District heat networks (generally with CHP) are increasingly common for medium and large scale developments in order to provide the CO2 reductions necessary for planning policy and Building Regulations compliance. Delivery of these networks on phased developments is complex. For effective delivery, it is important to consider a number of issues at an early stage.
1. Early development of a District Heating Masterplan
- Ensures that the development’s heat network is constructed as a coherent whole rather than disparate phases;
- This will set the operating parameters (temperatures, pressures, method of phase connection, etc) to which all phases must build;
- Safeguards routes for future district heating pipework and strategic utilities.
2. Liaison with DNO for export of CHP generated electricity
- For it to be cost-effective to operate CHP engines, it must be possible to sell the generated electricity. This generally requires a connection to the grid;
- Export of CHP generated electricity to the gird requires a Connection Agreement with the Distributed Network Operator (DNO). This process generally takes a year to undertake;
- The Guidance in Engineering Recommendation G59/2-1 should be followed in the design of generating plant and electrical infrastructure.
3. Operating Model – ESCO / Non-ESCO?
- Energy Services Companies (ESCOs) can provide capital contributions to developers to obtain the long-term (c.25 years) concession for the operation of the heat network. The earlier an ESCO is involved, the greater the value of their involvement. Care is required with this model to ensure that consumers interests (particularly with regard to energy bills) are protected;
- Non-ESCO models are run on a not-for-profit basis, with the developer/estate management company retaining full ownership of the asset. This model has the advantage of minimising consumer energy bills.
4. Tendering of contracts
- Whichever operating model is selected, a bespoke tendering process is required to obtain the necessary specialist services.
5. Consumer Tariff setting
- There are two important considerations: -
- Ensuring that revenues are no lower than expenditure;
- Aiming to ensure that consumer energy costs are no higher than with conventional heating.
The above can be achieved through the preparation of a Financial Analysis Model and an estimation of the operating characteristics of the network.
We have undertaken strategic energy masterplanning on several large regeneration projects in London. Our experience is that these issues need to be set out clearly as early as possible and ideally before the first phase is constructed.