Proposed Central Area CHP Extension Scheme

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1 The University of Edinburgh Estates Committee [EC] 8 December 2010 Proposed Central Area CHP Extension Scheme Brief description of the paper This paper is a follow on to a presentation given by the University s Engineering Operations Manager at the meeting on 31 March 2009 on engineering infrastructure for the University s Central Area. The paper outlines a proposal to provide new Combined Heat and Power (CHP) and associated electrical and district heating networks (DHN) to serve University properties between High School Yards, Pleasance and the Holyrood campus. Action requested EC is invited to: note the work which is in line with the previously presented engineering strategy, provide comment and endorse continuation of the feasibility study, business case preparation and procurement planning. Resource implications Does the paper have resource implications? Yes/No If Yes, in which section(s) of the paper are they described? Risk Assessment Work continues to assess the engineering and planning challenges Equality and Diversity Does the paper have equality and diversity implications? No Any other relevant information The recently adopted Climate Action Plan outlines demanding targets in terms of carbon footprint reduction by In order to deliver the savings it will be essential that significant investment in appropriate engineering infrastructure schemes continues. Freedom of information Can this paper be included in open business? Yes Originator of the paper David Barratt Engineering Operations Manager 29 November 2010 Page 1 of 6

2 University of Edinburgh Proposed Central Area CHP Scheme Extension Overview The proposal to provide new Combined Heat and Power (CHP) and associated electrical and district heating networks (DHN) to serve University properties between George Square and the Holyrood Campus (the Central Area) has been the subject of previous feasibility studies and papers. These include; PB Energy Solutions (PB) George Square Ph 2 project feasibility study, with associated Crown House Technologies (CHT) budget costs and simple payback input (2005), PB update/ revision to the 2005 feasibility study and peer review of CHT proposals, including modelling of existing George Square CHP as well as a range of new CHP capacities for the proposed Central Area scheme (2008), Estates Advisory Group (EPAG) Paper Central Area Engineering Infrastructure Strategy (31 March 2009). The Engineering Operations Manager has reviewed the scheme outlined in the 2009 EPAG Paper in light of the current financial climate, but also in relation to the Universities carbon emissions reduction commitments. This has resulted in a modified proposal as the next phase of the Central Area CHP scheme comprising a new stand-alone scheme with no physical connection to the existing George Square infrastructure. Consideration has however been made to future proof the scheme (potential for future connections to George Square and Old College infrastructure), with a view to improving the long term resilience of the Universities assets. This paper explores an option to develop a new CHP energy centre at St Leonards Land and new engineering infrastructure to serve buildings at Hollyrood, Pleasance and High School Yards. Key issues and opportunities in relation to the scheme are also discussed. Preliminary analysis of the proposed new CHP scheme indicates net operational savings of approximately 170,000 per annum and reduction in carbon emissions of approximately 1,016 tonnes CO 2 per annum (compared to a baseline scheme of gas boiler plant and grid supplied electricity). The budget cost plan for the scheme, produced by CHT, indicates a total budget cost of circa 5,000,000. Simple payback for the CHP unit alone (excluding associated engineering infrastructure) is approximately 6 years. The Proposed Scheme The revised scheme comprises a new CHP energy centre to be located on the current car park site at the rear of St Leonards Land. The energy centre would house CHP unit(s), thermal storage, back-up/ peak load gas boiler plant, HV/ LV switch rooms and all associated ancillary plant. New electrical and DHN networks would distribute from the energy centre and serve multiple buildings (refer to Appendix A for buildings schedule. Maps of proposed network routes which will be available for inspection at the Committee meeting). Although it is not proposed to create any physical connections to George Square or the Old College Area at this time, the networks will be sized to allow future extension, helping to future proof the scheme and providing the potential to realise further carbon savings at a later date. The existing HV network recently installed between Darroch Court and the Pleasance would be retained under this proposal. There are several key issues and opportunities associated with the revised scheme; 1. A business case for the scheme is based on the evidence of returns achieved on the other CHP schemes at Pollock Halls, Kings Buildings and George Square, helping to future proof the University against ongoing utility cost increases, 2. Providing efficient CHP schemes will help the University meet overall carbon emissions reduction commitments for the estate as a whole in line with the Climate Action Plan. 3. The criticality of the proposed new Holyrood Student Residential buildings being taken forward in order to provide sufficient heat and electrical loads to make the scheme technically and financially viable, Page 2 of 6

3 4. Meeting commitments to the new Holyrood Student Residential Buildings and Outreach Centre developers to provide a connection to electrical/ DHN served by CHP (in order that they are able to achieve Scottish Technical Standards Section 6 [Energy] compliance and other local Planning requirements in relation to renewable energy solutions) and commitments to the High School Yards (HSY) Climate Change Centre to help meet their green agenda. 5. Providing future potential to improve the resilience of the existing George Square and Old College electrical networks (where there have been shut downs and interruptions in recent years) and possible connection into the Scottish Power 33kV sub-station at Carlton Hill, 6. Future proofing the scheme in order to allow links into George Square and meeting the Old College Area electrical and heat loads, when additional capital becomes available. These issues are discussed in more detail below. 1. Business Case for Additional CHP Networks The existing CHP projects were installed and are operated within a University owned supply company (UoEUSCo). This company secured a capital loan and grants to construct the CHP plants and the loans have now been fully repaid during the 2nd quarter 2010, ahead of the original business plan, resulting in a significant surplus during succeeding years. Three CHP schemes are currently operational at; Pollock Halls (June 2003), Kings Buildings (December 2003) and George Square (May 2005). These installations had a combined cost of 12m (supported by a significant grant from the Energy Savings trust) and have an economic life of 20 years. The level of surplus funds from these existing schemes will depend upon the unit costs of gas and electricity (the spark spread) and the reliability of operation of the existing CHP plants. The volatility of the utility costs is likely to remain for the foreseeable future and this will make long term income prediction difficult. However the move to national procurement of utilities should smooth this out over coming years. 2. Carbon Emissions Reduction Commitments The Universities Climate Action Plan (2010) document sets out aims to achieve 29% carbon savings by 2020 against a 2007 baseline with interim target of 20% savings by 2015 as part of a contribution towards national targets set out in the Climate Change (Scotland) Act Investment in energy infrastructure projects has been identified as a strategic objective to help achieve this low carbon vision. The Universities commitments to reduce carbon emissions have been helped by the existing CHP installations, in particular by the reduction of grid electricity consumed. The existing CHP schemes are also achieving the standards required by the CHP Quality Assurance (CHPQA) scheme, an initiative by Government to monitor, assess and improve the quality of UK CHP schemes. The CHPQA programme provides a practical, robust and determinate methodology for defining Good Quality CHP. Meeting the standard demonstrates the efficiency of the existing schemes, helping to maximise energy running cost reductions and carbon savings. Decentralising the energy supply to the buildings across the Central Area campus will further assist the University to meet the ongoing carbon targets set out in the Climate Action Plan. Biofuel options were considered for future University CHP schemes (as an alternative to natural gas CHP) within the PB report CHP Replacement Scoping Study Technical Options Review (June 2010). There is deemed to be a risk with the long term availability/ supply of biofuel and hence this option will not be further considered for the proposed Central Area scheme. Biofuel and other emerging technologies will however continue to be evaluated for future schemes as the technologies and associated supply chain continue to develop. 3. Holyrood Student Residential Buildings The CHP feasibility studies carried out to date for the Central Area have been conducted on the basis that the proposed new Holyrood north and south student residencies will be taken forward and occupied in the next 2 3 years. This is critical to the business case for the proposed new CHP scheme, as the electrical and heat loads of these buildings would constitute a sizable proportion of the overall energy demand. Without these loads the scale of the CHP system reduces, with detrimental effects to the financial model Page 3 of 6

4 and viability of the business case. A firm commitment that the student residential projects will be implemented is required as part of any decision to proceed with the proposed CHP scheme. Although less significant in terms of loads (and therefore a smaller knock on effect to the proposed CHP scheme financial viability), the Climate Change Centre building loads have also been included within current analysis. It should also be noted that proposed low carbon infrastructure connections to the HSY Climate Change Centre building will be important to help the Centre meet their green agenda commitments. 4. Energy Supply Commitments to the building / developer partner The new Scottish Technical Standards Section 6 (Energy) 2010 came into effect on 1st October 2010 and imposes ever more stringent energy and carbon emissions requirements on new buildings. Achieving compliance is commonly acknowledged to involve a coordinated range of strategies, including improved building fabric performance, efficient environmental systems and use of low and zero carbon technologies. The University is committed to providing the developers of the new Holyrood student residencies (and Climate Change Centre buildings) with connections to a CHP energy network, in order to achieve Section 6 compliance. Additionally, the developers will be subject to onerous city centre environmental Planning conditions relating to use of low and zero carbon technologies to offset fossil fuel use within the new buildings, imposed by the local Council under the wider requirements of national Scottish Planning Policy (SPP). It is proposed that any district energy connections to these buildings are served from the new CHP scheme. 5. Electrical Network Resilience Continuity of electricity supply is vital to the operation of buildings across the estate. Power shut downs have been experienced at George Square and the Old College Area over recent years. Any future projects that decrease dependence on national grid electricity supply by increasing the Universities control over the infrastructure supplying buildings across the campus will be hugely beneficial to maintaining availability and continuity of supply. The proposed new CHP scheme would be the next significant stage to achieving this aim. A preliminary discussion with Scottish Power (SP) has revealed the potential for HV connection to the new 33KV Scottish Power installation at Carlton Hill to provide better / alternative power supply resilience. An allowance for the new electrical intake at Carlton Hill has been included within the overall costings for the proposed CHP scheme; however this does not include any additional amount that may be required by SP. Further discussions will be had with SP to establish the extent of this possible additional cost. 6. Future Proofing Energy Networks The revised proposal for a CHP energy centre and associated electricity/ DHN to serve Holyrood, Pleasance and HSY does not include connections to the existing George Square infrastructure or Old College Area owing to financial constraints, even though this would be highly desirable from a technical perspective to improve resilience and availability of energy supply. However, the new proposal does include provision to future proof the scheme by sizing the DHN to accommodate later extension to serve the Old College Area and link into George Square, allowing further carbon savings to be realised. Increasing distribution pipework sizes sufficiently to serve the wider scheme in due course incurs only a minimal cost increase in relation to the base cost of installing the mains and associated civil engineering works. Cost and Carbon Savings Associated with The Proposed Scheme As part of this revised proposal, PB energy modelling analysis has been used by CHT to create budget capital cost estimates and associated operational expenditure estimates. In conjunction with Buro Happold (BH), CHT have also produced carbon emission savings estimates for the CHP scheme versus a baseline of gas boiler plant and grid supplied electricity for the buildings. A summary of these cost and carbon savings is presented in Table 1 below. Page 4 of 6

5 Energy (kwh) Rate Cost Carbon (tco 2 ) 1. Baseline Scheme Gas used by 'normal' scheme (based on load profile) 7,909, ,181 1,566 Elec used by 'normal' scheme (based on load profile) 10,304, ,831 5, ,012 6, CHP Scheme Gas used by CHP 21,745, ,901 4,306 Gas used by boilers (over and above CHP) 1,472, , Grid elec used (over and above that produced by CHP) 2,476, ,731 1, ,079 5,877 O+M Cost 108,277 Table 1 Central Area CHP scheme cost and carbon savings Net Saving 172,656 1,016 Say 170,000 This demonstrates a net operational saving of approximately 170,000 per annum (19%) and reduction in carbon emissions of approximately 1,016 tonnes CO 2 per annum (15%) for the proposed CHP scheme. The budget cost plan for the proposed scheme, produced by CHT, indicates a total scheme budget cost of circa 5,000,000. Of this figure approximately 1,000,000 is associated with the CHP unit itself and the remainder ( 4,000,000) associated with engineering infrastructure costs (energy centre, mechanical/ electrical systems, civils and other infrastructure works). The simple payback for the scheme based on the CHP unit cost alone and the net annual saving presented in Table 1 is approximately 6 years. The remainder of the engineering infrastructure costs are deemed to be ongoing infrastructure investment and are excluded from this payback calculation. Additionally, the CHP unit has a useful life of years, whereas the infrastructure (including the new energy centre building at St Leonards Land) has a useful life nearer to 40 years. It is therefore not appropriate to compare these investments within the same payback calculation. The investment should also be considered in the context of any avoided costs (i.e. works that are not required owing to the proposed CHP scheme), and any other net cash inflows as a direct benefit of the proposed scheme. DHN connections to the new North and South OGC Residencies buildings would avoid the need for local gas fired boiler plant within these buildings, saving in the region of 250,000. The Carbon Reduction Commitment (CRC) Energy Efficiency Scheme charges qualifying organisations 12 per tonne for carbon emissions arising from their energy use, amounting to a yearly saving of approximately 12,000 based on carbon savings estimates for the proposed scheme. The figures presented above are subject to a more detailed feasibility study and review of the scheme at the next stage of the project. EC is invited to note the work which is in line with the previously presented engineering strategy provide comment and endorse continuation of the feasibility study, business case preparation and procurement planning. Page 5 of 6

6 APPENDIX A BUILDINGS SCHEDULE The buildings listed in Table 2 below are included in the proposed CHP scheme. Building Number Infrastructure Connections (Electrical E, District Heat Network DHN ) High Schools Yards 300 E + DHN 11 & 13 Infirmary Street 305 E + DHN Old High School 310 E + DHN Old Surgeons House 313 E + DHN Chisholm House 317 E + DHN 46 Pleasance 328 E + DHN 60 Pleasance 330 E + DHN Doctors Surgery 337 E Mackenzie House 338 E Charteris Land 558 E + DHN St Leonards Land 564 E + DHN Darroch Court 567 E The new Holyrood Student n/a E + DHN Residencies and Outreach Centre Table 2 Buildings Schedule APPENDIX B PROPOSED INFRASTRUCTURE DISTRIBUTION LAYOUTS Proposed infrastructure layout plans for the electrical network and DHNs have been produced by CHT as follows and will be available for inspection at the meeting; University of Edinburgh High School Yards and Holyrood CHP Scheme drawing V0000_Option B Scheme, District Heating Mains University of Edinburgh High School Yards and Holyrood CHP Scheme drawing V0000_Option B Scheme, HV Distribution Page 6 of 6

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