Retrofitting District Heating Systems

Retrofitting District Heating Systems Creating Replicable Retrofit Models in Hackbridge A report from BioRegional Funded by: April 2012

Contents 1 Executive Summary... 4 2 Introduction... 6 2.1 What is district heating?... 7 2.2 Why Hackbridge?... 9 2.3 What does this report consider?... 11 3 Methodology... 12 3.1 Locating the district heating network and identifying the flats which could connect... 12 3.2 Calculating the cost of the connection to the district heating network... 12 3.3 Calculating the carbon emission savings achieved by the district heating network... 13 3.4 Comparing cost and carbon emission savings of district heating with traditional retrofit... 13 3.5 Researching thermal comfort, fuel poverty and residents attitudes... 13 3.6 Investigating the economic viability of a district heating scheme... 14 4 Locating the district heating network and identifying the flats which could connect... 15 5 Calculating the cost of the district heating network... 19 5.1 Pipework connecting the blocks of flats to the main district heating network... 19 5.2 Connection to each flat... 19 5.3 Energy generation... 21 5.4 Coupling a district heating network with the installation of fibre optic cables... 22 5.5 Total cost of the different district heating networks... 23 6 Carbon emission savings achieved by the district heating network... 25 7 Comparing carbon emission savings achieved by district heating networks with those achieved by traditional retrofit.... 27 8 Impact on thermal comfort and fuel poverty... 30 9 Disruption... 32 10 Resident attitudes... 32 11 Combining energy efficiency measures with district heating... 33 12 Investigating the economic viability of a district heating scheme... 36 13 Conclusion... 37 14 Appendix... 38 14.1 ESCos explained... 38 14.2 Reference data for carbon emission savings calculations... 39 2 of 51

14.3 Cost data... 40 14.3.1 District energy infrastructure costs... 40 14.3.2 Utility costs... 40 14.3.3 Energy generation equipment costs... 41 14.4 Comparison of the district energy scenarios with retrofit for different flat types... 42 14.5 Survey with residents... 45 3 of 51

1 Executive Summary Context The UK is striving to achieve 34 % greenhouse gas emissions reductions by 2020 and 80 % by 20501. The UK s domestic buildings contribute 23 % of the UK s greenhouse gas emissions. Whilst new homes are being built to much higher environmental standards (Code for Sustainable Homes level 4 thermal standards become statutory in 2013), most of the UK s existing building stock is very energy inefficient and so there is a lot of scope to reduce emissions from these buildings. BioRegional are working in partnership with the London Borough of Sutton to make Hackbridge (the London suburb that is the home of BedZED) a pilot for how a zero carbon area could be achieved. A number of new developments are planned in Hackbridge. The developers of the largest of the development sites, Felnex Trading Estate, are investigating the potential for establishing a district heating network for their development. If this option is taken forward, it can be envisaged that this network could then be extended to the rest of the suburb. The London Borough of Sutton is keen to extend this network to cover not only the other development sites planned for Hackbridge, but also to existing buildings in the area. Thus there is an urgent need to quantify the cost of supplying district energy to existing dwellings, looking at carbon dioxide savings per pound spent in comparison to more traditional retrofit measures (e.g. insulation) to achieve the zero carbon Hackbridge vision that is aspired to. District heating is the supply of hot water from a central boiler plant or other heat source to buildings in a local area. Where possible, waste heat is used to power the network. This is heat that is produced as a biproduct of another process such as electricity generation and so is classed as emission free, since all emissions have already been attributed to the primary product. It is also common for the central boiler plant to be a combined heat and power unit (CHP). The second approach is the more traditional retrofit, whereby a building s energy efficiency is increased by improving the building fabric (for example, cavity wall and loft insulation) and installing energy efficient or renewable sources of heat and electricity in the building itself. Hackbridge lends itself to a district heating network because three potential sources of waste heat exist: heat and electricity production using methane collected from the neighbouring landfill site; a pyrolysis plant to the north; and a proposed waste management facility to the east. The costs and carbon savings from connecting the flats to an energy network supplied by waste heat were modelled. In addition, three other CHP units powered by biogas, natural gas and biomass were modelled. These would be applicable to areas that do not have existing sources of waste heat available. Key results The study found that each of the district heating options achieves more carbon emission savings than the full traditional retrofit option (as much as 84 % in the biogas CHP unit scenario compared to 34 % with the retrofit approach), and at a lower cost. Unlike the district heating approach, however, traditional retrofit tackles other issues such as fuel poverty and thermal comfort. These were important considerations for the residents surveyed who, whilst in favour of both approaches, would prioritise the retrofit. 1 Climate Change Act 2008 4 of 51

Furthermore, it was found that some retrofit measures provide far greater carbon savings per pound spent than others. For example, energy efficient light bulbs save carbon at a cost of 14 pence per kilogram whereas floor insulation saves carbon at a cost of 142 per kilogram. With this in mind, a model was created where a district heating network was combined with a light retrofit approach. The measures included in the light retrofit were those that would payback in a period of 25 years. Table 1 provides a comparison between the different options considered, showing costs, costs compared to carbon savings along with the advantages and disadvantages of each approach. It should be noted that all approaches achieve considerably higher carbon emission savings when applied to flats with electric heating compared to those with gas heating. This is because using electricity is over three times more carbon polluting than gas to generate hot water. Approach Cost per flat ( ) Cost per kilogram of carbon saved ( /kgco2e) Advantages & disadvantages District heating network 10,125 3 High carbon emission savings, no increase in thermal comfort, fuel bills remain the same, cheapest option Full retrofit 29,949 9 Lower carbon emission savings, expensive, increase in thermal comfort, lower fuel bills District heating network + "light" retrofit 14,611 7 High carbon emission savings, increase in thermal comfort, lower fuel bills Table 1: comparing costs, carbon emission savings and other impacts of three different scenarios As Table 1 shows, even a light retrofit approach adds significant expense to the district heating option, however the residents would benefit from lower energy bills and a more comfortable home. It makes theoretical sense to connect blocks of flats in Hackbridge to a district heating network because: a) There are a large number of blocks of flats in one area; b) There is already a planned district heating network proposed for the Felnex Trading Estate site which could be expanded to service the existing flats too; and c) Sources of waste heat currently exist to power the network and there are more planned for the future. However, it makes more environmental sense to reduce the energy demand of these buildings first with a light retrofit programme. Whilst a district heating scheme would deliver high levels of emissions saving per pound spent, the initial capital investment required to set one up is large. Depending on the heat demand of the network, this may be sufficient to pay off the initial investment over a 25 year period. In the case of Hackbridge, the overall heat demand of the flats is not sufficient to generate enough profit over a 25 year period to match the initial investment, even if the waste heat could be bought for only 1p/kWh. In order to pay off the capital investment within a 25 year period, an additional 150 300 per flat would be required per year. Alternatively additional investment of between 4 8,000 would be needed. If light retrofitting is done before the flats are connected to the district heating network there will be less heat revenue from the flats and therefore the additional investment needed would rise. The next steps will be to identify exactly how much the waste heat could be purchased for in order to undertake a full financial feasibility study for connecting the flats. 5 of 51

2 Introduction The UK is striving to achieve 34 % greenhouse gas emissions reductions by 2020 and 80 % by 2050 2. The UK s domestic buildings contribute 23 % to the UK s greenhouse gas emissions. Whilst new homes are being built to much higher environmental standards (Code for Sustainable Homes level 4 thermal standards become statutory in 2013), most of the UK s existing building stock is very energy inefficient. There are two common approaches to reducing the carbon emissions 3 from homes that can be done without country wide decarbonisation of the gas and electricity networks. The first is the traditional retrofit, whereby the building fabric is improved (for example, increasing the levels of insulation), the energy generators within the home are made more energy efficient (for example, replacing an old gas boiler with a new one) and building integrated renewable energy technologies. The second approach is to generate low carbon energy locally and retrofit a district heating system into the home to deliver this low carbon heat as well as providing low carbon/renewable electricity to the national grid. Planned Government initiatives such as the Green Deal and the Energy Company Obligation are paving the way for large scale roll out of retrofitting the UK s existing building stock. However, current data suggests a rapid rise in the cost per tonne of carbon dioxide saved for dwellings after a 7,000 investment on traditional retrofitting measures, rising even faster after 11,000. Blocks of flats are some of the hardest building types to retrofit, due to their construction and multiple occupancy nature. They are therefore an obvious choice for connecting to district heating systems, as this can potentially provide a cost effective alternative to traditional full retrofit approaches, causing less disruption to residents. However, little research is available comparing the two approaches, which would allow owners of blocks of flats (particularly social housing providers) to make informed decisions about which approach is best for their building stock. This report investigates which approach is the most economically viable and carbon efficient for blocks of flats in the suburb of Hackbridge, Sutton. Given the typical nature of these flats, the results of this study should apply to most other blocks of flats in the UK. 2 Climate Change Act 2008 3 Throughout the document, the term carbon emissions refers to all greenhouse gas emissions. 6 of 51

2.1 What is district heating? Figure 1: A typical district heating network. Source: Energy Saving Trust. (2004). Community Heating a guide. District heating is where hot water is produced by a central boiler plant or other heat source and is piped into buildings to provide their space heating and domestic hot water for cooking and cleaning (see Figure 1). Where possible, waste heat is used to power the network. This is heat that is produced as a bi product of another process such as electricity generation and so is classed as emission free, since all emissions have already been attributed to the primary product. It is also common for the central boiler plant to be a combined heat and power unit (CHP). CHP involves the production of electricity and useful heat from a single plant, which is more efficient than generating electricity and heat separately. This is because during the generation of electricity from fossil fuels heat is also generated. With electricity from the national grid, this heat is mostly wasted as there are few heat users next to the power generation facility. Wasting the heat means that the efficiency of the conversion from fossil fuel to electricity is only around 40%. If that heat can be used, the efficiency increases to around 70%, as can be seen in Figure 2. 7 of 51

Figure 2: Why combined heat and power is more efficient than conventional power generation. Source: DEFRA CHP allows electricity to be generated near to heat users (as it is smaller scale than traditional power stations). This means that the carbon emissions per kwh of heat produced are lower than for a gas boiler because for the 1kWh of gas that is put in the system, not only is heat generated but also electricity. Generating electricity using CHP to offset grid electricity results in carbon savings, regardless of the fuel used. The total carbon savings achieved by using heating from the network are therefore a sum of the emission free heat, plus the carbon emission savings from the more efficient generation of electricity compared to that produced for the grid. It is possible to deliver the electricity directly to the buildings using a private wire system, but it is more common that this electricity is fed into the National Grid. This is because, in most situations, the community CHP unit would not be equipped to cope with peaks in electricity demand hence the buildings would need to remain connected to the National Grid to ensure a guaranteed electricity supply. Furthermore, setting up a private network incurs a high capital cost. Excess hot water produced by the network is stored in large, insulated tanks. This means that, in cases where a CHP unit is used, it may be switched off during periods of low heat demand, for example, overnight. The hot water tanks will be able to supply any heat demand during these times. Since it is inefficient for a CHP unit to provide the peaks in the energy demand (for example, first thing in the morning when everyone wakes up and showers) an additional boiler would be required to meet these peaks. District heating suits areas of high, constant heat demand hence densely populated, mixed use areas are preferable. District heating is very common in Denmark and other European countries, where it serves the heat demand of whole cities. It is now becoming more common in new developments in the UK and, in some cases, has been fitted into existing buildings. For example, in Aberdeen, four multi storey blocks of flats built in the 8 of 51

1970s which had electric storage heating have now been connected to a district heating network 4. Similarly, five multi storey blocks have been converted from electric storage heating to district heating in Newcastle 5. Like in the Aberdeen and Newcastle examples, district heating schemes are often managed by an Energy Services Company (ESCo). The ESCo will be responsible for the installation, financing, operation, maintenance, regulation and billing of the network. For further information on ESCos please see Appendix 14.1. 2.2 Why Hackbridge? Hackbridge is located in Sutton, a London borough which has pledged to become zero carbon enabled by 2025. Sutton Council and BioRegional would like Hackbridge to become the pilot that shows how this could be achieved. Significant levels of regeneration are occurring within Hackbridge. A masterplan has been developed to create the UK's first truly sustainable suburb'. Detailed plans include 1,100 new sustainable homes, more shops, leisure and community facilities, new jobs, sustainable transport including pedestrian/ cycle initiatives and improved networks and open spaces. The Council s Core Strategy for planning was adopted in December 2009. The strategy contains a commitment for all new buildings constructed in Hackbridge from 2011 onwards to be zero carbon. The developers of the largest of the development sites in Hackbridge, Felnex Trading Estate, are investigating the potential for establishing a district heating network for their development in order to meet the zero carbon requirement. To the east of Hackbridge is a landfill site from where methane is collected and burnt in a gas engine to generate electricity. Heat is a by product of this process and is currently not being used. One of the options being investigated by the developers of Felnex Trading Estate is building a heat pipe to deliver this heat to the Felnex Trading Estate. If this option is taken forward, it would then become possible to envisage extending this network to the rest of the suburb. The London Borough of Sutton is keen to extend this network to cover not only the other development sites planned for Hackbridge, but also to existing buildings in the area. Thus there is an urgent need to quantify the cost of supplying district energy to existing dwellings, looking at carbon dioxide savings per pound spent in comparison to more traditional retrofit measures (e.g. solid wall insulation) to achieve the zero carbon Hackbridge vision that is aspired to. This study only considers connecting blocks of flats to the network since these are seen to be some of the easiest buildings to connect to and costly to retrofit compared to the CO2 savings that can be achieved. One third of the existing building stock in Hackbridge is flats, making this an ideal place to look at how they could be connected to district heating. Many of these flats are owned by the London Borough of Sutton s Arm s Length Management Organisation, Sutton Housing Partnership, hence any changes to the flats would be easier to implement because the council owns the freehold for all the properties and can therefore require the flats to connect to the district heating network. Furthermore, the majority of the flats have electric storage heating therefore there is significant scope to reduce carbon emissions by retrofitting a district heating system. In addition to the waste heat from the landfill site in Hackbridge there are a number of other sources of waste heat in the vicinity, including: 4 Energy Saving Trust. (2003). Aberdeen City Council: a case study of community heating. 5 Homes and Communities Agency. (2011). District Heating Good Practice: Learning from the Low Carbon Infrastructure Fund. 9 of 51

1. A pyrolysis plant. This plant heats waste to very high temperatures in the absence of oxygen. A gas is produced which can then be burned in an engine to generate electricity. Heat is a by product for which there is currently no demand. Hence this is a waste heat scenario similar to the landfill gas scenario; this heat could be used in the district heating network. 2. A proposed waste management facility may be built next to the landfill site to manage all the household waste from the London Boroughs of Sutton, Kingston, Croydon and Merton. This could be an energy from waste plant which would burn the waste in a CHP engine to produce electricity and heat which could be pumped around a district heating network. 3. A proposed anaerobic digestion plant which would also be built near the landfill site. This plant would produce biogas (methane) from food and garden waste. The biogas could be burned in a CHP unit to produce electricity and hot water which could feed the network. It is possible that other sources of waste heat would be built nearby since Hackbridge is surrounded by industrial parks. It would also be possible to install a standalone gas or woodfuel (biomass) CHP unit to meet the heat demand. Table 2 shows how much waste heat is available as well as how much heat and electricity from the proposed energy from waste plant could be available. In addition, the amount of heat needed for the flats that could be generated from a biogas, natural gas or biomass CHP plant is shown along with the amount of electricity that would be generated. Energy source Waste heat from landfill or pyrolysis plant Rated output Annual heat generation (kwh) Electricity generated (kwh) 4MWe 28,000,000 n/a Biogas CHP 800kWth 4,824,777 4,824,777 Energy from waste 20MWe 156,000,000 175,200,000 Natural gas CHP 800kWth 4,824,777 4,824,777 Biomass CHP 800kWth 4,824,777 1,080,174 Table 2: Details of the different potential energy sources in Hackbridge Finally, like the majority of places in the UK, Hackbridge s telecommunications services need to be improved. Currently, they are supplied by copper cables enabling broadband speeds of up to 10 MB per second to be achieved. The government has pledged that, by 2015, 90 % of the UK will have access to superfast broadband speeds of up to 30 MB per second 6. In order for this to be possible, the copper cables carrying the broadband from the network trunk to the buildings will need to be replaced with fibre optic cables. Since the replacement of these cables will require digging up the roads and drilling into people s homes, it would be sensible to combine this with the installation of the district heating network (if one was to be set up). Combining these activities could create an opportunity to reduce the costs associated with both. 6 Richmond, S. (12 May 2011) Superfast broadband 'for 90 per cent of Britain by 2015'. The Telegraph. [Online] Available from: http://www.telegraph.co.uk/technology/broadband/8510062/superfast broadband for 90 per cent of Britain by 2015.html 10 of 51

2.3 What does this report consider? The purpose of this report is to assess whether the existing blocks of flats in Hackbridge could connect to the planned district heating, how much this would cost and what the carbon savings would be. This report has modelled a district heating network which provides space heating and domestic hot water for the blocks of flats in Hackbridge. The use of each of the potential energy sources described in Section 2.2 has been modelled and the carbon emission savings achieved by the network calculated. In addition, some other energy sources (biomass CHP and natural gas CHP) have been considered to cover all the potential scenarios that would be applicable to other areas. These savings have then been compared with those achieved by traditional retrofit measures such as loft insulation and cavity wall insulation in order to determine which approach is the most effective at reducing a flat s carbon emissions per pound spent. The opportunity and extent to which the costs of the district heating network could be reduced by coupling the laying of the pipework with telecommunications data cables was also investigated. Whilst calculating the potential carbon emission savings was the primary driver for this study, it was important to compare the impact of each approach on the residents: would either approach affect their thermal comfort or fuel bills and, if so, how? A household s energy efficiency and the price of fuel are two components contributing to fuel poverty 7. The government is trying to eliminate fuel poverty by 2016 8. However, in 2009, four million households were still living in fuel poverty 7. Any retrofitting scheme therefore also needs to be considered in terms of its impact on residents fuel bills and thermal comfort. With these impacts in mind, residents were then surveyed to find out their attitudes towards each of the approaches. 7 DECC. (2011). Annual report of fuel poverty statistics. 8 Warm Homes and Energy Conservation Act 200. [Online] Available from: http://www.legislation.gov.uk/ukpga/2000/31/pdfs/ukpga_20000031_en.pdf 11 of 51

3 Methodology The following methodology was used in order to identify the most cost effective route to carbon reductions for blocks of flats: 3.1 Locating the district heating network and identifying the flats which could connect i) The proposed pipe work for the district heating network was located based on tender documentation and information from the London Borough of Sutton. ii) All blocks of flats within 1 km of the network were identified and the additional length of pipework that would need to be installed in order to connect the blocks to the network was calculated. iii) The energy consumption (split into domestic hot water, heating and electricity demand) of each of the different flat types was already known through a survey conducted by Parity Projects 9. This was converted into carbon emissions using the 2010 DEFRA greenhouse gas conversion factors 10 (see Appendix 14.2). All scopes of carbon emissions (1 to 3: those associated with the direct combustion of the fuel, plus extraction, transport and processing of the fuel) were included in the calculations. 3.2 Calculating the cost of the connection to the district heating network i) The cost of the additional pipe work required to connect the blocks of flats to the planned network was estimated. This comprises the main network ring and branches off to individual blocks of flats. A greater cost was incurred where the pipework would have to be laid under roads or pavements compared to where it could be laid under soft ground. ii) iii) iv) The cost of connecting each flat to the network was calculated. For each flat, a cost was assigned to the installation of pipework within the flat, the heat interface unit (which allows the resident to control their heating and domestic hot water), and the installation and commissioning of the unit. For flats with electric heating, an extra cost had to be assigned in order to remove the electric storage heaters and install the plumbing required for the district heating system. The cost of the energy generation equipment was calculated. This did not include the cost of building the energy centre or installation costs since it was assumed that these would be borne by the developer of the energy network for the new development planned in Hackbridge. Similarly, in more general cases, it is envisaged that existing buildings would be connecting to a pre existing network where these costs have already been borne. The three costs calculated in steps i) to iii) were summed together in order to calculate the total cost of the network. This cost was then divided by the number of flats that would be connected to the network to identify the connection cost per flat. v) The potential contribution from broadband providers for providing fibre optic data cables with the heat network was investigated. 9 Parity Projects. (2008) Energy Options Appraisal for Domestic Buildings in Hackbridge. 10 DEFRA/ DECC. (2010). 2010 Guidelines to Defra/ DECC s GHG conversion factors for company reporting. 12 of 51

3.3 Calculating the carbon emission savings achieved by the district heating network i) The energy sources described in section 2.2 were modelled to supply the heat demand through a district heating network. In addition, a natural gas fired combined heat and power (CHP) unit and a biomass (woodfuel) CHP unit were modelled since these may be more common energy options for district heating networks elsewhere. Since it is inefficient for a combined heat and power unit to provide the peaks in the energy demand, an additional boiler would be required to meet these peaks. No peak load boiler was required for the waste heat and energy from waste scenarios since heat is produced in excess of the flats heat demand. The following generation scenarios were therefore considered: a. Waste heat (from the landfill gas site or pyrolysis plant) b. Energy from waste CHP unit c. Natural gas CHP unit + natural gas boiler d. Natural gas CHP unit + biogas boiler e. Biomass CHP unit + natural gas boiler f. Biomass CHP unit + biogas boiler g. Biogas CHP unit + natural gas boiler h. Biogas CHP unit + biogas boiler ii) The carbon emission savings achieved by each of these energy generation scenarios were calculated. 3.4 Comparing cost and carbon emission savings of district heating with traditional retrofit i) The costs and carbon emission savings associated with individual retrofit measures had been calculated previously for the Formulating a zero carbon strategy for Hackbridge 11 study. Combinations of these measures were chosen in order to match the carbon emissions savings achieved by the various power generators considered for the district heating schemes. Behaviour change measures were not included as these are relevant for both traditional retrofit and district heating approaches. ii) The carbon emissions savings and associated costs of the different district heating and retrofit options were compared to assess which option achieved the greatest carbon emission savings per pound spent. 3.5 Researching thermal comfort, fuel poverty and residents attitudes i) The impact that each of the two options would have on the thermal comfort of the flats was considered. 11 BioRegional (2011) Formulating a zero carbon strategy for Hackbridge 13 of 51

ii) iii) An operator of an existing district heating scheme was interviewed about pricing; and the billing aspects of other district heating schemes were researched in order to establish the impact each option would have on residents fuel bills. A door to door survey was conducted with current residents of the flats owned by Sutton Housing Partnership to gather their opinions on the two different options. 3.6 Investigating the economic viability of a district heating scheme i) The revenue and profit which could be made from a district heating scheme over a period of 25 years were estimated. ii) This was compared with the capital cost of the network in order to establish the pay back period of the network in order to identify whether it would be economically viable to connect the flats to the network. 14 of 51

4 Locating the district heating network and identifying the flats which could connect Figure 3: Map of the district heating model The proposed network piping is represented in Figure 3 by the thick blue and green lines. (The green line represents the most likely route that will be adopted for the network that might be provided by the developers of the Felnex Trading Estate, hence it has not been included in the costings.) The blue line represents pipe work running along the River Wandle which is a low cost route for the piping as no hard surfaces would need to be dug up. The energy centre would be situated in the Felnex Trading Estate, the heat from the landfill site would come to this energy centre where it could be topped up by back up boilers before being distributed to the buildings connected to the network. Any additional power generation equipment would be situated here. A route has been mapped which serves as many blocks of flats as possible whilst avoiding as much hard surface as possible since digging up roads and other hard surfaces is more expensive than digging up soft ground. The blocks of flats are highlighted in red and dark green. Dark green signifies those owned by the social housing provider, Sutton Housing Partnership. The thinner orange lines show where the pipework may branch off from the network trunk to transport the hot water to the individual blocks of flats. 15 of 51

There are 65 blocks of flats in Hackbridge. Five of these have been excluded from the network since they are relatively isolated and their energy consumption is too small to justify the cost of laying the pipework out to them. 16 of 51

After assessing the energy consumption of each of the blocks of flats, three broad categories of flats were identified; these are the same categories as those used in the report, Formulating a zero carbon strategy for Hackbridge. Table 3 presents their key distinguishing features. Category Number of Features of Heating Age Annual heat Associated CO2 Annual Associated CO2 flats building fabric source demand per emissions per electricity emissions per flat flat (kgco2e/ demand per flat (kgco2e/ (kwh/yr) yr) flat (kwh/yr) yr) Type E 186 Cavity wall insulation Individual gas central 1950s 11,341 2,305 7,560 4,665 Loft insulation heating Type F 602 Timber frame Electric storage 1990s 5,776 3,564 7,656 4,724 heaters Type H 65 Cavity wall insulation Individual gas central 2000s 4,533 1,174 7,656 4,724 Loft insulation heating Table 3: Key features of the three flat types present in Hackbridge 17 of 51

Flat type E represents 22 % of the flats in Hackbridge. All of the blocks of this type are owned by Sutton Housing Partnership (the Arms Length Management Organisation for the Council s social housing stock). However, some of the flats in the block are owned by leaseholders. These flats were built in the 1950s; cavity wall and loft insulation have since been added. They have gas fired central heating. Because the owner of the freehold of these flats is the local council, it will be easier to implement the retrofitting of district heating in these flats. Type F forms the majority of flats in Hackbridge (70 %). These were built in the 1990s. They have a timber frame which already has some insulation integrated into the wall. However, as there is no cavity in the wall it is not possible to increase the level of insulation without installing external insulation. This type of flat has electric storage heaters. Type H represents the remaining 8 % of flats. These were built from 2001 onwards and have cavity wall and loft insulation. They have gas fired central heating. None of the blocks of flats have a communal heating system, this study therefore allows for the cost of installing communal heating distribution infrastructure throughout each block of flats. The total annual heat demand of all the blocks of flats is 6,030,971 kwh/ year, which produces 2,623,555 kg of carbon dioxide emissions per year. The total electricity demand of the blocks of flats (excluding electricity required for heating) is 6,558,958 kwh/ year, which produces 4,047,336 kg of carbon dioxide emissions per year. 18 of 51

5 Calculating the cost of the district heating network In order to connect the blocks of flats to the network, the following infrastructure is required: Pipework from the front door of the block of flats to the planned district heating network. Internal pipework from the front door of the block of flats to the flat. A heat interface unit to deliver the heat to the flat s central heating system and to allow the resident to control the heating and domestic hot water. If the flat doesn t currently have a wet heating distribution system with radiators this would need to be installed. The energy generation unit to provide the additional energy generation capacity for the flats. Costs for each of these infrastructure requirements have been estimated in the proceeding sections. All the assumptions used in estimating these costs can be found in the Appendix 14.3. 5.1 Pipework connecting the blocks of flats to the main district heating network The total length of the pipework required to connect each of the blocks of flats to the planned district heating network has been measured and the cost calculated accordingly, as can be seen in Table 4. The cost of pipework per flat was calculated by dividing the total cost of the pipework by the total number of flats (853) that are to be connected to the network. Type of ground that pipes will be laid in Cost per m ( ) Total length (m) Total cost ( ) Cost of pipework per flat ( ) Soft 750 2,951 2,213,250 Hard 1,000 2,324 2,324,000 5,319 Table 4: Cost of pipework from planned district heating network to all the blocks of flats in Hackbridge The cost of laying the infrastructure may be lower than in a comparatively sized area, because the geography of the suburb lends itself to soft dig (pipework can be laid along the river and in the soft ground which surrounds the potential heat sources and the suburb) this is cheaper than when roads need to be dug up. 5.2 Connection to each flat Once the pipework reaches the block of flats, it then branches again to deliver the hot water to each flat. A heat exchanger would be required in each flat to transfer the heat from the network s hot water to the cold water in the flat s central heating distribution system. In flats which currently have gas fired central heating, the heat exchanger would substitute the gas boiler and the hot water would be distributed around the flat through the existing pipework and radiators. In flats which currently have electric storage heaters, pipework would need to be plumbed in to allow the hot water to be distributed; this is called a wet heating system. This incurs an additional cost of around 2,550 per flat. 19 of 51

The heat exchanger would be housed in a box alongside a heat meter (for billing) and the user controls; this whole unit is called the heat interface unit and is slightly smaller than a standard boiler (please see Figure 4). Further space is saved by the removal of any hot water storage tanks; since the network would provide a constant supply of hot water, a storage tank would no longer be required. Figure 4: Picture of a heat interface unit4 It is technically feasible to connect any block of flats to the network. The cost of doing so varies depending on the complexity of plumbing required. For example, if pipework has to be drilled though multiple walls and floors rather than going up a central shaft then the costs would be much greater. A set cost of 2,200 per flat was used in the calculations 12. This figure is a conservative estimate, in the simplest of cases it may be around 1,800. The costs associated with connecting the flats to a district heating network are summarised in Table 5. Item Cost per flat ( ) Internal pipework from front door of block to flat s Heat Interface Unit (HIU) 2,200 Heat Interface Unit (HIU) 1,750 Conversion from electric to wet heating system (where required) 2,550 Table 5: Costs associated with connecting each flat to a district heating network 12 Conversation with Vital Energi, on 12 th July 2011 20 of 51

Cost of connecting flat types E & H (gas heating) to the district heating network = 3,950/flat Cost of connecting flat type F (electric) to the district heating network = 6,500/flat 5.3 Energy generation In addition to calculating the cost of the district heating network s pipework and the cost of connecting the flats to the network, the cost of generating the heat for the network needs to be included in order to calculate the total cost of the network. The cost of harnessing each of the potential heat sources described in Section 2.2 was estimated. Waste heat: Where waste heat could be extracted from the existing electricity generation process (the landfill gas site or the pyrolysis plant) and pumped around the network, a cost was assigned to the equipment required to harness the heat. The current engines are designed to generate electricity only and so the heat which is produced is wasted. These engines would need to be converted to combined heat and power (CHP) generators which are designed so that both the electricity and the heat that they produce can be extracted. Energy from waste: Where heat could be taken from the proposed energy from waste facility, no generation costs were assigned to the network since it is likely that the developer of the plant will be required to pay for the CHP unit as part of their planning permission. Biogas CHP: In the scenario where biogas produced by an anaerobic digestion plant would be used to generate the power, the cost of a CHP unit was assigned to the network as this would be generated by the owners of the network. Biomass and natural gas CHP: In the biomass and natural gas CHP scenarios, the cost of each of these units was assigned to the network. In each scenario, except for the waste heat and energy from waste plant scenarios, the cost of the peak load boiler was included. The waste heat and energy from waste plant scenarios did not require a peak load boiler since the heat produced is well in excess of the flats heat demand. Boiler type Capacity (kw th ) Baseload and Peak Total Cost ( ) Cost per flat ( ) Gas CHP & gas back up 800 & 200 765,172 897 Biomass CHP & gas back up 800 & 200 1,012,000 1,186 Biogas CHP & gas back up 800 & 200 765,172 897 Gas CHP & biogas back up 800 & 200 765,172 897 Biomass CHP & biogas back up 800 & 200 1,012,000 1,186 21 of 51

Boiler type Capacity (kw th ) Baseload and Peak Total Cost ( ) Cost per flat ( ) Biogas CHP & biogas back up 800 & 200 765,172 897 Waste heat from landfill gas 19,500,000 753,172 883 Energy from waste 156,000,000 0 0 Table 6: Costs of the different energy generation plant possible for Hackbridge The costs in Table 6 show the total cost of each of the energy generation options, but do not include auxiliary costs such as costs of the energy centre and installation costs. This is because, in the case of Hackbridge, the proposed district heating network would be an extension of the one proposed for the Felnex Trading Estate, hence these costs would already be covered by the developer of that site. Similarly, in more general cases, it is envisaged that flats would be connecting to a pre existing network where these costs have already been borne. If an energy centre were required it is likely to cost in the region of 450/m2. An energy centre to accommodate equipment for up to 1,000 buildings would be in the region of 20m by 15m. This would have a total cost of around 135,000. It can be seen that the biomass CHP unit is the most expensive option. This is because of the more complex nature of the generator required. The energy from waste scenario is the cheapest as the cost would be borne by the energy from waste plant owner. The remaining options cost similar amounts. 5.4 Coupling a district heating network with the installation of fibre optic cables The possibility of combining the installation of the district heating network with fibre optic cables in order to reduce the costs of the network was investigated. Before starting this study BioRegional assumed that government funding would be available to support the switch from copper to fibre optic cables. Therefore this funding could be used to cover some of the digging costs. In August 2011 it was announced that 530 million would be provided for this purpose. However, Hackbridge will not be eligible to receive any of this because it is situated in London where no funding has been allocated. It is thought by the Government that private investment will cover all costs there 13. Whilst no funding from the government can be obtained, the coupling of fibre optic cables with a district heating network installation could present other opportunities to reduce costs. Telecommunications service providers would be keen to combine the work 14 and could offer around 150 per property connected to the developer who is laying the district heating pipework down if they include fibre optic cabling 15. Whilst this won t contribute to the costs of the district heating network significantly, it would mean that, at the very least, the installation of a district heating network would allow Hackbridge residents to enjoy a better quality of broadband services than they currently receive. Furthermore, a fibre optic cable communications 13 BBC. (16 August 2011) Rural broadband funding ready for England and Scotland. [Online] Available from: file:///y:/active/00073%20 %20Zero%20Carbon%20Hackbridge/Working%20documents/Project%202%20 %20SCT_Retrofitting%20district%20heating%20systems/Reference%20docs/fibre%20optic%20cable/BBC%20News%20 %20Rural%20broadband%20funding%20ready%20for%20England%20and%20Scotland.htm 14 Conversation with Peter O Connell, Hackbridge Programme Director, on 27 th January 2011. 15 Conversation with the Inexus Group, on 22 nd September 2011. 22 of 51

infrastructure would make metering and billing of all services cheaper and easier, since the services can be measured directly without need to manually read the meters. 5.5 Total cost of the different district heating networks Summing the piping, equipment and energy plant costs gives the total price per flat for each of the district heating network options available in Hackbridge, see Figure 5. 14,000 12,000 Cost per flat 10,000 8,000 6,000 4,000 2,000 Flat types E & H (gas heating) Flat type F (electric heating) Average Hackbridge flat 0 District heating network option Figure 5: Total cost per flat of the different district heating networks Figure 5 shows how it is significantly more expensive to connect the flats with electric heating to the network compared to those with gas heating, because of the costs involved in converting from a dry to a wet heating distribution system. It also shows that the energy from waste option is the cheapest option since the costs of the energy generating equipment are borne by the developer of the energy from waste plant. Depending on the different situations the costs of the different energy sources will vary, for example even in Hackbridge it is possible that the owners of the landfill gas site may pay for the conversion of their electricity generation equipment to enable it to harness heat. Table 7 presents the total cost of setting up each of the different district heating scenarios and connecting the blocks of flats. 23 of 51

Scenario Total cost ( ) Gas CHP & gas back up 10,206,872 Biomass CHP & gas back up 10,453,700 Biogas CHP & gas back up 10,206,872 Gas CHP & biogas back up 10,206,872 Biomass CHP & biogas back up 10,453,700 Biogas CHP & biogas back up 10,206,872 Waste Heat 10,194,872 Energy from waste 9,441,700 Table 7: Total cost to connect the flats in Hackbridge to each of the different district heating network scenarios It would cost in the region of 10 million to connect the flats in Hackbridge to a district heating network. The type of energy generation equipment used has very little bearing on the cost. 24 of 51

6 Carbon emission savings achieved by the district heating network For each energy source modelled in the district heating network, the carbon emission savings were calculated. As can be seen in Table 8, each scenario would achieve carbon emission savings because the different energy sources proposed for the network are less carbon intensive than using either a) grid electricity or b) individual gas boilers. Scenario Carbon emission intensity (kgco2e 16 / kwh) Grid electricity 0.62 Energy from waste 0.49 Natural gas boiler 0.20 Biomass CHP 0.12 Natural gas CHP 0.08 Biogas CHP 0.00 Biogas boiler 0.00 Waste heat 0.00 Table 8: Carbon emission intensities of the different energy sources in Hackbridge Using grid electricity to provide heat to the home is significantly more polluting than any other method because the average efficiency of the power stations producing the electricity is low (around 40 %4). Whilst burning natural gas in an individual boiler to heat the home is less polluting than using grid electricity, it is still more polluting than taking heat from a district heating network which is powered by a natural gas CHP unit. The ratio of electricity to heat produced by the CHP unit varies depending on the fuel used. Natural gas CHP units produce as much electricity as they do heat. This ratio is much lower for biomass CHP units: for every kwh of heat produced, only 0.25kWh of electricity is produced. This means that, when a CHP unit is sized to meet the heat demand of the district heating network, a lot less electricity can be produced by a biomass CHP unit than the same size natural gas CHP unit. Therefore less grid electricity is offset. This explains why the heat produced by a biomass CHP unit is more carbon intensive than the heat produced by a natural gas CHP unit, despite biomass fuel being classed as almost carbon neutral 10. Biomass is not classed as completely carbon neutral because of the emissions associated with transporting it. 800 tonnes of woodfuel would be required annually by the CHP unit modelled. Biogas is classed as completely carbon neutral 10 because its emissions from transportation are considered negligible and, when burned in a CHP unit, it produces heat and electricity in a ratio of 1:1. Therefore the total carbon savings achieved by a district heating network powered by a biogas CHP unit are high. 16 CO2e stands for Carbon dioxide equivalent. It describes the total global warming potential of emissions comprising one or more greenhouse gases by equating them to the global warming potential of carbon dioxide. 25 of 51

Waste heat is also classed as carbon neutral. This is because, as when accounting for a CHP unit s emissions, the total emissions produced are apportioned to the primary process. In the case of using the waste heat from the landfill gas electricity production, or the pyrolysis plant, any emissions released have already been attributed to the electricity produced. The energy from waste facility also uses a CHP unit to generate the electricity and heat, hence the carbon emissions are accounted for in the same way as described for a gas or biomass CHP unit. The proposed plant will be large enough to meet the flats total heat and electricity demand. 8,000 7,000 Carbon emission savings per flat (kgco2e/yr) 6,000 5,000 4,000 3,000 2,000 1,000 0 Flat type E (gas heating) Flat type H (gas heating) Flat type F (electric heating) District heating network option Figure 6: Carbon emission savings per flat achieved by each district heating scenario Figure 6 shows that the biogas options produce the greatest savings. They produce significantly greater savings than the biomass CHP options because the biomass generator produces much less electricity than the biogas generator hence less grid electricity is offset. Greatest savings are achieved by connecting the flats with electric heating to the network. This is because their current heat demand is served by grid electricity which is far more polluting than using gas to generate their heat. A district heating network can significantly reduce carbon emissions. A network powered by a biogas fuelled system would result in an 80 % reduction in carbon emissions. 26 of 51

7 Comparing carbon emission savings achieved by district heating networks with those achieved by traditional retrofit. Once the potential carbon emission savings achieved by the different district heating networks and the associated costs were known, the study then considered if a) a traditional retrofit approach could achieve the same extent of carbon emission savings and b) how the costs of doing so would compare. The costs and carbon emission savings of the following retrofit measures had been calculated for the Formulating a zero carbon strategy for Hackbridge study: o o o o o o o o o o o o o o o o o o Loft insulation Draught proofing around windows etc. Ground floor insulation Double glazing Heat exchange ventilation Boiler upgrade to A rated unit Draught proofing floors (silicone sealant around the skirting boards) Heating controls (2 channel time clock, room thermostat and cylinder thermostat) Hot water cylinder lagging Hot water pipework on external walls/floors lagging Thermostatic radiator valves New front door to the block of flats Door draught proofing Cavity wall insulation New A++ rated fridge/ freezer Energy saving light bulbs Solar hot water system Solar photovoltaic panels Retrofit measures were selected in order to meet the carbon emission savings achieved by the district heating network scenarios. All appropriate retrofit measures were required in order to approach the scale of carbon emission savings achieved by the district heating scenarios, but even when all the retrofit measures were installed the carbon savings were less than connecting the flat to a district energy network. Table 9 provides a comparison between the different options for retrofitting flats (energy efficiency measures and connection to a district energy network). The costs and carbon savings can be seen for both retrofitting energy efficiency measures and for a district energy network using different energy sources. 27 of 51

Scenario CO2 savings (kgco2) % reduction in CO2e emissions Cost ( ) Cost per carbon savings ( /kgco2e saved) Retrofitting energy efficiency measures 2,281,494 34% 18,441,076 8 Biogas CHP & biogas back up 5,622,613 84% 10,206,872 2 Biogas CHP & gas back up 5,232,970 78% 10,206,872 2 Energy from waste 3,472,276 52% 9,441,700 3 Gas CHP & biogas back up 3,220,348 48% 10,206,872 3 Biomass CHP & biogas back up 3,182,323 48% 10,453,700 3 Gas CHP & gas back up 2,830,706 42% 10,206,872 4 Biomass CHP & gas back up 2,792,681 42% 10,453,700 4 Waste Heat 2,645,388 40% 10,194,872 4 Table 9: Comparison of the costs and carbon savings for the different district heating scenarios and retrofitting As can be seen in Table 9, the two biogas scenarios provide the greatest carbon emission savings per pound spent: each kilogram of carbon emissions saved costs 2. The most expensive option is the retrofitting of energy efficiency measures. Each kilogram of carbon emissions saved costs 8; this is twice as expensive as the most expensive district heating option. The waste heat option offers intermediate savings per pound spent ( 4 per kilogram of carbon emissions saved). A comparison of the district heating options and the retrofitting option for the different flat types can be found in Appendix 14.4. Comparing the results for each flat type, because electric heating is three times more polluting that gas heating, more carbon emissions can be saved per pound spent on the flats with electric heating than those with gas heating. This is despite the extra costs incurred for converting to a wet heating system (in the district heating scenario). For each flat type, the biogas fuelled district heating option remains the most cost effective option. The retrofit option remains the most expensive option, although slightly less so for the new flats with gas heating because there is less space on their roofs for solar photovoltaic panels (this is a Hackbridge specific issue rather than a UK wide issue). 28 of 51

Lower carbon savings per pound spent are achieved for the newer flats than the older flats, this is because the newer flats are more energy efficient to start with and therefore less CO2 can be saved from district heating. However, the costs of the district heating connection do not change for newer flats. Retrofitting energy efficiency measures and building integrated renewable energy technologies is a significantly more expensive way to achieve carbon savings than any of the district heating options. More carbon savings are achieved per pound spent on an electrically heated flat because they are currently significantly more polluting per kwh of heat used than the other two flat types. More carbon savings are achieved per pound spent on the older flats, because the costs of connection do not vary but the new flats need less heat. 29 of 51

8 Impact on thermal comfort and fuel poverty The optimal approach to retrofitting flats depends on the perspective that each option is viewed from, be it carbon savings, capital costs, fuel bill savings or thermal comfort. It is clear that, per pound spent, each of the district heating scenarios has a far greater impact on carbon emission savings than the traditional retrofit approach. It is important, however, to determine what impact, if any, the different approaches have on the residents. Unlike traditional retrofitting, connecting to a district heating network would not improve the energy efficiency of the flat. This means that the flat s energy demand would remain the same. If, currently, heat is lost through draughts and conduction through walls, this will remain the case. The only physical difference which residents may notice is that the domestic hot water supply will be plentiful and space will be saved by not needing to have a hot water storage tank. In contrast, a full retrofit would improve the building fabric and energy efficiency of the flat. For example, draught proofing would reduce the amount of warm air which is lost from ventilation by up to 15 %. Loft and cavity wall insulation would reduce the amount of heat lost through conduction. This means that the same amount of heating energy currently used will make the flat warmer, or less heating energy could be used to achieve the same level of warmth. Thermal comfort and fuel poverty are intrinsically linked. Reducing the heat demand of a flat helps to reduce fuel bills and alleviate fuel poverty. It is commonly perceived that heating provided by a district heating network would be cheaper than heating derived by conventional methods. Whilst the district heating will be cheaper per unit than electricity, whether or not it would be cheaper than natural gas would depend on the Energy Services Company (ESCo) managing the scheme. If waste heat is used, then the ESCo s fuel costs will be lower than if they were using natural gas. The degree to which the consumer would notice the difference would depend on how much of a profit the ESCo makes and the cost of the initial infrastructure 17. In Aberdeen, where a district heating network has been set up to serve several blocks of flats, Aberdeen Council set up a not for profit company to run the network which has ensured that the residents bills are kept as low as possible4. Retrofitting the flats will lead to a reduction in energy bills because the energy demand would be reduced. Table 10 summarises the impact each approach would have on the residents energy bills. 17 Conversation with Inventa, on 10 th October 2011. 30 of 51

Impact on energy bills Flat type District heating Retrofit E (1950's gas central heating) Similar to current situation 657* to be saved annually F (1990 s electric storage heaters) The heating bill will be lower because the flats were previously using electric heating which will be more expensive than buying heat from an energy network 298* to be saved annually H (2000's gas central heating) Similar to current situation 354* to be saved annually *Savings estimated based on the following energy costs 18 : 1 kwh electricity = 13 pence 1 KWh gas = 4 pence Table 10: Impact on energy bills for the different flat types if retrofitting or district heating were to occur Flats connected to the district heating network would have to pay a standing charge to cover maintenance and management costs. This may end up being cheaper than the cost of maintaining and replacing an individual boiler over the years. The annual energy bill savings resulting from retrofitting a flat with gas heating is higher than for a flat with electric heating as there are fewer options available for retrofitting electrically heated flats. The traditional retrofit approach has a positive impact on thermal comfort and fuel poverty, since it improves the energy efficiency of the home. The district heating approach will have no impact on thermal comfort and fuel poverty, unless the home currently has electric heating, in which case the fuel bills will be reduced. 18 Department of Energy and Climate Change. (2011) Quarterly Energy Prices September 2011 31 of 51

9 Disruption Another way in which residents will be affected by the proposed options is by any disruption caused by installing them. In order to install the district heating network, pipes will have to be laid down around the suburb (see Figure 3) which would often involve digging up roads. Then, there will be disruption within the block of flats as the infrastructure to connect individual flats to the network is installed. The time taken to do this will depend on the complexity of the job. It will take one or two days to install the heat interface unit and any necessary pipework within the flat itself. For the flats with electric heating, the replacement of the electric storage heaters with a wet heating distribution system would take around 3 days. It has been estimated that a full retrofit could be done within a week, if the work was well coordinated and ran smoothly. However, it will be significantly more disruptive than connection to a district heating system, unless a wet distribution system needs to be installed. 10 Resident attitudes Eight residents of a housing estate managed by the social housing provider, Sutton Housing Partnership, were interviewed about their attitudes towards district heating and traditional retrofit (please see Appendix 14.5 for the completed surveys). The residents all live in type E flats which already have loft and cavity wall insulation. Both approaches were explained, along with the findings from the previous sections on carbon emission savings, thermal comfort, energy bills and disruption. The answers were unanimous. People were in favour of both options, but thought that retrofitting (draughtproofing and double glazing in particular) should be the priority for the following reasons: o o o Without the retrofit, significant amounts of heat energy would continue to be lost by the inefficient building. This is a waste. The retrofit options would contribute positively to the thermal comfort of the flat which is a very attractive prospect. Saving money is the number one priority hence the immediate reduction in bills offered by the retrofit option is preferred 19. All of the residents interviewed were familiar with the majority of the proposed traditional retrofit measures. Over half already knew what district heating was, mainly because there are a couple of social housing blocks in the borough which used to have communal heating (some of which has now been replaced with individual heating). Nobody had a bad impression of district heating. With regard to cost, residents had heard of schemes where everyone paid a flat fee for the heat, regardless of what they consumed. The residents interviewed didn t feel that this was a fair method, and would prefer to be billed according to the amount 0f heat used. The residents who were leaseholders were also concerned that neither option should increase their annual service charge or come with extra maintenance costs. It is encouraging to note that none of the residents interviewed were deterred by the disruption incurred by either the district heating or retrofit option. And all felt it important that any improvements to their flats should be in line with protecting the environment. 19 The residents surveyed were mostly social housing tenants and therefore would expect that any energy efficiency measures or connection to a district heating network would be paid for by their social housing landlord. 32 of 51

In either case, the residents stressed that consultation is important, so that they can have a detailed understanding of the process and outcomes. 11 Combining energy efficiency measures with district heating As has been seen, the district heating approach would provide much greater carbon emission savings than the traditional retrofit approach. The retrofit approach, however, improves the energy efficiency of the building. This prevents energy being wasted, has a positive impact on thermal comfort and fuel poverty. In light of these findings, the report then considered the option of combining approaches. Because of the high costs involved for either approach, it would be unlikely that both could be financed and by reducing the heat demand of the flats through energy efficiency measures it would make district heating less financially viable. But, as Table 11 shows, it would be sensible to consider a light retrofit combined with a district heating scheme since significant carbon emission savings can be achieved relatively cheaply with certain retrofit measures. Table 11 shows the relative value for money that the different retrofit measures and district heating options provide in terms of pound spent per kgco2 saved for a gas heated flat from the 1950s. Energy saving option /kg CO2 saved (gas heated flat) Energy saving light bulbs 0.14 Lag hot water cylinder 0.27 Door draught proofing 0.40 Loft insulation 0.96 Heating controls: 2 channel time clock, room thermostat and cylinder thermostat 1.60 New fridge/freezer 1.70 Biogas CHP & biogas back up 1.77 Biogas CHP & gas back up 1.93 Energy from waste 2.85 Gas CHP & biogas back up 3.43 Draught proofing around windows etc. 3.48 Biomass CHP & biogas back up 3.58 Gas CHP & gas back up 4.06 Biomass CHP & gas back up 4.25 Waste Heat 4.41 Cavity wall insulation 4.92 Boiler exchange 6.22 Lag hot water pipework on external walls/floors 8.00 Solid wall insulation 8.00 Install TRVs (cost if draining system only to install TRVs) 9.59 Solar photovoltaic panels* 9.69 Heat exchange ventilation 12.25 New front door to the whole building (cost split between flats) 13.55 33 of 51

Energy saving option /kg CO2 saved (gas heated flat) Double Glazing 18.07 Solar thermal system 22.25 Draught proofing floors 27.10 Average cost of floor insulation 141.74 *This does not take into account the revenue which could be earned from the Feed in Tariff. Table 11: Cost per kilogram of carbon emissions achieved by the individual retrofit measures and the different district heating options. (For a type E flat, but without cavity wall or loft insulation.) As Table 11 shows, there are several retrofit measures which achieve more carbon emission savings per pound spent than the district heating options. There are also several measures which are extremely expensive, for example, floor insulation costs 141.74 per kilogram of carbon emission savings. It is these expensive options that make the overall retrofit option less effective at saving carbon emissions per pound spent than the district heating approaches. By combining the district heating option with the better value retrofit options, it could be possible to achieve large carbon emissions savings, improve the thermal comfort of the flats and reduce energy bills without costing significantly more than installing the district heating scheme alone. Table 12 compares the cost and carbon savings of the following scenarios: o o o District heating network (average of the different options) Full retrofit, and Light retrofit (loft insulation, draught proofing, boiler exchange, heating controls, hot water cylinder and hot water pipework lagging, thermostatic radiator valves and cavity wall insulation) in combination with the average district heating scenario. Approach Cost per flat* ( ) Average savings ( /kgco2e) Advantages & disadvantages District heating network* 10,125 3 Cheapest option, high carbon emission savings, no increase in thermal comfort, fuel bills remain the same Full retrofit 29,949 9 Lower carbon emission savings, expensive, increase in thermal comfort, lower fuel bills District heating network + "light" retrofit 14,611 7 High carbon emission savings, increase in thermal comfort, lower fuel bills, half the price of the full retrofit option. * For a type E flat, but without cavity wall or loft insulation. Table 12: comparing costs, carbon emission savings and other impacts of three different scenarios. 34 of 51

As Table 12 shows, it costs 7 to save a kilogram of carbon emissions using a combination of connecting to a district heating network with a light retrofit. This is relatively expensive compared to the district heating option alone. By doing this however, the residents will experience a significant decrease in their fuel bills and an increase in the thermal comfort of their flats. 35 of 51

12 Investigating the economic viability of a district heating scheme Some high level calculations were done to assess the payback period of a district heating scheme. The waste heat model was used. It was assumed that the ESCo would sell the heat at a similar price to current gas prices which would generate a profit since the waste heat would be bought for significantly less. The profit generated over a 25 year period was then compared with the capital cost of the average network. It should be noted that these are high level calculations and were estimated using data that was based on district energy networks that connect new buildings to an energy source rather than existing buildings. A number of assumptions were therefore made about how these costs would change when connecting existing buildings. These costs will be liable to change based on the specific costs of metering and billing and the price paid to generate the heat. Newer flat Old flat Average annual heat demand of average flat (kwh) 5,776 11,341 Price of biogas bought from landfill site ( /kwh) 0.01 0.01 Price of gas sold to customer ( / kwh) 0.04 0.04 Standing charge ( /year) 150 150 Annual profit ( ) 144 284 Profit over 25 year period ( ) 4,228 7,706 Cost of connecting average flat ( ) 11,900 11,900 Profit/deficit over 25 year period ( ) 7,672 4,194 Annual profit/deficit ( ) 307 168 Table 13: Potential financial model per new and old flat for a district heating scheme As can be seen in Table 13 it has been modelled that the ESCo would buy the waste heat from the landfill site at 1 pence per kwh and sell it onto the flats connected to the district heating network at around 3.5p/kWh (which is slightly lower than standard gas prices). In addition, residents would be required to pay a standing charge to cover the cost of metering, billing and maintenance of 150 per year. This is similar to the cost of maintaining and periodically replacing a gas boiler. Assuming all profits from the sale of the heat go towards paying off the initial capital investment (extending the network, connecting the flats, etc.) it can be seen that after 25 years, the cost of the network would not have paid for itself. If the capital costs are to be recouped through residents bills for the newer flats, then this means that each flat connected to the network will incur an additional annual fee in the region of 300 to 150.This cost could also be met by public funding or if the heat could be bought for less than 1p/kWh. This cost could potentially decrease if the houses in the area were connected to the network. This is because the cost of connecting houses is similar to the cost of connecting to flats but because houses have a higher heat demand greater revenue can be generated from selling heat to them, this can then subsidise the connection of the flats. 36 of 51

13 Conclusion It makes theoretical sense to connect blocks of flats in Hackbridge to a district heating network because a) they are a large number of blocks of flats in one area, b) there is already a planned district heating network proposed for the Felnex Trading Estate site which could be expanded to service the existing flats too and c) sources of waste heat currently exist to power the network and there are more planned for the future. Modelling a district heating network with the different possible heat sources has shown that, by connecting to a district heating network, the carbon emissions from the flats can be reduced by as much as 84 % when using a biogas CHP unit for energy generation. Comparing this with the carbon emission savings which can be achieved via the traditional retrofit approach reveals that all of the different networks could achieve greater savings than the traditional retrofit approach. Furthermore, the traditional retrofit approach achieves less than half the carbon emission savings per pound spent than the worst performing district heating network. Unlike the district heating approach, however, retrofitting achieves more than just carbon emission savings. It improves the energy efficiency of the flat which means that the residents fuel bills will decrease and the thermal comfort of the flats will increase. These were important considerations for the residents surveyed who, whilst in favour of both approaches, would prioritise the retrofit. Some retrofit measures achieve more carbon emission savings per pound spent than others, ranging from 14 pence per kilogram of emissions saved to 141.74 per kilogram of emissions saved. It is therefore suggested that the ideal approach would be to install the most cost effective retrofit measures in combination with connecting the flats to a district heating network. This approach would achieve carbon emission savings as well as reducing residents fuel bills. The biogas scenario costs the same as most of the other options and provides by far the most emission savings per pound spent hence it is this district heating scenario which would be recommended first. Using waste heat from either the pyrolysis plant or the landfill gas electricity production would also be favoured since, currently, this heat is being wasted. The biomass CHP scenario is not recommended because its electricity to heat ratio is low: this is not the best use of biomass. Furthermore, a biomass CHP unit requires a large land take (a 800 kw unit would require around 800 tonnes of woodfuel a year). This approach could be complimented with behaviour change. Simple actions such as turning down the room thermostat or washing clothes at 30 C rather than 40 C don t cost anything and can reduce a flat s emissions by a further 8 %. An ideal opportunity to talk to the residents about behaviour change would be when work is being done in their flats to connect them to the district heating network or to install the retrofit measures. It should be noted that all approaches achieve considerably higher carbon emission savings when applied to flats with electric heating compared to those with gas heating. This is because using electricity is over three times more polluting than gas to generate hot water. Whilst a district heating scheme would deliver high levels of emissions saving per pound spent, the initial capital investment required to set one up is large. Depending on the heat demand of the network, this may be sufficient to pay off the initial investment over a 25 year period. In the case of Hackbridge, the overall heat demand of the flats is not sufficient to generate enough profit over a 25 year period to match the initial investment, even if the waste heat could be bought for only 1p/kWh. In order to pay off the capital investment within a 25 year period, an additional 150 300 per flat would be required per year. Alternatively additional investment of between 4,000 and 8,000 per flat would be needed. 37 of 51

14 Appendix 14.1 ESCos explained The term ESCO is understood to mean different things by different people but in the majority of cases, it stands for either Energy Services Contract or Energy Services Company. Fundamentally, ESCos involve the outsourcing of one or more energy related services to a third party and may take place for a number of reasons. The following provides a list of the key elements of the ESCo: - Financing - Installation - Operation and Maintenance - Fuel supply contracting - Billing - Regulation An ESCo may guarantee supplies of heat and/or electricity at a reduced / pre agreed cost per unit of energy, or the contract may guarantee particular levels of service provision, such as room temperature or comfort. ESCos can be set up by a public sector organisation (with or without private sector participation) for the purpose of delivering energy efficiency, energy savings and/or sustainable energy, whether through a variety of different initiatives or through a particular initiative, such as a CHP scheme. Such entities may well have a public body or quasi public body nature. ESCos of this nature may use a variety of means of delivering the services which they have been set up to perform, including contracting with the private sector. 38 of 51

14.2 Reference data for carbon emission savings calculations Energy source Units Conversion factor (kg CO2e per unit) Notes Source Natural gas kwh Electricity kwh 0.20322 0.61707 Gross, all scopes, total greenhouse gases (GHG) DEFRA/ DECC. 2010. 2008, grid rolling average, all scopes, total GHG Woodchip kwh 0.02 All scopes, total GHG Biogas kwh 0 All scopes, total GHG Table 14: Carbon emission factors for different energy sources Grid losses (2008) = 7.40% (DEFRA/ DECC. 2010. 2010 Guidelines to Defra/ DECC s GHG conversion factors for company reporting) 2010 Guidelines to Defra/ DECC s GHG conversion factors for company reporting. 39 of 51

14.3 Cost data 14.3.1 District energy infrastructure costs Item Cost ( ) Source Piping (hard dig) 1,000 per m Internal Piping (soft dig) 750 per m Internal Internal pipework (from entry to block to entry to flat) 2,200 per flat HIU 1,750 per flat Replacement of storage heaters 2,550 per flat 14.3.2 Utility costs Table 15: Costs associated with district heating infrastructure Conversation with Vital Energi, on 12th July 2011 Conversation with Vital Energi, on 12th July 2011 Conversation with Vital Energi, on 12th July 2011 Energy type Cost ( /kwh) Source Electricity 0.13 Department of Energy and Climate Change. (2011) Quarterly Energy Natural gas 0.04 Prices September 2011 Table 16: Cost of energy 40 of 51

14.3.3 Energy generation equipment costs Technology Capacity Unit Capital cost ( ) Source Biomass Boiler 200 kwth 113,070 Internal, Conversation with Vital Energi, on 12th July 2011 Gas Boiler 200 kwth 12,000 Conversation with Vital Energi, on 12th July 2011; Pöyry, Faber Maunsell, AECOM. (2009). The potential and costs of district heating neworks. A report to the Department of Energy and Climate Change. Biomass CHP 800 kwth 1,000,000 Conversation with Vital Energi, on 12th July 2011 Gas CHP 800 kwth 753,172 Internal, Pöyry, Faber Maunsell, AECOM. (2009). The potential and costs of district heating neworks. A report to the Department of Energy and Climate Change. AD Gas CHP 800 kwth 753,172 Assume same price as gas CHP unit. AD Gas boiler 800 kwth 12,000 Assume same price as gas CHP unit. Waste heat (CHP engine) 800 kwth 753,172 Assume same price as gas CHP unit. Table 17: Costs of the various energy generators 41 of 51

14.4 Comparison of the district energy scenarios with retrofit for different flat types Flat type E (1950s with gas central heating) Scenario CO2 savings (compared to business as usual, kgco2e) % reduction in CO2e emissions Cost of approach ( ) / kgco2e saved Biogas CHP & biogas boiler 5,736 82% 10,166 2 Biogas CHP & gas boiler 5,275 76% 10,166 2 Energy from waste 3,258 47% 9,269 3 Gas CHP & biogas boiler 2,967 43% 10,166 3 Biomass CHP & biogas boiler 2,924 42% 10,456 4 Gas CHP & gas boiler 2,506 36% 10,166 4 Biomass CHP & gas boiler 2,463 35% 10,456 4 Waste heat 2,305 33% 10,152 4 Retrofit* 3,360 48% 29,949 9 Table 18: Costs and carbon emission savings for the different district heating scenarios compared to retrofitting for a 1950s flat with central heating 42 of 51

Flat type F (1990s with electric storage heating) Scenario CO2 savings (compared to business as usual, kgco2e) % reduction in CO2e emissions Cost of approach ( ) / kgco2e saved Biogas CHP & biogas back up 7,039 85% 12,716 2 Biogas CHP & gas back up 6,561 79% 12,716 2 Energy from waste 4,529 55% 11,819 3 Gas CHP & biogas back up 4,235 51% 12,716 3 Biomass CHP & biogas back up 4,191 51% 13,006 3 Gas CHP & gas back up 3,757 45% 12,716 3 Biomass CHP & gas back up 3,713 45% 13,006 4 Waste heat 3,564 43% 12,702 4 Retrofit* 2,594 31% 19,722 8 Table 19: Costs and carbon emission savings for the different district heating scenarios compared to retrofitting for a 1990s flat with electric storage heating 43 of 51

Flat type H (2000s with gas heating) Scenario CO2 savings (compared to business as usual, kgco2e) % reduction in CO2e emissions Cost of approach ( ) / kgco2e saved Biogas CHP & biogas back up 4,649 79% 10,166 2 Biogas CHP & gas back up 4,414 75% 10,166 2 Energy from waste 2,139 36% 9,269 4 Gas CHP & biogas back up 1,845 31% 10,166 6 Biomass CHP & biogas back up 1,800 31% 10,456 6 Gas CHP & gas back up 1,610 27% 10,166 6 Biomass CHP & gas back up 1,566 27% 10,456 7 Waste heat 1,174 20% 10,152 9 Retrofit* 1,461 25% 15,356 11 Table 20: Costs and carbon emission savings for the different district heating scenarios compared to retrofitting for a 2000s flat with gas central heating 44 of 51

14.5 Survey with residents Resident 1 Question What are your initial thoughts? WHY? Given the differences listed above, is one option more appealing than the other? WHY? Answer Good idea, save on energy, but looking to move anyway, there are always lots of road works so the disruption wouldn t make a difference. Retrofitting first all heat is currently escaping. Has already draught proofed to some extent but the windows and doors need to be air tightened. In the flat new windows and heating were installed in 1989. Even if they prefer to have a full retrofit would they be interested in having district heating anyway? Do the environmental benefits of DHNs concern you? Do the money saving benefits concern you? Would the disruption during installation put you off DHN? The technology is common across mainland Europe, but not so much in the UK. Does that concern you? Yes solar panels would be good, thought could sell electricity to the grid. New windows a priority over dhn but would be happy with both. Disruption not a problem. Yes Currently spends 30 pounds a week on energy, so keen to reduce this. Don't mind the disruption. Always digging up the roads. No problems with district heating in two other estates in Sutton: Roundshaw and Chaucer House. 45 of 51

Resident 2 Question What are your initial thoughts? WHY? Given the differences listed above, is one option more appealing than the other? WHY? Even if they prefer to have a full retrofit would they be interested in having district heating anyway? Do the environmental benefits of DHNs concern you? Do the money saving benefits concern you? Would the disruption during installation put you off DHN? The technology is common across mainland Europe, but not so much in the UK. Does that concern you? Answer Good idea Retrofit makes the home more comfortable Both Yes Yes No No, UK is just behind 46 of 51

Resident 3 Question What are your initial thoughts? WHY? Given the differences listed above, is one option more appealing than the other? WHY? Even if they prefer to have a full retrofit would they be interested in having district heating anyway? Do the environmental benefits of DHNs concern you? Do the money saving benefits concern you? Would the disruption during installation put you off DHN? Answer Heard about One Planet Sutton. Knows about district heating, heat made in central place and then pumped round the flats. Did know someone who had it. Would want to know whether there would be a standing charge as that wouldn't be fair. Would want to know where the hot water pipe work would go and how the maintenance would work. Thought that already pay a high service charge. At the moment the boiler is broken, how would that work if replace the boiler. Would want to know in advance if they are doing this, so can plan for it. Wouldn't want an increase in the service charge. Want to have a water meter, not able to. There are lots of pipes. Would want the windows draught proofed or double glazed first though. Yes Yes, has a smart car, wants to stop wastage. Recycling, take bottle bins down the road, done draught proofing, went to the environment fair, has a hippo. Try not to buy new stuff, re use things. Yes. And want to ensure that either scheme would not increase bills/ service charge. The timing of the disruption would be critical, ok if during the school holidays. Would be difficult for lots of families. Had new gas meters, was really difficult. Disruption wouldn't put off as likely to reduce the bills, and be good for the environment. The technology is common across mainland Europe, but not so much in the UK. Does that concern you? 47 of 51

Resident 4 Question What are your initial thoughts? WHY? Answer Resident has gas fire, no central heating, immersion heating. Not sure how it would it would work. Mentioned discontinued schemes like Roundshaw. Interested to know if residents have benefit for the free heat? Leaseholder. Given the differences listed above, is one option more appealing than the other? WHY? Even if they prefer to have a full retrofit would they be interested in having district heating anyway? Do the environmental benefits of DHNs concern you? Do the money saving benefits concern you? Would the disruption during installation put you off DHN? The technology is common across mainland Europe, but not so much in the UK. Does that concern you? Retrofitting. Concerned about why lots of people have pulled out. Would be interested but would need to see more about it all to compare. Yes, very pro the environment. Yes No Yes, why isn't it common? 48 of 51

Resident 5 Question What are your initial thoughts? WHY? Given the differences listed above, is one option more appealing than the other? WHY? Even if they prefer to have a full retrofit would they be interested in having district heating anyway? Do the environmental benefits of DHNs concern you? Do the money saving benefits concern you? Would the disruption during installation put you off DHN? Answer People really would like/ need to know the price before making a proper choice. Want to reduce their bills. Know about new flats in Hackbrige with dhn. Combination of 2. Very much like dhn because it's fixed personal to you, and possibly lower. But need to do the windows first, etc BEFORE dhn. Combination of 2. But retrofit priority. Yes Yes Yes No The technology is common across mainland Europe, but not so much in the UK. Does that concern you? 49 of 51

Resident 6 Question What are your initial thoughts? WHY? Given the differences listed above, is one option more appealing than the other? WHY? Even if they prefer to have a full retrofit would they be interested in having district heating anyway? Do the environmental benefits of DHNs concern you? Do the money saving benefits concern you? Would the disruption during installation put you off DHN? Answer Know about the Roundshaw in Sutton that has District Heating. Both would be good! Would like the double glazing etc., then the dhn. Priority retrofit. Then dhn. Yes Yes Yes No The technology is common across mainland Europe, but not so much in the UK. Does that concern you? 50 of 51

Resident 7 Question What are your initial thoughts? WHY? Given the differences listed above, is one option more appealing than the other? WHY? Even if they prefer to have a full retrofit would they be interested in having district heating anyway? Do the environmental benefits of DHNs concern you? Do the money saving benefits concern you? Would the disruption during installation put you off DHN? Answer Had not heard about dhn before. Would like to know about both options in detail so can make an informed choice. Retrofit first to reduce the bills and stop the wastage. No point in having the DHN if all the heat is being wasted anyway. Yes Yes Yes, this is the most important No The technology is common across mainland Europe, but not so much in the UK. Does that concern you? BioRegional Development Group BedZED Centre 24 Helios Road Wallington Surrey SM6 7BZ Tel : 020 8404 4880 Fax : 020 8404 4893 Email : info@bioregional.com Website : www.bioregional.com 51 of 51