1. Local Energy: What next? Session 1
Simon Morris
© Ricardo plc 2017

2. Local Energy Supply Options
CARES Conference 2019
Local Energy Supply Options
Community Heat Supply Company
(the easy option)
Decarbonising domestic heat
Small scale project requiring modest investment
Short term development
Modest investment returns
Direct social impact
Energy Campus
(the complex option)
Decarbonising commercial scale power and heat
Large scale project requiring significant capital investment
Medium term development
Significant investment returns

3. Energy Systems Catapult: Modern Energy Partners (the complex one)
The Challenge and Opportunity
Both public and private sector energy consumers and the supply chain, currently have limited expertise to scope, install and operate ‘integrated energy solutions’ . This has been compounded by the current focus on single technology  distributed energy solutions, which can have unintended negative consequences on the wider energy system. Informed consumers and an attuned supply chain for integrated energy solutions do not yet exist.
Campus approach
Campus scale sites are ideal for integrated energy solutions because, typically, their energy demands are large enough to have material economic impact, but not so vast and complex as to be unmanageable. Campuses include:
Airports
NHS campus
University

4. Multi vector campus energy systems
Campus control system
Fully integrated campus buildings
Power Generation
EV consumption and charging
V2G power storage
Heat centres and distribution
Distributed heating
Heat and power storage
Energy pricing/ time of day

5. Multi vector campus energy systems – local energy options for communities
Campus control system
Fully integrated campus buildings
Power Generation
EV consumption and charging
V2G power storage
Heat centres and distribution
Distributed heating
Heat and power storage
Energy pricing/ time of day

6. Campus heat, power and transport upgrade phasing
New 11kV cable installed across site to connect power generation
Localised energy generation now the main source of energy, able to cover the power, heat and transport demand
Phase 1
Transport upgrade
heat generation and transport install
Phase 1
Heat network
Phase 2
Heat network
Control redesign to match needs of V2G, DSR, supply and demand balancing
Control – Review to match future needs
Heat/ transport feasibility determine energy demand
Power generation development
Feasibility provides further analysis of future supply and demand
Transport feasibility
Feasibility provides further analysis of future supply and demand
Heat feasibility
Control - Install/ upgrade
Now
2021
2023
2025

7. Two campus options for community energy
CARES Conference 2019
Two campus options for community energy
Local supply of power
Local supply of heat

8. Community Heat Supply Company (the easy one)
CARES Conference 2019
Community Heat Supply Company (the easy one)
Based on the principle of Assignation of Rights of the Domestic RHI
Community group with access to capital pays for Air source heat pumps to be installed in domestic properties by a community owned Energy Services Company (ESCO).
Renewable heat incentive (RHI) paid to community ESCO,
Householder gets a new heating system and any associated saving.
Householder still has full control of heating.
Householder responsible for paying electricity bill to their electricity supplier as normal
Optimal for oil or electrically heated properties (eg storage heaters)

9. Local Energy: What next? Session 2 and 3
Simon Morris
© Ricardo plc 2017

10. Local Energy Supply Options
CARES Conference 2019
Local Energy Supply Options
Energy Campus
(the complex option)
Decarbonising commercial scale power and heat
Large scale project requiring significant capital investment
Medium term development
Significant investment returns

11. Multi vector campus energy systems – local energy options for communities
Campus control system
Fully integrated campus buildings
Power Generation
EV consumption and charging
V2G power storage
Heat centres and distribution
Distributed heating
Heat and power storage
Energy pricing/ time of day

12. The complex option - Campus Energy Systems Power Generation
Siting issues are changing, with consequences for the land, grid, planning package
Power prices 5p wholesale, 9-10p retail.
Grid costs still incurred, may be complex at point of connection inside a site. Need to be short to be viable
Completely different site search and selection,
Generation profile versus demand profile
Sizing (all used on site vs % export)
Ofgem: Targeted charging review is looking at charging demand for avoided demand residual charges

13. Projected power prices

14. The PPA
The site supplied is usually the only point of connection. In order to avoid a stranded asset, (or an expensive mainly redundant connection) a Power Purchase Agreement is needed to secure the connection.
The connection will be inside a live site so there are rules about what can and cant be done, who pays, (and consequences of breach)
The value of a PPA is a significant uplift on wholesale prices.
Both the connection and the value uplift need to be for the lifetime of the project.
This in turn requires
a mechanism to revalue the power over the life of the agreement, and
redress if the contract is broken (eg the site no longer demands power)
the counterparty to the agreement (the customer) needs to be of good standing in credit terms to stand such a contract.
Some power may be exported from the customer, and the contract needs to cover this as well.

15. Typical Power Projects: wind at Micheline Dundee
Site address: Michelin Tyre PLC, Baldovie Road, Dundee
Running Since: May 2006
Number of turbines: 2
Rotor diameter: 71m
Hub height: 85m
Capacity: 4 MW
Generation 7GWh p.a
Around 25% of site demand

16. Typical Power Projects: solar
Crookedstone Road Solar Farm & Belfast International Airport
A 4.84MW Lightsource funded solar farm connects directly into the airport’s private network.
The solar plant generates around 4,000 megawatt hours a year
Meeting 27% of the airport’s annual energy demand

17. Local Energy Supply Options
CARES Conference 2019
Local Energy Supply Options
Community Heat Supply Company
(the easy option)
Decarbonising domestic heat
Small scale project requiring modest investment
Short term development
Modest investment returns
Direct social impact

18. Community ESCO – Distributed heating
CARES Conference 2019
Community ESCO – Distributed heating
Community group with access to capital pays for Air source heat pumps to be installed in domestic properties by a community owned Energy Services Company (ESCO).
Renewable heat incentive (RHI) paid to community ESCO, referred to as Assignment of Rights).
Householder gets a new heating system and any associated saving.
Householder still has full control of heating.
Householder responsible for paying electricity bill to their electricity supplier as normal, no billing for heat as is the case in District Heating networks.
In many cases RHI is not metered but is paid based on the Energy Performance Certificate (EPC) for the property

19. Air source heat pumps: the myths
CARES Conference 2019
Air source heat pumps: the myths
Heat pumps are noisy
Heat pumps don’t work when it’s cold
Heat pumps only work in new builds
Heat pumps breakdown regularly
Heat pumps can’t heat hot water

20. Air source heat pumps: the benefits
CARES Conference 2019
Air source heat pumps: the benefits
Decarbonising heat
Reduce operating costs compared to oil and electricity
Simple to operate
Require you to insulate your home

21. CARES Conference 2019
For householder
Allows a new, efficient, renewable heating system without capital outlay.
Point of contact locally within community ESCO
Knowledge and experience can be shared between people with the same system.
Householder has control over operating the system and responsibility for paying the electricity bill.
Many heat pump suppliers have monitoring packages (e.g. MMSP) which can be used to verify system performance. This can also be used to diagnose any problems (either with heat pump itself, with the heat distribution system or the way the system is being operated).
Private rental tenants could benefit as Landlords may be more willing to grant consent if capital outlay not required.
There are RHI obligations which the householder will need to meet to ensure RHI payments continue to investor

22. CARES Conference 2019
For the Community ESCO
RHI income allows capital to be repaid to the community ESCO, allowing funds to be re-invested in the future.
No billing for heat, householder pays electricity bill for heat pump.
Properties eligible for deemed heat use do not require heat to be metered.
In rural locations, having several properties near to one another increases bargaining power in negotiating service/maintenance contracts.
Scalable – additional systems can be added over time as funds are available and/or properties wishing to participate.
Purchasing of multiple installations as part of one contract can reduce costs.
Some skills could be provided in the community, possibly through training for local tradespeople.

23. Example Capital cost £ 8,000 SPF 3 Property heat usage (kWh) 20,000
CARES Conference 2019
Example
Capital cost
£ 8,000
SPF 3
Property heat usage (kWh)
20,000
Existing fuel
Oil
Existing fuel price (£/kWh) £
Electricity cost £
Existing boiler efficiency
80%
Existing cost of heat
£ 1,375
New cost of heat
£ 1,000
Householder saving
27%
RHI Tarrif
£0.1071
ESCO income/year
£ 1,428
Community ESCO payback
5.6
Total RHI income
£ 9,996
House uses 20,000kWh of heat
Currently heated by an oil boiler
Community ESCO pays for an air source heat pump system costing £8,000 (including heat emitter upgrades)
It operates at an SPF of 3
Householder pays 15p/kWh for their electricity resulting in an electricity bill of £1000, meaning a saving of £375 or 27% compared to gas.
Community ESCO paid RHI for each unit of renewable heat (heat produced minus electricity consumed). £1,428 annually resulting in a payback of 5.6 years.
RHI payments for 7 years
Under RHI rules, installation owned at all times by the householder so they continue to benefit from it after RHI is paid.
There are ongoing obligations for both householder and the ESCO to continue to be eligible for RHI.

24. Simon Morris
Ricardo Energy & Environment
Tel: