The University of Edinburgh SEAG Operations Group SEAG Operations Paper 6 4 th May 2011 4th May 2011 Combined Heat and Power Central Area Brief description of the paper This paper describes the current position with regard to providing a new Combined Heat and Power plant (CHP) and associated electrical and district heating networks to service buildings between High School Yards and Holyrood. Following endorsement by Estates Committee, consultants have completed a financial model and Business Case and are commencing initial design. Action requested SEAG OPS is invited to:- note the proposal and the results of the feasibility study; note that it is proposed to progress this scheme through UoE Utilities Supply Co on the basis of a business plan and loan from the University; Resource implications Does the paper have resource implications? Yes Endorsed by Estates Committee - professional fees of 120K for design development, business case and preparation of Employers Requirements tender package. Risk Assessment Does the paper include a risk analysis? Yes included in the text of the paper Equality and Diversity Does the paper have equality and diversity implications? No Freedom of information Can this paper be included in open business? No Its disclosure would substantially prejudice the commercial interests of any person or organisation Originator of the paper David Barratt Engineering Operations Manager 27 April 2011
University of Edinburgh Central Area - Holyrood CHP Scheme Technical Analysis The scheme comprises a new CHP energy centre to be located on the current car park site at the rear of St Leonard s Land. The energy centre would house CHP unit(s), thermal storage, back-up/ peak load gas boiler plant, HV/ LV switch-rooms and all associated ancillary plant. The new CHP scheme would provide both heat and power via a district heat network (DHN) and private wire network (PWN) respectively. A schedule of the buildings the scheme incorporates is provided within Appendix 1, including whether the building will be served with new DHN and/or PWN connections. The new North and South Holyrood Development, Pleasance and HSY are included within the scheme. Owing to the anticipated completion dates of these buildings (Climate Change centre and Holyrood South 2013, North 2015), it is proposed to install 2no. CHP units within the new energy centre. This phased approach allows future flexibility should the Holyrood North building be delayed postponed. On this basis the proposed CHP sizes are as follows; CHP-1: 1.41MWe (Phase-1) CHP-2: 1.13MWe (Phase-2) These compare to the existing CHP engine sizes at; Kings Buildings (2.7MWe), Pollock Halls (0.526MWe) and George Square (1.6MWe). The proposed Holyrood CHP scheme does not include connections to the existing George Square infrastructure or Old College Area owing to financial constraints though this would be highly desirable from a technical perspective to improve resilience and availability of energy supply. However, the proposal does include provision to future proof the scheme by sizing the DHN to accommodate later extension to serve the Old College Area and link to George Square. Richard Murphy Architects (RMA) have produced option studies to consider the viability of various forms and massing for the energy centre. On the basis of minimising costs, it is considered that a simple stand alone box plant room is the preferred option. RMA also initiated dialogue with the local Planners during the course of the feasibility study and were verbally advised that there is no major objection to locating a new CHP energy centre on the existing car park site. This will result in a loss of c 15 car park spaces. Financial Analysis The estimated capital costs (scheme will be zero VAT under UoEUSCo) presented below assumes a phased installation. Phase-1 involves the energy centre, CHP-1 (plus associated boilers, thermal stores and ancillaries) and all district energy networks. Phase-2 would involve installation of CHP-2 (plus any ancillaries to support this unit) and final network connections to the new Holyrood North development and adjacent buildings. Phase-1 budget costs - 6.0M Phase-2 budget costs - 1.4M Total budget costs - 7.4M The original CHP schemes benefited from substantial external grant funding. This support is no longer available; however there will be a significant benefit to the emerging projects at Holyrood and HSY. The NPV at 15 years and breakeven points for the preferred scheme are provided in Table 1 below. The sub-sections of the table illustrate the scheme with and without avoided costs/ CRC savings for comparison purposes. The four fuel price scenarios represent the OFGEM modelling see Appendix 3.
The results demonstrate that; The scheme achieves a financial return only under fuel price inflation as indicated below, CRC savings represent a circa 400k saving to the scheme, Avoided costs represent a circa 1.672M saving to the scheme (see Appendix 2), Green Transition (GT) and Green Stimulus (GS) OFGEM scenarios provide lower NPVs compared to Dash for Energy (DfE) and Slow Growth (SG). This is a result of gas cost increases being greater than electricity cost increases under GT and GS scenarios (whereas electricity cost increases are greater than gas cost increases under DfE and SG scenarios), resulting in a lower financial return (due to CHP systems being gas fired). Fuel Price Scenario CHP Scheme NPV (at 15 yrs) Breakeven Point (years) 1. NPV with CRC Saving and Avoided Costs Current Energy Prices - 1,613,996 20+ OFGEM Green Transition 2,099,166 11 OFGEM Green Stimulus 1,899,055 11 OFGEM Dash for Energy 3,146,105 10 OFGEM Slow Growth 3,272,056 10 2. NPV without CRC Saving and Avoided Costs Current Energy Prices - 3,687,415 20+ OFGEM Green Transition 23,931 14 OFGEM Green Stimulus - 175,664 16 OFGEM Dash for Energy 1,067,266 13 OFGEM Slow Growth 1,198,110 13 Table 1 Financial Analysis Results Summary Carbon Emissions Savings The Universities Climate Action Plan 2010 2020 (2010) document sets out aims to achieve 29% carbon savings by 2020 against a 2007 baseline with interim target of 20% savings by 2015 as part of a contribution towards national targets set out in the Climate Change (Scotland) Act 2009. Investment in energy infrastructure projects including George Square phase 2, of which this is a significant part, has been identified as a strategic objective to help achieve this low carbon vision. Based on DECC/DEFRA carbon emission factors, the anticipated carbon savings for the proposed Holyrood CHP scheme are estimated to be 2,133 tonnes C0 2 per annum, equating to an approximate 27% reduction versus a baseline scheme (gas fired boiler plant and grid electricity for the buildings). Providing the new Holyrood Development and Climate Change Centre buildings with connections to a CHP energy network will assist the design teams to achieve Scottish Technical Standards Section 6 (Energy) compliance. This would require the proposed new Holyrood CHP scheme to be operational in sufficient time to allow district energy connections to be provided (and testing/ commissioning), prior to practical completion of the buildings. This places a degree of time pressure on the CHP project, owing to the proposed opening dates from early 2013 for the Climate Change Centre and Holyrood South development. It should be noted that it would be possible for the developers of these buildings to achieve Section 6 compliance by alternative means, most likely by employing low/zero carbon technologies
locally at each building in lieu of a CHP energy network connection and this benefit will be factored into the CHP business plan SEAG OPS is invited to note the proposal to progress this scheme through UoE Utilities Supply Co on the basis of a business plan and loan from the University David Barratt Engineering Operations Manager 28 th April 2011
APPENDIX 1 BUILDINGS SCHEDULE The buildings listed in below are included in the proposed Holyrood CHP scheme. Holyrood CHP Scheme - Buildings Schedule Infrastructure Connections (E and/or Building Name Building Number Existing/ New Building DHN) Building Online Date St Leonard s Land 564 Existing E + DHN now South Holyrood Development - New E + DHN 2013 (assumed) North Holyrood Development - New E + DHN 2015 (assumed) Charteris Land 558 Existing E + DHN now Patterson s Land 551 Existing E + DHN now Thompson s Land 555 Existing E + DHN now Dalhousie 552 Existing E + DHN now Darroch Court 567 Existing E now 46 Pleasance 328 Existing E + DHN now 60 Pleasance 330 Existing E + DHN now 48 Pleasance 329 Existing E + DHN now 9-11 Infirmary Street 305 Existing E + DHN now Estates and Buildings 306 Existing E + DHN now Division Old High School 310 Existing E + DHN now Old Infirmary 311 Existing E + DHN now Old Surgeons Hall 313 Existing E + DHN now HSY Boiler House 320 Existing E + DHN now Chisholm House 317 Existing E now Doctors Surgery 337 Existing E now Mackenzie House 338 Existing E now Churchill House 801 Existing E now Fleming House 812 Existing E now Kenneth Mackenzie House 868 Existing E now Lister Institute 335 Existing E now Pfizer 336 Existing E now 1-7 Roxburgh Place 322 Existing E now
APPENDIX 2 AVOIDED COSTS BREAKDOWN Avoided costs included with the financial analysis are identified in Table 2 below. Item Avoided Cost 1. Gas boiler plant for North/ South OGC Residencies 75,000 2. Gas utility connections for North/ South OGC Residencies 40,000 3. LV utility connections for North/ South OGC Residencies 40,000 4. Renewable energy technologies for North/ South OGC Residencies 1,000,000 (assumes Ground Source Heat Pumps) 5. Gas boiler plant for Climate Change 25,000 6. Renewable energy technologies for Climate Change centre 400,000 (assumes Ground Source Heat Pump) 7. The Pleasance gas boiler plant replacement 52,000 8. Infirmary Street gas boiler plant replacement 30,000 9. Refrigerant replacement for Dalhousie VRF system (currently R22) 10,000 Total 1,672,000 APPENDIX 3 OFGEM FUEL PRICE SCENARIOS An overview of the four OFGEM gas and electricity fuel price scenarios are presented in Table 3 below (extract taken from OFGEM document Project Discovery, Energy Market Scenarios Update Ref 16a/10).
OFGEM Fuel Price Scenario Overview The gas and electricity price rises year-on-year for each OFGEM scenario, as used with the financial analysis of the CHP scheme, are presented in Table 4 below. Table 4 OFGEM Scenario year-on-year energy costs rises