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27 March 2013

Heat, risk, business, politics and sustainability

heating pipesI spent a remarkable amount of time yesterday talking about district heating and combined heat and power (CHP) - with students in the morning and the Council in the afternoon (with my political hat on).

This is one issue that I am very passionate about but very frustrated about. Why on earth do we in the UK burn fossil fuels to make electricity but then chuck away the majority of the thermal energy produced - and then burn more gas to heat buildings? It is madness - and the fact that many of our European cousins do it as a matter of course suggest that it is a attitude problem rather than being a technical or economic one.

A number of times in my career I have tried to push such heating schemes but I have consistently come up against people in positions of power who pay a bit of lip service to the idea and then skilfully back heel the ball into the long grass. I have seen others suffer the same fate, so it's not just my lack of persuasion skills.

The one new UK system which bucks the trend is in Birmingham. The owner, Utilicom, asked the Council to sign up to a long term electricity and heat contract pegged below market rates. That was it.

Utilicom de-risked and incentivised the project for the local authority (traditionally risk averse) and gave itself the financial confidence to get on with it, installing the distribution pipes and signing up customers. Everybody seems very happy about it and carbon emissions fall - a nice example of what Umair Haque calls 'thick value', economic value with net social and environmental benefits.

Coincidentally, DECC published a raft of analysis on district heating yesterday. This confirms that, as in the Birmingham example, the private sector sees less risk in district heating than the public sector. This throws the traditional green shibboleth of "business = bad" on its head. Change means risk and risk simply isn't rewarded in the public sector the way it is in business, so projects wither on the vine.

I am one of a growing number of people who believe that only business can embrace that risk and deliver sustainability for us. The state's most powerful contribution in many situations is to incentivise 'good' behaviour, penalise 'bad' behaviour and let the market deliver it in the most efficient way. That will be heresy for many, but it is about time we gave up on politics and embraced pragmatism.


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30 March 2012

Are we stuck in an oil price doom loop?

I'm reading The Third Industrial Revolution by Jeremy Rifkin - I'll post a review here in the next few weeks - but in the first section he makes a persuasive argument that everytime the global economy tries to rally, the demand for oil pushes its price up, smothering the green shoots.

The graph below shows Brent and West Texas Intermediate oil prices. You can see how they shot up to a peak in 2008 before crashing as the global financial markets went into meltdown. But the prices have rallied again staying above the $100 mark which seemed so impossible pre 2008. This has lead to periodic warnings from the International Energy Agency amongst others that we will never get out of the mire if prices are that high. The big question is: how much is oil price a symptom and how much is it a cause of financial woes? This is rarely part of the current political discourse in the UK which has recently been focussing on tax on snacks. Are we hiding from the truth and squandering opportunities to break out of this loop?

The loop poses a real challenge. Money is tight, oil prices are stifling growth, so where are we going to find the investment to break free? Clearly it would have been better to be investing in the boom years, but we are where we are. I think the answer can be seen in Southampton - where a distributed energy system has developed over 21 years, expanding organically - and in Woking - where an innovative energy services company financing system has allowed enormous investment in local energy generation - and more recently in Birmingham.

These example show it can be done and for the time being we might just have to start small and grow. But we could have lots of entrepreneurs and forward looking companies initiating lots of these small projects. Innovation is key - not just in technology, but in finance and, dare I say it, public/private partnerships. But more than anything else, we're going to have to face up to the fact we have a problem.

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8 May 2009

A new start for district heating?

According to the ENDS report, the Department for Energy and Climate Change (DECC) has commissioned a report on district heating in the UK, which accounts for just 2% of heat demand. It recommends the government intervene as district heating is “the preferred option for achieving carbon reduction in built up areas”. If a scheme was powered by waste heat from a power station, it would save carbon dioxide at a cost of £50 per tonne. This compares to over £150/t for solar thermal units and over £500/t for ground source heat pumps.

This is music to my ears. If you've been reading this blog for long you'll know it's a hobby horse of mine.

In this country we simply let two thirds of the fossil fuel energy we put into our electricity generation system fly up into the sky (or out into the sea). So much of this could be used to heat homes, public buildings, offices and factories at zero additional carbon and there is loads of it. 60% of Denmark's heat load is delivered through district heating.

We did a project in 2007 mapping potential heat users around a proposed power station in the North of England and found a good network of public buildings around which to base a commercially viable system. There are a number of CHP based district heating schemes like the establish one in Southampton and the new one in Birmingham. So there are green shoots in this area and Government investment would be very welcome.

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12 February 2009

District Heating in Brum

I spent yesterday in Birmingham looking at the Utilicom District Heating Scheme which is growing fast organically like their Southampton example. The initial scheme for Broad Street proved the principle, another cluster is under development with a hospital and Aston University and they are now planning to build a network around every rebuilt school in the city. The schemes are gas CHP with biomass being added soon.

The generic lessons you can take from this example to apply to any large scale environmental project are:

1. A reinforcement of the "evolution, not revolution" principle – grandiose schemes will usually collapse under their own weight. Start small and stable and grow.

2. Build a flexible business model – Utilicom sell heat, coolth and electricity, but each client gets what they need – some get all three, others get just one etc.

3. If you want to work with a Local Authority, take as much risk out of the equation as you can (Utilicom take 100% of the risk in this case). No matter how good your scheme is, gambling with tax payers’ money is not in the Local Authority psyche.

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17 September 2008

Hot & Cold in Southampton

Yesterday morning I visited the Southampton District Energy Scheme. It supplies not only heat (some of which comes from a geothermal source) but also cooling and electricity (through trigeneration combined heat & power). And the headline stats are impressive:

- over 40 customers

- 12 000 tonnes CO2 per year avoided

- reduced costs for clients

But what really interested me is how the scheme has evolved over the last 21 years from humble beginnings - just the Civic Centre to begin with (with geothermal only) and then spreading out across the city centre to other large users and adding CHP units as and when necessary.

There is a raft of evidence that this 'evolution, not revolution' approach for large distributed sustainability projects is the best way forward by a country mile, but yet again and again proposals come forward that try to solve all problems at once, but only if about 20 partners sign up and a huge wodge of public money is chucked in the pot. The evolutionary approach has made the Southampton scheme robust, effective and self financing - just like the famous energy scheme developed by Woking Council. Grandiose schemes which require a colossal injection of public funds more than often don't get off the drawing board and if they do, usually collapse under their own weight.

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4 February 2008

What is Heat?

An interesting juxtaposition of headlines on edie last week:

On Thursday: Academic blasts Government's green construction rules

On Friday: Government wants tips on 'renewable' heating

Maybe Jo Williams, the academic in question, had an extraordinarily fast response to her 'blast'! Joking aside, if you do want to contribute to the Government's heat query you can at the BERR website here. I may just point out that the total heating demand is roughly the same as the amount of waste heat from electricity generation (although unfortunately the UK's population isn't concentrated around Drax, Ferrybridge etc).

Fortunately you don't have to answer the rather tricky question at the top of the BERR webpage: "What is Heat?". Answers on the back of a postcard/in the comments, please - the winner will be the wittiest, not the most pedantic.

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5 December 2007

Waste heat "will be zero carbon"

Another positive from the Local Government Association Climate Change conference. I asked the Audit Commission's carbon gurus about the use of heat from electricity generation and was told that it is almost certainly to be counted as zero carbon against Local Authority targets. In other words the carbon will be counted 100% against the electricity user rather than divvied up between the two.

This will provide a huge incentive for councils to use waste heat energy in social housing and municipal buildings when the new Comprehensive Area Assessment (CAA) reporting and the Carbon Reduction Commitment hit in 2009 and 2010 respectively. The CAA will also measure emissions from non-social housing and commercial properties.

Maybe we will see district heating rise again, rather than squandering this easy source of energy.

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3 December 2007

Why don't we do district heating in the UK?

I was giving a presentation on Sustainable Construction on Friday to a group of Local Authority energy managers. I mentioned Kalundborg in Denmark where the entire town is heated using 'waste' heat from the local coal fired power station. From the conversation afterwards it turned out that many towns in the North East of England used to have district heating, but that most had be ripped out, not because of cost or performance, but because people just preferred to have their own central heating system. This is a real shame as the heat lost from our electricity generation almost exactly matches the heat demand from domestic homes, which in turn is responsible for a whopping 28% of the country's carbon footprint.

This prejudice seems to be continuing. I've just been commissioned to do a scoping study for using waste heat, but the client has specified that I exclude domestic developments because they've drawn a complete blank so far. Only in Southampton does a district heating system using a combination of geothermal energy and combined heat and power seem to have taken off in recent years.

I can only assume the prejudice is based on security of supply. But, hold on, in my house there's only one gas connection and combi boiler - if that goes down we're cold. In district heating systems there's a back-up boiler, and if that fails, we'd no worse off than with the gas. Plus hot water arriving in our house would always be safer than gas. Given the opportunity, I'd sign up in a flash!

So why don't we do district heating?

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