Energy Efficient Scotland: the future of low carbon heat for off gas buildings - call for evidence

Low Carbon Heat Technologies

There are a range of different heat technologies which could be deployed as replacements for high carbon heating systems. The right technology will depend on the property's characteristics, its location and the features of the available technologies. We want to build the evidence base around these technologies and the extent to which innovation and cost reduction are possible. We are also interested in innovative new technologies that may have a role to play in the sector. The following section outlines the key low carbon heat technologies available, the scope for innovation and the potential constraints on the deployment of low carbon heat. We are interested in evidence on the cost of installation and operation for the variety of low carbon heat technologies.

We are also keen to receive evidence on the life cycle of different devices, the relative cost of replacing existing systems and components within existing systems, and running costs. Table 2 outlines average self-reported costs of domestic installations made under the RHI, while Table 3 covers non-domestic installations^[28].

The remainder of this section outlines each of the main low carbon heat technologies, (although is not a comprehensive list), their applicability and the scope for innovation to drive down overall costs.

Table 2: Average self-reported costs of domestic RHI installations (Apr/14 – Dec/17) reported by BEIS

Technology	Installation capacity	Median cost	Median cost per KW
Air Source Heat Pump	8 KW	£7,500	£970
	12-13 KW	£10,850	£865
	16 KW	£12,430	£780
Ground Source Heat Pumps	8 KW	£14,860	£1,860
	12-13 KW	£18,330	£1,475
	16 KW	£24,060	£1,500
Biomass boilers	10-20 KW	£9,713	£694
	20-30 KW	£14,121	£583
	30-45 KW	£19,759	£534
Solar Thermal	3-5 KW	£4,983	£1,277

Table 3: Self-reported costs of non-domestic RHI installations (Nov/11 – Mar/17) reported by BEIS

Technology	Installation capacity	Median cost of installation	Median cost per kW
Air Source Heat Pumps	All sizes	£9,300	£790
Water or Ground Source Heat Pumps	<100 kW	£31,510	£1,880
Solid Biomass Boiler	< 200 kW	£60,000	£580
Solid Biomass Boiler	200 - 1000 kW	£187,000	£380
Solar Thermal	< 200 kW	£14,000	£1,420

Source: BEIS 'Non-Domestic and Domestic Renewable Heat Incentive (RHI) monthly deployment data: August 2018'

Electric Heating Solutions

The falling carbon intensity of electricity generated in Scotland means that the electrification of heat has the potential to play a key role in the decarbonisation of heat in buildings.

Electric Heat Pumps

Analysis by the CCC suggests that heat pumps are a key technology for decarbonising off gas properties^[29]. Other independent commentators support this view but, like the CCC, note the limitations presented by the level of energy efficiency required to match heat demand, and the pressure that the electrification of heat would put on electricity generation and distribution infrastructure^{[30] [31]}.

Heat pumps tend to provide heat at lower temperatures than conventional fossil fuel boiler systems. As such, they operate optimally in buildings that are energy efficient and that have been adapted to provide low temperature heat e.g. larger radiators or underfloor heating. They also require a change in heating patterns, needing to be on for longer in order to achieve comfortable indoor temperatures. Heat pumps are often used alongside an additional electric heat source in order to provide hot water.

Higher temperature heat pump systems may be more suited to being used with less energy efficient properties or with existing heat distribution systems. However, higher temperature systems can be more expensive to operate and have a higher upfront cost compared to low temperature equivalents.^{[32] [33]} Heat pumps can be used as the sole heat provision system to a property, alongside thermal storage, or as part of the heat source for a district heating system.

Air Source Heat Pumps are approximately equivalent in size to other domestic appliances such as a fridge or washing machine and are attached to an external wall. As such they are often the most deployable type of heat pumps. The installation of Ground Source and Water Source Heat Pumps is restricted by the need to install underground pipes or have access to a nearby body of water, respectively.

Heat pump systems have a higher upfront installation cost compared to existing high carbon heating systems, but over their lifetime may have lower maintenance costs. ^{[34] [35] [36]} Running costs for heat pumps, can be competitive with existing high carbon systems, where appropriately installed. They are also less likely to be subject to price fluctuations than heating systems that use feed stocks like oil or biomass.

Whilst not commonly used at present in Scotland, heat pumps are established technologies with developed supply chains in other countries, potentially enabling their more immediate deployment to decarbonise off gas heating systems.

Questions

Please specify whether your evidence relates to domestic or non-domestic systems.

9. Regarding ground source, air source and water source heat pumps, what evidence can you provide on:

a) the cost of the technology, including installation, maintenance and running costs and alignment with costs related in the RHI data in tables 2 and 3

b) customer satisfaction with the system

c) lifecycle and overall efficiency of the technology

10. What factors might inhibit uptake of heat pumps?

11. What do you propose as solutions to overcome any barriers to uptake?

12. What innovations could reduce the operational cost of heat pumps, i.e. higher performing heat pumps, new refrigerants, 'time-of-use' tariffs coupled with thermal storage, and 'heat-as-a-service' business models?

Hybrid Heat Pumps

A recent analysis from the CCC suggests that hybrid heat pump (HHP) systems may have an important role to play for properties currently on and off the gas grid.^[37] Hybrid systems combine a heat pump alongside an existing fossil fuel boiler, with the heat pump covering the baseload demand and the boiler used during peak demand.

Hybrid systems allow for a lower capacity of heat pump, relative to a full heat pump solution, helping to potentially keep upfront costs down. They can also help improve security of supply, by providing backup heat during cold periods, thus helping shift the extra demand out of peak hours to balance electricity networks, as well as allowing consumers to retain a more familiar system alongside a less familiar technology.^[38] Hybrid heat pumps could be used in off gas buildings with oil or LPG boilers, and potentially combined with bio-fuel solutions. They may also have a role to play in less thermally efficient buildings where a full electric heating solution is infeasible.

Questions

Please specify whether your evidence relates to domestic or non-domestic systems.

13. Regarding hybrid heat pumps, what evidence can you provide on:

a) the cost of the technology, including installation, maintenance and running costs

b) customer satisfaction with the system

c) lifecycle and overall efficiency of the technology

d) the ability of hybrid heat pumps to reduce peak demand for electricity whilst also reducing carbon emissions

14. What factors might inhibit uptake of hybrid heat pumps?

15. What do you propose as solutions to overcome any barriers to uptake?

16. Can you share any evidence on the types of buildings where hybrid heat pumps may best be deployed?

Storage Heaters

Electric storage heaters conventionally involve the use of internal ceramic bricks within a casing, that are used to store (typically at night when overall electricity demand is lower) and then release heat (typically during the day). They are associated with Economy 10, Economy 7 and dynamically tele-switched (DTS), meters and tariffs and are currently thought to be the most commonly used electric heating technology in the UK^{[39] [40]}.

Storage heaters act to partly decouple energy demand from energy supply and provide an opportunity to manage utilisation of energy as part of a 'smart' electricity system. They can act as a means of lessening demand at peak times. For example, on Shetland^[41] and Mull^[42] innovation projects have sought to demonstrate the use of modern smart electrical storage heaters. These systems can be operated to release constraints on the electricity networks, increase the level of renewable generation, and link local heat demand to local electricity generation.

More efficient and controllable storage heaters are now available, which can be operated manually, or automatically with a thermostat, and can utilise a fan for heat propagation or a direct heat convection unit to provide additional heat when required.

Conventional electric storage heaters are less expensive to purchase and install than heat pumps and comparable in price to high carbon systems such as oil and LPG^[43]. Like other forms of electric heat, the widespread adoption of storage heaters could put a substantial strain on the electricity grid if their implementation is not managed appropriately^[44]. As they are less efficient at converting electricity to heat than heat pumps they can be more expensive to operate. As such, they may be more suited to smaller properties with lower energy demands.

Questions

Please specify whether your evidence relates to domestic or non-domestic systems.

17. Regarding electric storage heating, what evidence can you provide on:

a) the cost of the technology, including installation, maintenance and running costs

b) customer satisfaction with the system?

c) lifecycle and overall efficiency of the technology

18. What factors might inhibit uptake of electric storage heating?

19. What do you propose as solutions to overcome any barriers to uptake?

Other electric heating sources and storage (battery and thermal storage)

There are multiple other means of using electricity to provide both space and water heating. Direct or resistive heaters, electric panel heaters and infrared heaters can all be used to provide space heating but ordinarily use relatively high cost on-peak electricity and thus can be expensive to run if they are the sole heat source. These units are often used as secondary, supplementary heat sources or in areas of a property where heat is only occasionally required. For water heating, electric immersion water heaters using a hot water tank, and electric showering units are both common.

There are a variety of energy storage technologies, beyond storage heaters, that are relevant to future low carbon heat systems. Heat pumps systems also normally involve some form of energy storage, the most fundamental of which is a hot water storage tank. A buffer tank, which essentially increases the volume of the heat distribution system and is capable of improving overall efficiency, is also a useful add-on to a heat pump system.

All electric heating systems can operate alongside electric battery storage. Battery storage on a household scale can be used to store the excess electricity generated by intermittent renewable energy devices such as solar PV and wind energy. Phase-change devices are also capable of storing the excess electricity from renewable devices and returning it as heat when required.

Storage used alongside electric heating is useful as a means of reducing the peak demand and as a result lessening the requirement for electricity generation and electricity network investment.

Questions

20. Can you provide any evidence of electric heating technologies not already described that should be considered as potential future heating solution?

21. Can you comment on the comparative installation, operating and maintenance costs of these technologies in relation to other electric heating sources? As well as their lifetime and efficiency?

22. Can you provide evidence on the performance of integrated systems such as heat pumps used in conjunction with battery storage and solar PV?

23. How could locally integrated systems, such as those mentioned above, help to overcome electrical grid constraints and what market mechanisms could be used to promote on site generation and use for low carbon heat?

Biomass and bio-liquid solutions

Solid biomass currently accounts for more than 80% of renewable heat capacity in Scotland. It has been widely supported under the RHI.^[45] Like incumbent heating systems biomass can be used to provide high temperature heat via conventional internal heat distribution systems. There are concerns, however, around the long term sustainability of domestic biomass feed stocks, and certain geographic restrictions on where they should be deployed. For example^{[46] [47]} individual standalone biomass boilers should only be installed in remote and rural areas where air quality issues are less of a concern, however biomass CHP can be used in urban areas where suitable controls are in place.

Unlike solid biomass, the market and supply chains for bio-liquid heating fuels are much less developed. However, they potentially offer an additional energy source that can support emission reduction in off gas buildings, particularly in hard-to-treat properties that have a poor energy performance.

Like biomass systems, bio-liquid systems can provide high temperature heat and when used as a 'drop-in' fuel or like-for-like replacement, are compatible with incumbent internal heat distribution systems to some extent. They could potentially be used as a transitionary fuel as they can be blended with high-carbon heating oil or LPG, especially for properties which have limited choices for heat. In order to meet our long term decarbonisation targets, however, it is likely that systems would be required to run on 100% bio-liquids.

There is currently limited domestic production of bio-liquids, which could constrain a rapid expansion in the scale of deployment. They are currently used in transport and have the potential to aid the decarbonisation of the aviation and shipping sectors. Like solid biomass, the use of bio-liquids would need a sustainable long-term, domestic supply infrastructure and to be consistent with air quality objectives. Likewise, running costs would be a key consideration so as not to push people into fuel poverty.

Questions

Please specify whether your evidence relates to domestic or non-domestic systems.

24. Regarding Bioenergy technologies, what evidence can you provide on:

a) the cost of the technology, including installation, maintenance, fuel and other running costs, and the extent to which costs of biomass boilers are in line with those in tables 2 and 3 above

b) customer satisfaction with the system

c) lifecycle and overall efficiency of the technology

d) type of feedstock used, and whether this is grown in Scotland or imported?

25. What factors might inhibit uptake of bioenergy technology?

26. What do you propose as solutions to overcome any barriers to uptake?

27. What evidence can you provide to show whether there is a strong potential for growth of the biogas supply?

28. Can you provide evidence on the relative cost of using Scottish produced bioenergy feedstocks compared with conventional fossil fuels?

29. Can you provide any evidence on the potential to supply bioliquid fuels sustainably at reasonable cost? With reference to specific fuels such as bio- LPG and different types of bio-diesel.

Heat Networks

A heat network is a distribution system of insulated pipes that takes heat from a central source to multiple properties.^[48] Heat networks can use a wide range of heat sources, including those recovered from industry and urban infrastructure, sewers, canals and rivers, or waste plants as well as biofuels, or CHP. Many of the heat networks currently operating in Scotland use mains-gas, although it is understood that over time heat networks can be retrofitted to use lower carbon sources of heat.

Heat networks are ordinarily located in dense urban areas. Viable heat networks have, however, been developed at smaller scales, including in remote and rural areas, and remain a viable option where alternative solutions are technically or financially prohibitive, or where there are co-benefits from implementation, such as providing high-temperature heat for industry. In fact heat networks in Scotland tend to be smaller in scale and serve groups of buildings that are under single ownership, such as campuses or blocks of flats owned by a university, a local authority or a housing association.

Some building types are more easily retrofitted to district heating than others and we are interested in evidence on the most appropriate circumstances and building typologies to facilitate the development of heat networks – both retrofit and new build.

Questions

Please specify whether your evidence relates to domestic or non-domestic systems.

30. Regarding heat networks, what evidence can you provide on:

a) the cost of the technology, including installation, maintenance, fuel and other running costs

b) customer satisfaction with the system

c) lifecycle and overall efficiency of the technology

31. What factors might inhibit uptake of the installation of heat networks?

32. What could be done to further encourage the development of heat networks?

33. Where and in which circumstances are heat networks the most appropriate low carbon solution in areas not using mains gas?

34. What examples can be provided to show how readily heat networks can be moved to renewables – especially in those buildings with a high peak heat load?

Gas Grid Extension: the roles of hydrogen and biogas as low carbon alternatives to natural gas

Natural gas is lower carbon than heating oil and LPG and, in some circumstances expanding the gas grid may be an option to reduce emissions. Gas heating systems are also relatively cheaper to run and gas connections can help to tackle fuel poverty as well as providing a more secure energy supply.

Ultimately, in order to meet emission reduction targets natural gas will have to be replaced by low carbon alternatives, for example biomethane or the grid repurposed to carry hydrogen. We do not, however, currently have sufficient evidence to understand whether such a solution for hydrogen is feasible and safe, and so there is a risk that gas grid extensions could result in stranded assets in the future.

Industrial users of energy can be a catalyst for extending gas networks to meet their needs for fuel and this can enable homes or non-domestic buildings to benefit from connection into the extended infrastructure. A number of communities in Speyside have recently benefitted via an eight-mile pipeline extension led by a number of distilleries in the area.

Recent evidence from the Committee on Climate Change has suggested that whilst there is likely to be some future for the delivery of low carbon gas through gas mains, it is not obvious that the whole scale conversion of the gas network to hydrogen represents the most effective way to decarbonise heat^[49].

Today there are 15 biomethane production sites connected to the gas distribution network in Scotland, and there are trial and demonstration projects underway in a number of locations across Britain to learn about the safety, and viability of delivering hydrogen through the networks. For example, in Scotland, SGN plans to demonstrate a network that delivers 100% hydrogen in the next few years^[50] whilst at Keele University in England a trial is underway to identify the level at which hydrogen can be blended with natural gas.^[51]

Ultimately, investment decisions for general development of the gas network are made by gas network operators within the regulatory environment set out by Ofgem, while specific extensions or "infill"^[52] projects (where the gas network is extended to a new area) are a matter for the gas network company and new connecting customers. Any investment decisions made by the gas network companies will need to consider broader policy developments for decarbonising heat in Scotland. The UK Government will take ultimate decisions on future decarbonisation of the gas grid within its reserved competence.

More detailed information on the role of the gas network in supporting a low carbon energy transition is given in our Vision for Scotland's electricity and gas networks^[53]. This highlights the need to incrementally decarbonise the gas that flows through the networks during the 2020s, through blending low carbon gasses, including hydrogen, with natural gas. It also challenges the industry to build the evidence base around the technical feasibility and costs associated with repurposing the gas networks to carry 100% hydrogen in future.

Questions

35. What is your view on the continued extension of gas networks before low carbon alternatives to natural gas (e.g. hydrogen) are proven?

36. How should wider decarbonisation demands, including for industrial processes, be factored in when considering gas grid extension?

37. What evidence can you provide on the economic and technical viability of the existing gas grid if it was maintained and operated with low gas flows?

Innovation in low carbon heat technologies

The market for low carbon energy is continuously evolving, and evidence suggests that the cost of new technologies can drastically fall, even over a short period of time. For example, the cost of photovoltaic panels in the UK fell by a cumulative 15% to 20% in real terms over the 3 years to 2016/17. This substantial drop has been attributed to technological innovation and economies of scale driven by an increase in demand.^[54]

Our Low Carbon Infrastructure Transition Programme stimulates commercial interest and investment in the low carbon sector. It helps projects to develop investment-grade business cases, and to secure public and private capital finance. To date it has accelerated the deployment of over 50 low carbon projects by providing £48 million of financial support. Building on this success we have established a Low Carbon Innovation Fund, investing a further £60 million to deliver innovative low carbon energy infrastructure.

We are keen to understand what further opportunities exist for innovation in low carbon heat technologies, where support is needed to bring technologies to market and the potential for a reduction in cost of low carbon heat technologies.

Questions

38. What evidence can you provide on the further developments needed for future market readiness and deployment of the low carbon technologies covered above?

39. What evidence can you provide to show potential economies of scale and unit cost reductions that could be achieved through increases in annual levels of deployment of the low carbon heat technologies covered in this call for evidence?