Welcome to Better Energy Blog, the leading conversation on how the UK should deliver a consumer focused, secure, low carbon and affordable energy system.
We learned from the Telegraph this week that 10 wind farms have each been paid ‘constraint payments’ of more than £3 million over the past three years to shut down their turbines, with one alone receiving £11 million.
The reason for these payments is that generation and demand on an electricity network must be balanced from second to second. When demand is not sufficient to take up this generation, National Grid has to find a cost-effective way to reduce the electricity generated. They do this through constraint payments. As variable renewable generation such as wind and solar penetration increases from 18%, the need for these capacity services grows.
In order for National Grid to successfully persuade generators to shut off, it needs to offer a price that is greater than the price those generators would have gotten for selling their electricity in the market. Renewable generators, like wind turbines, also receive a subsidy for every megawatt hour they generate, so National Grid has to pay more.
In future, the aim is to store this wind energy using batteries for when we need it. But battery technology, while progressing, is still not ready for cost-effective storage.
But there is another way to better balance intermittent renewables that is already being successfully used today, across the North Sea in Denmark.
Denmark has seen a major expansion in wind electrical generation capacity to already more than 30% of capacity. But thanks to with 60% of household heating provided by heat networks, with large thermal stores, Denmark is able to manage this variable demand in a more cost effective way.
Thermal stores are a large version of a household hot water tank, and heat is very cheap to store. Using thermal stores not only reduces the cost of balancing the electricity system, and therefore the cost to electricity consumers’ bills. It reduces consumers’ heating bills too.
When the electricity grid has too much power, instead of using constraint payments, heat networks can turn on electric boilers or heat pumps and store the heat for when customers need it. So, we spend less money on constraint payments and have fewer charges on our electricity bills. And because the heat networks are buying electricity when it’s at its cheapest, thanks to the excess supply, the heat network customers can lower the cost of their heating.
When the electricity grid does not have enough power, a heat network can use highly-efficient combined heat and power to generate high-value electricity and store the heat for when they need it. Once again, the value can be used to lower heat network customers’ heating bills.
And this integrated energy opportunity does not just apply to heat networks. Electric boilers and heat pumps in homes can provide the same service when there is excess demand, storing the excess heat in hot water tanks. An innovative project on the Sheltand Islands run by SSE is doing this already. Household-sized combined heat and power can help to generate electricity when the grid needs it and store heat as well.
These are great examples of how a system approach to how we deliver energy can help to reduce costs for consumers. We just need start thinking about our heat and electricity as cohesive whole, instead of as two separate silos.
Above, we see how in Denmark, electric boilers (shown here in orange) turn on when the electricity spot price falls.
Two weeks ago, the Government reported progress on a part of its flagship Green Deal scheme - the catchily entitled Green Deal Home Improvement Fund (or GDHIF for short). The Government reported that of the total £120m budget, £43m had been spent in the first six weeks and over £50m worth of vouchers had been applied for[i]. The government said it would pay attention to budget uptake and continue to report. Just one week later, the Government announced that the GDHIF was closed with immediate effect. The reason - the entire remainder of the budget, some £60 million, had been spent in just two days[ii]. That is an astonishing 29 fold increase in uptake.
So what happened? It seems that a large number of applications for funds were made speculatively by companies on behalf of unknowing householders. All a Green Deal installer needs is their reference number and an Energy Performance Certificate number which can be obtained from the Landmark register. There is no need for the homeowner's approval.
It looks like companies have speculative applications so that they can approach a homeowner and say that they already have a grant of £6,000 to help them improve their home. Of course, the homeowner can refuse and so there is a real likelihood that all the money that has been claimed will not get spent.
The criticism that has been levelled at the government for creating a stopstart policy preventing the establishment of a stable, sustainable industry may be vey misplaced. The trigger of the stop-start seems to be that some companies figured out a clever way to block book the budget for themselves. Whilst they may feel very pleased with their ingenuity these companies are fuelling a growing problem: The erosion of trust between government and industry.
When the intent of a policy gets abused as seems to be the case with the GDHIF, the inevitable result is that Government will become more wary of industry and seek to design policy with ever increasing safeguards. Those safeguards translate into administrative bureaucracy and cost for industry, Government and taxpayers, with more checks and more evidence. The result? Less investment is made for greater cost.
Of course, those that took advantage of the loophole may say 'we have done nothing wrong, we have acted within the law'. But, it feels rather similar to the companies who say they pay the legally required amount of tax. Those who seek to squeeze the most out of policy risk are doing their own industry a disservice. It is all too easy to point the finger of blame at government but as we increasingly rely on policy solutions to correct market failures, especially for energy efficiency investments, perhaps on this occasion the industry needs to look at itself.
In the news this week Boris Johnson, Mayor of London warned that population growth in London could cause blackouts in the not too distant future. His solution? A £210m investment in substations.
The Mayor’s new London Infrastructure Plan outlined that unprecedented growth in certain areas of London had pushed substations to their capacity and that there is now an urgent need to upgrade so that potential investment can be unlocked for these development areas.
It is clear that this investment is needed, but is there more that we can be doing to keep the cost of the transformation of our energy system to a minimum?
In a live interview with BBC London Radio’s Breakfast Show, CHPA Director Tim Rotheray explains;
“When people talk about energy they often think about electricity but, electricity is only part of the energy we use. Half of our energy demand is heat, we need to think about the energy we use holistically so we can find the most cost effective way of meeting consumers’ needs.”
He suggests that by creating more user participation in the system we can reduce the amount that needs to be invested in infrastructure and have a more secure energy supply.
Rotheray highlighted the recent case study from Royal Festival Hall who engaged with National Grid in an experiment to see if at times of peak system demand the Hall could control its own demand to reduce stress on the system. When needed the Hall turned off its air conditioning units, with very limit impact on the ambient temperature or performances. The trial was deemed a success.
Boris plans for 25% of London’s energy needs to be produced locally by 2025, what we need to consider now is how heat can form part of the solution to the electricity capacity crunch.
One way in which heat production can support electricity capacity is through the use of combined heat and power. The supply can be tailored to the consumer, it does not require billions of pounds of investment upfront, unlike the cost of building new nuclear and gas fired power stations, and it can support the grid in times of stress by allowing companies to switch from taking electricity from the grid, to using CHP, or by switching on to supply extra capacity to the grid.
There are intelligent ways that we can tackle the capacity crunch that could be far cheaper and put more power into the hands of the consumer; substations are not the only option.
Guest blogger Ian Hopkins, Sales and Marketing Director for ENER-G Combined Power tells us why CHP remains on the front line as a way to boost environmental performance scores under BREEAM despite 'major change' to the energy category of the assessment.
A revised environmental scorecard for buildings still values CHP, despite lower weighting for energy efficiency.
TheBuilding Research Establishment Environmental Assessment Method(BREEAM) is a means devised by consultancy, the Building Research Establishment (BRE), to score the performance of non-domestic buildings under a range of environmental and sustainability criteria.
It covers nine areas, including building management, water use, transport issues and - crucially for combined heat and power considerations - energy and carbon emissions. Its aim is to go beyond regulatory obligations and keep in step with advances in technology and best practice.
BREEAM is highly rated by developers, designers and building managers as a way to demonstrate the environmental credentials of their buildings.
Its scoring system is “transparent, flexible, easy to understand and supported by evidence-based science and research,” according to its deviser BRE. BREEAM has been reviewed for a second time this year - the first time since 2008. Inevitably, there are significant changes to energy assessment.
Fundamentally the new scoring system has changed little. Credits are gained by outstripping a baseline building standard. Each section has an environmental weighting. The total of the weighted scores is translated into one of five ratings from “pass” to “outstanding.”
Change in climate
One area of “major change", according to BRE, is in the energy category.
The 2014 revision has ended the use of a single energy performance baseline throughout the UK. BREEAM will now use the national building regulations for Scotland, Wales and Northern Ireland to set a baseline for each of the devolved administrations. (Note - Previously, under BREEAM 2011 the Part L 2010 notional building was used as the baseline for all buildings assessed under BREEAM, regardless of their UK country location).
Another change is the end of a requirement - under the former low or zero carbon (LZC) technologies section (Ene04) - that some of the building’s energy was from renewable sources.
That obligation is now addressed in recently beefed up building regulations. Following on from those changes are:
● The weighting for energy under BREEAM has been reduced from 19% to 15%.
● The number of credits available under the reduction of energy use and carbon emission section (Ene01) has been cut from 15 to 12.
● LZC credit has been replaced with a Low Carbon Design credit that favours energy conservation from the building’s fabric. But there remains credit for an LZC feasibility study for a proposed building and implementation of its findings. In further detail, the section Ene04- Low Carbon Design has a total of 3 credits. And the section is split into two parts – 1) Passive Design (2 Credits) 2) Low or Zero Carbon Technologies (1 Credit). LZC percentage carbon reduction targets (which were part of BREEAM-2011- Ene-04 LZC issue) have now been removed from the new version.
● The weighting for Pollution remains unchanged at 10% and NOx emissions were reviewed, but no changes in NOx levels or credits were made.
Although each credit under ENE01 is now worth less, the criteria for acquiring them are basically unchanged, so achieving excellent is no more or less difficult.
For CHP compliance with the Low Carbon Design criteria it is necessary to consider:
● Annual energy generated from CHP
● Life cycle cost of the CHP including payback
● Local planning criteria, including land use and noise
● Feasibility of exporting heat and electricity
● Available grants
● All appropriate LZC technologies and reasons for excluding any of them
You should also consider possibilities for:
● Connecting the proposed building to an existing community CHP system or source of waste heat or power.
● Specifying a CHP system or source of heat or power waste, with the potential to export excess heat or power via a local community energy scheme.
Ian Hopkins is the Sales and Marketing Director at ENER-G Combined Power. For more useful guidance, check out ENER-G Combined Power’s free e-magazine “Regenerate” is out. Click here to read it.
- The oldest district heating scheme dates back to the 1300s when a village in France set up a network of wooden pipes to distribute warm water from a geothermal source. 700 years later and the UK is just catching up with plans for the UK's first geothermal district heating scheme announced this year.
- The more modern version of district heating was invented by Birdsill Holly in 1877. Holly designed a system that used a central boiler to generate steam that was then pumped to homes and commercial properties connected together by a pipe network running along several main streets in the US town of Lockport.
- Here in the UK, district heating became a popular choice for use in high rise buildings and saw a boom during the 60s and 70s.
- Now, the UK has around 2,000 heat networks that connected around 210,000 homes and 1,700 businesses – a little under 2% of all properties in the UK.
- With support from the Government, the technology is set to make a comeback, with over 50 local authorities and counting looking into the feasibility of heat networks in their area.
- Stats from DECC show that there is a significant opportunity for district heating in the UK, with potential as big as 20% by 2030 and 40% by 2050.