Electricity network constraints and the 2024 New Build Heat Standard: research

A1 Stakeholder engagement findings

This section presents the notes that were gathered from the stakeholders either through an interview or from survey responses, which aimed to help understand the processes, decisions and costs involved in establishing energy infrastructure and connections for new domestic developments, and the impact of switching to low carbon and zero emissions heating technologies. The stakeholder engagement also aimed to collect information and data to inform the technical modelling task.

A1.1 Developers

Two interviews were carried out with developers; with Angus Housing Association and CALA Homes. CALA homes engaged further in the project, providing data and information about real case studies and insight. In addition, a survey was issued to a set of affordable housing developers, and five responses were received.

A1.1.1 Interview: Angus Housing Association

A1.1.1.1 The choice of heating technologies commonly used today

Gas combi boilers are the preferred technology, provided there is direct access to the gas network. Air source heat pumps are chosen for developments that are off the gas grid. This is due to the ease of use for tenants and efficiency. Angus do not install convection heaters, and in the case for retrofit, they would install gas boilers over resistive heaters. Other technologies that are considered are:

• Electric wet heating systems but are expensive to operate.
• Solar heating and wet systems were installed previously but have had issues with complexity.
• Ground source heat pumps are very expensive in capital, so need separate funding.
• District heating systems, which has not been installed to date and is under review.

Decision factors for the choice of heating technology is based on existing relationships with suppliers and cost / ease of use for tenants.

A1.1.1.2 The process for establishing energy infrastructure for new domestic developments

Angus may not be the lead developer within a development but may be part of a larger private development. Section 75 is a planning requirement to provide social housing as part of a private development. In these cases, housing associations may have some influence on the design of heating requirements, but this will be limited.

When they have been involved in decisions regarding energy infrastructure, Angus have preferred suppliers based on their post installation service.

A1.1.1.3 Main drivers for the cost of network connection for developments, and who pays for them

The main drivers for decisions about energy infrastructure is the running costs and ease of use for tenants. To date, gas central heating has been an easy decision, as the capital and running costs are lower.

Costs are recovered through rent, though this is kept as low as possible.

• Rent can be influenced by heating technology, scaled with the aim of keeping overall costs controlled i.e. if a heating technology is considered less efficient, then the rent is lower to compensate.
• However, there is no separate category for heat pumps; they are considered for the purposes of rent as electric heating, with higher operating costs than gas. Therefore, at the moment the rent cannot be increased for a home with a heat pump.
• The Energy Performance Certificate (EPC) rating of a home also has an impact on the rent; the standard rent rate is based on C, D or E ratings. If the house is rated at B or A, then the rent can increase to balance the lower operating costs. If less than E, then the rent is decreased.

The network infrastructure to support Electric Vehicle (EV) charging infrastructure is installed in new build houses and shared parking areas, but the cost of the charging equipment itself is currently too high to be included.

Installing solar panels is becoming common where needed to meet the energy efficiency requirements in the building regulations. There has been a choice between solar panels and ventilation systems, and Angus have found solar panels to be less problematic. The Housing Association want to give the income generated from solar panels to the tenant but have found this to be difficult to arrange. More recent and better technology for capturing readings will make this easier.

A1.1.1.4 Impact of zero emissions heating on connection process

The main impacts of zero emissions heating on connection process are as follows.

• Infrastructure: Angus is unsure of the ability of the network to be able to cope with a large increase in demand from heat pumps.
• Building envelopes: There is a drive to insulate buildings, and to achieve EPC ratings of B. To date, buildings are generally insulated to meet the building regulations. There might be a drive to go further, but there is also the drive to keep capital costs under control. There is a premium to pay to achieve a higher energy efficiency, but generally funding is insufficient to cover costs. There is the desire amongst developers to go further but quite often the additional costs dissuade housing associations going the extra mile.
• Tenant behaviour: Tenants are used to being reactive to heating requirements from being able to get instant bursts of heat from gas boilers. In comparison, heat pumps require proactive behaviour to preheat and maintain the home to a comfortable level, which requires a behavioural change.

A1.1.1.5 Innovative Products

Dundee City Council has engaged in a consultation for funding district heating systems. Angus Housing Association has considered a district heat system for a remote scheme. This only works with external funding and is complex.

Dundee City Council are looking into EV charging points, and Angus Housing Association looked into providing EV charge points in each house for a recent project but found the costs to be prohibitive. The infrastructure will be provided but not the charging points.

Bicycle storage for individual houses will be installed in the Dundee area.

A1.1.2 Interview: CALA Homes

A1.1.2.1 The choice of heating technologies commonly used today

Historically gas heating was the most common choice used by CALA Homes, but they now do a combination of solar panels plus gas and hybrid heat pumps to improve the environmental performance and to meet building regulations. CALA Homes are aware that they will need to move to full electrification of the heat network and are considering options including heat pumps and infrared heat mats.

The decision of the choice of heating is driven by:

• Meeting building regulations: Some thought is being considered in exceeding the minimum sustainability standards (Silver / Silver plus). Would like to consider meeting the highest standards but the costs are prohibitive
• Cost
• Practicalities of installing

Larger developers have more buying power and might be able to get lower cost deals with suppliers, but this is not the case for CALA Homes. CALA Homes is owned by Legal & General, who have made a commitment to reach zero carbon. This has resulted in additional drivers for CALA Homes to invest in low carbon and zero carbon solutions, beyond those mandated by regulations.

A1.1.2.2 The process for establishing energy infrastructure for new domestic developments

Generally, a developer would buy land, undertake initial planning, and pass information to the IDNO, including layout, dwelling arrangement and technologies to be installed. The IDNO would design the network, build and arrange connection.

The rise of low carbon technologies has resulted in a lack of understanding about how to deal with peak load and diversity assumptions, leading to conservative designs and excess costs. CALA Homes have been engaging with the DNOs (SSEN and SPEN in Scotland, and some interaction with English DNOs), and are developing a standardised approach across their areas to calculate appropriate diversity assumptions across developments. They have created a utility sheet for developments, which is then passed on to the IDNOs. This makes it easier for the IDNO to design the network using the assumptions provided by CALA Homes.

A1.1.2.3 Main drivers for the cost of network connection for developments, and who pays for them

Drivers for cost are:

• Size of connection: This is driven by the number and type of dwelling and technology selection
• Location: The presence of gas and/or local electricity network capacity will impact costs

A1.1.2.4 Impact of zero emissions heating on the connection process

Low carbon technologies have changed the connection process as there is a lack of understanding about how to deal with peak load and diversity assumptions, which leads to network operators taking conservative views on design, which leads to extra costs.

A1.1.2.5 Other points raised

Land is often bought years before homes are built, and large developments are built in phases over many more years. When land is bought, the business case built up around that decision can only be based on the regulations that are in force at the time. This needs to be taken into account when considering the implementation of new rules like the 2024 regulations. If these apply to existing or already planned projects, then it may have serious implications on the developers.

A1.1.2.6 Related projects

CALA Homes is undertaking a related study into the impact of different heating and low carbon technology choices on the energy infrastructure costs, focusing on three case study developments in Scotland.

A1.1.3 Affordable Homes survey response: Hillcrest Homes

A1.1.3.1 When you are developing housing, what heating technologies are generally installed today? What drives this decision?

At present the preference remains gas and more particularly individual gas boilers. If gas is unavailable, then dry electric heating is preferred. This decision is driven by operational cost and maintenance requirements. Gas remains the cheapest option for tenants to run and is easy to operate to control temperature for their living environment. In addition, in-house maintenance teams have the ability to repair and return gas boilers to service or replace electric heaters with minimum delay or impact on the tenant.

A1.1.3.2 Are the costs of energy network infrastructure and connections a significant factor in the design of the development as a whole? Are there any circumstances where they become more significant?

Hillcrest Homes have mixed views on this. They generate a budget for the development through rental income and this is put to the developer / contractor. They have a design brief but are influenced by what can be feasibly provided within the contract. As an organisation they are open to new technologies but only if they can demonstrate value for money to both the tenants and themselves. Circumstances where they become more significant is when gas services are not available, or they are involved as part of a larger development overall and an alternative proposal is put forward by the lead developer.

A1.1.3.3 How will these costs be impacted by the need for low carbon / zero emissions heating technologies such as heat pumps? Are there any wider impacts of switching to these technologies?

The biggest issue with switching to zero emissions and low carbon heating technologies is maintenance, accessibility to and ease of repair. They have looked at and installed several experimental and alternative technologies in the past but unfortunately not to any great success.

They foresee installation costs working within the confines of the development budget as an issue for low carbon / zero emissions heating, as well as availability of installers. In addition, a major factor in the installation of alternative technologies on their organisation was the education of their tenants on how to use them and operate them on a day to day basis. Unfortunately, most people are familiar with gas but not with alternative technologies so the education process can be a timely and expensive exercise.

A1.1.3.4 What data do you calculate or estimate for the design of heating solution for the properties?

Data collection and technical design is predominantly contractor led. Homes will meet the Scottish Governments greener standard and this is verified through average SAP calculations, ratings and average energy consumption savings.

A1.1.4 Affordable Homes survey response: Eildon Housing Association

A1.1.4.1 When you are developing housing, what heating technologies are generally installed today? What drives this decision?

Over recent years Eildon Housing Association's approach is to use highly efficient gas boilers where mains gas is available and where it is unavailable to provide air-source heat pumps. They find this approach is well suited and a cost-effective way to meet Silver Standards of the SAP Building Regulation requirements; where necessary to meet these standards, they will supplement with solar panels. The second driver is the running cost of the systems which they understand must remain affordable. Third is the technical understanding of the systems both with the property teams and maintenance contractors. The fourth is ease of use and understanding of the systems by their tenants.

Eildon Housing Association are now at a turning point with all current schemes and are assessing what heating systems new programmes will adopt. They have a working principle that air-source heat pumps will be the norm across future programmes.

A1.1.4.2 Are the costs of energy network infrastructure and connections a significant factor in the design of the development as a whole? Are there any circumstances where they become more significant?

Working in a rural part of the country has been a factor in design with many villages in the borders not having access to mains gas. As noted above, ongoing sustainability and a move away from use of fossil fuel will play a more significant factor than energy networks and connections.

A1.1.4.3 How will these costs be impacted by the need for low carbon / zero emissions heating technologies such as heat pumps? Are there any wider impacts of switching to these technologies?

There is an issue around the capital cost of adopting any low carbon / zero emissions heating technology. Eildon Housing Association are assuming heat pumps will increase capital cost at least by £5k per home. Additionally, tenant education requirements and ongoing asset management issues need to be considered. Ongoing asset management isn't only an issue in respect of ensuring their property team are educated about new systems but also in respect of the availability of maintenance contractors in the borders who are technically qualified to work on new systems.

A1.1.4.4 What data do you calculate or estimate for the design of heating solution the properties?

Currently Eildon Housing Association's approach is targeted to meet the requirements of Silver Standard, SAP and Building Warrant.

A1.1.5 Affordable Homes survey response: West Lothian Council

A1.1.5.1 When you are developing housing, what heating technologies are generally installed today? What drives this decision?

In the majority of West Lothian Council's new homes, they install gas central heating. Gas has been regarded as cost effective, easy for the tenant to use and for the council to maintain and meets requirements on sustainability.

A1.1.5.2 Are the costs of energy network infrastructure and connections a significant factor in the design of the development as a whole? Are there any circumstances where they become more significant?

The cost of energy network infrastructure has not generally been a significant factor. At one site however, in Mossend, West Calder, they would have considered air source heat pumps, but this would have required an additional substation.

A1.1.5.3 How will these costs be impacted by the need for low carbon / zero emissions heating technologies such as heat pumps? Are there any wider impacts of switching to these technologies?

One issue that has arisen at a site at Mossend in West Calder is in relation to the capacity of the electricity substation. This is a site for 69 homes, and they may have considered using air-source heat pumps here, but they were advised that there is insufficient capacity at the substation to permit this. It may also impact on electric charging points for cars.

A1.1.5.4 What data do you calculate or estimate for the design of heating solution for the properties?

In most cases West Lothian Council contracts the design and build. They set out what they expect of developers who provide evidence that they have met the requirements. In some case West Lothian Council buys directly from volume house builders, so they have less influence over what is provided. Where appropriate, they would employ building services engineers to calculate the required space heating hot water requirements – all in accordance with the SAP calculations required for Building Warrant.

A1.1.6 Affordable Homes survey response: North Ayrshire Council

A1.1.6.1 When you are developing housing, what heating technologies are generally installed today? What drives this decision?

North Ayrshire Council declared a Climate Emergency in 2019 and is committed to achieving net-zero carbon emissions by 2030. The Council understands that housing has a key role to play in carbon reduction, climate change mitigation, and the alleviation of fuel poverty. The Council's new-build programme aims to support the Environmental Sustainability and Climate Change Strategy by helping to reduce fuel use, and in turn fuel costs and carbon emissions. Consideration as to what heating technologies will be used is on a site by site basis. A number of factors are taken into account, including meeting sustainability requirements, capacity of systems to heat standard house types, and cost.

The Council has just completed two 'sustainable demonstrator homes' within the Dickson Drive development in Irvine. The homes are heated by a 'Sunamp' system supported by solar photovoltaic panels. This project highlights best practice in design and innovation, ensuring benefits from sustainable technologies are maximised. The sustainable benefits from the homes will be evaluated, and the findings shared with partners in order to inform the wider development programme and investment in existing stock. The Council has also installed biomass district heating schemes to service their 123-unit flagship Flatt Road development in Largs, their 49-unit development at Watt Court, Dalry, and their 28-unit sheltered housing facility, Glencairn House in Stevenston. The Council has previously installed air source heat pumps in Cumbrae and a solar assisted heating and hot water system in Saltcoats.

In their experience the cost of installing sustainable heating and hot water systems is significantly more expensive than those incurred to install a traditional gas boiler. The cost of traditional network connections and infrastructure (for gas, electricity and water) do not usually constrain the development process or costs.

A1.1.6.2 Are the costs of energy network infrastructure and connections a significant factor in the design of the development as a whole? Are there any circumstances where they become more significant?

The existing network infrastructure may be inadequate to suit the needs of the proposed new development. An infrastructure upgrade adds substantial costs to the development and could be too high to justify depending upon the number of plots on that particular site. North Ayrshire Council have had to provide new substations at their Flatt Road and St Michael's Wynd projects but the number of units at both of these sites justifies the cost.

The existing energy network infrastructure may also not be able to take any additional input, such as from solar panels where the unused power cannot be fed back into the main grid. Other items to be considered include EV charge points, again having an impact on the existing energy network and whether it is capable of providing such points for every dwelling within the development.

A1.1.6.3 How will these costs be impacted by the need for low carbon / zero emissions heating technologies such as heat pumps? Are there any wider impacts of switching to these technologies?

The main impact of the need for low carbon / zero emissions heating is the additional cost of these technologies, when compared to those for traditional heating systems.

Some of the heat pumps have other issues such as noise pollution, which may not be appropriate for more densely populated developments. Ongoing maintenance costs for low carbon heating can be an issue, as gas boilers offer a 10-year warranty. Running costs also need to be considered. Electric boilers, for example, can be cheaper to install than gas boilers but running costs are higher. Some of the renewable energy solutions are only suitable for new build homes as they are so well insulated. A lack of trained engineers to maintain systems and maintenance costs is also a potential issue.

This may improve with time as more companies invest the time and money to develop technology and train their engineers.

A1.1.6.4 What data do you calculate or estimate for the design of heating solution for the properties?

The council employ the services of mechanical and electrical design consultants to carry out heat loss calculations and heating system / plant design adhering to their specified criteria which is Scottish Building Standards, Section 7 'Silver Levels 1+2 of Sustainability'. This details the required heat loss / u values the council must design to and the SAP calculation determines the amount of solar generation / technologies they require to provide to meet the design requirements. Designing to the Silver Levels 1+2 will reduce the size of the radiators required as the heat loss / u values they design to are very energy efficient. Also, the air tightness they currently design to reduces and limits the carbon emissions from the dwelling.

The Council also undertakes Dynamic Simulation Modelling calculations, where appropriate, to identify the most sustainable technologies for their new build developments.

A1.1.7 Affordable Homes survey response: Caledonia Housing Association

A1.1.7.1 When you are developing housing, what heating technologies are generally installed today? What drives this decision?

The vast majority of Caledonia Housing Association's heating systems use a gas boiler. This decision is driven by a number of factors including;

• Existing maintenance regimes
• Ease and relatively low cost of installation
• Ease of use for customers

A1.1.7.2 Are the costs of energy network infrastructure and connections a significant factor in the design of the development as a whole? Are there any circumstances where they become more significant?

The costs of energy network infrastructure and connections has no impact in the design of the development, unless they are providing homes in remote rural locations where infrastructure costs would come into play.

A1.1.7.3 How will these costs be impacted by the need for low carbon / zero emissions heating technologies such as heat pumps? Are there any wider impacts of switching to these technologies?

Whilst the technology is relatively new there will be impacts on the cost of installation and maintenance of zero emissions heating technologies. As the technology becomes more widespread the costs will be lower, as seen with solar panels for example. The wider impacts will be the maintenance plans and finding suitable and competent contractors to take on this role. Also, education for customers and staff around the new technologies will be important and support and training will be required.

A1.1.7.4 What data do you calculate or estimate for the design of heating solution for the properties?

Caledonia Housing Association usually leave it up to the contractor to calculate in line with their brief around the energy standard the property is expected to achieve.

A1.2 Information from Ramboll

Ramboll is an engineering, architecture and consultancy company that have been commissioned by the Scottish Government to undertake a related project; Costs of Zero Carbon Heat Research, which explores the operational costs and other implications of operating alternative heating technologies.

As part of this project, Ramboll have developed scenarios that describe a range of different development types to be considered in their analysis. Three of these case studies are domestic developments, with the others covering commercial or other scenarios. The three housing scenarios are aligned with the three modelled case studies described in this report. Refer to Appendix A2 for more information.

Ramboll also undertook stakeholder engagement as part of their project, and with the consent of the stakeholders involved, provided notes for three interviews they had with developers including:

• Hjatland Housing Association
• Winchburgh Development, who are a land developer currently working with CALA Homes
• Eldon Housing Association

Hjatland Housing Association, based in the Shetlands, typically install heating technologies with zero emissions at the point of use. This can be either electric storage heaters or heat pumps. There are cases with district heating, which directly imports the heat generated from burning waste from an energy plant.

The island has never had a gas supply, so all properties are fitted with electric heaters. The current preference is to use electric storage heaters as they offer the best value and have lower capital and maintenance costs as well as cost to the tenants. Their tenants generally prefer storage heaters. Heat pumps are over three times the capital costs and need replacing every few years. Air-source heat pumps supply the heat only and the properties have separate hot water cylinders for hot water. They have considered solar thermal heating and solar panel electricity generation, but this would not be practical in the Shetlands. Due to the current building regulations and meeting their SAP calculations for new builds, they have been unable to install storage or district heating.

Eldon Housing Association has built a few low carbon homes, particularly on off-gas systems, and are transitioning towards installing air-source heat pumps combined with solar panels, which tends to work quite well for their developments. As they see the direction of travel towards phasing out gas, they are considering installing air-source heat pumps in favour of gas boilers. They still have storage heaters and are fitting new ones but recognise that is not the right thing to do, as they are less environmentally friendly.

A1.3 DNOs

The two DNOs in Scotland, Scottish Power Electricity Network (SPEN) and Scottish and Southern Energy Networks (SSEN) were interviewed, and both provided additional contributions to the project in the form of information and data to support case study development.

A1.3.1 Interview: Scottish Power Electricity Network (SPEN)

A1.3.1.1 Process for establishing energy infrastructure for new build developments

The process from SPEN's point of view is provided below.

• The developer / IDNO / ICP will contact the DNO for a connection.
• If a full connection request is made by the developer:
  • The DNO will quote for the full works, including the onsite network infrastructure, as well as a DNO point of connection and any reinforcement. The DNO will use their own calculations on the size of connections needed based on the site plans and their own diversity assumptions.
  • The developer accepts the connection offer.
  • The DNO builds the network to their standards and provides a connection.
  • The DNO operates the network as part of their wider network.
• If a point of connection request is made by an IDNO or ICP
  • The IDNOs / ICPs will have calculated the required connection capacity, taking into account connected technologies.
  • The DNO designs the network and provides a point of connection offer. They design the connection to the size and information provided all the necessary information has been submitted and may not have visibility of the design of the development itself.
  • The developer / IDNO / ICP interacts with the DNO to arrange a point of connection quote, design approval and implementation.
  • The ICP builds the network.
  • The DNO provides the point of connection.
  • In some cases, the DNO may adopt the network that the ICP builds. If the DNO is adopting, then the network must be in line with their network standards and will be part of an adoption agreement.

There may be multiple ICPs / IDNOs applying for the same connection before the developer has selected the chosen contractor. This means that the DNO may be doing multiple design and assessment studies for the same project. The results cannot be shared between the applicants, due to commercial sensitivities, and the submissions might be slightly different due to differing assumptions. This adds to the work for the DNO associated with that development.

A1.3.1.2 Main drivers for the cost of network connection for developments, and who pays for them

DNOs are obligated to provide the least cost, competent and capable connections in their connection offer to provide the capacity and requirements stated in the connection application. This might not mean the least cost for the customer as, for example, the route might require going over private land, where wayleaves can be costly and take time. These are indicative costs only.

DNOs generally do not size their connections to take account for larger future load, or future proof for communications infrastructure unless there is an agreement with the customer.

The scenarios for paying for a connection are as follows:

• Customers who ask for additional network capacity will pay for it.
• Customers pay a proportion of any wider works (reinforcement work) while the rest is socialised to the public.
• Socialised costs are very small per customer, and there are wider societal and energy system benefits. Socialised costs are spread across the customers for that particular DNO.

A1.3.1.3 Impact of zero emissions heat technologies on connection process

The impact on costs brought by electric heating will be socialised to the public, with societal and energy system benefits. This needs to be carefully considered to make sure it is fair and valuable for society. The impact of low carbon technologies on top of traditional load will present new challenges to the DNOs.

A1.3.1.4 Related innovation projects

A list of related innovation projects SPEN are involved in is provided below

• SPEN are considering installing and owning EV chargers (trial licence exemption) which will allow building of knowledge about EV charging loads. In the future, this might be a build and sell opportunity for SPEN.
• SPEN are using monitoring to understand what the loads look like (how they add up, what the diversity is, and what this means for the peak demand). They are working with CALA Homes, SSE and E.ON to understand how electric heating and low carbon technologies impacts the network. SPEN are also working with a number of developers in an area of weak network, where the developers want to install heat pumps, but where the reinforcement requirement would be prohibitive. They are working with the developers and the IDNO to identify alternative solutions to accommodate them, such as a behind the meter approach.
• SPEN's other major aim is to focus on the service provided to the customer, and to provide solutions that can last the lifetime of 30 or 40 years.

A1.3.1.5 Other points raised

Key messages are listed below.

• There is a recognition that the building fabric should be the first priority to address in order to make homes more energy efficient.
• Heat cannot be seen in isolation. There is a need to consider EVs, different types of load, penetration of technology and comms, which allows people to participate in a new energy market.
• Changes to need to be incentivised or mandated. DNOs are in the perfect position to socialise the costs and mitigate the impact on consumers.
• DNOs cannot be the blocker for innovation and progress.

A1.3.2 Interview: Scottish and Southern Energy Networks (SSEN)

A1.3.2.1 Process for establishing energy infrastructure for new build developments

The process from SSEN's point of view is provided below.

• Customer (in this case, a developer, ICP or IDNO) will submit an application to the DNO for a connection
• The DNO runs studies and provides a quote
  • All full works quotes to developers are convertible to point of connections quotes; the contestable and non-contestable works are itemised, allowing the quotes for contestable works to be compared with quotes from ICPs.
  • Smaller connections have to be quoted and returned to the developer in 5 working days, while larger developments can last up to 65 days. The quote offered to the developer is valid for a period of up to 3 months.
• The customer accepts the quote
• The DNO contacts the customer to discuss carrying out the project, for example, the start and end date will be agreed and will tie in with the onsite works.
• The customer develops the project, and the DNO provides the agreed works
  • Some ICPs are authorised to undertake work on DNOs network at low voltage, meaning that there could be very little DNO input, unless reinforcement is required. ICPs can design and connect with authorised personnel.
• Small jobs must be completed within three months, while larger projects will have up to a year to finalise works. This is to ensure that there is not significant network capacity being reserved for projects that do not happen.

A key point to note is the Second Comer Rebate. If a developer pays for reinforcement, and another developer comes along later (within 10 years) who also wants to use that capacity, then the second developer gets a 'second comer' charge, which is repaid to the party who paid for the original investment.

Where an IDNOs is operating an existing local network connected to the DNO and has additional connections within their network, they have to apply to the DNO for a change in connection terms, which might require reinforcement.

A1.3.2.2 Main drivers for the cost of network connection for developments, and who pays for them

The main drivers for the cost of new infrastructure is listed below.

• Location
• Energy requirements of the new development
• Availability of existing assets to provide the capacity required for the new connection
• The distance between the site and the point of connection

The party who normally pays for the infrastructure is as follows.

• The developer will pay for extension of assets
• Non-contestable work is carried out by SSEN and is paid for by the developer
• Reinforcement work is apportioned between the developer and the rest is socialised between the DNOs customers.

The rules that determine how to apportion reinforcement costs might be changing in the next price control period for the DNOs. For example, the amount a DNO can recover from its investment may vary for each geographical location, thereby factoring in localised DUoS charges. The amount recovered is more likely be focused on larger voltage levels. The changes are being brought in through the Significant Code Review, an Ofgem-led project that assesses how network charges should be set and recovered in Great Britain.

A1.3.2.3 Impact of zero emissions heat technologies on connection process

For establishing size of connections per plot, SSEN does not generally consider any expected future uptake of low carbon technologies and the impact on their connections. They assess the projects as presented to them in the connection request. However, it would be possible to identify weak spots (e.g. small diameter cables), which could be upgraded to cope with additional load on the network. Part of the next Ofgem price controls process has been around strategic investment, with a particular focus on where increased load is likely to be and identify the electrical assets that require an upgrade. This is all factored into how SSEN and other DNOs quote for a design.

Designers use a point of connection matrix to input customer requirements at the site, which would give the DNO an idea about the diversified load they have to design to. This might be more often used for smaller domestic developments rather than at large sites. The ICP, working on behalf of the developer, will have factored in diversity calculations at the site before they approach the DNO for a connection offer. This allows the ICP / developer to get what they requested.

Power quality issues are not known at domestic level; however, studies have been carried out at larger levels. Connection offers for larger sites will have constraints around harmonics and other power quality issues.

A1.3.2.4 Other points raised

Generally, developments will be a mixture of heating technologies, more than all low carbon heating. Making the transition to 100% renewable heating will have a significant impact on the network's performance. All development sizes will have similar engineering issues, but the real difference will be driven by the location of the site, and the existing network assets in the area at the time.

SSEN have stopped using smaller sizes for some assets. This is driven by the convenience of managing assets and procurement, but also has advantages in future-proofing the network.

A1.4 IDNOs

A1.4.1 Interview: GTC

GTC is the UK's leading independent utility infrastructure provider who delivers cost-effective gas, electric and water networks along with sustainable solutions to new housing and commercial developments.

A1.4.1.1 Process for establishing energy infrastructure for new build developments

The process from GTC's point of view is provided below.

The developer will establish the project and its requirements and will either engage directly with the IDNO or ICP.

In the case where the developer engages directly with the ICP the process is as follows:

• The developer and ICP collaborate on the design of the network.
• The ICP forms a commercial agreement with the IDNO to adopt the assets. The IDNO will likely agree an asset value to adopt the assets. DNOs will not offer this, hence why many ICP developed networks will be adopted by IDNOs.
• A connection request is submitted to the DNO. The connection request process with the DNO is the same for an ICP as any other customer.
• The ICP builds the network. Assets must be up to the standards of the network operator who will be adopting the assets.
• The DNO provides a point of connection to the network.
• The IDNO adopts the assets.
• The IDNO operates the assets going forward.

In the case where the developer engages directly with the IDNO, the process is as follows below:

• The developer and IDNO collaborate on the design of the network. The IDNO will work with the developer to see what they think their load will be (GTC provide support here, particularly with low carbon technologies and diversity assumptions).
• The IDNO applies for a connection to the DNO network. The point of connection could be on the low voltage, high voltage or extra high voltage network. The DNO will give characteristics of the connection so that the network can be designed within limits.
• The IDNO builds the network, potentially engaging an external ICP or using an in-house team. Some larger works or works requiring specialist feasibility studies etc. might be contracted out.
• The DNO provides a point of connection to the network and may wish to inspect any assets they are adopting. Inspection depends on the authority that the organisation has (GTC have self-authorisation). If the IDNO establish a new substation, then the high voltage side will need to be adopted by the DNO, which the DNO will want to inspect before adopting.
• The IDNO operates the assets on an ongoing basis.

Costs are covered through two processes.

• GTC will have a commercial agreement in place with the developer for the installation of new equipment.
• Ongoing operation and maintenance costs of the assets are recovered through DUoS charges.

The only difference between the gas and electricity process is that there are fewer GDNs than DNOs.

A1.4.1.2 Key difference between Independent utilities and DNOs / GDNs when connecting and operating energy networks for domestic developments

The key differences between independent utilities and DNO / GDNs are listed below:

• Independent utilities can be multi-utility, supplying a range for services such as electricity, gas, water, communications, and increasingly district heating, which can give commercial and practical advantages.
• The independent utilities are not area bound. This means that there is one approach across the whole GB. Independent utilities tend to stick with industry standards for best practice, while the DNO / GDNs have their own standards.
• They cannot receive incentives under ED1 or ED2, such as innovation allowances, health indices or load indices
• IDNOs do not need to publish Long-Term Development Statements (LTDS).

A1.4.1.3 Main drivers for the cost of network connection for developments, and who pays for them

The main drivers for the cost of network connection are listed below;

• Spare capacity on local network: Spare capacity on the network means that there are circumstances where the costs are different. For reinforcement needed upstream, a contractual arrangement is agreed with the host DNO. For new transformers, the developer is only charged a proportionate cost depending on the released capacity that is needed at the development.
• Practices of connecting to the DNO: E.g. for SPEN, a connection with more than 200kW of export requires a TO application.
• Connection voltage level: If there is not enough spare capacity at one voltage level, then they will connect one level up, which means that the level of infrastructure will go up.
• Design and construction programme of the site: GTC wants to run the development in the most cost-effective way, but the design of the site might prevent this.

GTC will communicate with the developer on the costs of the infrastructure, and the contribution they will make. Going forward, DUoS pays for the operation of the network.

A1.4.1.4 Impact of zero emissions heat technologies on connection process

The impact that heat technologies has on the network is driven by the developer. Low carbon heating cannot be considered in a silo because, for example, the building fabric and installed technologies means that the energy consumption of new homes is quite different from old homes. This includes low carbon heating, EV charging, solar panels, efficient appliances, as well as insulation and building fabric changes.

GTC owns and operates approximately five heat network energy centres, and heat networks are becoming more standard for new developments.

There are some power quality issues associated with LED lighting, and to a smaller extent, from heat pumps. This is low at the moment, but low carbon technologies can have an impact on power quality. Each individual asset passes requirements, but together the effects can combine. A development that will include all low carbon technologies and LED lighting will result in power quality becoming a major issue. GTC highlighted they need better information about the network in order to manage this.

The existing gas network owned by GTC will continue to supply existing customers going forward.

A1.4.2 Interview: Independent Networks Association (INA)

The INA is an industry body which represents the voice of the UK's independent utility networks. Independent utility providers are organisations that provide Multi-Utility services, such as electricity, gas and water supply to their customers. IDNOs are represented within this body.

A1.4.2.1 Process for establishing energy infrastructure for new build developments

A developer will issue a tender for energy infrastructure onsite. The ICP determines which operator (DNO or IDNO) will be adopting the equipment. An ICP may speak to multiple IDNOs to get an asset value for their assets. This can happen at any stage of the process but is likely to happen at tender stage so that the ICP can base their offer on the asset value they receive from an IDNO. The ICPs develop the initial design and respond to the tender. An ICP is typically geographically based and has strong relationships with the developers. Several ICPs may go to separate IDNOs to get quotes for their assets. The developer selects the ICP based on their tendered options and begins working with the ICP on the design of the network.

If the ICP decides that the DNO is adopting the assets, the process is as follows:

• The ICP interacts with the DNO to arrange a point of connection and adoption agreement. This is very rare as most new build developments are adopted by IDNOs. There are some cases where the DNO would do some of the connection work instead of the ICP, but this is very uncommon.
• The ICP builds the network.
• The DNO adopts and operates the network as part of their wider network.

If the ICP decides that the IDNO is adopting the assets, the process is as follows:

• The ICP interacts with the DNO to arrange a point of connection quote, design approval, and implementation. Even though the ICP is applying for this connection this is still an agreement between the DNO and IDNO.
• In parallel to above, the ICP interacts with the IDNO to arrange an adoption contract and design approval. The ICP will be paid for the assets that the IDNO adopts.
• The ICP builds the network.
• The IDNO adopts and operates the network.

Network design and equipment specification must be in line with the requirements of the adopting network operator. This will vary between operators (IDNOs and DNOs). The ICP needs approval from the IDNO to move on to each phase of the work by regularly inspecting the assets they will be adopting. The IDNO is responsible for all connection operations after the network is built and has emergency service protocols and first emergency call outs to respond to faults on their network. The DNO can provide emergency services to the IDNO and secure capacity to feed their network.

There are multiple routes by which energy infrastructure is established for a new development. The process described above covers one case where the developer issues a tender to lead design and development of infrastructure. Alternatively, the developer might contact the DNO directly, in which case there is no ICP or IDNO involved.

A1.4.2.2 Key difference between Independent utilities and DNOs / GDNs when connecting and operating energy networks for domestic developments

In terms of the end user there should be no difference in relation to who owns and is supplying the energy needed. From a commercial point of view, an independent utility provider (gas & electric) may offer an asset value to an ICP to adopt their assets to secure the work that the ICP has agreed with the developer. DNO and GDNs do not have the option to offer asset values.

In some cases, DNO / GDN network data is not made available to IDNOs (particularly from higher voltage / pressure levels). Independent utilities only have access to their own network data.

A1.4.2.3 Main drivers for the cost of network connection for developments, and who pays for them

The location of the site will have an impact on connection cost, as well as available capacity. House buyers would normally pay for a simple connection, which is an extension of an existing connection. If reinforcement is required, then there is a test that is used to determine how much each respective party pays towards the work involved. If the ICP has to pay a proportion of the costs, then they would look to charge the costs to the developer. This is a commercial call that the ICP would make.

A1.4.2.4 Impact of zero emissions heat technologies on connection process

Different low carbon technologies are presenting challenges which needs to be considered. EVs and solar panels are already being looked at as part of the design document. The type of technology and load consumption information is needed as well as an indication on any future loads.

The plan is to keep using gas at existing sites unless changes occur. The INA believe there is room for hydrogen and heat networks as an alternative for heating as well as electric.

When considering low carbon technologies, the following aspects need to be considered:

• Operational and maintenance costs
• Space in the home to accommodate the technology
• Effectiveness and comfort levels.
• The potential need for gas supplies for secondary heating (i.e. fires) and for cooking.

A1.5 ICPs

Energetics are an ICP that designs and builds utility network connections in Scotland, North Wales and the North of England.

A1.5.1.1 Process for establishing energy infrastructure for new domestic developments

The process for establishing new energy infrastructure from Energetics point of view is the same as the one from the Independent Networks Association.

For small projects (less than 50 homes), the developer may choose to organise connection directly with the DNO, but most large developments will use an ICP. Generally, the developer will select the heating technology and other design aspects of the development, independently of the ICP. The ICP business is highly commoditised, with many developers simply awarding their project to the highest bidder.

A1.5.1.2 Main drivers for the costs of network connection for developments, and who pays for them

Developers will generally award the cheapest price for the design of the network. If there is no gas, developers can consider LPG. The main drivers for the cost of infrastructure is provided below.

• The load that is requested and if there is any generation export
  • This will dictate if work is required at high voltage levels (which is more onerous) or just low voltage
  • This will dictate reinforcement requirements
• Distance to the point of connection
  • What you are crossing - Water crossings, major road crossings, cobbles or block roads
  • The need to deal with other landowners
  • This can drive the cost per plot which might be prohibitive. E.g. if there are relatively small numbers of low-cost social housing plots, and the distance to site is high
• Diversion costs
  • Existing circuits that cross a development (e.g. undergrounding overhead lines or diverting cables that are in the way of building works), are generally re-routed by the ICP within the timelines of the development (which might require a phased approach). If the DNO undertakes it, then the costs are passed on to the developers

Asset costs are paid for by the ICP, and this this gets passed on to the IDNO. IDNOs have a calculator that tells them the likely income per plot over the next few years of operation, and they generally offer the ICP a part of this which is then passed onto the developer to reduce the infrastructure costs. The IDNOs do this to secure the network for adoption. DNOs do not offer asset value.

ICPs have a minimum of three parties to interact with:

• DNOs to ensure that the point of connection and the high voltage infrastructure meets their requirements
• IDNOs to ensure that the low voltage network meets their requirements
• Developer, who is paying for the infrastructure for their development

A1.5.1.3 Impact of zero emissions heating on connection process

When the heating technology is electric, it will result in a higher load, which will have many implications on the cost of the infrastructure such as:

• Higher onsite costs through more infrastructure
  • Higher rated cables
  • More substations
  • Possibility for higher connection voltages, meaning the need for higher voltage infrastructure.
• Higher offsite costs
  • More reinforcement might be needed on the DNO network,
  • It might mean that the point of connection is in a different location, or a higher voltage, which might be further away from site.

Similar impacts are observed with EV charging points; however, for smart charging, it is assumed that it will not add to peak demand of the site.

The impact of not needing gas is that the work contracted to the ICP is reduced, and they would no longer get a gas asset value. This results in lost revenue for an electricity-only site. The cost saving for the developer of not putting in the gas might be outweighed by the higher cost of a low carbon heating technology.

Considerations that need to be made for sizing connections for low carbon technologies are listed below.

• Diversity assumptions are indicated by the asset owners. They will generally vary load and diversity requirements between different building types (DNOs might have a standard value for a wide range of homes).
• Diversity assumptions made might not allow for futureproofing against load growth. They will generally build to what the owner dictates.
• Some requirements are vague. Making allowance for EV charging can be interpreted in different ways but there is increasingly specific guidance from local authorities (and passed on by developers)

A1.5.1.4 Innovation projects

Innovation projects around heat / low carbon technologies are as follows:

• Energetics are involved in installing EV, solar panels and heat pumps in Scotland.
• A project focussed on Queens Quay, Clydebank for District Heating. The client has to pay for a district heating network, and there is no asset value offered on this. District heating is unregulated, and IDNOs do not necessarily have an ownership model for this yet.

A1.6 Heat Pump Manufacturers

A1.6.1 Interview: Mitsubishi Electric

Mitsubishi Electric are a manufacturer of cooling, heating and ventilation solutions, including air source heat pumps. The interview focused on the heat pump units they offer, and the barriers and benefits they see in adoption of heat pumps into new build developments.

A1.6.1.1 Zero emissions heating landscape

The market changed for off gas grid developments when the new build standards came out in 2015. This accelerated the adoption of heat pumps, and Mitsubishi Electric is now starting to see some social housing developers considering heat pumps as the primary solution as it is zero emissions and low cost for the tenants. Some regions are used to having heat pumps in their housing stock, and it has become a proven default which future-proofs their housing stock. .

Private developers are more likely to favour gas if available due to costs. In off gas areas, certainly in the highlands and islands, they will install heat pumps. The Scottish Borders are beginning to do the same, and the central belt is lagging behind.

Developers are not thinking in terms of zero emissions heating options, they are trying to meet the building standards in the most optimal / cheapest way.

The challenges and barriers of moving towards zero emissions heating are as follows:

• Existing infrastructure and industry around gas supplies.
• Perception of heat pumps, particularly within the larger developers, and homeowners.
• Perceived cost increase for putting in a heat pump. If you compare the cost of a heat pump to the cost of a gas boiler, you should include the cost of the gas system and connection.
• Lack of understanding of the DNOs. Mitsubishi are seeing significant regional differences in how heat pumps are treated, even within DNOs. Some regions understand the landscape, and some do not. There is no standard methodology by which a DNO will accept or reject an application based on heat pumps. Mitsubishi has been working with the DNOs across the UK to help them understand the operation of a heat pump, and their diversity.

Mitsubishi Electric's conclusion on the level of diversity of heat pumps is as follows:

• Monitoring has shown that you can assume 30% to 60% diversity. Mitsubishi has looked at retrofit and are still finding a diversity of 30%. In other words, across a wider group of heat pump heated properties, the average heat pump electrical load per house is 30% to 60% of its maximum capacity.
• This is because most of the time, heat pumps are not heating hot water (which would be full capacity), and most of the time, the heating will only use a small proportion of the capacity.
• Heating based on heat loss calculation will very rarely come to 4kW. Therefore, it will not need the full amount. It is much more likely to use 1kW to 1.5kW as its electrical input to provide heating. Then there is diversity between units.

A1.6.1.2 Choice of heating technology commonly used today

The market can provide solutions that can deliver the heating requirements of a home no matter what the property type is. The following describes the range offered by Mitsubishi Electric.

• Minimum heat pumps sizes start at 4kW unit (electrical input of up to 2kW) designed to focus on hot water as the prime driver. They have a seasonal efficiency of 3.5 and are typically installed in individual houses and flats up to 3 or 4 bedrooms, or highly insulated homes, where the demand is driven by hot water above heating.
• The main range of heat pumps for domestic heating includes 5kW, 6kW, 8kW, 11kW and 14kW units. These units are designed for heating, and the heat pump size can be matched to the heating requirement of the property and this is what the range provides. Some properties have multiple units installed which are cascaded together, optimising each unit to be as efficient as possible by matching the load.
• A large range of heat pumps can be air source rated at 43kW, and a large water loop system rated at 60kW. These can be cascaded together, covering projects of greater than 1MW (up to 3MW on existing projects). They often serve shared heating systems, including hot shared heating loops, or ambient loops.
• Intelligent controls can come with heat pumps installations
  • 4kW and 5kW to 14kW heat pumps have intelligent controls, which are simple, easy to use interfaces within the property, which learns about the thermal behaviour of the space and makes decisions about how to operate in order to meet the heating requirements.
  • An app can be used which pairs to the WIFI, and allows control of the heating system, provides heating data, and notifies the user of any issue. Additionally, when a homeowner calls up with an issue, this system allows ~70% of the issues to be solved remotely through diagnostics. No additional fees are incurred for the service.
  • Through Smart Grid Interface, heat pumps have the ability to accept inputs from batteries, solar panels and demand side response notifications for example, which allows them to manage hot water and heating requirements.

The size of the unit for each property is driven by the heat loss calculations. This will help to inform electrical requirement, fuse size and information required by the DNO. Note that the 4kW unit is used a lot (60% of the time), particularly for affordable housing, and typical small / moderate sized homes. Larger private housing might use 8kW and 11kW, with the occasional larger unit. If larger homes are specified to a high standard of insulation, then the 4kW may serve the heating requirements.

The heat pump location and noise it makes in a property is an important aspect to consider.

A1.6.1.3 Relationship with developers

Mitsubishi Electric offer a service from design to installation of heat pumps, and then ongoing support.

• Specification team engage with developers and stakeholders, provide education on heat pumps, undertake desktop designs on sizing of units and running cost expectations, and once projects are secured, provide detailed designs.
• They provide training for staff, open days for potential homeowners, engage the developers within site as well as supporting installation and commissioning.
• Once installed they provide support with services and ongoing operation.

In the wider market for Heat Pumps other suppliers typically do not offer a complete offering for developers, and there is a varying quality of products available.

A1.6.1.4 Impact of zero emissions heating

The cost implications are as follows:

• Oil boilers and heat pumps are cost neutral.
• In comparison to gas boilers, there is typically a 20% increase in cost through installation; however, factoring in that the gas network and connection will not be needed at all can save the developer / homeowner a lot of money and initial investment.
• Operational costs with gas and electricity costs at today's prices is a factor. The operational costs are comparable for new builds. Smarter heating controls can reduce the costs further for electric heating.
• Maintenance costs are comparable. This is influenced by economies of scale for maintenance resource, training and technical expertise.

The practical implications are as follows:

• Many of the skills needed for installation and maintenance of heating technologies can be provided through training.
• Skills and understanding are needed in order to size heating technologies correctly.
• User interaction is vital. The system has optimised controls and is designed to be intuitive, but users need support in using the systems correctly. Where the installers have provided the appropriate information to the homeowners about how to use it along with proper training, fewer issues are seen in the future.

The issue of harmonics is already well understood as part of the sector, for example in air conditioning. For the heat pumps, this knowledge is built into the design. The units have filters, and therefore the issue is limited. This should be the case with most of the major manufacturers, as long as they are held to the standards.