Ground Source Heat Pump Solutions for Social Landlords Chris Davis Commercial Director, Kensa Heat Pumps

Tackling fuel poverty through renewable heat Client: Trent & Dove Housing Project: Installation of ground source heat pump systems, replacing electric heating Supplier: Kensa Heat Pumps Installed by: Kensa Contracting, GeoDrill, J. Tomlinson Number of properties: 133 bungalows Funding: Non Domestic RHI and Energy Company Obligation ECO supplier: EdF Energy Ground source heat pumps in action

Tackling fuel poverty through renewable heat Ground source heat pumps in action 133 bungalows, across 15 sites Off the gas grid, in rural Staffordshire Heated by night storage heaters Elderly residents

Tackling fuel poverty through renewable heat Ground source heat pumps: great idea, but…. Typical social landlord reaction to ground source heat pumps: “Like the technology in theory, but….” Cost is a barrier Complex, high risk, difficult Poor experiences with other technologies Don’t have enough information to influence others All can be an issue, but not if…

Tackling fuel poverty through renewable heat The scheme is well thought through and planned; You work with specialists with a track record in the social sector; The right properties in the right locations are selected; You take advantage of ALL the funding options available; You consider ALL the benefits Ground source heat pumps: great idea, but….

Tackling fuel poverty through renewable heat A different approach for social landlords Turnkey delivery Innovative approach to the RHI Support with up front capital contribution Longer term income stream Fundable Retrofit and new build

Tackling fuel poverty through renewable heat About Kensa UK manufacturer Single technology solution provider Established 1999 Based in Truro, Cornwall Industry accredited Over 4000 installations Social housing specialists UK market leader Recently established delivery arm – Kensa Contracting

Tackling fuel poverty through renewable heat Ground Source Heat Pump Technology Highly energy efficient space and water heating solution Electrically driven appliance Moves solar energy from the ground into the property Utilises “collector” pipework buried in the ground Typically one unit of electricity produces between 3 and 4 units of heat Borehole Hot water cylinder Radiator system Heat Pump

Tackling fuel poverty through renewable heat Ground Source Benefits Tenant Benefits Lowest possible tenant heating and hot water energy costs Highest efficiency; unaffected by outside weather conditions Typical savings of around 50% vs night storage heaters and 30% vs oil No bulk fuel purchases Lower standard rate electricity charges than split tariffs Reduces cost of other household electrical consumption Improved comfort, health, well-being, quality of life

Tackling fuel poverty through renewable heat Ground Source Benefits For a typical social home: 8,000kWh heating/hot water per year Electrically heated: £784 per year running cost + “supplementary” heating costs Ground source heat pump heated: £355 per year running cost SAVING: £429 per year!

Tackling fuel poverty through renewable heat Ground Source Benefits Landlord Benefits Planning exempt (no noise issues) Lower CO 2 emissions, improved SAP ratings Other building maintenance costs reduced E.g. less damp due to under heating Minimal service & maintenance costs No mandatory annual safety inspection Minimal preventative maintenance Extremely low lifetime ownership costs 20 – 25 year heat pump unit life expectancy >100 year borehole life expectancy

Tackling fuel poverty through renewable heat Renewable Heat Incentive Designed to support 2020 Renewable Energy targets 15% of energy from renewable sources Tariff based payment Aimed at covering additional costs of a renewable heat technology Two streams Domestic Non domestic including residential district heating

Tackling fuel poverty through renewable heat Non Domestic RHI Opportunity for social housing (both new build and retro fit) to benefit from adopting district systems supported by the Non Domestic RHI and ECO DomesticNon Domestic CoverageIndividual domestic propertiesResidential district, commercial Includes retro fitYes Includes new buildNoYes Tariff payment7 years20 years MeasurementDeemedMetered Paid on“Renewable” heat onlyAll heat Tariff ratesModest – requires fuel cost saving to produce payback Attractive – GSHP rates recently doubled Can be used in conjunction with ECO*NoYes

Tackling fuel poverty through renewable heat Individual Kensa Shoebox heat pump in each home “Micro District” ground source heating Shared ground array, serving 2 or more properties Designed, delivered and installed by Kensa Eligible as “district heating” for ECO and RHI purposes Scalable and versatile Each home has own radiators, hot water cylinder and controls No heat loss through district pipework No need to apportion energy bills New build or retrofit No need for a plant room

Tackling fuel poverty through renewable heat Energy Company Obligation (ECO) Provides an upfront capital subsidy Typically 20-25% of the total cost Supports district heating schemes District heating now confirmed as a primary measure Rural areas attractive Grant level dependent on CO 2 savings Displacement of electric heating is preferable Ofgem recently confirmed 40 year lifetime for district ground source heat pump systems EdF Energy has provided Kensa customers with over £1m in ECO funding for GSHP projects

Tackling fuel poverty through renewable heat The Unique Kensa Shoebox Heat Pump Designed to be installed inside the property; Small, compact dimensions – fits in a standard airing cupboard; 6kW model ideal for social housing retro fits; Ultra-quiet, using twin, low output compressors; Up to 65°C flow temperature (R134a refrigerant), so able to cope with domestic hot water with no need for back up; Designed for use with standard heating controls.

Tackling fuel poverty through renewable heat Feasibility & Design Delivery Compliance & Support Kensa’s process Feasibility study Clear cost and return analysis Property survey and EPC Geotechnical survey Full system design (incl MCS, borehole array, mechanical) Tenant liaison On site project management Drilling contractors Heating system contractors Commission and hand over Access ECO funding RHI compliance and application Comprehensive system warranty Remote access meter readings Ongoing technical support Responsive maintenance

Tackling fuel poverty through renewable heat GSHP System Costs and Returns Typical 2 bedroom bungalow, 8000kWh/yr INSTALLED COST: £13,500 TOTAL RHI INCOME OVER 20 YEARS: £16,500

Tackling fuel poverty through renewable heat Kensa funding Options for “micro-district” or individual properties Kensa finance packages typically cover the borehole and ground source heat pump installation RHI income offsets cost of finance Landlord may need to provide some contribution towards the internal heating system Up to the value of a NSH replacement system Dependent on energy demand/house size, fully funded schemes are possible

Tackling fuel poverty through renewable heat New build Non Domestic RHI model also applies in new build Not possible with Domestic RHI Ofgem has confirmed RHI payments are allowable even if in receipt of an HCA grant (although some conditions apply) Allows social housing new build to benefit from: 20 year RHI income stream Cost effective Lowest possible tenant running costs Lowest lifetime ownership costs – long service lifetime and no mandatory annual servicing requirement Example: New Linx Housing 53 unit development Micro district ground source heat pump system Accesses funding through HCA and RHI

Tackling fuel poverty through renewable heat Conclusions Changes to the Non Domestic RHI tariffs have created opportunities in the social housing sector for district ground source heat pump systems Such systems are technically robust and can be delivered at lower capital cost (when compared to “stand alone” single property installations) ECO funding can provide upfront capital subsidy, to circa 25% of the project cost Long term financial returns can be compelling GSHP-based systems deliver the lowest running costs to the tenant and the lowest lifetime ownership costs for the landlord Both retrofit and new build projects will benefit from the RHI income