Ed Milliband – Energy Price Saviour or Misguided?

Andrew Eastwell, BSRIA CEO

Andrew Eastwell, BSRIA CEO

In announcing that a Labour government would freeze energy bills for two years, Ed Milliband has created a year of fear for potential investors in funding desperately needed new generating capacity for the UK.  Which investor is going to put up the millions needed for both renewable and conventional plant when the return on that investment has effectively been politicised and put into the hands of a new, unknown body – Ofgem II?

Ofgem I has already sounded serious warning bells about UK’s generating margin falling from about 14% to sub 4% levels around 2016.  Introducing the kind of uncertainty that his announcement implies could hardly come at a worst moment; in effect it is perfectly possible that this choice of policy, aimed as it probably was to win votes from the general public, could in fact result in a greater likelihood of brown or blackouts.  This is hardly an outcome that will increase the efficiency of industry and the generation of wealth and jobs.

Wholesale energy pricing is a little like the tide – there is no possibility of defeating the ebb and flow of the market and Mr Milliband is going to look a little like King Canute in attempting to hold back world changes in the price of energy. Should the opposition put such an important element of UK’s basic infrastructure under threat without any responsibility for the outcome?

Is this the Real Answer for Cheap Green Energy?

Ever since the first serious concerns were raised about man-made climate change a generation ago the world has been caught on the horns of a dilemma. The choice has too often seemed to be between securing the kind of short-term economic growth which the developed world expects and the developing world desperately needs  on the one hand, and paying more now in order to secure the future of our world on the other.

It is small wonder that green energy solutions are still seen as something of a luxury accessory, perhaps affordable in times of prosperity, but pushed into the background at times of world recession, when achieving growth and combatting fuel poverty becomes an even bigger concern.

But could it be that a large part of the answer is beneath our feet, or that at least it might be: an answer that could have a huge impact on the UK as it already has had in similar countries. For once I am not  talking about fracking, but about something that has been around for a century, though the technology continues to evolve in exciting ways.

The heat network rests on the fundamentally simple idea of producing heat (or cooling) centrally, in the most efficient and environmentally friendly way, and then distributing this through highly insulated underground piping, to homes, offices, hospitals, factories and anywhere else that needs it. Often this simply taps into heat that would otherwise be pumped wastefully straight into the atmosphere.

Different measures could radically affect the growth of Heat Networks in the UK

Different measures could radically affect the growth of Heat Networks in the UK

 Such networks not only distribute heat but can store it, for hours or potentially  months, ironing out the wild and often unpredictable fluctuations in both and supply and demand and making it much more practicable to use ‘green’ power sources, such as wind or photovoltaic that are inherently unreliable, not to mention biofuels. Even where gas is still used there is scope for greater efficiencies, especially where the opportunity is taken to use generated combined heat and power (CHP)

 So why is it that this technology accounts for only about 1% of the UK’s current heating needs while in Denmark, with an only slightly colder climate, the figure is over 60%. In fact most European countries already make much greater use of this resource than the UK does, as do countries as diverse as China, Japan and the USA.

In fact the benefits of district energy are already recognised by many UK hospitals, universities and industrial plants and office complexes, frequently powered by CHP systems which offer added security of supply. So why has the residential sector been so slow up until now?

Part of the answer lies in how the UK population lives: predominantly in individual houses which are more expensive to connect, and in most cases owner occupied or privately rented, making it much harder to convert individual householders to heat networks. The relatively low rate of house building in recent decades hasn’t helped either. Gas prices that are low by international standards have also reduced incentives to innovate in this direction.

However the last few years have seen a sea-change, with far more new homes tapping into heat networks, especially new flats, spurred on partly by enhanced incentives from government and encouragement from local planners, but also by a growing Energy Services industry that is prepared to make substantial investments in order to make a long term return.

Here at BSRIA we have recognised this trend, and so decided that a fresh look at the UK district energy market was needed. The result is a report which examines the market, the main players and what has drawn them into the market. It also considers the main positive drivers along with the biggest barriers to future development, and what can be learned from experience outside of the UK.

Our research indicates that the UK District Energy market is already worth over £400 million annually (including capital investment), and that it is growing at the fastest rate in its history, so that we expect it to exceed £500 million by

This blog was written by BSRIA's Henry Lawson

This blog was written by BSRIA’s Henry Lawson

2015).

The overview takes in different possible initatives on the part of national, and local government, as well as the EU, which could speed up development or hinder it, and at the key changes in technology which are likely to make a difference in future.

If you want to know how big this market is likely to be in two or five years’ time and what the prospects are for the future, then this should be an indispensible read.

To find out more about the report or to purchase it contact our Worldwide Market Intelligence team on 01344 465610 or wmi@bsria.co.uk

What do Gas Boilers and Mark Twain have in Common?

Mark Twain

Mark Twain

It is all happening in the UK now Green Deal has been kick started and the long awaited RHI scheme for residential consumers has serious chances to become reality at the beginning of 2014.

The government is working on the next revision of Building Regulation that should be published late in 2013 and might change the way the standards for energy efficiency and carbon emissions will be set in the future.

There are talks of aiming to sell a million heat pumps by 2030 this against a backdrop of fears about electricity shortages by 2015, during 2012 the electricity generation from coal has increased.

At the same time gas imports for the UK are increasing and gas as well as electricity prices are on the rise.  The HVAC industry are trying to find a clear path for the development that will suit both, government targets and the need of consumers but it often proves to be a contradictory task.

We have seen, recent years the introduction of many different technologies that take advantage of renewable sources to provide heat or electricity or both. They are usually energy efficient and help reducing CO2 emissions.

They have all been entering the market in a truly competitive spirit and we have all read articles predicting the demise of gas boilers in favour of heat pumps.  Certainly heat pumps have an important role to play, particularly if they are installed in the environment where electricity is generated from renewable sources.

We have seen it in other countries in Europe. Sweden, for example, long before the Kyoto protocol were producing electricity from hydro sources and today renewables account for around 45% in electricity production and further 38.1% comes from nuclear plants generation. However electricity in Sweden is second most expensive in the European Union. But along with increasing electricity prices, for decades, the Swedish government has continually promoted the use of products that help reduce the use of electricity, notably efficient heat pumps.

Today the focus is shifting towards controls that are seen as a further important tool to improve energy efficiency of buildings and also towards on-site electricity generation.

On-site electricity generation and controls are of increasing importance in Germany as well. After heat pumps and solar thermal have nearly become mainstream products in the country, PV, CHP, controls and in recent years Smart Home technologies are seeing sharp increases in sales.

German “Energiewende” (Change in energy generation and usage) that will see the share of renewables in electricity production going up from 17% in 2010 to around 60%  in 2030 is very costly. To help offset sharp electricity price increases the government is promoting efficient, controlled use of electricity aiming to cut electricity consumption by 10 % until 2020 and by 25 % until 2050.

This blog is by BSRIA's Krystyna Dawson

This blog is by BSRIA’s Krystyna Dawson

Whilst there is a drive to produce electricity efficiently, Gas will certainly not be phased out by other solutions in the foreseeable time. Not in Germany, not in the UK. Boilers and cogeneration boilers will be needed to help balance the electricity grid that has to cope with increasingly uneven supply.

So far it is clear that it will hardly be possible to cope with the challenges presented by the ambitious EU energy goals using one ideal solution. Combination of products will be needed to respond to the increasingly close interrelation between energy production and use in buildings, so despite Government policy promoting one technology the reality is far removed.

 To paraphrase the Mark Twain quote “The reports of the death of Gas Boilers has been greatly exaggerated”

How to procure Soft Landings

BG 45/2013 Soft Landings procurement Guide

BG 45/2013 Soft Landings procurement Guide

BSRIA has just launched its latest guidance on the Soft Landings graduated handover process.   How to Procure Soft Landings – guidance for clients, consultants and contractors is designed to help clients and their professional and building teams frame their Soft Landings requirements in a consistent and structured manner.

 The guide is a response to two clear trends in the use of Soft Landings. Primarily, clients aren’t sure what they are asking for when they call for it in tenders. Construction firms are seeing wide differences in client requirements. The initiated clients may spell it out, but for every expert client there are 20 who simply ask for Soft Landings without a clear idea of what it is.

 Many builders and contractors, particularly those not up with current thinking, are similarly clueless on how best to respond. That’s one of the downsides with an open-source protocol – the viral spread of Soft Landings is a good thing, but a lack of certification and control means that the uninitiated can easily catch a cold.

 Second, Soft Landings is being adopted by central government as a formal procurement policy. This is Government Soft Landings (otherwise known as GSL), a Cabinet Office-inspired interpretation of Soft Landings for government clients. While it’s not a million miles away from the official version published by BSRIA and the Usable Buildings Trust, GSL takes a more facilities management perspective of the process and focusses far more on getting guaranteed outcomes from the construction industry. GSL is slated to be mandated for central government projects in 2016, along with the adoption of Building Information Modelling (BIM), with which Soft Landings is well-suited.

 So what we have, then, are commercial clients still a little confused in their (voluntary) adoption of Soft Landings. On top of that is an incoming group of government clients, building anything from schools to prisons to aircraft hangers,  for whom Soft Landings is a huge unknown but who will be mandated to adopt it. BSRIA’s view is that it might be a good idea to lay out the best ways of expressing Soft Landings in client requirements, pre-qualification questionnaires, and invitations to tender, so that the clients and industry alike get greater consistency in Soft Landings projects from the very outset.  

 The procurement guide has benefited substantially from the Soft Landings User Group, a BSRIA-run team of clients, architects, consultants and contractors who have learnt from experience on Soft Landings projects what works well and what doesn’t. This learning has been used to create practical, generic requirements for Soft Landings activities that can be used in project documentation. 

 A body like the User Group is absolutely vital for the practical development of Soft Landings. BSRIA knows it doesn’t have all the answers, and in any case should not dictate how Soft Landings is put into operation on real projects. Each project has its own needs and objectives, and each form of procurement throws up its own set of opportunities and challenges. The trick is to find out what works in each context, and try and find ways round thorny issues like novation and cost-cutting for instance, both of which can compromise the best of intentions.

 The guide provides specifically-worded requirements for each step in each of the five stages of Soft Landings.  The guidance is split into three sections, with requirements worded for clients appointing professional designers, clients appointing main contractors/builders, and contractors appointing sub-contractors.  Inevitably, there is some repetition, but the guide gets round that at relevant points by referring the reader to sections in the guide where a specific requirement is more logically located. 

Stage 3 - Pre-handover

Stage 3 – Pre-handover

The example shown is typical. Energy metering installations are proving to be a major problem – they are installed to satisfy Building Regulations, but are often not set up in a way that makes them useful. Although the Soft Landings Framework calls for an energy metering strategy, the procurement guide goes a step further by spelling out what should be provided, in this case at the pre-handover stage. Each requirement is supported by explanatory text that gives the main contractor, in this instance, some background context and the reasons for the requirement.

 Some Soft Landings stages may have more than one worded requirement. Some optional requirements have also been provided, for instance in the aftercare stages where it may be important to spell out precisely who should be involved and for how long.

 For example, under the core requirements for main contractors appointing sub-contractors, contractors have the option of requiring a subcontractor to be retained to assist the client and other members of the project team during handover, and afterwards to monitor the building’s performance. Some sub-contractors may be required to be based on site full-time during the initial aftercare period to assist with end-user queries and to undertake fine-tuning of systems. This would not typically apply to a ductwork sub-contractor, but it would usually apply to a controls sub-contractor. More critically, it could apply to any contractor whose systems or components come with automatic controls, particularly those with bespoke communication protocols (seemly most of them) which can only be adjusted by the supplier after payment of a fat call-out fee. If you’re nodding at this point, you know how it is. The Soft Landings procurement guide now covers this issue, and many others like it.

 An opportunity has been taken to fill gaps in the Soft Landings Framework, published back in 2009 when practical experience was a bit thin on the ground. For example, the guide contains a generic design work stage which was not included in the Framework. The procurement guide also provides more detailed advice on principles of procurement and tendering, how to include Soft Landings in tender processes and interviews, and some advice on the best way to budget for Soft Landings.

 The timing of the guidance also coincided fortuitously with the publication of the 2013 RIBA Plan of Work, which gave BSRIA the opportunity to align Soft Landings stages against the new RIBA stages, and those published by the CIC. There’s also a public sector Soft Landings decision tree included to help government and local authority clients dovetail their procurement requirements with Soft Landings requirements.

 Building performance research is identifying many critical aspects of procurement where clients and the construction industry need to tighten up their respective acts. The commissioning manager is a critical role, and the earlier they can be appointed the better. The procurement guide offers some advice on how to do this, and what their role should be in Soft Landings.

 Soft Landings is not job in itself but a set of roles and responsibilities shared among the client and project team. However, on large jobs particularly a co-ordinator may be needed to make sure the administration is carried out. Paperwork – which could include updating operational risk registers in BIM models for example – needs to be done by someone. If this isn’t covered, Soft Landings might fail ‘for want of a nail’.

 BSRIA hopes that How to Procure Soft Landings – guidance for clients, consultants and contractors will provide all that clients and project teams need to put Soft Landings into operation.  It is a practical guide to accompany the Soft Landings Framework – still the industry bible on what Soft Landings is about, and why you should adopt it.

 With all this talk about the performance gap between design and building operation, we mustn’t lose sight of the fact that the act of procuring a building and constructing it is a team enterprise. No-one goes into the process with the intention of doing a bad job.  Events, like many things in life, can conspire against it. What Soft Landings tries to do is provide toeholds for everyone involved to do a better job in the face of budgetary, time and skills pressures.  How to Procure Soft Landings – guidance for clients, consultants and contractors provides a whole load more toeholds for everyone.

 BSRIA BG45/2013 How to Procure Soft Landings – guidance for clients, consultants and contractors is available from BSRIA bookshop.

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