District heating is on the move

Last November at the BSRIA Briefing, I shared my thoughts about how CHP and Energy Supply Contracting models can possibly contribute to building a low carbon community. CHP is a low carbon technology but is only suitable for a larger scale site with a good base load to have better efficiency. ESCOs using the Energy Supply Contracting model can avoid a client’s upfront cost on implementation. However, no matter how good the solution and technology is, capital is always the barrier. Recently, I came across two pieces of news that I would like to share with you. It looks to me things are now moving.

First, the Scottish government announced in March a new £2.5 million District Heating Loan Fund. Registered social authorities, SMEs and ESCOs can apply for funding. The fund will offer loans of up to £400,000 to support low carbon and renewable district heating in Scotland.

Second, Leicester City Council is going to extend the current district heating network across the City of Leicester. The Council signed a 25-year contract with an ESCO to maintain and operate the plant. The ESCO will be responsible for part of the capital investment and there is additional funding from the Community Energy Saving Programme (CESP). It is predicted that the project will help the Council to reduce at least 10% of their carbon footprint.

It seems funding is coming and district heating is on the move. Are you aware of this move?

As an aside I noticed National Grid runs a program called Short Term Operating Reserve (STOR). Under this scheme, National Grid buys electricity power from privately owned generating facilities. The need for STOR is because at certain times of the day, the National Grid needs reserve power in the form of either generation or demand reduction to be able to deal with actual demand being greater than forecasted demand.

The question is, how will STOR influence large scale CHP in the future?…

3 Responses to District heating is on the move

  1. George Adams says:

    Gambi, In the UK there are a number of small-scale CHP installations in individual buildings.
    Larger CHP installations are found mainly in industry.
    Some applications of CHP with District Heating.
    Researcher in UK as i see it concentrates on new approaches to CHP/DH in order to achieve a higher take up.
    I believe the UK has a current target for 5,000MWe more CHP capacity and there is a lot to do to determine the application/form this will be.
    UK Government from the Policy and Information Unit indicates CHP for individual buildings could play a major role in the future

  2. James Parker says:

    Thanks for your comments George. You do highlight a key fact missed in the original blog in that CHP is a perfectly acceptable solution in individual buildings, not just for community or district heating schemes. The key factor to the success of any CHP based scheme is having a good base heating load to allow the CHP to run for long periods of time.
    Another issue not raised here is distribution losses. We have seen several community heating schemes where the distribution losses have been significant, around 50%. Also, with modern low energy housing the actual heat demands are getting lower and lower. Together these factors may change the economics and viability of CHP based community heating schemes.
    As with all technologies, its horses for courses. In some situations CHP is the best option and in others it isn’t. So it is important to make sure that incentives and policies don’t encourage people to install technologies when they are not necessarily the best option.

  3. Richard says:

    I was looking at Npower Cogen’s portfolio of CHP plants in the UK, and it looks like the CHP plants that have signed up to STOR are the ones which no longer serve a firm. The plants were built, they were used, firms shut down, and a massive investment was sitting idle. By enrolling in STOR they can recoup some of that investment via availability payments, and maybe utilisation payments as well.

    If a CHP site is serving a firm/firms, I’m not sure how it can also participate in STOR. I think it’s a little more complex because how then does one reconcile daily operations with a DR event – and this is only because CHP is closely integrated with production processes (as compared to plain old generation).

    I’d be interested in other views out there…

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