHI incentive ( pence/ kwh) (3) A good rule of thumb is that heat pumps are most economic when the electricity price is no more than four times the gas price, and this applies today to the UK, most of Europe and the US. This doesn t currently apply to some countries such as Russia and China which have particularly low gas prices or high electricity prices (see the graph below). Country-specific incentives for renewable heat effectively reduce the fuel price ratio at which heat pumps become economic, making them more attractive. Heat pump technologies are continuing to improve, while gas and chiller technologies are much more mature. We foresee that heat pumps will become even more cost effective into the future. For installations in 2030, the saving is forecast to improve to around 40% over a conventional gas boiler and chiller system (before incentives). This is important, as for a retail centre of 20,000m 2, it typically equates to a saving of up to 500k over the lifetime of the system, which is more than double the incremental capital investment. 6 Gas boiler & electric chiller (baseline) Biomass boiler & electric chiller * 2.4 Air source heat pump 3.0 * 1.0 Ground source heat pump 3.0 * 1.0 * Where applicable, country-specific incentives for renewable heating typically reduce these costs by a further 30-70% (e.g. UK and Germany) Notes: 1. Combinations of technologies are chosen to compare equivalent HVAC systems which provide heating and cooling services over a year for a typical commercial building. All values are based on current (2017) prices and the latest available emissions factors. 2. Lifetime costs include capital expenditure, fuel and maintenance costs over 20 years. kwh values are totals for heating plus cooling utility delivered over the same period for a typical European building. Country-specific incentives for renewable heating and the value of carbon are excluded. A fuel price inflation rate of 2% per annum is assumed and no discounting is applied. Carbon costs are excluded and are country-specific. 3. Incentive is based on current UK RHI rates as of August 2017 and may be subject to change Ratio of electricity to Gas Price Austria Australia Belgium Canada Switzerland China Czech Republic Germany Denmark Spain Finland France Great Britain Hungary Croatia Rep. of Ireland Italy Japan South Korea Netherlands Norway Poland Portugal Romania Russia Sweden Slovakia USA 7

5 We forecast that heat pumps will become even more cost effective in the future Heat pumps have the lowest whole-life cost, but are more expensive to buy in the first place The most robust way to evaluate an investment in heating and cooling systems is to use lifetime costs, typically reported as net present cost (NPC) at the relevant discount rate and compared to the default option. However, simple payback time is the most commonly used decision-making tool and typically property managers require a twoyear payback. Developers and Landlords can also have an incentive to install the lowest first-cost equipment, whereas Tenants will focus on rental charges which typically include costs for heating system operation. The reality is that gas boilers can be cheaper to buy and install in the first place. The capital costs of an air source heat pump (ASHP) or a ground source heat pump (GSHP) are currently two to four times greater than those of a gas boiler plus chiller. These heat pump costs typically add a small percentage to the total building construction cost. Yet heat pumps have a much lower operating cost, making them the most costeffective option over the whole life. However, we foresee that rapid uptake of heat pumps may require policy support to overcome this higher first capital cost barrier. Example Cappital Cost ( /KW) Gas Boiler & Chiller Biomass Boiler & Chiller Air Source Heat Pump Ground Source Heat Pump 3,000,000 2,500,000 Example Lifetime Cost for a 1000kW System 2,000,000 1,500,000 1,000, ,000 0 Gas Boiler & Chiller Biomass Boiler & Chiller Air Source Heat Pump -25% Ground Source Heat Pump Capital - heating Capital - cooling Fuel - heating Fuel - cooling Maintenance 8 Although heat pumps cost more to install, they re 25% cheaper over their whole life than traditional gas systems (before incentives). 9

6 Changing to heat pumps will bring major environmental benefits Heat pumps bring significant carbon reduction benefits When coupled with standard, grid electricity supply, heat pumps have lower carbon emissions for a given heating load than natural gas-fired boilers. If the power source is renewable, heat pumps provide genuinely zero-carbon heating and cooling all-year round. This assumes the building is well insulated and reasonably airtight to minimise heat gains and losses. generated per kwh of useful heat output. Only China and Russia currently have such a high grid electricity emission factor. Grid emission factors, particularly in Europe, are forecast to continue to drop significantly by 2030 as the renewables share increases. It s all about the CoP For a given annual heating or cooling load, operating costs and efficiency are dictated by the heat pump s Coefficient of Performance (CoP). CO 2 emissions per unit of heating or cooling load are dictated by the electricity carbon intensity (zero if a renewable source) and the CoP. Increased uptake of heat pumps is key to reducing NO x levels in cities Cutting Nitrogen Oxide (NO x ) levels in cities is one of the key planks of the UK Government s air quality strategies. Nitrogen oxides emitted from gas boilers in cities account for more than 30% (g) of total city emissions. Other than the odd call to address wood-burning boilers, emissions from buildings are not addressed by existing air quality strategies at all. Most policy measures today focus on road transport phasing out diesel vehicles, clean air charging zones for traffic and controlling emissions from buses, taxis and HGVs. Since heat pumps produce zero NO x emissions at point of use, the wide-scale adoption of this technology represents a major, cost-effective policy measure. Underlining this point, historical NO x data and forecasts based on current policies for the Greater London Area indicate no major reduction in domestic and commercial gas (D&C gas) related NO x emissions in the city between 2008 and 2030 (h). While major measures are underway to cut NO x from transport, emissions from gas boilers remain almost static under current proposals for most cities. Even looking at the wider picture, NO x emissions from generating the electricity that heat pumps run on are typically <0.2gNO x /kwh (based on European grid average generation), reducing to zero for solar or wind generated electricity sources. These emissions largely originate from outside cities where the power station is based. In contrast, gas boilers with standard NO x reduction measures typically emit up to 0.4gNO x /kwh (f), although the models which incorporate low-no x burners and controls are available at extra cost. NOx Emissions ( 000 Tonnes) Total NOx Emissions by Source Type - GLA Year No major reductions by 2030 Other D&C Other Fuels D&C Gas NRMM Industry Rail River Aviation Road Transport Heat pumps are much more carbon efficient than a conventional gas boiler Heating & Cooling Technology (1) Carbon (kgco 2 /kwh) (4) Gas boiler & electric chiller 0.22 Biomass boiler & electric chiller 0.07 Air source heat pump 0.08 Ground source heat pump 0.05 Notes: 4. Carbon emissions are GHG Protocol Scope1+2 and based on typical European emission factors (grid average) (e). Conventional heating systems emit greenhouse gases from burning gas in the building and from the fossil fuels used to generate the electricity used to run the chillers. Heat pumps run on electricity alone so greenhouse gases emitted from their operation will depend on the source of the electricity. In the vast majority of regions, it s a much lower carbon option to run heat pumps rather than gas boilers. This is certainly true if the electricity supply is renewable, with a zero emission factor, compared to kgco 2 /kwh of natural gas. This conclusion is also valid in many countries when the standard grid electricity carbon factor is applied. So if the typical CoP of an air source heat pump is 3, the electricity carbon factor would have to be >0.6 kgco 2 /kwh to be worse than a gas boiler in terms of CO 2 emissions The typical CoP for a modern Variable Refrigerant Flow heat pump is in the range 3 (air source) to 5 (ground source), which is high compared to that of a gas boiler of 0.8 to 1. So for every 1kWh of electricity input a ground source heat pump can deliver up to 5kWh of useful heat. The CoP value differs for heating and for cooling and is also affected by the local climate, seasonal variations and other design factors which must be accounted for. Chiller leaks from heat pumps must be well controlled Like all refrigeration technologies, heat pumps contain a refrigerant fluid. In the past, these refrigerants had a high global warming potential (GWP) and could leak. Newer systems are typically hermetically sealed with low losses and contain newer low-gwp refrigerants

7 Four actions are needed to drive rapid uptake Even though heat pumps are the most cost-effective option today, we see four reasons that inhibit their rapid uptake: 1. Higher first capital cost; 2. Lack of awareness of the lifetime costs of alternatives; 3. Lack of experienced designers and maintenance engineers in the new technologies; and, 4. Perceived risks of adopting a new technology that is different to conventional systems. We recommend four actions that will support the rapid progress of heat pump roll-out: 1. Heat pumps should be a central feature of city air-quality strategies. Today, the vast majority of national and city air quality strategies make no mention of NO x -free heating systems. City air quality strategies should include a requirement that new commercial buildings should be fitted with heat pumps rather than gas heating. Gas boilers should also be replaced with heat pumps when they re replaced in existing commercial buildings. 2. Building Regulations and city Supplementary Planning Guidance, where this exists, should direct the use of heat pumps for new build and for replacement of existing heating systems. Including a requirement for heat pumps at new build or in replacement of all existing heating systems will overcome the disconnect between landlord cost and tenant benefits. It overcomes the challenge that landlords and builders will continue to choose traditional gas systems as they re the lowest first installation cost, even though heat pumps are by far the lowest cost system for tenants. 3. A programme is needed to give designers and contractors the skills to specify, install and maintain heat pumps effectively and to give customers the confidence in the standard of workmanship. - Heat pumps should be a core part of mechanical and electrical engineering degrees and apprenticeships. - The Microgeneration Certification Scheme, or similar, needs to scale up to become an equivalent body to the current Gas Safe scheme. This can be supported by individual trade organisations, such as NICEIC. - Finally, if gas engineers installing boilers will progressively be replaced by electricians installing heat pumps, a skills programme to give gas engineers new skills in heat pumps rather than only being able to install (and so recommend) gas boilers will support the career and technology transition. 4. Cities need to have confidence that their electricity networks have the capacity for the long-term move to all-electric buildings and transport. As cities transition to all electric futures, city authorities and energy distribution companies will need to give citizens the confidence in the capacity of the future network. Many cities are already completing these studies

8 Disclaimer WSP has prepared this white paper independently and in good faith to help stimulate informed debate on the topic of how to provide low-carbon heating and cooling in commercial buildings. It is based on some of our most recent work and evidence gathered on the topic. WSP UK currently has no commercial interest in promoting specific heating and cooling technologies or specific types of energy supply. The opinions stated are the authors and rely on a number of assumptions and forecasts which may or may not prove to be correct in future. WSP accepts no responsibility for any reliance upon the contents of this White Paper by third parties. Costs and carbon emissions can vary significantly year-to-year and by region, and values quoted only provide indicative comparisons based on the assumptions made. We recommend that individual commercial buildings typically require a tailored assessment of heating and cooling options before investment decisions are made. References a. EC Greenhouse Gas Statistics 2015 (available at emission_statistics) b. EU Strategy for Heating and Cooling Roadmap 2016 (available at en/topics/energy-efficiency/heating-andcooling) c. The Paris Agreement, UNFCCC 2016 (available at items/9485.php) d. WSP White Paper on All-electric Cities 2014 (available at UK/Whitepapers/Cities/WSP_Electric_Cities_ Whitepaper.pdf) e. UK and European fuel and grid electricity carbon factors (available at uk/government/publications/greenhouse-gasreporting-conversion-factors-2016) f. EU Ecolabel and Green Public Procurement for Heating Systems (available at jrc.ec.europa.eu/heating/) g. DEFRA Valuation of Health Impacts of NOx (available at uploads/system/uploads/attachment_data/ file/460401/air-quality-econanalysis-nitrogeninterim-guidance.pdf) h. GLA London Atmospheric Emissions Inventory (available at dataset/london-atmospheric-emissionsinventory-2013) 14 15

9 Andrew Marsh-Patrick +44 (0) Simon Clouston +44 (0) WSP 70 Chancery Lane London WC2A 1AF wsp.com WSP is one of the world s leading engineering professional services consulting firms. We are dedicated to our local communities and propelled by international brainpower. We are technical experts and strategic advisors including engineers, technicians, scientists, architects, planners, surveyors and environmental specialists, as well as other design, program and construction management professionals. We design lasting solutions in the Property & Buildings, Transportation & Infrastructure, Environment, Industry, Resources (including Mining and Oil & Gas) and Power & Energy sectors as well as project delivery and strategic consulting services. With 7,000 talented people in the UK (including Mouchel Consulting) and 37,000 globally, we engineer projects that will help societies grow for lifetimes to come. WSP has been involved in many high profile UK projects including the Shard, Crossrail, Queen Elizabeth University Hospital, Manchester Metrolink, M1 Smart Motorway, the re-development of London Bridge Station, and the London Olympic & Paralympic Route Network. August 2017