Low Carbon Heat: The Scottish Opportunity. Neil Ferguson Scottish Enterprise

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1 Low Carbon Heat: The Scottish Opportunity Neil Ferguson Scottish Enterprise

2 Scottish Enterprise Scottish Enterprise aims to deliver a significant, lasting effect on the Scottish economy. Our four interconnected drivers of growth We have over 1100 staff and invest around 300m per annum in the Scottish economy.

3 About Scottish Development International Scottish Development International (SDI) is the specialist trade and investment arm of The Scottish Government, Scottish Enterprise, and Highlands & Islands Enterprise. SDI is the single point of contact for all international business development needs

4 Domestic Context National Targets 80% reduction in greenhouse gas emissions by Total final energy consumption in Scotland is reduced by 12% by 2020 (against a baseline of the average final energy consumption in ) 11% of non-electrical heat demand is delivered from renewable sources by 2020.

5 Local Context: Rural Scotland % householders not connected to gas network % 45-60% 30-45%

6 Approach to Decarbonising Heat 3 levels of the Heat Hierarchy Heat Demand: Energy efficiency designated as a national infrastructure priority Heat transmission & storage: Ambition to achieve 1.5 TWh of Scotland s heat demand to be delivered by district or communal heating and have 40,000 homes connected by 2020 Low Carbon Heat Generation

7 Economic Development: Why focus on Low Carbon Heat? For example: Siemens estimate that 24bn will be invested in the UK to meet renewable heat targets ( ). DECC s Heat TINA estimated that innovation in heat technologies has the potential to add c. 25bn to UK GDP by 2050 Delta EE forecast that completely new markets will develop, with the sale of commercial scale hybrid gas heat pumps rising from zero to over 3,000 per year by 2025.

8 Low Carbon Heating & Cooling: SE Strategic Priorities Maximise economic benefits within Scotland from new market opportunities in low carbon heat Build the Scottish supply chain to take advantage of UK growth Targeted inward investment to fill key supply chain gaps. Maximise the potential for exports to identified key international markets Develop Scotland as a leading location for innovative solutions Support for indigenous companies to innovate Encourage innovative inward investors

9 Scotland s Heating & Cooling Industry SE Survey Identified 227 low carbon heating and cooling companies in Scotland Majority in design and installation of equipment although also a significant manufacturing base Heat recovery, storage, heat pumps, bio fuels and fuel cell companies present Strong core of companies in the heat control, sensors and monitoring areas The four clusters Heat Generation Cooling Energy Management Heat Distribution Heat pumps Controls District heat Efficient heat / fossil fuels (eg CHP / fuel cells) Sensors Heat storage Heating, Geothermal Ventilating and Waste heat Heat modelling efficient air recovery conditioning Burning organic Energy Refrigeration matter, biomass monitoring - Solar thermal - Demand management -

10 Scottish Market Opportunities: Short term Control Systems Essential element of Smart Energy System implementation DECC forecast 10 fold increase in heat output by DH schemes (30 TWh) by 2030 District heating Heat pumps DECC forecast 1m heat pumps installed in UK and 150,000 in Scotland by 2030 Scottish Government predict 50% non-domestic heat supplied by biomass by 2050 Biomass Biogas/liquid Forecasts of 5-23% of total UK gas demand to be supplied by bio-methane by 2050

11 Opportunities for Innovative Technology Within context of Decentralised, Integrated Energy Systems Geothermal 12GW of low grade heat available from disused minewater Hybrid Gas Boilers 1.8 million homes in Scotland by 2030? Heat Storage UK potential for 3GW inter-seasonal storage Hydrogen Current UK Roadmap development Waste Heat Recovery UK process industries have 11.4 TWh of recoverable heat

12 E.g. Injection to the Gas Grid Renewable gas - Benefits include: Use of existing gas network, with high capacity and storage potential; Potential to address electricity grid constraints and connection issues for renewable electricity; Potential for gas energy storage, e.g. caverns Scotia Networks aims to have 250,000 customers supplied with green gas by g-the-gas/ 3 main renewable systems

13 There s a lot going on in Scotland... Energyzing Insch project Local Energy Challenge Fund provided 4.3m Scottish Government grant to develop local energy grid - project will generate renewable heat and electricity, battery storage and fibre optic network for active network management Hartwood Geothermal project Scottish Government has provided 185k grant funding for 4 geothermal projects this project will look at the feasibility of extracting heat from mine water Mull Hydro-Heat Project: Local Energy Challenge Fund provided 1.76m to fund a hydro scheme matching local energy generation with local energy demand to heat homes on Isle Mull Viridor Recycling and Renewable energy centre 154m RREC plant will be opened in 2016 and will process 200 k tonnes domestic organic waste to producing enough heat for 8000 homes. Orkney Surf n Turf Local Energy Challenge Fund provided 1.1m to produce hydrogen from electrolysis for fuel cell use in buildings and berthed ferries. Keithick Biogas plant AD bio-methane grid injection plant producing 3 million m3 of biomethane for the gas grid Levenmouth Community Energy Project Local Energy Challenge Fund provided 4.3m Scottish Government grant to develop energy storage system utilising renewable energy with hydrogen generation and fuel cell power module system East Heat project Local Energy Challenge Fund provided 3.1m Scottish Government grant to develop heat battery storage system for domestic hot water powered by solar pv system

14 ...and plenty of opportunity globally For example: China: Use of renewable heat in buildings will double by 2020, and its deployment will account for 60% of total global growth. France: aggressive energy efficiency programmes 2012 directive to reduce residential buildings heat use from 150 to 50 kwh/m2 Sweden: Aims to phase out fossil fuel heat and achieve a 50% renewable share in final demand by USA: States have strong incentives for renewable heat. 400 kwe gas CHP market to grow 12% / year.

15 SE/SDI Initiatives Survey of Scottish companies involved in low carbon heat (Innovas) Research into key international opportunities (Delta EE) Catalogue of Scottish capability to support low carbon heat innovation (BRE) Development of Low Carbon Heating & Cooling Expert Support programme Low Carbon Technology Showcase conference Geothermal learning journey to Iceland Research into operation of heat market: UK & international (Delta EE) Team Scotland approach with HIE, Scottish Government and members of the Scottish Heat Network Partnership

16 Understanding the landscape key players

17 Understanding the landscape market operation Conventional and novel boiler supply chain, USA

18 Low Carbon Heat Expert Support Programme Designed to help companies consider and build strategies to enable them to plan for and win business in the low carbon heat sector Awareness raising workshops + provides up to 2 days worth (100% funded) of one-to-one support for companies Delivered by specialist suppliers who have knowledge and experience of the sector Focus on identifying and exploring potential profitable revenue steams for the business in the future Registration of interest at:

19 Broader economic development support Company Growth services: support for strategy development, planning, marketing, people development etc. SMART: SCOTLAND: Grants that support technical and commercial feasibility studies and R&D projects. R&D Grant: Grants to support industrial research and experimental development. Collaborative R&D grants: e.g supporting customer-supplier co-developments Regional Selective Assistance (RSA): to support investment that will directly result in the creation or safeguarding of jobs in Scotland. Scottish Investment Bank: seed, co-investment and venture funding