Heat Masterplan for East Hampshire

Heat Masterplan for East Hampshire FINAL REPORT

On behalf of East

Hampshire District Council

Project Ref: 34707/001 | Rev: 4 | Date: September 2015

Office Address: Caversham Bridge House, Waterman Place, Reading, Berkshire RG1 8DN T: +44 (0)118 950 0761 F: +44 (0)118 959 7498 E: reading@peterbrett.com

Heat Masterplan for East Hampshire

Document Control Sheet Project Name: East Hampshire District Council Heat Mapping and Masterplanning Project Ref: 34707 Report Title: Heat Masterplan for East Hampshire Doc Ref: Rev 4 Date: September 2015

Name

Position

Signature

Date

Prepared by:

Jonathan Riggall

Senior Associate

JR

14/8/15

Reviewed by:

Dan Ulanowsky

Principal Consultant

DU

14/8/15

Approved by:

Michael Parkinson

Partner

MP

19/8/15

For and on behalf of Peter Brett Associates LLP

Revision

Date

Description

Prepared

Reviewed

Approved

R1

14/8/15

Draft for comment

JR

DU

MP

R2

19/8/15

Draft

JR

EHDC

MP

R3

3/9/15

Final Draft

JR/DU

EHDC

MP

R4

8/9/15

Final Report

DU

JR

MP

Peter Brett Associates LLP disclaims any responsibility to the Client and others in respect of any matters outside the scope of this report. This report has been prepared with reasonable skill, care and diligence within the terms of the Contract with the Client and generally in accordance with the appropriate ACE Agreement and taking account of the manpower, resources, investigations and testing devoted to it by agreement with the Client. This report is confidential to the Client and Peter Brett Associates LLP accepts no responsibility of whatsoever nature to third parties to whom this report or any part thereof is made known. Any such party relies upon the report at their own risk.

Š Peter Brett Associates LLP 2015

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Contents 1

2

3

4

5

6

7

Executive Summary .................................................................................................................... 1 1.1

Introduction .................................................................................................................... 1

1.2

Heat Network Opportunities in East Hampshire ............................................................ 1

1.3

Recommended next steps ............................................................................................. 5

Introduction ................................................................................................................................. 7 2.1

Background ................................................................................................................... 7

2.2

Why District Heat Networks? ......................................................................................... 7

2.3

Heat network investment ............................................................................................... 8

2.4

Approach to this Study .................................................................................................. 9

2.5

Structure of report........................................................................................................ 10

Energy and Policy Context ....................................................................................................... 11 3.1

Introduction .................................................................................................................. 11

3.2

National Policy and Regulation ................................................................................... 11

3.3

Local Policy ................................................................................................................. 12

3.4

East Hampshire Energy Strategy ................................................................................ 12

3.5

Energy in East Hampshire ........................................................................................... 13

Heat Demand Mapping.............................................................................................................. 15 4.1

Introduction .................................................................................................................. 15

4.2

Scope .......................................................................................................................... 15

4.3

Approach ..................................................................................................................... 15

4.4

Existing Heat Demands ............................................................................................... 16

4.5

Future Predicted Heat Demands ................................................................................. 17

Heat Sources ............................................................................................................................. 18 5.1

Introduction .................................................................................................................. 18

5.2

Approach ..................................................................................................................... 18

5.3

Existing heat supply opportunities ............................................................................... 18

5.4

Alternative heat supply opportunities .......................................................................... 19

5.5

Low carbon supply chain ............................................................................................. 19

5.6

Electrical connection opportunities .............................................................................. 20

Heat Masterplanning ................................................................................................................. 22 6.1

Introduction .................................................................................................................. 22

6.2

Approach ..................................................................................................................... 22

6.3

Network Design ........................................................................................................... 25

Economic potential ................................................................................................................... 26 7.1

Introduction .................................................................................................................. 26

7.2

Heat network costs ...................................................................................................... 26

7.3

Operational costs and revenue return ......................................................................... 27

7.4

CO2 Savings ................................................................................................................ 28

7.5

Economic modelling approach .................................................................................... 28

7.6

Sensitivity Analysis ...................................................................................................... 29

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8

9

7.7

Penns Place Economic Appraisal ............................................................................... 30

7.8

Whitehill & Bordon Economic Appraisal ...................................................................... 31

7.9

Alton Economic Appraisal ........................................................................................... 34

7.10

Rural Community Network Economic Appraisal ......................................................... 37

7.11

Strategic Village Growth Economic Appraisal ............................................................. 38

7.12

Horndean Economic Appraisal .................................................................................... 40

7.13

Summary of Results .................................................................................................... 42

7.14

Stakeholder workshop - August 2015 ......................................................................... 42

District Heating Potential for East Hampshire ....................................................................... 44 8.1

Introduction .................................................................................................................. 44

8.2

Overview of Opportunities for District Heat Networks in East Hampshire .................. 44

8.3

Carbon Taxation Benefits ............................................................................................ 45

8.4

Social Benefits ............................................................................................................. 45

8.5

Economic Benefits and Funding Opportunities ........................................................... 46

Conclusions and Recommendations ...................................................................................... 47 9.1

Introduction .................................................................................................................. 47

9.2

Heat Mapping and Masterplanning Findings ............................................................... 47

9.3

Recommended next steps ........................................................................................... 48

Figures Figure 2.1: Principal infrastructure of a heat network .............................................................................. 7 Figure 2.2: Outline methodology ............................................................................................................. 9 Figure 3.2: Final energy consumption (GWh) in East Hampshire by sector, 2012 ............................... 13 Figure 3.3: Final energy consumption (GWh) in East Hampshire by fuel type, 2012 ........................... 14 Figure 3.4: CO2 emissions in East Hampshire by sector, 2005-2012 ................................................... 14 Figure 4.4: Total Heat Density Map ...................................................................................................... 17 Figure 7.2: Whitehill & Bordon – Town Wide Heat Network .................................................................. 32 Figure 7.5: Alton Wide Heat Network .................................................................................................... 36 Figure 7.8: Hornden Heat Network ........................................................................................................ 41 Tables Table 7.1 Cost assumption used in Heat Network Economic Model .................................................... 27 Table 7.2 Income assumptions used in Heat Network Economic Model .............................................. 27 Table 7.3 Technical Parameters for Penns Place ................................................................................. 30 Table 7.4 Financial Assessment of Penns Place .................................................................................. 30 Table 7.5 Technical Parameters Whitehill & Bordon ............................................................................. 32 Table 7.6 Financial Assessment of Whitehill & Bordon ......................................................................... 32 Table 7.7 Financial Assessment of Whitehill & Bordon (town centre) .................................................. 34 Table 7.8 Technical Parameters for Alton ............................................................................................. 35 Table 7.9 Financial Assessment of Alton .............................................................................................. 35 Table 7.10 Technical Parameters for the Rural Community Network ................................................... 37 Table 7.11 Financial Assessment of Rural Community Network ......................................................... 37 Table 7.12 Technical Parameters Strategic Village Growth .................................................................. 38 Table 7.13 Financial Assessment of Strategic Village Growth.............................................................. 39 Table 7.14 Technical Parameters for Horndean ................................................................................... 40 Table 7.15 Financial Assessment of Horndean .................................................................................... 40 Table 7.16 Summary of Economic Appraisal ........................................................................................ 42

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Appendices Appendix A

Figures

Appendix B

Policy Review

Appendix C

Predicted energy demand modelling methodology

Appendix D

Heat Masterplans

Appendix E

Economic Model Assumptions

Appendix F

Stakeholder Workshop

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1

Executive Summary

1.1

Introduction

1.1.1

Climate change has been recognised as one of the most critical global environmental challenges we currently face. As a result the UK have committed to reducing our national carbon emissions by 80% by 2050.

1.1.2

In response to the twin threats of climate change and energy price uncertainty and insecurity 1 East Hampshire District Council has launched an ambitious yet deliverable Energy Strategy.

This puts the planet and sustainability at the heart of council decisions and will see substantial investment in East Hampshire over the coming years in order to secure a sustainable and low carbon future for the district.

1.1.3

Over 50% of East Hampshire’s carbon emissions are associated with building energy usage.

Addressing these emissions is therefore critical for the Energy Strategy. In addition, over 99% 3 of the energy demand in East Hampshire is still supplied by fossil fuels.

1.1.4

In comparison to other regions, it is arguably more difficult to decarbonise East Hampshire’s energy demand due to the historic nature of the region’s towns and the fact that half the district is located in the South Downs National Park. In addition, the region is not an obvious candidate for heat networks as the region is generally of a low density and heat networks tend to suit areas of high urban density.

1.1.5

However, the district’s natural resource may in fact present a potential opportunity. By utilising local, sustainable sources of heat the district can address the significant carbon emissions associated with energy use.

1.1.6

Furthermore, the planned expansion of the district’s towns and villages as allocated in the 4 Local Plan presents a real opportunity to ensure these developments take place in a way which will benefit the East Hampshire’s existing and future communities.

1.1.7

This Heat Masterplan for East Hampshire (2015) is the starting point for the Council taking action to address the carbon emissions association with heating and unlocking the benefits this can bring to the district through the exploration of district heat network opportunities.

1.2

Heat Network Opportunities in East Hampshire

1.2.1

A heat mapping appraisal has been used to identify and select a number of key opportunities for developing urban and rural heat networks across the district as shown in Figure 1.1 overleaf. These opportunities have been tested through a stakeholder workshop and the economics of developing heat networks at these sites appraised (Table 1.1).

1.2.2

From this appraisal, 3 priority sites have been identified and recommended for further detailed study, namely;

2



Penns Place;



Whitehill & Bordon; and



Alton.

1

East Hampshire District Council Energy Strategy 2014-2019 (EHDC 2014) DECC (2014) UK local authority and regional carbon dioxide emissions national statistics: 2005-2012. [online] Available at: https://www.gov.uk/government/statistics/local-authority-emissions-estimates [Accessed 06/08/2015] 3 DECC (2014) Total final energy consumption at regional and local authority level 4 East Hampshire District Local Plan: Joint Core Strategy 2014 (EHDC 2014) 2

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1.2.3

The study has also appraised opportunities for rural heat network development using Bentley as an example of strategic village growth and Langrish as an example of a potential smaller community rural heat network. Finally, the strategic urban extension north east of Horndean has also been examined.

Figure 1.1 East Hampshire showing significant rural landscape of the district with 6 specific heat network opportunities examined in this Heat Masterplan

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Table 1.1 Heat network opportunities identified and examined in the East Hampshire Heat Masterplan

OTHER PRIORITY SITES

EHDC STRATEGIC PRIORITY SITES

Opportunity

Capital Cost (£m)

Economic Scenario

Modelled Payback (years)

8%

14

0.3%

19

£55

Penns Place (no dwellings) Whitehill & Bordon (Town centre) Alton (Leisure Centre site)

1.7

Rural Community Network

n/a

n/a*

0.4

Biomass 40 yrs

15%

7

£50

Strategic Village Growth

n/a

n/a*

n/a

n/a

n/a

4.5

Not Viable

Not Viable

£865

9.1

Gas 40 yrs Biomass 40 yrs

26

-£2,331

19

£172

Horndean

1.7

Gas 40 yrs Biomass 40 yrs

Modelled Rate of return (IRR)

Carbon saving (cost per tonne CO2 saved) £342

2.7

Gas 40 yrs

9%

13

£635

2.7

Biomass 40 yrs

5%

15

£75

5%

19

£630

-0.5%

Not Viable

-£1,540

n/a

n/a

n/a

4.4 4.4

9.5

Gas 40 yrs Biomass 40 yrs

Implementation risk

Low

Low

Medium

High

Not Viable 3% 4%

Medium

High

*No gas solution modelled as site taken as example of location not connect to the gas network

1.2.4

Each of the opportunities was modelled over a 25 and 40 year time horizon and with biomass and gas (CHP) as the fuel type. The figures in Table 1.1 represent the optimal business cases of the various options at each site under the assumptions defined in Section 7.

1.2.5

In addition to the capital cost of the scheme, there are a number of parameters which will affect the economic viability of the scheme. In particular the price paid for heat, the price of gas and the renewable heat incentive (RHI) paid for biomass fuelled heat can all have an impact. Further details on these sensitivities are described in Section 7.

1.2.6

The carbon saving metric is a measure of the cost effectiveness of delivering carbon savings and allows a like for like comparison. It is commonly used when appraising the cost of differing carbon reduction options.

1.2.7

The implementation risk is the perceive risk of heat network implementation at the site in question. Further details of the methodology for this risk appraisal are given in Section 6.

1.2.8

A summary of the site opportunities is given below.

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EHDC Strategic Priority site 1: Penn’s Place 1.2.9

The key opportunity available to EHDC is associated with the Council’s head office at Penns Place, Petersfield and the adjacent Taro Leisure Centre. The opportunity is to develop an energy centre connecting these two facilities. Initial economic modelling of the opportunity presents an attractive investment proposition with internal rate of returns in the region of 8%.

There is also the opportunity to link any network with the future proposed homes development at the adjacent Penns Field.

EHDC Strategic Priority site 2: Whitehill & Bordon

1.2.10 There exists a significant opportunity to influence the low carbon design of East Hampshire’s major strategic growth town of Whitehill & Bordon. There are a number of municipal buildings planned for the strategic development of the town, and these could be co-located to create a heat network. Value could be added by creating geographic continuity with the town centre, supermarket and leisure facilities. There are a range of network design opportunities ranging from a town-wide scheme, to a heat network centred around the new town or the existing business parks.

EHDC Strategic Priority site 3: Alton 1.2.11 The appraisal has also highlighted the heat network opportunities associated with the Alton area. The initial appraisal shows the potential for delivering a heat network between the Alton leisure centre which is due for refurbishment, the community hospital, and the proposed ‘Treloar’ residential development south west of Alton.

1.2.12 Other key possible opportunities include the potential for a heat network as part of the redevelopment of the former Coors Brewery site in the town centre. This 5 hectare site would be attractive since it would offer heat network extension into Alton town centre where properties have otherwise limited opportunities to decarbonise.

Other priority site 1: Rural Community Network 1.2.13 Rural community opportunities were also noted as being an extremely attractive investment proposition. The study looked at a typical rural heat network at Langrish involving the connection of a hotel and a light manufacturing site. The economic appraisal shows such a scheme could yield attractive returns up to 10%.

1.2.14 The abundance of wood resource in East Hampshire, combined with the limited existing biomass supply chain in the region represents a significant opportunity for the District to create revenue from a local biomass heat supply. This would also advance rural job creation, which in turn will create revenue for EHDC. This aligns to the East Hampshire Business Strategy 2015 to 2021 in both creating business through infrastructure investment and reducing operational costs for existing businesses.

Other priority site 2: Strategic Village Growth 1.2.15 The village of Bentley was examined as an example of an East Hampshire village due to undergo significant growth over the coming years. The option of delivering a heat network to supply the new and existing homes in the village was assessed.

The outline economic appraisal for a site-wide network for strategic village growth highlights that this does not currently offer a potential viable heat network opportunity for investment.

This is largely down to the extensive network costs that would be associated with extending a heat main around a village with limited revenue returns from low density low carbon homes.

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Other priority site 3: Horndean 1.2.16 A major development of over 650 homes, as well as community facilities and commercial developments, is planned to the east of Horndean.

1.2.17 The outline economic appraisal for a site-wide network for Horndean suggests that work would need to be undertaken to decrease capital expenditure and increase returns to make the project more attractive from an investment point of view.

1.2.18 The largely residential-led development does not offer a particular attractive end heat market due to the low heat demand and extensive network required to supply it.

1.3

Recommended next steps Recommendation 1: Carry out feasibility studies at EHDC Priority sites

1.3.1

A detailed feasibility study is recommended for the Penns Place opportunity. This should examine the immediate opportunity to link the EHDC offices and the Taro Leisure Centre building with a combined energy centre and should also explore the option for linking the future proposed homes development at Penns Field. The current operators of the Taro LC Places for People will need to be engaged as part of this study.

1.3.2

It is recommended that outline feasibility studies are undertaken for the Whitehill & Bordon and Alton opportunities. However, the Whitehill & Bordon development is not in the control of EHDC other than through its duties as the planning authority. It is therefore recommended that an infrastructure working group is established with the developers of the Whitehill & Bordon growth area to ensure consistency in approaches to delivering infrastructure.

1.3.3

Within this working group a special project should be set up to draw together delivery partners and explore the financial opportunity of delivering a heat network in the town. This would enable the heat network development opportunities in the region to align with EHDC’s aspirations to invest in infrastructure and potentially deliver a municipal led Multi Utility Service Company (MUSCo).

1.3.4

An outline feasibility study of the heat network opportunities associated with the Alton area is recommended. Whilst this Heat Masterplan has examined the potential of a heat network centred around the leisure centre, the study has also identified at opportunity at the former Coors Brewery site in the Town Centre.

1.3.5

This offers an excellent opportunity to create a high value land development project in the centre of Alton. Again whilst EHDC do not have direct control over that site, through the planning duties they can seek to influence the investigation of heat networks for the site. In addition, further exploration of how heat networks can increase the investment value of the development is recommended.

1.3.6

As part of the feasibility studies above, there should be a review of the commercial structures and financial options for delivering the new opportunities including consideration of how the opportunities can be linked to the EHDC MUSCo investment programme.

Recommendation 2: Further explore the potential of rural heat networks

1.3.7

The economic appraisal of the Langrish opportunity has demonstrated that this type of rural community heating scheme can be an extremely attractive investment proposition. In terms of evaluating such rural opportunities further, it is recommended that EHDC pursue these through the Rural Community Energy Fund (RCEF) including linking with a community partner.

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Recommendation 3: Biomass market supply chain study 1.3.8

Further exploration of the biomass market supply chain is key to unlocking a potentially large energy market in rural Hampshire. A supply chain analysis is recommended of the biomass market to explore the market gap and look at enabling the growth of a biomass supply chain.

This could explore the current barriers to the implementation of biomass technology and fuel supply markets in East Hampshire. This could also look at routes for EHDC to support the deployment of technology, jobs related to installation and services and the fuel supply chain.

This analysis would provide a link between the East Hampshire Business Strategy and Energy Strategy.

Recommendation 4: Influencing East Hampshire Energy Infrastructure Masterplanning

1.3.9

EHDC have the ability within the planning process to influence land development projects early through consultation with developers to appraise the opportunity for delivering heat networks and act on the findings. Early engagement on projects through the EHDC planning process is extremely important.

1.3.10 Engagement with EHDC’s sustainability and energy team is recommended by the EHDC’s planning department for strategic housing and commercial development to ensure the opportunities for the delivery of low carbon energy infrastructure is considered at the earliest opportunity where maximum benefit can be achieved.

1.3.11 The involvement and commitment of the East Hampshire community will be critical to the successful implementation of any heat network in the district. In addition to sharing the findings of this study with stakeholders, the Council will build on the early engagement carried out as part of this study to continue to involve the local community, other public sector bodies, developers and other parties in the heat network development.

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2

Introduction

2.1

Background

2.1.1

Peter Brett Associates LLP (PBA) was commissioned by East Hampshire District Council (EHDC) to identify opportunities for delivering district heat networks (DHN).

2.1.2

EHDC is looking to consolidate opportunities for DHN in the form of a series of Heat Masterplans for the District. A crucial initial step for this is to understand the nature and extent of heat use across the district. The Council has therefore successfully bid for funding from DECC’s Heat Network Delivery Unit to undertake Heat Mapping and Masterplanning of East Hampshire and a feasibility study of the opportunities which emerge from the mapping.

2.1.3

The purpose of this study is to identify key opportunities for delivering DHNs and to undertake outline economic appraisals to prioritise three areas with the highest potential to take forward to the detailed feasibility stage.

2.2

Why District Heat Networks?

2.2.1

The UK national strategy for provision of heat is based on a national gas grid network, with a local distribution network connecting properties. Where properties are not on the national grid alternative heating fuel is used such as fuel oil, wood, coal, and electric heating.

2.2.2

Electricity is generated at power stations that are remote from the point of use and this can lead to inefficiencies in the form of waste heat produced in the generation process and the losses associated with electricity transmission.

2.2.3

District heating networks are associated with the generation and distribution of heat from a central point to a number of buildings or uses by using waste heat sourced from industrial processes, power generation, or direct heat generating facilities.

2.2.4

District heat networks are essentially insulated pipes which distribute hot water from a source of waste heat to a building(s) to provide space heating and hot water. The principal infrastructure of a heat network is presented in Figure 2.1 below.

Figure 2.1 Principal infrastructure of a heat network

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2.2.5

2.2.6

5

In 2013, the government published the UK’s low carbon heat vision and created the Heat Network Delivery Unit (HNDU) at the Department of Energy and Climate Change (DECC).

The vision recognises that heat networks play an important role as an effective means of distributing heat energy in appropriate geographic contexts. A range of additional benefits exist with heat networks which support the expansion and implementation of new heat networks including: 

Improving the environmental performance of old building stock;



Creating investment returns from energy consumption;



Energy security from global geopolitical supply and pricing issues;



Economic growth through investing in primary infrastructure; and



Social improvement through lower energy bills and warmer homes.

The development of district heat networks in East Hampshire offers many potential benefits to the district including: 

CO2 emissions reductions – generating and distributing heat and electrical energy locally reduces the potential for transmission losses, therefore presenting a more efficient distribution network compared to the national distribution network.



Emissions reductions in hard-to-treat buildings –older buildings, especially within conservation areas, can be connected to an efficient heat network where no other low carbon solutions are available.



Financial – generating and selling energy (both heat and power) can be profitable.

Coupled with central Government carbon taxation policies such as the Carbon Reduction Commitment Energy Efficiency Scheme (CRC-EES) and subsidy regimes such as the Renewable Heat Incentive, investment into energy projects can be attractive for investors.



Energy security – by reducing dependency on fossil fuels a security of supply can be achieved which avoids national and international risks associated with fossil fuels.



Economic growth – delivering decentralised energy will establish new jobs and offer the ability to grow a supply chain in low carbon services that will contribute to the local economy. In addition, a growing local supply chain also has the potential to export services and goods to surrounding regions and national markets. A robust supply chain in this market will offer resilience both in terms of operational risk and energy security risks from National and International geopolitical changes. In addition the opportunity to generate a low cost supply of heat will be attractive to industries with large heat/cooling demands.



Social improvement – in addition to providing commercial benefits a low cost supply of heat will support communities at risk from high energy costs and, especially, could benefit those in fuel poverty.

2.3

Heat network investment

2.3.1

The operational structure of a heat network has been assessed by EHDC in their MUSCo Business Case (PBA, 2014) which should be read in conjunction with this report as a part of a suite of documents that support infrastructure investment in East Hampshire.

5

The Future of Heating: Meeting the challenge (DECC, 2013)

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2.3.2

A MUSCo is a multi-utility services Company (MUSCo) which provides one or more utility related services for a project developer under a single contract or agreement. An ‘ESCo’ relates to a company that provides energy services.

2.3.3

The term ESCo is used interchangeably in the heat network market to define both an existing Energy Service Company such as E.ON, as well the specific contract vehicle which may be 6 established to develop a heat network (i.e. a Special Purpose Vehicle, SPV ).

2.3.4

The key features of an ESCo SPV are that it has a separate budget and business plan from the host organisation and it provides a focused management of the energy projects. The business plan will typically be over a long period and should be sound enough to attract 7 external investment into the project.

2.3.5

The ESCo SPV may be set up with two or more shareholders/investors (including joint ventures) typically where one is the project developer. Alternatively the SPV may be set up as a subsidiary to a single company/organisation which may or may not be the project developer.

2.3.6

ESCo projects can range in size from simply linking two buildings together, to spanning entire cities. In some continental European countries the use of district heating is widespread although this is mainly because there is no national gas infrastructure.

2.3.7

The above opportunities and benefits are the platform for exploring the opportunity for district heating and are considered throughout this report.

2.4

Approach to this Study

2.4.1

The overarching methodology applied is summarised in Figure 2.1 below.

Figure 2.2 Outline methodology

Create heat maps and anchor loads across East Hampshire Identify significant heat clusters and prioritise opportunties Model high level financial returns of notional networks Rationalise opportunities to a short list of three 2.4.2

The purpose of this report is therefore to identify and describe the opportunities for district heating across East Hampshire through the above four steps. Detailed methodology for each part of this appraisal is provided in Chapters 4-7.

2.4.3

The findings from this Heat Masterplan will be used as part of the evidence base for EHDC’s Heat Plan for East Hampshire, discussed further in Section 3.4. Three priority sites will be taken forward to detailed and outline feasibility study stage.

6

An SPV is usually a subsidiary company with an asset/liability structure and legal status that makes its obligations secure even if the parent company goes bankrupt 7 http://www.theade.co.uk/

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2.5

Structure of report

2.5.1

This report is set out in the following sections in line with the methodology set for the project: 

Energy and Policy Context –sets out the energy landscape, political background and local strategy for delivering heat networks.



Heat demand mapping –describes the heat/cooling/power demand within East Hampshire both in terms of existing loads and projected loads with the planned developments as defined with the EHDC Local Plan



Heat supply opportunities – describes the opportunities for supply of heat. This includes both the existing potential sources of waste heat, but more significantly opportunities to develop new, decentralised heat supply including renewable and low carbon sources. This section also looks at cooling and power supply opportunities



Heat Masterplanning – this section brings together the key heat network opportunities across East Hampshire using the defined selection criteria. Six sites were selected for high level analysis and economic modelling.



Economic potential – Six sites were modelled to test the economic viability based on broad infrastructure appraisals.



District Heating trajectory for East Hampshire – Finally, in light of the study’s findings, this section provides an overview of the opportunities for district heating in East Hampshire. In addition further exploration of potential benefits beyond economic returns has also been provided.

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3

Energy and Policy Context

3.1

Introduction

3.1.1

Government legislation includes numerous provisions to minimise climate change and mitigate the anticipated effects. The Climate Change Act 2008 and Energy Act 2008 have sought to deliver on commitments to reduce carbon emissions throughout the UK. The Government’s approach to the future of the UK’s energy was described in the Low Carbon Transition with the primary aim to reduce carbon emissions associated with energy.

3.2

National Policy and Regulation

3.2.1

Energy efficiency requirements of the 2013 Building Regulations continue require a 6% carbon 8 saving across the new homes build mix and have now introduced a new fabric energy efficiency target to ensure a minimum efficiency for building fabric.

3.2.2

The Treasury have confirmed that new build projects can achieve compliance with the Building Regulations through fabric first approaches without the need for renewable and low carbon technology approaches. Therefore DHNs no longer need renewable technology to comply with the current Government Regulation strategy.

3.2.3

The Energy Act implements the legislative aspects of the 2007 Energy White Paper: “meeting the energy challenge”. It provides the basis of regulatory change to meet the needs for energy generation, energy infrastructure and promotion of low carbon technologies. Critically for EHDC, the Act allows Local Authorities to become power suppliers.

3.2.4

The UK Heat Strategy sets out an approach to decarbonise heat supply. DECC established the Heat Networks Delivery Unit (HNDU) to support technological innovation, provide funding for feasibility work, explore potential additional financial incentives and distribute government funding for heat networks.

3.2.5

Through the National Planning Policy Framework (NPPF) , local planning authorities are required to develop policies which increase the use and supply of low carbon energy, have a positive strategy to promote energy from renewable and low carbon sources, support community-led initiatives for low carbon energy and identify suitable areas for low carbon energy sources.

3.2.6

The following regulations and acts have therefore been reviewed based on their direct influence on the formation of local policy surrounding the development of DHNs:

3.2.7

9

10



Building Regulations (2013)



The Energy Act 2008 (as amended)



The UK Heat Strategy (2013; and



The National Planning Policy Framework (2012).

A detailed review of the policy landscape is provided in Appendix B.

8

Requirement of Part L1A 2013, 6% figure is relative to Part L 2010 The Future of Heating: Meeting the challenge (DECC, 2013) 10 https://www.gov.uk/government/publications/national-planning-policy-framework--2 9

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3.3

Local Policy

3.3.1

East Hampshire District Council (EHDC) and the South Downs National Park Authority 11 (SDNPA) adopted their Local Plan (previously the Joint Core Strategy (JCS)) in June 2014.

The SDNPA are currently consulting on the development of their local plan to be adopted in 12 2017.

3.3.2

As part of the Sustainable Construction policy, the JCS requires new developments to provide at least 10% of energy demand from decentralised and renewable or low carbon energy sources, including connections to a district heating systems, unless it is proven that this is not 13 feasible or viable .

3.3.3

The Council successfully bid for the funding from the HNDU to undertake Heat Mapping and Masterplanning of East Hampshire. The Council bid in the context of recognising the requirement of new developments to meet part of their energy demand, the potential to reduce carbon emissions, the opportunity to bring green investment into the area and attain greater price certainty.

3.4

East Hampshire Energy Strategy

3.4.1

In their 2014 Energy Strategy, EHDC set out their response to three perceived threats:

3.4.2



Rising energy prices;



Uncertain energy supply; and



Climate change.

The Strategy describes the Council’s four responses to these threats as follows: 

Increased control of energy pricing through establishing a renewable energy company;



Attract green investment and growth in the district;



Reduce energy demand across the district; and



Contribute and influence to achieve innovation in the energy sector.

3.4.3

The strategy recognises that energy used to heat buildings generates a significant proportion of the district’s carbon emissions. The development of low carbon heat supply is therefore seen as a key activity to support the Energy Strategy. In addition to reducing carbon and providing greater price certainty, this provides the opportunity to explore local sustainable fuel sources including the significant biomass resources across the region. This in turn will channel green investment in the region including further potential investment opportunities for EHDC.

3.4.4

The Council is looking to consolidate these opportunities in the form of a series of Heat Masterplans. A crucial initial step for this is to understand the nature and extent of heat use across the district in order to establish real opportunities for delivery heat networks

3.4.5

The Council has therefore successfully bid for funding from DECC’s Heat Network Delivery Unit to undertake Heat Mapping and Masterplanning of East Hampshire and undertake a feasibility study of the opportunities which emerge from the mapping.

11 12

East Hampshire District Council, 2014. http://www.southdowns.gov.uk/planning/planning-policy/national-park-local-plan/

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3.5

Energy in East Hampshire

3.5.1

The study area for East Hampshire is presented as Figure 3.1 in Appendix A. East 14 Hampshire is a largely rural district in southern England with a population of 117,600 (2014) 15 and an area of 514 sq km . It comprises a number of small market towns (Petersfield, Alton and Bordon); with the rest of the population spread through the district’s many villages.

3.5.2

East Hampshire has significant areas of countryside with rich biodiversity. The South Downs National Park cuts across the district presenting a nationally significant environmental designation.

3.5.3

In 2012, final energy consumption in East Hampshire was 2,725GWh , with consumption quite evenly split between the transport and domestic sectors (43% and 36% respectively) and a lower commercial and industrial output reflecting the nature of East Hampshire’s position in the regional economy, as shown in Figure 3.2.

16

Figure 3.2: Final energy consumption (GWh) in East Hampshire by sector, 2012

21%

Industry & Commercial

43%

Domestic Transport 36%

3.5.4

Petroleum products, gas and electricity are the dominant fuel sources, as illustrated in Figure 3.3. It is important to note biomass makes up less than 1% of the energy supply in East Hampshire.

14

Hampshire County Council (2014) Small Area Population Forecasts [online] Available at:http://documents.hants.gov.uk/population/EastHampshireinfographic-2014SAPF.pdf [Accessed 06/08/2015] 15 East Hampshire District Council (no date) About East Hampshire [online] Available at: http://www.easthants.gov.uk/business-east-hampshire/about-east-hampshire [Accessed 06/08/2015] 16 DECC (2014) Total final energy consumption at regional and local authority level [online] Available at: https://www.gov.uk/government/statistical-data-sets/total-final-energy-consumption-at-regional-and-localauthority-level-2005-to-2010 [Accessed 06/08/2015]

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Figure 3.3: Final energy consumption (GWh) in East Hampshire by fuel type, 2012

1%

2%

0%

17% Coal Manufactured fuels Petroleum products Gas

50%

Electricity

30%

Bioenergy & wastes

3.5.5

CO2 emissions are similarly split between the three sectors, as shown in Figure 3.4.

Emissions fell between 2005 and 2009, but fluctuated slightly between 2010 and 2012.

17 Overall, emissions reduced by 9.6% between 2005 and 2012. The largest emissions reductions have been from the transport sector.

Figure 3.4: CO2 emissions in East Hampshire by sector, 2005-2012

1,000.0 900.0 Emissions (ktCO2)

800.0 700.0 600.0 500.0

Transport

400.0

Domestic

300.0

Industry & Commercial

200.0 100.0 20052006200720082009201020112012 Year 3.5.6

The above shows that carbon emissions from buildings make up a large proportion of East Hampshire’s carbon footprint. This in itself justifies action to align East Hampshire with both the national and international climate change action agenda.

3.5.7

Emissions from business, industry and transport have been the focus of the East Hampshire District Council Energy Strategy (2014-2019) and the Climate Change Action Plan (20112013).

3.5.8

These strategies provide a clear structure to tackling East Hampshire’s exposure to the world’s energy market and response to climate change, making EHDC a leading authority in tackling these global issues.

17

DECC (2014) UK local authority and regional carbon dioxide emissions national statistics: 2005-2012. [online] Available at: https://www.gov.uk/government/statistics/local-authority-emissions-estimates [Accessed 06/08/2015]

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4

Heat Demand Mapping

4.1

Introduction

4.1.1

The aim of the heat mapping stage is to identify and categorise existing heat demand in the area. It is also important to predict future demands based on implementation of energy efficiency measures and increased demands from new development within the district identified through the forward planning process.

4.2

Scope

4.2.1

The scope of study covers all of East Hampshire but it was agreed to also examine any potential opportunities within 1km of the District boundary. The study area is shown in Figure 3.1 Appendix A.

4.3

Approach Land Use Allocation

4.3.1

Once the study area was defined different types of existing development were identified for inclusion in the energy demand analysis. The types of development were defined by the planning use classes and including the following:          

A1 – Retail B1 – Offices B2 – General Industrial B8 – Storage and Distribution C1 – Hotels C2 – Hospitals C3 – Pre 2002 Residential C3 – Post 2002 Residential D1 – Schools D2 – Leisure

4.3.2

To identify the use of a building within the study area Ordnance Survey master mapping and 1:25,000 mapping was used in conjunction with aerial photography and known mapped commercial addresses provided by EHDC. The urban areas within the study area were the focus of this exercise. Individual buildings were identified and assigned a land use class within the in these urban areas while assumptions were made for more rural locations where the predominant development type was C3, pre 2002 residential.

4.3.3

The C3 residential use class was split into two categories; pre and post 2002. This is due to the difference in the fabric efficiencies of the buildings that has been dictated by the building regulations. For the purposes of heat mapping it is important to split this use class as the heat demand of a residential dwelling post 2002 is considerable reduced compared to the heat demand of a dwelling pre 2002.

4.3.4

The land use allocations across the study area are shown in Figure 4.1 Appendix A. The figure shows a largely rural geography with the noticeable isolated urban areas of Alton, Four Marks, Bordon, Whitehill, Hindhead, Liphook, Liss, Petersfield and Horndean. The remainder of the study area is comprised of small villages, hamlets and farms connected by a minor road network. Areas of woodland, arable and pastoral farm land are most common across the study area with the majority of the study area being within the South Downs National Park except the northern and southern reaches of EHDC.

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Building Plan Area 4.3.5

Once use classes had been defined within the study area the building plan area could be calculated using the Ordnance Survey master map data to assign plan areas to each building.

The area along with the use class allows estimations to be made of the building heat demand benchmarks from CIBSE TM64 data sets.

4.4

Existing Heat Demands

4.4.1

The annual heat demand for each building was calculated using a kWh/m value derived from benchmarks for each use class. For each building its total annual energy demand was calculated by multiplying its area by the relevant energy demand per meter squared.

4.4.2

To spatially plot the existing heat demand across the EHDC study area a 100 m by 100m grid was used so that both annual heat demand and heat density could be identified thematically.

4.4.3

For each 100m by 100m grid square the sum of the total annual heat demand from the buildings was calculated. Using this data a thematic map was created assigning banded colours of blues and greens to low heat demand and yellows and reds to high heat demand.

4.4.4

The existing annual heat demand map is shown in Figure 4.2, Appendix A alongside the Strategic Housing Land Availability Assessment (SHLAA) site allocations that show where new developments within EHDC are proposed.

4.4.5

To provide a heat demand density based on kwh/m across the whole study area the gridded 2 totals are dived by 100m and thematically mapped as well as shown in Figure 4.3, Appendix A.

4.4.6

The data shows the majority of East Hampshire’s energy demand is associated with the small towns and villages that make up the urban environment. Limited high heat density is associated with high street retail within towns. A number of business parks with B2 light industrial units are associated with each urban area. The energy demands of B2 use can vary significantly due to the adaptable nature of the use class such as cold storage, food processing and industrial cleaning. Agricultural B2 use classes can also include grain storage and drying.

4.4.7

Anchor demands are generally associated with the towns of the region, with a number of EHDC assets around Petersfield and Alton. Of particular interest is the co-location of EHDC’s offices at Penns Place and the Taro Leisure centre, and the Alton Leisure Centre and the Alton Community Hospital.

4.4.8

The geographical mapping exercise and engagement with EHDC and stakeholders has not revealed areas or building with significant cooling loads. It is recommended that cooling demands are assessed for the specific projects to be included in the feasibility study. In particular, this is where supply opportunities may include consideration of heat pump technology which is able to provide both heating and cooling.

4.4.9

The DECC online heat map was used to provide a comparison to check our results against.

Although the DECC map is produced at a larger scale the spatial distribution of the heat demand within EHDC is similar to the results produced within this study with the urban areas of Alton, Whitehill & Bordon, Petersfield and Horndean being identified as having the highest heat demand in a predominately rural study area.

2

2

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4.4.10 Figure 4.4 shows the online DECC heat density map below.

Figure 4.4 – Total Heat Density Map (http://tools.decc.gov.uk/nationalheatmap/ )

4.4.11 As well as mapping the spatial distribution of the existing heat demand across East Hampshire, ‘anchor’ heat demand loads have also been identified alongside the Strategic Housing Land Allocation Assessment (SHLAA) sites and municipal owned assets. Anchor loads are where a single building energy load can provide an initial demand for the creation of a heat network.

4.4.12 Figure 4.5 Appendix A shows the existing anchor loads that include general industrial buildings, sewage treatment works, hospitals and leisure centres. The existing anchor loads and future development sites focus around the main urban areas within the study area and have been identified to aid in the selection of potential projects that are listed in Chapter 6 of this report.

4.4.13 EHDC have recently been in receipt of domestic Energy Performance Certificate (EPC) data for the region. This arrived too late to be incorporated into the analysis here but it is recommended that it is considered and used as appropriate in the next phase of work.

4.5

Future Predicted Heat Demands

4.5.1

The future predicted heat demands are based around known developments such as Whitehill & Bordon as well as the SHLAA sites. Unit numbers and use mix of these predominantly residential led developments have been used to calculate their predicted heat demands against Building Regulation 2013 Part L compliance.

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5

Heat Sources

5.1

Introduction

5.1.1

A key principle for establishing a viable heat network is the presence of heat sources. Heat sources are associated with any process (industrial/commercial) that emits or vents heat.

Typically these process are associated with ‘burning’ fuel such as manufacturing process (e.g. cement works) or power generation (e.g. EfW).

5.1.2

There is the opportunity to take heat from such sources to supply heat into a DHN, if they are geographically co-located.

5.1.3

In addition there are a variety of natural heat sources that are available to extract energy from.

Water, geology, and biomass fuels all offer potential sources of heat across the district.

5.1.4

This section geographically references potential heat sources across East Hampshire. Heat source opportunities are then linked to heat demand established in Section 4 to establish key opportunities which are reviewed further in Section 6.

5.2

Approach

5.2.1

A review of heat generation sources was undertaken through identification of point source opportunities across East Hampshire.

5.2.2

Initial review of commercial and industrial locations was undertaken to identify existing or planned manufacturing and energy generation plant that might offer a source of over 1MW of waste heat.

5.2.3

A further investigation of building classification that may offer supplementary (<1MW) heat sources was also undertaken based on broad land classification.

5.2.4

These potential point sources have been identified as industrial developments, leisure facilities, sewage treatment works and hospitals. It is unlikely however that these facilities are emitting waste heat at rates suitable for anchor suppliers for heat networks. They may however offer supplementary heat sources to a network.

5.2.5

Finally a review of natural heat sources has also been undertaken. It is possible to extract low temperature heat from the ground and water bodies (rivers, lakes etc) through heat pump technology. A review of geology has been undertaken to search for consolidated soil (bedrocks, clays, chalks etc) materials that would offer the potential for extracting heat. In addition the water bodies of East Hampshire have also been mapped to review suitable flow and size to accommodate closed and open loop water source heating opportunities.

5.2.6

An analysis of the biomass fuel sources across East Hampshire has also been undertaken.

Whilst biomass supply is not strictly a heat source in itself (i.e. it is a fuel) the EHDC Energy Strategy rightly notes that biomass has a large part to play within the Districtâ&#x20AC;&#x2122;s rural economy.

Understanding the supply chain and potential barriers will be key to developing micro biomass heat sources and placing a value to this market as typically it is a weak link in the supply chain that reduces market take up of micro biomass.

5.3

Existing heat supply opportunities

5.3.1

There are no known sources of waste heat above 1MW in East Hampshire.

5.3.2

Potential supplementary sources of heat (i.e. <1MW) have been mapped and are presented in Figure 5.1. In addition the local gas infrastructure has also been plotted to review the potential for delivering gas led district heat networks.

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5.3.3

Whilst the supplementary heat opportunities are undefined at this point the majority of the opportunities are associated with light industrial areas of the main towns in the district.

5.4

Alternative heat supply opportunities

5.4.1

Heat pumps are a proven technology based on exchanging heat between two mediums. Heat energy is drawn from the ground or water at low temperature (0 degrees to 15 degrees Celsius) and converted to higher temperature for the purpose of heating (30 to 40 degree Celsius) through a heat exchanger. Some energy is used running a pump and the heat exchanger, but otherwise very little energy is put into the system. Heat pumps have an added benefit that in the summer the heat exchange can be reversed reducing the temperature of properties by providing cooling.

5.4.2

Heat pumps can be operated as an open or closed loop system. Closed loop systems are typical in the UK and consist of laying a series of coils either in shallow trenches or vertically down boreholes. Open loop systems have the advantage of limited infrastructure but require an environmental permit to extract and discharge water.

5.4.3

The cost effectiveness of heat pump technology is reliant on the thermal conductivity of the geology beneath the site or the flow of water. It is therefore important to establish suitable geological condition or bodies of water that can support heat pump technology.

5.4.4

Figure 5.1 sets out the suitable locations across the District for both ground source and water source heating.

5.4.5

The bedrock geology of East Hampshire with both sandstones and chalk offer good potential for the delivery of low temperature heat in the district.

5.4.6

For ground source heating there appear to be opportunities to link supplementary heat source locations and ground source heating opportunities to provide a combined low grade heat source opportunities. These areas are highlighted in Figure 5.1.

5.4.7

There appear to be no links between water source heating opportunities and the supplementary heat source areas.

5.4.8

The above evidence shows there is the potential for delivering low temperature heat using heat pump technology across East Hampshire. Whilst these opportunities have not been explored further within this appraisal, it is recommended that heat pumps are included within detailed economic appraisals going forward.

5.5

Low carbon supply chain

5.5.1

There are less than 10 companies operating in East Hampshire advertising within business directories as suppling low carbon heating technologies or biomass fuel. It is expected that demand for low carbon technology in the area is being supported by businesses from a wider Hampshire area.

5.5.2

The East Hampshire Green Infrastructure Study (2011) identified the woodland resource in the region. It showed there are extensive areas of woodland totalling 11,000 hectares, although only 2,100 hectares of which are in public ownership. Furthermore number of the woodland sites are small and fragmented and not well managed making them vulnerable to pressures from recreation and climate change. Figure 5.2 sets out the known woodland resource in the East Hampshire area. Based on forestry management rates this area has the

18

18

http://www.easthants.gov.uk/ehdc/formsfordownload.nsf/0/C2C36BA75896D83780257BB900386612/ $File/Part+2+East+Hampshire+Green+Infrastructure+Strategy+2011+-+2018.pdf

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potential to yield 10,000 tonnes/year of wood alone, through sustainable management. This would be the rough equivalent of 1MW of biomass heat.

5.5.3

There are only two registered companies operating and supplying wood fuel in East Hampshire with the National Biomass Directory or Biofuel Directory.

5.5.4

The apparent limited supply chain for biomass products was referenced by work completed in South Hampshire by PUSH (Partnership for Urban South Hampshire) in a study into biomass 19 fuel within the southern regions of Hampshire .

5.5.5

The findings of the report suggested critical barriers preventing the growth of biomass supply in the South Hampshire area. It is expected that these barriers are similar to East Hampshire and include lack of local demand, lack of space for storage and processing and the high cost of specialist equipment (chippers, delivery vehicles etc).

5.5.6

These barriers can be overcome to allow supply of biomass fuel to increase more rapidly, via a combination of measures: 

Supply and demand must be tied strategically to give supplier confidence to invest;



Under-utilised plots of public land should be converted to wood storage and processing facilities. These plots could be at registered waste facilities such as Household Waste Recycling Centres (HWRCs), waste transfer stations, composting facilities or other sites.

The facility is likely to receive wood from multiple sources but be managed by a single contractor;



Partnership / cooperative approach could be taken by the wood fuel suppliers in the region to reduce the various costs of supply; and

5.5.7

To understand the implications of the limited low carbon supply chain in East Hampshire and what would appear to be missed opportunity in light of the large areas of East Hampshire being ‘off gas’, a full supply chain analysis is recommended. This would align to the wider East Hampshire Business Strategy 2015 to 2021 for investment and services in 20 infrastructure.

5.6

Electrical connection opportunities

5.6.1

There are a number of opportunities to build smaller scale power generation (kW and MW) plants across East Hampshire to supply electricity directly to end users under private wire arrangements. The benefit of co-locating power generation and demand are the opportunities to also off take heat from the power generation plant. This approach is known as combined heat and power (CHP).

5.6.2

The use of fossil fuels in CHP units is a common and well understood technology. The technology works with reciprocating engines, turbines, fuel cells or combined cycles. High exhaust temperatures can be utilised for heating purposes.

5.6.3

Fossil fuel CHP needs to be optimised to the heat demand and not electrical loading. Fossil fuel CHP is not a renewable energy and therefore detracts away from the sustainable energy production vision. It does offer some contribution to CO2 reduction through much improved efficiency.

5.6.4

The supply of Electricity is regulated by the Electricity Act. Generally, an electricity supplier must hold a licence, but some decentralised energy schemes can fall within what is known as a Class Order Exemption which exempts certain suppliers from having to have a licence.

19 20

http://www.push.gov.uk/biomass_supply_chains_in_south_hampshire.pdf http://www.easthants.gov.uk/sites/default/files/documents/BusinessStrategy2015_0.pdf

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5.6.5

A European Court of Justice case (the Citiworks case) in 2008 brought into question the efficacy of the Class Order exemption in the UK due the monopoly they create. Private wire is therefore only suitable between two or more parties agreeing to be supplied through a private connection.

5.6.6

Large industrial installations are likely to benefit financially from direct connection of private wire, as well as municipal facilities with large energy demands (local authority buildings, hospitals, leisure centres). The locations of these facilities would be the same geographical references as presented in Figure 5.1.

5.6.7

Heat Supply options modelled in this Heat Masterplan

5.6.8

For the purposes of the economic modelling within Section 7, it was agreed that biomass and gas CHP would be the heat supply options modelled for each opportunity.

5.6.9

However, it is recommended that the alternative heat supply opportunities described in this section are considered and further appraised on a site specific basis as part of any detailed feasibility study.

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6

Heat Masterplanning

6.1

Introduction

6.1.1

Section 4 and Section 5 have geographically appraised East Hampshire for heat density, potential heat sources and opportunities to supply low carbon electricity directly to high electrical users.

6.1.2

A heat masterplan draws all of these elements together to establish locations where the heat density would be suitable for a DHN in the first instance with key priorities for the supply of heat coming from: i.

Existing waste heat source;

ii.

Renewable heat source/generation;

iii. Fossil fuel CHP directly connected via private wire; and iv. Fossil fuel CHP 6.1.3

This section cross compares the heat density with the above potential supply options to create a list of geographic clusters for delivering DHNs.

6.2

Approach

6.2.1

The approach to reviewing potential DHNs has identified specific geographic locations in East Hampshire based on the following parameters: Energy Demand 

Heat demand: where areas of high heat demand offer a potential market for selling heat;



Heat density: where the concentration of heat demand is the highest /m in to increase the market value of the supply of heat;



Anchor loads: where a single building energy load can provide an initial demand for the creation of a heat network;

2

Building asset value 

Building ownership: where EHDC either owns or can influence the use of a building through planning;



Building use typology: to enable the potential for a good balance of heat demand. For example residential only area’s heat demand profiles are considerably lower in the summer months than winter offering a lower value market compared to a leisure centre with a large annual heat demand all year around.



New development sites: where there is no existing gas infrastructure;

Infrastructure Constraints and Opportunities 

Existing energy infrastructure: where there is no existing gas infrastructure in rural areas.



Physical constraints: such as railways, major roads etc. that would limit the potential for heat network development; and

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

6.2.2

Network growth opportunities: where a network has the greatest potential to grow beyond an initial development project.

Based on the above criteria, six cluster areas have been identified within the study area and are summarised below.

1. Whitehill & Bordon Whitehill & Bordon EHDC’s major strategic growth point with the regeneration of the former MOD sites of Louisburg and Prince Phillip Barracks. The regeneration project will introduce over 2400 new homes, a secondary and primary school, a new town centre and municipal facilities. There are also onward benefits to the regeneration of a number of business parks close to the area.

2. Horndean Outline planning consent has been given to Cala homes to develop a 750 home sustainable urban extension to Horndean. The development is a low density residential led new community with a local centre and primary school.

3. Alton EHDC have plans to redevelop the Alton leisure centre which offers a potential anchor load to base a heat network around. Immediately surrounding the site is a community hospital and a proposed 250 home development. The wider Alton area also offers the potential for heat network expansion based on the wider growth of the town, and the ‘older’ nature of the buildings within the town that could benefit from low carbon heating solutions.

4. Penns Place Penns Place is the location of both EHDC’s main offices and the Taro Leisure Centre.

EHDC’s offices were built in the early 1970s and it is understood due for major refurbishment.

The leisure centre contains a swimming pool which is heated through gas boilers. Both these buildings offer permanent and existing anchor loads for a heat network.

A proposed 89 home development is located a short distance away.

5. Strategic Village Growth Within EHDC’s strategic housing land allocation assessment (SHLAA) a number of villages around East Hampshire for growth have been allocated. Rural villages are typically either at the edges or not connected to gas networks. Gas networks will therefore have to be reinforced at potentially significant cost. An alternative is to deliver a biomass driven heat network to avoid the need to connect to a gas network. The village of Bentley has been used as an example of village growth with an expected 100 homes of development presented within the SHLAA. It should be noted that there are a number of other strategic growth opportunities in East Hampshire such as Liphook, which are considered similar to the Bentley allocation.

6. Rural Community Networks Around 7000 households in East Hampshire are not connected to the gas grid. Typically properties not connected to gas in the region burn oil or use electrical heating solutions. With the price of oil uncertain in the future, and the high carbon cost of oil, investment into wood fuelled heating systems offer rural communities a number of benefits. Villages are also typified by a number of use classes that may benefit from connection to small community heat networks such as hotels, primary schools, and large houses. In addition there are a number of agricultural activities that offer waste sources of heat such grain drying. These offer potential heat supply opportunities in rural areas. The village of Langrish has been used as an example of a rural community with a number of heat demands that may offer the potential for a small biomass led community network.

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6.2.3

These opportunities are presented in Figure 6.1 below. These are also presented with heat demand data in Figure 6.2 Appendix A. Figure 6.1 Key opportunities for delivering heat networks in East Hampshire

6.2.4

A heat masterplan has been developed for each opportunity area. Within each masterplan a predicted energy demand assessment has been undertaken to undertake the size and nature of the demand profile that each project offers for the delivery of a heat network.

6.2.5

The methodology for undertaking the predicted energy demand modelling is provided in Appendix C . A Red, Amber, Green (RAG) analysis has been provided against each of the criteria set out in Section 6.2 and incorporated in the heat masterplans provided in Appendix D

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6.3

Network Design

6.3.1

It was not felt that hydraulic modelling to establish heat network permutations as necessary at this stage of heat masterplanning. Heat networks are more likely to be defined by standards set out in the National Joint of Utility Group parameters in routing utilities than other geographical parameters.

6.3.2

A conceptual heat network design following National Joint of Utility Group standard routing approaches has therefore provided for each opportunity for the purposes of financial modelling.

6.3.3

This approach will also allow us to review the potential implications of existing utility infrastructure in implementing district wide heat network connections.

6.3.4

In analysing each project a number of variations have been explored that looks to refine or expand the opportunity in light of the opportunities each project presents through sensitivity analysis.

6.3.5

The outline design parameters for each masterplan have been appraised for indicative capital expenditure for the purposed of the high level economic appraisal presented in Chapter 7.

6.3.6

CHP Strategy

6.3.7

CHP has been estimated against predicted energy load duration profiles included heat losses and summer cooling allowance. The use of thermal stores is assumed to cover daily hot water peak demand, with gas boilers managing seasonal peaks.

6.3.8

For both Alton and Penns Place where there exists two large anchor demands, namely the swimming pools, a greater provision (80%) of CHP has been allowed for through a more modularised approached that would utilise small CHP units running for longer periods utilising the swimming pool has a ‘heat dump.’

Design Standards

6.3.9

The rapid reestablishment of district heating as an efficient means of heating in the UK has resulted in a significant amount of research which has resulted in the publication of important recent guidance on this subject. Lessons have been learnt from European experience; principally Scandinavian and acceptance of their design criteria and approach to efficient sizing has now been endorsed by design bodies in the UK.

6.3.10 The publication of ‘Heat networks – Code of practice for the UK’ by CIBSE and the Association of Decentralised Energy assembles comprehensive guidance that provides 21 designers with guidance on this subject. This guidance should be followed through the subsequent phases of opportunity development.

21

http://www.cibse.org/Knowledge/CIBSE-other-publications/CP1-Heat-Networks-Code-of-Practice-for-the-UK

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7

Economic potential

7.1

Introduction

7.1.1

An analysis has been undertaken of the potential economic value of delivering heat networks in each of the six energy clusters presented in Chapter 6. The following section sets out the methodology and assumptions made within the assessment and the potential economic returns that could be achieved based on a number of high level variables.

7.2

Heat network costs

7.2.1

An outline network design has been developed for each of the six energy clusters to assess the indicative financial viability. The financial viability analysis is a simple function of capital costs verses operational returns.

7.2.2

In order to establish the capital expenditure of each project both network costs and energy centre costs have been developed.

7.2.3

Network costs have been calculated based on standard utility runs to identified buildings and known cost of installation of heat pipes based on primary pipework (that from the energy centre), secondary pipework (that which spurs from the primary typically down smaller roads) and tertiary pipework (that which spurs from the secondary pipework and links directly to the building).

7.2.4

Energy centre costs have been established based on three sizes: 

Large ‘town size’ scale for Whitehill & Bordon and Horndean;



Medium ‘district’ scale for Alton, Penns Place and Village Growth;



Small ‘community’ scale for village community networks.

7.2.5

Two types of energy centres have been costed. The first is a gas led energy centre with combined heat and power sized against baseload hot water demand support by gas condensing boilers. The second a biomass boiler approach, with no gas backup.

7.2.6

Energy centre design and costs have been established from project examples, PBA design 22,23 experience and DECC evidence based on cost of technology installation . Locations for energy centres were based on a central location for each scheme, noting that there are likely to be competing drivers for siting energy centres (land value, access etc) that will need to be considered within detailed feasibility assessments. Assumption parameters for energy centre and network costs are provided in Appendix D .

7.2.7

Further work to refine each project opportunity in any of the clusters is critical to understand network efficiency and energy centre design (for example: space availability, grid connection, air quality assessment, and practicality of network routing).

22

Review of the generation costs and deployment potential of renewable electricity technologies in the UK, Study Report, DECC 2011.

23 http://www.poyry.co.uk/sites/www.poyry.uk/files/A_report_providing_a_technical_analysis_and_costing_of_DH_ networks.pdf

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7.3

Operational costs and revenue return

7.3.1

To assess the potential operation costs and revenue returns predicted energy demand calculations have been undertaken based on known energy demands or benchmark data.

Basic hourly energy demand profiles have been established for heat clusters to understand hot water and space heat ratios for the purposes of sizing combined heat and power and biomass heat plant.

7.3.2

There are a range of cost elements involved in the development and operation of heat networks. These include the upfront capital investment but also costs associated with ongoing operation of the network.

7.3.3

In developing an economic model to test each of the energy clusters the following key variables were utilised as presented in Table 7.1 below.

Table 7.1 Cost assumption used in Heat Network Economic Model

7.3.4

Cost Element

Value/assumption used in model

Assumption

Fuel

Wholesale cost of gas @ 3.5p/kWh

Commercial gas price

Pumps

Retail price of electricity @ 10p/kWh

Commercial electrical price

Operation & Maintenance

1 % of capex

Reasonable allowance to fund maintenance staff for life of project

Administration

0.25 % of capex

Reasonable allowance to fund Administration for life of project

Insurance

0.10% of capex

Reasonable allowance to cover Insurance for life of project

Business rates

0.20% of capex

Reasonable allowance to cover business rates

The sources of revenue associated with the heat network are broken down into the charge levied on the developer to connect to the network (connection charge) and the payments made by the user for use of the heat (heat tariff, standing changes). In addition, where the heat is generated by CHP, there is an additional revenue stream in the form of electricity sales. Finally, for biomass scheme, the plant owner will benefit in the form of renewable heat incentive (RHI) payments. A summary of the assumed income assumptions are provided below in Table 7.2.

Table 7.2 Income assumptions used in Heat Network Economic Model

Income element

Value/assumption used in model

Assumption

Sale of heat

6p/kWth

Typical market rate associated with ‘gas equivalent’

Domestic standing charge

£250/year

Typical market rate associated with ‘gas equivalent’

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Table 7.2 Income assumptions used in Heat Network Economic Model

Income element

Value/assumption used in model

Assumption

Commercial standing charge

£1/m /year

2

Assumed basic rate

Residential connection charge

£3000/dwelling

Comparative cost to connecting to gas

Commercial Connection charge

£9.25/m

Grid Electricity sales from CHP

4p/kWh

Wholesale price of 24 electricity

Private Electricity sales from CHP

Retail price of electricity @ 10p/kWh

Assumed commercial tariff private wire rate

Renewable Heat Incentive (RHI)

Prevailing RHI rate for relevant tariff band

Inflation

2.5% for heat, gas, electricity and RHI rates

Comparative cost to connecting to gas

2

Ofgem

25

Assumption

7.3.5

Key additional parameters applied within the financial model are associated with operational expenditure. This includes an assumption of operation and maintenance cost set at 1% of the total capex. This variable is particularly significant where there is technology risk. Both biomass and CHP have the potential for high levels of maintenance. This will significantly affect the investment opportunity and should be a key risk factor considered in later financial evaluation stages and sensitivity analysis.

7.3.6

Further assumption parameters for plant operation are provided in Appendix D

7.4

CO2 Savings

7.4.1

Based on the energy demand results a calculation has been made on the potential carbon emission savings from each approach. The calculations are based on Building Regulation Part L carbon emission factors.

7.4.2

These figures have been levalised against the CAPEX of the system to create a £/tCO2 saved.

This is important to understand the comparative cost of carbon saving to ensure the most cost-effective route to carbon emission reduction can be achieved in East Hampshire.

7.5

Economic modelling approach

7.5.1

The estimated CAPEX and OPEX have been run over a 25 year and 40 year investment horizon for both gas CHP and biomass to establish;

24 25



Simple payback period



Net present value (using a discount rate of 3.5% , as per the Green Book Guide); and

26

http://www.apxgroup.com/ https://www.ofgem.gov.uk/environmental-programmes/non-domestic-renewable-heat-incentive-rhi

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

Internal rate of return

7.5.2

The investment has been assumed on a self-financed position rather than debt.

7.5.3

A range of base assumptions have been made on financial parameters which are presented in Appendix E. In addition, full economic models of all of the options presented in this economic appraisal have been provided separately to EHDC.

7.5.4

The results of the technical and financial assessment of potential networks are based on broad assumptions. The results should not be used as the basis for network delivery. The aim of the results is to provide a broad indication of whether there may be a business case to explore taking forward schemes to outline or detailed feasibility.

7.6

Sensitivity Analysis

7.6.1

Each heat masterplan is different in terms of its geographical position and energy profile. As a result the financial outcomes are inevitably different when using generic modelling data. It is however possible to fine tune each economic model by undertaking sensitivity analysis. The aim of the sensitivity analysis is to review what might make a project more attractive from a financial perspective by altering key input data.

7.6.2

Each heat masterplan has therefore undergone sensitivity analysis to refine the project opportunity.

7.6.3

In addition to the assumptions detailed above, there are other aspects of the economic modelling which can have a significant effect on the economics of heat networks but have not been included in this sensitivity analysis. These are summarised below.

7.6.4

It is recommended that these particular sensitivities are fully explored as part of the feasibility studies of the selected priority sites.

Heat Price

7.6.5

This sensitivity analysis has not included varying the heat price which has been fixed at 6p/kWth across the projects with a standard 2.5% yearly inflation factor. The industry’s newly formed Heat Trust are due to publish their proposed consumer heat price comparator later in 2015 and may be a useful reference when further exploring projected heat costs for domestic consumers. However it should be noted that the price paid will be subject to the economics of the particular scheme and ultimately a commercial decision of the heat network operator.

Gas Price

7.6.6

This sensitivity analysis has not included varying the gas price which has been fixed at 3.5p/kWh across the projects with a standard 2.5% yearly inflation factor. The volatility of the gas market and the price paid by UK consumers is well documented. A higher gas price will evidently improve the economics of a biomass fuelled heat network compared to a gas fuelled equivalent.

Renewable Heat Incentive (RHI)

7.6.7

Finally it should be noted that the RHI tariff paid for heat generated by eligible heat generation technologies in the UK will have a significant bearing on the economics of a fuelled heat network. Two particular aspects are worth exploring further at the feasibility stage. Firstly, the 27 RHI tariff rates continue to reduce as per the rules of the scheme (so called ‘degression’).

26

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/220541/green_book_complete.pdf 27 https://www.ofgem.gov.uk/environmental-programmes/non-domestic-renewable-heat-incentive-rhi

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Therefore the economics of schemes installed and operational in 5-10 years’ time may look somewhat different to today.

7.6.8

Secondly, the RHI tariff are arranged in bands according to the size of the heat generation plant (i.e. kW rating of biomass boilers). In certain circumstances it is possible to configure the design of biomass boilers systems to optimise the RHI the scheme attracts e.g. 3 x 199kW boilers instead of 1 x 600kW boiler.

7.7

Penns Place Economic Appraisal

7.7.1

The following parameters, set out in Table 7.3 below, have been calculated for the Penns Place heat masterplan.

Table 7.3 Technical Parameters for Penns Place

7.7.2

Parameter

Value

CHP System Size (kWe)

400

Proportion of heat from CHP (%)

80

Boiler size (gas or biomass) (kW)

1,850

Primary and Secondary Network Length (m)

1,282

Based on the above assumptions Table 7.4 sets out the financial positon of the Penns Place heat masterplan.

Table 7.4 Financial Assessment of Penns Place

Parameter

Gas

Financial period (years)

25

40

25

40

Total Capex (£million)

2.7

2.7

2.7

2.7

Cumulative position (EBITDA) (£million)

1.9

6.0

0.07

0.3

Average annual income (£million)

0.07

0.15

0.002

0.007

Internal Rate of Return (%)

4.5

6.7

0.2

0.9

Net Present Value (£million)

0.3

1.6

-0.7

-0.6

Payback (years)

16

16

21

21

CO2 saved over baseline/annum (%) Cost per tonne carbon saved (£/tonne)

7.7.3

Biomass

15 760

82 470

130

80

The outline economic appraisal for a site wide network for Penns Place presents a potential opportunity for investing in a heat network based on either a gas or a biomass approach with a long term investment view.

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7.7.4

The anchor loads of the existing swimming pool and EHDCâ&#x20AC;&#x2122;s offices offer an extremely attractive proposition for supplying a heat network that balances two commercial heat demands, with a future development opportunity nearby.

7.7.5

The carbon emissions for both gas and biomass offer good reductions over the baseline.

7.7.6

The economic return would be increased if EHDC were in the position to influence the residential masterplan to increase development density to create a high value heat demand for a network.

Figure 7.1 Penns Place Heat Network

Sensitivity Analysis 7.7.7

As stakeholders noted at the workshop held in August (see Section 7.14 below), the Taro Leisure Centre and EHDCâ&#x20AC;&#x2122;s offices alone offer an attractive heat demand for the supply of district heating. This opportunity exists immediately.

7.7.8

Initial modelling with a gas first approach suggests an IRR of between 5 - 7% and payback within 14 years may be possible.

7.7.9

Further detailed exploration of this opportunity should be undertaken based on these initial results.

7.8

Whitehill & Bordon Economic Appraisal

7.8.1

Energy demand modelling for Whitehill & Bordon is based on the delivery of a range of municipal facilities including Local Centre, Offices, Leisure Centre, Supermarket, Primary School, Secondary School, as well as the allocation of 2400 homes as presented in Appendix D.

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Figure 7.2 Whitehill & Bordon – Town Wide Heat Network

7.8.2

The following parameters, set out in Table 7.5 below, have been calculated for the Whitehill & Bordon heat masterplan.

Table 7.5 Technical Parameters Whitehill & Bordon

7.8.3

Parameter

Value

CHP System Size (kWe)

500

Proportion of heat from CHP (%)

40

Boiler size (gas or biomass) (kW)

9000

Primary and Secondary Network Length (m)

21,850

Based on the above assumptions Table 7.6 sets out the financial positon of the Whitehill & Bordon heat masterplan.

Table 7.6 Financial Assessment of Whitehill & Bordon

Parameter

Gas

Biomass

Financial period (years)

25

40

25

40

Total Capex (£million)

21

21

22

22

Cumulative position (EBITDA) (£million)

7.4

30

13.4

34.4

Average annual income (£million)

0.3

0.75

0.54

0.86

Internal Rate of Return (%)

2.52

5

4.3

6

Net Present Value (£million)

-2

5

1.7

8.2

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Table 7.6 Financial Assessment of Whitehill & Bordon

Parameter Payback (years)

Gas 19

CO2 saved over baseline/annum (%) Cost per tonne carbon saved (ÂŁ/tonne)

Biomass 19

16

-6

16 82

N/A

N/A

260

160

7.8.4

The outline economic appraisal for a site wide network for Whitehill & Bordon presents a potential opportunity for investing in a heat network based on either a gas or a biomass approach.

7.8.5

The initial IRRâ&#x20AC;&#x2122;s show potential to deliver returns that may attract investors who are interested in low but longer term investment horizons. There is however a significant up front capital expenditure for the project due to the extent of the heat network which was estimated as ÂŁ14 million alone.

7.8.6

The carbon emission benefit for the gas CHP network approach would appear to be less effective than the baseline. This is largely due to the electricity required to pump the system.

Excluding the carbon loss associated with pumping the gas approach would offer a 3% improvement over baseline.

7.8.7

Biomass offers a high carbon benefit over the baseline.

7.8.8

It is however possible to reduce the heat network cost by focusing the network on the dense town centre energy demand where the majority of the heat demand could be focused.

Sensitivity Analysis

7.8.9

An analysis has been undertaken of a heat network focused in the town centre only connecting two schools, the town centre, supermarket and leisure centre.

Figure 7.3 Whitehill & Bordon Local Centre Heat Network

Location of possible heat network connecting the Woolmer Trading Estate and Viking Park with the existing A325 used as a heat spine

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7.8.10 This approach reduces the pipe network costs to £750,000 with an annual heat demand of around 4.6GWh/year.

Table 7.7 Financial Assessment of Whitehill & Bordon (town centre)

Parameter

Gas

Biomass

Financial period (years)

25

40

25

40

Total Capex (£million)

2.6

2.6

2.7

2.7

Cumulative position (EBITDA) (£million)

3.2

8.6

1.4

2.7

Average annual income (£million)

0.1

0.2

0.05

0.68

Internal Rate of Return (%)

7.5

9.2

4.3

5.4

Net Present Value (£million)

1.1

2.8

0.18

0.6

Payback (years)

13

13

15

15

CO2 saved over baseline/annum (%) Cost per tonne carbon saved (£/tonne)

9.6 1,000

82 635

122

75

7.8.11 This reduces capital costs for both biomass and gas approaches to around £3 million with an IRR of between 4 and 9%.

7.8.12 The carbon benefit of a gas led network also improves with this density to c.10% reduction over baseline conditions, largely due to the smaller pumping distances. Biomass continues to offer excellent emission reduction potential.

7.8.13 Condensing the network to the high end heat users therefore increases the rate of return whilst reducing overall costs.

7.8.14 As noted in Section 4 there are a number of opportunities to supply heat to industrial estates to the south of Bordon. This was also noted at the stakeholder workshop with the suggestion of connecting the Woolmer Trading Estate and Viking Park with the existing A325 used as a heat spine.

7.8.15 These opportunities should be further tested through detailed appraisal of network expansion opportunities.

7.9

Alton Economic Appraisal

7.9.1

The energy demand modelling for Alton is based on the opportunity of linking the Alton Sports Centre with the Community Hospital and the potential connection to 200 home south west extension to Alton.

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Figure 7.4 Alton Sports Centre Heat Network

7.9.2

The following parameters, set out in Table 7.8 below, have been calculated for the Alton heat masterplan.

Table 7.8 Technical Parameters for Alton

7.9.3

Parameter

Value

CHP System Size (kWe)

400

Proportion of heat from CHP (%)

80

Boiler size (gas or biomass) (kW)

2200

Primary and Secondary Network Length (m)

3829

Based on the above assumptions Table 7.9 sets out the financial positon of Alton heat masterplan.

Table 7.9 Financial Assessment of Alton

Parameter

Gas

Biomass

Financial period (years)

25

40

25

40

Total Capex (ÂŁmillion)

4.4

4.4

4.4

4.4

Cumulative position (EBITDA) (ÂŁmillion)

1.7

7

-0.7

-0.27

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Table 7.9 Financial Assessment of Alton

Parameter

Gas

Biomass

Average annual income (£million)

0.06

0.18

-0.03

-0.007

Internal Rate of Return (%)

2.7

5.2

-1.7

-0.5

Net Present Value (£million)

-0.36

1.3

-1.6

-1.5

Payback (years)

19

19

N/A

N/A

CO2 saved over baseline/annum (%) Cost per tonne carbon saved (£/tonne)

15% 1000

20% 630

180

110

7.9.4

The outline economic appraisal for a site wide network for Alton presents a low potential opportunity for investing in a heat network based on either a gas or a biomass approach even with a long term investment view.

7.9.5

Whilst both the leisure centre and the hospital present excellent anchor loads, the extension of the network across 250 low carbon homes detracts from the investment case. Increasing the development density around the anchor loads could offer a better investment opportunity but with outline planning granted the opportunity to influence the masterplan in favour of a heat network solution will be difficult.

Sensitivity Analysis

7.9.6

The wider Alton area offers a range of new urban extensions, high street and commercial offerings, which offer potential expansion opportunities for a network. An Alton Wide heat network was therefore appraised noting the infrastructure constraints that the rail line presents in design town wide network. An example of how an Alton wide network would look is presented in Figure 7.2 below.

Figure 7.5 Alton Wide Heat Network

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7.9.7

The network presented is over 17km long calculated at a cost of approximately £11 million.

The limited heat demand offered by the urban extensions compared to the length of the network has been appraised. Neither a biomass model or gas led approach offers any return on investment.

7.9.8

The stakeholder workshop noted a further opportunity within Alton Town centre with the recent closure of the Coors Brewery site on Turk Street. If this site was to come forward as a high density mixed use land development project a community heat network would be a potential option. This would also offer the opportunity of immediate expansion into Alton high street for the higher demand older building stock of Alton. Further exploration of this opportunity should be considered in support of enabling regeneration of this local land asset.

7.10

Rural Community Network Economic Appraisal

7.10.1 The following parameters, set out in Table 7.10 below, have been calculated for the Rural Community Network heat masterplan.

Table 7.10 Technical Parameters for the Rural Community Network

Parameter

Value

Boiler size (gas or biomass) (kW)

411

Tertiary Network Length (m)

50

7.10.2 Based on the above assumptions Table 7.11 sets out the financial positon of the Rural Community Network heat masterplan.

Table 7.11 Financial Assessment of Rural Community Network

Parameter

Biomass

Financial period (years)

25

40

Total Capex (£million)

0.38

0.38

Cumulative position (EBITDA) (£million)

1.02

1.14

Average annual income (£million)

0.04

0.03

Internal Rate of Return (%)

15.2

15.3

Net Present Value (£million)

0.56

0.6

Payback (years)

7

7

CO2 saved over baseline/annum (%)

82

82

Cost per tonne carbon saved (£/tonne)

80

50

7.10.3 The outline economic appraisal for a site wide network for a small rural community network presents a potential opportunity for investing in a heat network based on a small scale biomass approach.

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7.10.4 The carbon emission benefit of this approach would appear to have the lowest cost per tonne of carbon saved of all approaches. This could be the cheapest approach to saving carbon emissions from heat networks in East Hampshire.

Figure 7.6 Rural Community Heat Network

Sensitivity Analysis 7.10.5 Key to ensuring the investment case for a rural network is to keep the capital costs of the heat network down. Sensitivity analysis on network length within this economic appraisal suggests that as long as the rural network does not exceed 500m it is still possible to establish an IRR of 15% with a payback of 7 years. This should be considered in light of the alternative in a rural area such as oil fired boilers, which offers no payback in the investment.

7.11

Strategic Village Growth Economic Appraisal

7.11.1 The following parameters, set out in Table 7.12 below, have been calculated for the Strategic Village Growth heat masterplan.

Table 7.12 Technical Parameters Strategic Village Growth

Parameter

Value

Biomass Boiler size (kW)

400

Primary and Secondary Network Length (m)

5,900

7.11.2 Based on the above assumptions Table 7.13 sets out the financial positon of the Strategic Village Growth heat masterplan.

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Table 7.13 Financial Assessment of Strategic Village Growth

Parameter

Biomass

Financial period (years)

25

40

Total Capex (£million)

4.5

4.5

Cumulative position (EBITDA) (£million)

-4.8

-6.3

Average annual income (£million)

-0.19

-0.15

Internal Rate of Return (%)

N/A

N/A

Net Present Value (£million)

-4.4

-4.9

Payback (years)

N/A

N/A

CO2 saved over baseline/annum (%)

82

82

Cost per tonne carbon saved (£/tonne)

1400

870

7.11.3 The outline economic appraisal for a strategic village growth heat network does not offer a potential opportunity for investing in a heat network based on biomass. This is largely down to the extensive network costs that would be associated with extending a heat main around a village with limited revenue returns from low density low carbon homes.

Figure 7.7 Strategic Village Growth Heat Network

7.11.4 The stakeholder workshop noted a number of other villages which may offer opportunities for heat network development. In particular the opportunities for small urban fringe heat network opportunities in East Hampshire such as around Liphook. This should be considered during the planning process as required within the EHDC local plan policy.

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7.12

Horndean Economic Appraisal

7.12.1 Energy demand modelling for Horndean is based on the delivery of a 693 residential led development including a local centre, offices, primary school, and community centre as presented in Appendix D .

7.12.2

The following parameters, set out in Table 7.14 below, have been calculated for the Horndean heat masterplan.

Table 7.14 Technical Parameters for Horndean

Parameter

Value

CHP System Size (kWe)

230

Proportion of heat from CHP (%)

40

Boiler size (gas or biomass) (kW)

3500

Primary and Secondary Network Length (m)

8,563

7.12.3 Based on the above assumptions Table 7.15 sets out the financial positon of the Horndean heat masterplan.

Table 7.15 Financial Assessment of Horndean

Parameter

Gas

Biomass

Financial period (years)

25

40

25

40

Total Capex (£million)

9.1

9.1

9.5

9.5

Cumulative position (EBITDA) (£million)

-0.15

6.1

2.3

7.9

Average annual income (£million)

-0.006

0.15

0.09

0.2

Internal Rate of Return (%)

-0.2

3.1

2.3

4.3

Net Present Value (£million)

-2.4

-0.4

-0.8

0.9

Payback (years)

N/A

26

19

19

CO2 saved over baseline/annum (%) Cost per tonne carbon saved (£/tonne)

-6% N/A

82% N/A

280

170

7.12.4 The outline economic appraisal for a site wide network for Horndean associated with a gas suggests that work would need to be undertaken to decrease capital expenditure and increase returns to make the project more attractive from an investment point of view.

7.12.5 The largely residential led development does not offer a particular attractive end heat market due to the low heat demand and extensive network required to supply it.

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7.12.6 The carbon emission benefit for the gas CHP network approach would appear to be less effective than the baseline. This is largely due to the electricity required to pump the system.

Excluding the carbon loss associated with pumping the gas approach would offer a 3% improvement over baseline.

7.12.7 Biomass offers a high carbon benefit over the baseline.

7.12.8 A biomass fuel supply makes the opportunity more attractive but relies on the RHI as the basis of investment, which is considered a major investment risk due to evolving nature of the RHI programme.

Figure 7.8 Hornden Heat Network

Sensitivity Analysis 7.12.9 Removing the RHI from the appraisal reduces the IRR to 5% for the 40 year appraisal.

7.12.10 Similar to Whitehill & Bordon and Alton, if development density is increased and new anchor load demands are added to the development masterplan this will increase the potential rate of returns available at the site. It is understood however that the scheme has already received outline planning consent and the opportunity to influence development mix and density from EHDCâ&#x20AC;&#x2122;s perspective has passed.

7.12.11 The economic appraisal of Horndean does show the opportunity for EHDC in the future to influence the masterplanning process at the earliest opportunity to ensure developments look at supporting the delivering of heat networks through increasing density and development mix.

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7.13

Summary of Results

7.13.1 The economic appraisal above has considered a range of scenarios for each site in terms of fuel (gas CHP, biomass) and timescale (25, 40 year investment horizon).

7.13.2 The impact of different options at the sites has also been considered and shown that refining the scope of the outline scheme can improve the returns in some cases, namely: 

Penns Place - remove dwellings from scheme



Whitehill & Bordon - Town centre focussed scheme instead of town wide

7.13.3 Thus the summary Table 7.16 below presents the optimal returns which may be achieved for each site including these refined options for Penns Place and Whitehill & Bordon. The range of IRR and paybacks available are a function of the relative contribution of the RHI (biomass) or revenue from private wire (gas CHP).

Table 7.16 Summary of Economic Appraisal

Opportunity

Annual Heat Demand (MWh)

Capital Cost (£m)

Range of modelled rates of return (IRR)

Range of modelled payback (years)

Economic Scenario*

Penns Place (no dwellings)

3,472

1.7

0.27% to 7.8%

14 – 19 yrs

Gas 40 yrs

Whitehill & Bordon (Town centre)

1,180

2.7

4% to 9%

13 – 15 yrs

Biomass 40 yrs

4.4

-1.7% to 5%

Not viable to 19 yrs

Gas 40 yrs

Alton (Leisure Centre site)

4,293

Rural Community Network

961

0.4

15%

7 yrs

Biomass 40 yrs

Strategic Village Growth

653

4.5

Not Viable

Not Viable

Not Viable

Horndean

1,409

9.1 to 9.5

-0.1% to 4%

Not viable to 19 yrs

Biomass 40 yrs

7.14

Stakeholder workshop - August 2015 th

7.14.1 A workshop was held on the 4 August 2015 with key stakeholders from EHDC, the local community and public sector bodies such as the Forestry Commission and South Downs National Park to explore preliminary Heat Mapping and Masterplan results.

7.14.2 The group of stakeholders agreed to continue as part of the onward engagement in delivering heat network opportunities. The list of attendees for the workshop and a summary of outcomes are included in Appendix F . Further engagement is intended with the working group through the development of heat masterplans across East Hampshire.

7.14.3 The purpose of the workshop was to ‘ground truth’ the results of the geographic analysis to ensure the findings were consistent with local knowledge and reflect on the economic returns produce within the high level financial appraisal.

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7.14.4 The following key findings came from the workshop: 

Penns Place was considered to be an ideal candidate for further exploration of a heat network in detail;



The Coors Brewery site offers an excellent opportunity for EHDC to influence how infrastructure is delivered at the earliest stage;



Whitehill & Bordon offers an excellent opportunity to develop synergies with lower value industrial parks to the south to offer cheap low carbon heat to attract new business into East Hampshire;



Key to unlocking the potential for delivering heat networks on new strategic development sites is early engagement between EHDC planning department and environment & sustainability team. Through this early engagement opportunities can be tested to gain the maximum benefit at outline design.



There are a number of opportunities for EHDC to influence neighbourhood plans that are progressing to ensure heat networks opportunities could be delivered if viable;



Establishing a biomass supply chain in East Hampshire is critical although needs to be undertaken with Hampshire County Council in particular as well as EHDC to ensure transport logistics are managed accordingly;



There are many restrictions on the use of rural property that will need to be factored into any proposals;



There are a number of rural opportunities associated with agricultural practices such a grain drying that offer excess sources of heat. Whilst there is no central record of these opportunities there could be a number of opportunities available as part of the rural community to link heat producers to users;



The rural market is extremely interesting with a number of other funds that could be drawn together such as the Rural Community Energy Fund.

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8

District Heating Potential for East Hampshire

8.1

Introduction

8.1.1

Heat Networks form a key part of the governmentâ&#x20AC;&#x2122;s heat strategy to support UK carbon reduction target. Whilst there are around 2000 networks in operation in the UK, they currently provide less than 2% of UK heat demand. DECC estimates 14% of UK heat demand could be met by heat networks by 2030 and 43% by 2050

8.1.2

The results of Heat Mapping and Masterplanning appraisals have presented evidence to support further exploration of heat networks in the East Hampshire area, which aligns to the national strategy.

8.1.3

Currently the opportunities are predicated on a simple economic appraisal and carbon reduction analysis but there are wider benefits for delivering heat networks that have not been assessed within this analysis.

8.1.4

The following section provides a further overview of the opportunities for district heating in East Hampshire. In addition further exploration of potential benefits beyond economic returns has also been provided.

8.1.5

In the event that EHDC look to invest in delivering heat network these benefits would be drawn into a wider Green Book Financial appraisal in line with Treasury investment requirements.

8.2

Overview of Opportunities for District Heat Networks in East Hampshire

8.2.1

The economy and geography of East Hampshire does not necessarily lend itself to a region of high heat demand compared to many other more industrial and high urban regions of the UK.

8.2.2

It does however offer a very interesting energy profile with large proportions of the district off gas grid. In addition there are very few other opportunities to decarbonise East Hampshire due to their historic nature of towns and the wide National Park limiting the amount of large scale renewable generation potential.

8.2.3

Heat networks therefore offer a great potential to decarbonise both towns and villages of the district.

8.2.4

The heat mapping appraisal has identified a number of key strategic opportunities associated with EHDC owned assets.

8.2.5

The most obvious opportunity available is associated with the connection of EHDCâ&#x20AC;&#x2122;s offices and the Taro Leisure Centre. The opportunity to develop an energy centre connecting these two facilities immediately exists. In exploration with the Stakeholder Working Group it was agreed that this opportunity should be identified as a priority site.

8.2.6

The key strategic growth town of Bordon also presents an immediate opportunity to influence the low carbon agenda of the town. There are a number of municipal buildings coming forward that could be co-located to create a DHN, with value being added by creating geographic continuity with the town centre, supermarket and leisure facilities. The development however is out of the hands of EHDC other than through its duties as the planning authority. It is recommended that an infrastructure working group is established with the developers of the Whitehill & Bordon growth area to ensure consistency in approaches to delivering infrastructure.

28

28

The Future of Heating: Meeting the Challenge (DECC, 2013)

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8.2.7

Additionally the town of Alton presents a number of interesting options for a district heat network. In particular and as modelled within this study, the potential for delivering a heat network between the Alton leisure centre which is due for refurbishment, the community hospital, and the proposed ‘Treloar’ residential development south west growth of Alton.

8.2.8

Other key potential opportunities include the potential for a heat network as part of the redevelopment of the former Coors Brewery site in Alton town centre. This 5 hectare site would be attractive since it would offer heat network extension into Alton town centre where properties have limited otherwise opportunities to decarbonise.

8.2.9

Finally, a large proportion of East Hampshire is not connected to the national gas grid. East Hampshire also has an abundance of wood resource. There is however a limited biomass fuel economy in East Hampshire that could support the investment into the rural economy.

8.2.10 This is a local market and, as the economic analysis presented, shows a real opportunity to create revenue from local heat supply, and rural job creation, which in turn will create revenue to EHDC. As a result both biomass technology and fuel supply could rapidly grow in the East Hampshire market. There is however the need to stimulate this market through forward investment both into infrastructure and operational supply.

8.2.11 A supply chain analysis is recommended of the biomass market to explore the market gap and look to enabling the growth of a biomass supply chain that could include technology supply, servicing and maintenance jobs, and fuel supply. This would align the rural energy market to East Hampshire’s Business Strategy 2015 to 2021.

8.3

Carbon Taxation Benefits

8.3.1

Within the Climate Change Act a number of ‘carbon taxes’ have been established to incentivise high energy users to reduce carbon emissions. At the highest level this is enshrined in the UK Government’s commitments to EU Emission Trading Scheme, but also through to individual business level in the UK through the CRC Energy Efficiency Scheme, Carbon Levy and levy exemption certificates (LECs).

8.3.2

A supply of low carbon heat and electricity will offer EHDC and other large energy users a way of reducing carbon taxation costs across their organisations. This additional value should be considered within detail economic appraisals going forward.

8.4

Social Benefits

8.4.1

Energy prices continue to be effected by geo-politics with the rise and fall of oil prices relating to the international markets. This variation creates significant energy inflation risk beyond the control of EHDC and the population of East Hampshire.

8.4.2

A source of decentralised energy with preference of being ‘off fossil fuel’ allows a degree of protection from energy inflation. This has onward benefits including: 

The ability to influence and reduce fuel poverty;



Improve the affordability of heating to reduce illness associated with damp and cold which effect vulnerable people;



Creation of jobs in the local market and within the rural economy which is often limited in its ability to diversify; and



Reducing the infrastructure costs of delivering new urban development, which in-turn enables economic growth.

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8.5

Economic Benefits and Funding Opportunities

8.5.1

Beyond the basic financial returns and the potential reduction of costs to end users delivering heat infrastructure can unlock a number of funding sources to support EHDC in decarbonising the district. These funding sources can be called on to either invest directly into networks or support the exploration of viability. A summary of potential funding sources are provided below. 

Renewable heat incentive;



Renewable Obligation Order for biomass CHP;



Contract for Difference for biomass CHP;



Enhanced capital allowance for tax relief of CHP;



ECO funding;



Bond financing and prudential borrowing; and



Rural Community Energy Fund (RCEF) – this will be specifically investigated to develop the options for a rural heat network. Access to the RCEF funding will require partnership with community partner e.g. Parish Council or Charity



European funding opportunities through EU programme e.g. Horizon 2020

8.5.2

For each of the projects identified it is possible to explore these funding sources to reduce investment risk and increase the potential for better rates of return as part of future feasibility work.

8.5.3

In order to access a number of these funds it will be important to consider partnerships as well as EHDC leading on funding calls. For example ECO (Energy Companies Obligation) can only be provided through energy suppliers such as British Gas, and the Rural Community Energy Fund through community groups. EHDC however can be the catalyst to draw these organisations together to access funding.

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9

Conclusions and Recommendations

9.1

Introduction

9.1.1

PBA were commissioned by EHDC to identify areas of opportunity for delivering heat networks by undertaking a geographical analysis of the district.

9.1.2

The study refined key opportunities for delivering DHNs and undertook outline economic appraisal to select three sites with the highest potential to take forward to further detailed feasibility.

9.1.3

As shown in Section 3, just 1% of energy is currently supplied by biomass fuel sources. This study has also explored the opportunity for EHDC to grow this significantly through supporting the development of biomass fuel supply chains to support low carbon heat network development.

9.2

Heat Mapping and Masterplanning Findings

9.2.1

This Heat Mapping and Masterplanning has appraised a number of key opportunities for delivering heat networks in East Hampshire.

9.2.2

These opportunities include: 1. Whitehill & Bordon town centre regeneration; 2. Horndean sustainable urban extension; 3. Alton leisure centre anchor load and town centre regeneration; 4. Penns Place connection of the Taro Centre and EHDC’s Offices; 5. Strategic Village Growth associated with villages off gas grid; and 6. Rural Community Networks connection high demand properties off gas grid.

9.2.3

The results have shown the following heat network opportunities in order of priority: 

A heat network connection EHDC’s offices at Penns Place to the Taro Leisure Centre with the potential onward connection to future development sites in Petersfield



A town centre heat network as part of the Regeneration of Whitehill & Bordon.



The potential for delivering a heat network between the Alton leisure centre which is due for refurbishment, the community hospital, and the proposed ‘Treloar’ residential development south west growth of Alton.

9.2.4

In addition, the study has shown the potential for developing rural community heat networks associated with dense heat loads in village settings.

9.2.5

There are a number of other opportunities that EHDC could explore especially associated with strategic growth. It is important however that any engagement is done at an early design and economic appraisal stage to ensure the investment requirements of a heat network can be accommodated with the development viability appraisals.

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9.3

Recommended next steps Recommendation 1: Carry out feasibility studies at EHDC Priority sites

9.3.1

A detailed feasibility study is recommended for the Penns Place opportunity. This should examine the immediate opportunity to link the EHDC offices and the Taro Leisure Centre building with a combine energy centre but also explore the option for linking the future proposed homes development at Penns Field. The current operators of the Taro LC Places for People will need to be engaged as part of this study.

9.3.2

It is recommended that outline feasibility studies are undertaken at Whitehill & Bordon and Alton.

9.3.3

The Whitehill & Bordon development however is out of the hands of EHDC other than through its duties as the planning authority. It is therefore recommended that an infrastructure working group is established with the developers of the Whitehill & Bordon growth area to ensure consistency in approaches to delivering infrastructure.

9.3.4

Within this working group a special project should be set up to explore the financial opportunity of delivering a heat network in the town which can draw together delivery partners.

This aligns the heat network development opportunities in the region to EHDC’s aspirations to invest in infrastructure and potentially deliver a municipal led Multi Utility Service Company (MUSCo).

9.3.5

An outline feasibility is recommended of the heat network opportunities associated with the Alton area. Whilst this Masterplan has examined the potential a heat network centred around the leisure centre, the study has also identified at opportunity at the former Coors Brewery site in the Town Centre.

9.3.6

This offers an excellent opportunity to create a high value land development project in the centre of Alton. Again whilst EHDC do not have direct control over that site, through the planning duties they can seek to influence the investigation of heat networks for the site. In addition, further exploration of how heat networks can increase the investment value of the development is recommended.

9.3.7

As part of the feasibility studies above, there will be a review the commercial structures and financial options for delivering the new opportunities including linking the opportunities to the EHDC MUSCo investment programme.

9.3.8

The feasibility studies will need to assess: 

Building energy demands that may connect to the network in detail;



Network design and energy centre configuration;



Planning appraisal for delivering energy generation at each location;



Comprehensive financial and commercial modelling;



Sensitivity analysis of key variables in the modelling to optimise each scheme;



Appraise different technology options and configurations beyond gas and biomass;



Governance structure to take forward project in line with wide EHDC multi service utility company aspirations; and



Establish a risk register for the projects.

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Recommendation 2: Further explore the potential of rural heat networks 9.3.9

The economic appraisal of the Langrish opportunity has demonstrated that type of rural community heating scheme can be an extremely attractive investment proposition. In terms of evaluating such rural opportunities further, it is recommended that EHDC pursue these through the Rural Community Energy Fund (RCEF) including linking with a community partner.

Recommendation 3: Biomass market supply chain study

9.3.10 Further exploration of the biomass market supply chain is key to unlocking a potentially large energy market in rural Hampshire. A supply chain analysis is recommended of the biomass market to explore the market gap and look at enabling the growth of a biomass supply chain.

This could explore the current barriers to the biomass technology and fuel supply markets in East Hampshire, and look at routes for EHDC to support the deployment of technology, jobs related to installation and services and the fuel supply chain. This analysis would provide a link between the East Hampshire Business Strategy and Energy Strategy.

Recommendation 4: Influencing East Hampshire Energy Infrastructure Masterplanning 9.3.11 EHDC have the ability within the planning process through consultation with developers to influence land development projects early to appraise the opportunity for delivering heat networks and act on the findings. Early engagement on projects through the EHDC planning process is extremely important.

9.3.12 Engagement with EHDCâ&#x20AC;&#x2122;s sustainability and energy team is recommended by the EHDCâ&#x20AC;&#x2122;s planning department for strategic housing and commercial development to ensure the opportunities for the delivering of low carbon energy infrastructure is considered at the earliest opportunity where maximum benefit can be achieved.

9.3.13 The involvement and commitment of the East Hampshire community will be critical to the successful implementation of any heat network in the district. In addition to sharing the findings of this study with stakeholders, the Council will build on the early engagement carried out as part of this study continue to involve the local community, other public sector bodies, developers and other parties in the heat network development.

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Appendix A

Figures

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Legend

EHDC Boundary

Study Area - 1km Radii from EHDC Boundary Client 0

2.5

5

Km

Contains Ordnance Survey data Š Crown copyright and database right 2015.

www.pba.co.uk Peter Brett Associates LLP READING Tel: 0118 950 0761 Fax: 0118 959 7498

EHDC Heat Mapping and Masterplanning Study Area Map

Date Scale Drawn By

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Checked By Revision Number Figure Number

JH 01

Figure 2.1

Document Path: J:\34707 EHDC Heat Mapping\Technical\GIS Files\MXDs\34707_2_1_Study_Area.mxd

Legend

EHDC Boundary

Study Area - 1km Radii from EHDC Boundary

Land Use

A1 Retail

B1 Office B2 Industrial B8 Storage C1 Hotels

C2 Hospital

C3 Post 2002 Residential C3 Pre 2002 Residential D1 Schools D2 Leisure Client 0

2.5

5

Km

Contains Ordnance Survey data Š Crown copyright and database right 2015.

www.pba.co.uk Peter Brett Associates LLP READING Tel: 0118 950 0761 Fax: 0118 959 7498

EHDC Heat Mapping and Masterplanning Land Use Allocation Map

Date Scale Drawn By

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Checked By Revision Number Figure Number

JH 01

Figure 4.1

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Legend

EHDC Boundary Study Area - 1km Radii from EHDC Boundary SHLAA Sites

Annual Heat kWh

2900000 - 4500000 1500000 - 2900000 1000000 - 1500000 800000 - 1000000 600000 - 800000 500000 - 600000 400000 - 500000 300000 - 400000 200000 - 300000 100000 - 200000 1 - 100000 0

Client 0

2.5

5

Km

Contains Ordnance Survey data Š Crown copyright and database right 2015.

www.pba.co.uk Peter Brett Associates LLP READING Tel: 0118 950 0761 Fax: 0118 959 7498

EHDC Heat Mapping and Masterplanning Annual Heat Demand Map

Date Scale Drawn By

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Checked By Revision Number Figure Number

JH 01

Figure 4.2

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Legend

EHDC Boundary

Study Area - 1km Radii from EHDC Boundary SHLAA Sites

Heat Density Demand kWh/m2/yr 29000 - 45000 15000 - 29000 10000 - 15000 8000 - 10000 6000 - 8000 5000 - 6000 4000 - 5000 3000 - 4000 2000 - 3000 1000 - 2000 1 - 1000 0 Client 0

2.5

5

Km

Contains Ordnance Survey data Š Crown copyright and database right 2015.

www.pba.co.uk Peter Brett Associates LLP READING Tel: 0118 950 0761 Fax: 0118 959 7498

EHDC Heat Mapping and Masterplanning Heat Density Demand Map

Date Scale Drawn By

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Checked By Revision Number Figure Number

JH 01

Figure 4.3

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Legend

EHDC Boundary Study Area - 1km Radii from EHDC Boundary B2 Industrial C2 Hospital D2 Leisure

SHLAA Sites Sewage treatment works

East Hampshire District Council Assets Client 0

2.5

5

Km

Contains Ordnance Survey data Š Crown copyright and database right 2015.

www.pba.co.uk Peter Brett Associates LLP READING Tel: 0118 950 0761 Fax: 0118 959 7498

EHDC Heat Mapping and Masterplanning Heat Anchor Demand Map

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JH 01

Figure 4.4

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Legend

EHDC Boundary

Study Area - 1km Radii from EHDC Boundary B2 Industrial C2 Hospital D2 Leisure

Sewage treatment works Gas Infrastructure Surface water

Potential Ground Source Heat Areas Client 0

2.5

5

Km

Contains Ordnance Survey data Š Crown copyright and database right 2015.

www.pba.co.uk Peter Brett Associates LLP READING Tel: 0118 950 0761 Fax: 0118 959 7498

EHDC Heat Mapping and Masterplanning

Potential Heat Sources and Gas Infrastructure Map

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JH 01

Figure 5.1

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Legend

EHDC Boundary Study Area - 1km Radii from EHDC Boundary Woodland

Client 0

2.5

5

Km

Contains Ordnance Survey data Š Crown copyright and database right 2015.

www.pba.co.uk Peter Brett Associates LLP READING Tel: 0118 950 0761 Fax: 0118 959 7498

EHDC Heat Mapping and Masterplanning

Woodland Resource Map

Date Scale Drawn By

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JH 01

Figure 5.2

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5

3

1

4

6

Legend EHDC Boundary

Study Area - 1km Radii from EHDC Boundary B2 Industrial C2 Hospital

D2 Leisure SHLAA Sites

Sewage treatment works East Hampshire District Council Assets Opportunity Cluster

1. Whitehill and Bordon 2. Horndean 3. Alton 4. Penns Place 5. Village Growth 6. Rural Community Network

Heat Density Demand kWh/m2/yr 29000 - 45000 15000 - 29000 10000 - 15000 8000 - 10000

2

6000 - 8000 5000 - 6000 4000 - 5000 3000 - 4000 2000 - 3000 1000 - 2000 1 - 1000 0

Client 0

2.5

5

Km

Contains Ordnance Survey data Š Crown copyright and database right 2015.

www.pba.co.uk Peter Brett Associates LLP READING Tel: 0118 950 0761 Fax: 0118 959 7498

EHDC Heat Mapping and Masterplanning Heat Network Opportunity Cluster

Date Scale Drawn By

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JH 01

Figure 6.2

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Heat Masterplan for East Hampshire

Appendix B

Policy Review

International Policy The Kyoto Protocol The Kyoto Protocol is an amendment to the United Nations Framework Convention on Climate Change, which set targets for reductions in carbon emissions for several industrialised nations. It was negotiated in 1997 and came into force in 2005. The Kyoto Protocol is a legally binding agreement, which requires the UK to reduce greenhouse gas emissions by 12.5% below 1990 levels by 2008, increasing to an 80% cut by 2050. In 2012, the ‘Doha Amendment to the Kyoto Protocol’ was adopted which included: new emission reductions commitments for the period 2013 to 2020 and a revised list of greenhouse gas emissions to be reported.

The European Directive on the Energy Performance of Buildings (EPBD) The European Directive on the Energy Performance of Buildings (EPBD) requires that the ‘technical, environmental and economic feasibility of alternative energy supply systems should be considered’ for 2 all new buildings with a useful floor area greater than 1,000 m . Article 5 of the EPBD is addressed in England and Wales by revisions to Part L of the Building Regulations, which address the conservation of fuel and power. These came into effect in 2006 and contain limits for overall carbon emissions associated with energy use.

In May 2010, a Recast of the Energy Performance of Buildings Directive was adopted in order to strengthen the energy performance requirements and to clarify and streamline some of the provisions from the 2002 Directive it replaces. One of the key requirements of the Recast Directive is that as of December 2020, new buildings in the EU will have to consume ‘nearly zero’ energy and the energy will be ‘to a very large extent’ from renewable sources.

National Policy Climate change has been recognised as one of the most critical environmental challenges we currently face. Government legislation now includes numerous provisions to minimise climate change and mitigate the anticipated effects. These provisions include a reduction in the emission of greenhouse gases, including CO2 emissions, which are to be reduced by 80% from 1990 levels by the year 2050.

Both the Climate Change Act 2008 and Energy Act 2008 as amend have sought to deliver on all party commitments to reducing carbon emissions throughout the UK. The approach to the future of energy in the UK was described in the Low Carbon Transition with primary focus on reducing carbon emissions associated with energy.

The Low Carbon Transition Plan 2009 set out the Government’s aim to decarbonise energy through a mixture of the decarbonisation of energy generation, the development of a more efficient energy supply and distribution system, ensure that consumption is reduced and where consumption is unavoidable that it is used as efficiently as possible.

At a national level this strategy is translated into a number of regulations and policies from the development of new nuclear power and carbon capture and storage through to the provision of renewable energy subsidies such as the feed-in-tariff and renewable heat incentive.

The following regulation and act have therefore been reviewed based on direct influence on the formation of local policy surrounding the development of DHNs:  Building Regulations  The Energy Act 2008 (as amended)  The UK Heat Strategy; and

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

The National Planning Policy Framework

It is recognised that a raft of policy associated with planning, environmental permitting, and consenting renewable energy also requires consideration going forward.

Government’s Vision for Sustainable Development In February 2011, the former coalition Government launched its Vision for Sustainable Development.

The vision aimed to build on the principles of the UK’s 2005 Sustainable Development Strategy, in order to realise the former Government’s goal of stimulating economic growth and tackling the deficit, maximising well-being and protecting the environment, without negatively impacting on the ability of future generations to do the same. In practice, this vision included:     

The mainstreaming of sustainable development so that it is central to the way policy is made, buildings are run, and goods and services purchased; Moving towards a green economy by maximising economic growth whilst decoupling it from impacts on the environment; Tackling climate change in order to achieve an 80% cut in greenhouse gas emissions by 2050 in a manner which supports economic growth; Protecting and enhancing the environment; and Improving transparency and public accountability.

The Conservative Government elected in May 2015 have yet to amend this vision.

Energy Performance of Buildings (Certificates and Inspections) (England and Wales) Regulations (2007) The requirements of the Energy Performance of Buildings Directive were implemented on a phased basis by the Energy Performance of Buildings (Certificates and Inspections) (England and Wales) Regulations (2007). The main requirements were:   

Energy performance certificates to be produced on the sale, rent or construction of a building; Energy display certificate to be produced and displayed in large public buildings; and Air conditioning equipment above a certain size to be inspected regularly.

Changes have been made to the regulations, to transpose the requirements of a recast of the Energy Performance of Buildings Directive in England and Wales. The main requirements were introduced in January 2013 and are summarised below:    

Property advertisements to include details of energy performance certificate rating where available; No longer a requirement to attach front page of the energy performance certificate to written material; Extension of current requirements for a display energy certificate in large public buildings, 2 2 to public buildings above 500 m . Unlike buildings larger than 1,000 m , display energy certificates for smaller public buildings will be valid for 10 years; and 2 Energy performance certificate to be displayed in commercial premises larger than 500 m where one has been previously issued.

The National Planning Policy Framework (NPPF) The NPPF sets out the Government’s planning policies for England and stipulates how they should be applied through local planning policies. Local planning authorities are required to design policies which increase the use and supply of low carbon energy, have a positive strategy to promote energy from renewable and low carbon sources, support community-led initiatives for low carbon energy and identify suitable areas for low carbon energy sources.

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Section 95 of the National Planning Policy Framework (NPPF) requires local planning authorities to:   

Plan for new development in locations and ways which reduce greenhouse gas emissions; Actively support energy efficiency improvements to existing buildings; and When setting any local requirement for a building’s sustainability, do so in a way consistent with the Government’s zero carbon buildings policy and adopt nationally described standards.

The purpose of aligning all local policy to the nationally described standards (i.e. Building Regulations) is to create a single platform for all development nationwide to work together in parallel in achieving the overarching goals of zero carbon developments.

Energy Act The Energy Act implements the legislative aspects of the 2007 Energy White Paper: ‘Meeting the energy challenge’. It provides the basis of regulatory change to meet the needs for energy generation, energy infrastructure and promotion of low carbon technologies. Notable provisions within the Act allow for banding of the Renewable Obligation (RO), the introduction of a Feed-In Tariff for low carbon electricity generation (FIT), introduction of a Renewables Heat Incentive (RHI), changes to the licensing requirements for offshore energy developments and offshore carbon storage, and licensing requirements relating to the cost of processing waste at new nuclear sites.

This 2008 Act formed part of the first wave of instruments to take the UK into a low carbon and resource efficient economy. The main focus of the Act was to apply British Carbon Capture and Storage (CCS) theoretical capabilities into deliverable and demonstrable projects.

The Energy Act 2010 provided the next stage in process of decarbonising energy supply. The Office of Gas and Electricity Markets (OFGEM) obtained greater regulatory powers to tackle market exploitation and drive the low carbon transition. In addition, the Act provided a mandatory social price support mechanism to help alleviate social fuel poverty.

The flagship policy in the 2011 Act was the ‘Green Deal’, a scheme whereby householders, private landlords and businesses would be given finance upfront to make energy efficiency improvements, which would then be paid for by the energy savings bill. Other provisions included:     

An obligation on energy companies to help certain groups of people with energy savings; Facilitation of the roll-out of smart meters; Wider access to Energy Performance Certificates; Clearer information on energy bills; and Measures designed to help improve energy security and to encourage low carbon generation.

The Energy Act 2013 received Royal Assent on the 18 December 2013. In summary, the act stipulates that provision must be made for or in connection with reforming the electricity market for purposes of encouraging low carbon electricity generation or ensuring security of supply; for the establishment and functions of the Office for Nuclear Regulation; about the government pipe-line and storage system and rights exercisable to it; about the designation of a strategy and policy statement; for the making of orders requiring regulated persons to provide redress to consumers of gas and electricity; about offshore transmission of electricity during a commissioning period; for imposing further fees in respect of nuclear decommissioning costs; and for connected purposes.

Critically for EHDC the Energy Act provides allowances for Local Authorities to become power suppliers. This is extremely important when considering EHDC own energy demand and how decentralised energy provision can supply their own market.

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The UK Heat Strategy (2013) The UK Heat Strategy sets out an approach to decarbonise heat supply. DECC’s established the Heat Networks Delivery Unit to support technological innovation, provision of funding for feasibility work, exploration of potential additional financial incentives and government funding for heat networks.

Climate Change Act 2008 The UK remains the only country in the world to set itself legally binding carbon emission targets via the Climate Change Act, which puts into statute the UK’s targets to reduce carbon dioxide emissions through domestic and international action by at least 80% by 2050 and at least 26% by 2020 (against a 1990 baseline).

Four carbon budgets have been set in law, covering the period from 2008 to 2027. Each carbon budget is split into:  

The traded sector, which is based on the UK’s share of the European Union Emissions Trading Scheme (EU ETS) limit for the period and covers power and heavy industry; and The non-traded sector, which covers everything else (including buildings).

Specifically, the carbon budgets limit emissions to:    

3,018 MtCO2e over the first carbon budget period (2008 to 2012); 2,782 MtCO2e over the second carbon budget period (2013 to 2017); 2,544 MtCO2e over the third carbon budget period (2018 to 2022); and 1,950 MtCO2e over the fourth carbon budget period (2023 to 2027).

Renewables Obligation Order The Renewable Obligation (RO) is the main support mechanism for renewable energy projects in the UK. Smaller scale generation is mainly supported through the Feed-in Tariff scheme (FIT). The RO came into effect in 2002 in England. It places an obligation on UK electricity suppliers to source an increasing proportion of the electricity they supply from renewable sources.

Renewable Obligation Certificates (ROCs) are green certificates issued to operators of accredited renewable generating stations for the eligible renewable electricity they generate. Operators can trade ROCs with other parties. ROCs are ultimately used by suppliers to demonstrate that they have met their obligation.

The RO scheme closed to large-scale solar PV on 1 April 2015.

Renewable Heat Incentive (RHI) 2011 Like its sister subsidy mechanism the Feed in Tariff (FiT), the purpose of the RHI is to stimulate the market for renewable heat. The RHI will be rolled out in two phases. The first is focused on the nondomestic market with payments made against metered consumption (which includes decentralised energy plant supplying heat to multiple domestic dwellings). For the domestic market a mechanism known as Renewable Heat Payment Premiums (paid quarterly). This payment will be made against the peak generation capacity of single systems supplying individual properties.

Building Regulations Approved Document L: Conservation of Fuel and Power The energy efficiency requirements of the Building Regulations are set out in Part L of Schedule 1 of the Building Regulations and in a number of specific building regulations. Approved Document L1A sets out the requirements for conservation of fuel and power in dwellings, and L2A for conservation of fuel and power in buildings other than dwellings.

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The current edition of L1A 2013 came into effect on 6 April 2014. This strengthens the requirements of Part L1A to deliver 6% CO2 savings across the new build home mix relative to Part L 2010 and also introduces a Fabric Energy Efficiency (FEE) target, to ensure a minimum energy efficiency standard for building fabric (the longest-lasting part of a dwelling). The current edition of L2A 2013 strengthens the previous requirements to deliver 9% CO2 savings across the new non-domestic building mix.

In their Productivity Plan the Treasury has confirmed that there will be no change in Part L of the Building Regulations in 2016. It does not intend to proceed with the zero carbon “Allowable Solutions” carbon offsetting scheme or the proposed 2016 increase in on-site energy efficiency standards.

For the purposes on new build projects it is expected that Building Regulation compliance can be achieved through fabric first approaches without the need for renewable and low carbon technology approaches.

This affects the delivery of DHNs dramatically in the context of new build as additional renewable technology in no longer needed to comply with the current Government Building Regulation strategy.

Code for Sustainable Homes The Code for Sustainable Homes is a standard for the sustainable design and construction of new homes. The Code measures the sustainability of a new home against nine categories of sustainable design and construction, rating the “whole home” as a complete package. The Code uses a one to six star rating system to community the overall sustainability performance. It sets minimum standards for energy and water use at each level.

Following a fundamental review of technical housing standards, the Government has withdrawn the Code from Sustainable Homes, aside from the management of legacy cases.

Local Policy East Hampshire District Council (EHDC) and the South Downs National Park Authority adopted a Local Plan (previously the Joint Core Strategy (JCS)) in June 2014, which sets out the planning vision and framework for the region to 2028. The population is East Hampshire is expect to grow by around 9% to 128,000 by 2021 and in response to this, there is provision for over 10,000 new homes within the district by 2028.

The housing provision includes the new strategic development of Whitehill & Bordon, which will deliver up to 2,275 homes within the plan period. There are a number of other sizeable developments planned across the district including new allocations for 700 homes each in Petersfield, Horndean and Alton.

It is necessary that these developments take places in a sustainable manner. As part of the Sustainable Construction policy, the JCS requires new developments to provide at least 10% of energy demand from decentralised and renewable or low carbon energy sources, including connections to a district heating systems, unless it is proven that this is not feasible or viable.

The key section within the Local Plan for the purposes of this Energy Statement is CP24 – Sustainable Construction (see below) The Government has now withdrawn the Code for Sustainable Homes, aside from the management of 29 legacy cases . Furthermore, the planned “Zero Carbon Homes” policy in 2016, including “Carbon Compliance” and the “Allowable Solutions” mechanism will not be implemented for the foreseeable future. It should be noted however that the UK Government will be required to align national policy to the emerging EU Directive ‘Nearly Zero Energy Demand Buildings’ by 2019.

Whilst the above significantly effects the implementation of CP24 the evidence based created by EHDC still presents the opportunities for new development to deliver low carbon energy infrastructure, and therefore should be explored at the earliest opportunities to add value to projects.

29

https://www.gov.uk/government/speeches/planning-update-march-2015

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East Hampshire District Council is the local planning authority for the development site. The key policies and guidance documents are detailed below:

East Hampshire District Local Plan: Joint Core Strategy (Adopted June 2014) CP24 – Sustainable Construction “Planning permission will be granted for development which on completion: a) Meets the following minimum Code for Sustainable Homes threshold level, and equivalents for non-residential development (unless proven to be financially or technically unviable), as set out below:

All residential development achieves at least the following level of the Code for Sustainable Homes and meets the minimum carbon compliance standards set out under the Zero Carbon Hub report recommendations

All multi residential and non-residential developments with a floor 2 space of over 500 m must achieve at least the following BREEAM standards

Until the end of 2012

3

BREEAM “Very Good”

From 2013

4

BREEAM “Excellent”

5’*

BREEAM “Excellent”

From 2016 (*Level 5 can include for “Allowable Solutions”

b) Provides at least 10% of energy demand from decentralised and renewable or low carbon energy sources (if possible, including connections to a district heating system), unless it is proven that this is not feasible or viable; c) For major areas of development, provides adequate land or funding for waste management infrastructure; Major areas of development must ensure that their on-site renewable or low carbon energy production and resource efficiency is maximised. Where on-site proposals to achieve higher levels of carbon reduction are not feasible or viable “Allowable Solutions” should be used.

Note: The policy approach to sustainable construction is currently under review by the Government and all or some of the elements of this policy may be superseded by the changes. In this eventuality development proposals would be assessed in accordance with the latest Government policy.

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Appendix C

Predicted energy demand modelling methodology

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Project Name: Project Number: Consultant:

Masterplan Energy Model: Data Report This data report provides a summary of the masterplan energy model and its results. These results are provided in line with the recommendations presented in the main body of the report and the limitations provided below.

Key Performance Indicators and Assumptions Commercial and Industrial Use Class Data References Energy Efficiency in Buildings CIBSE Guide F 2004 BSRIA Rules of Thumb Fourth Edition 2003 Peter Brett Associates Industry Experience 2010 BCO Guide to Specification 2009

Methodology The benchmark data from the above references have been adjusted to reflect a 44% reduction in carbon emissions over the 2002 Building Regulations, in order to represent Building Regulations 2010. The majority of this 44% reduction has been achieved through applying a standard reduction in regulated electricity demand of 55% and a 25% reduction in hot water demand (although this reduction changes slightly depending on use class). The remaining carbon emission reductions required in order to meet the 2013 Building Regulations were then achieved through space heating reductions.

Additional carbon emission reductions required to meet standards for Building Regulations 2013 have been established through PBA's knowledge of M&E and Structural Engineering and guidance presented by the BCO. Unregulated energy demand has not been adjusted to reflect changes in demand use since 2002. Our assumption is that whilst appliances contributing to the unregulated demand continue to have improved efficiencies and lower energy requirements, more appliances and technologies are being bought and used, hence displacing the carbon emission savings achieved.

Each commercial use class has been subdivided into a use typology to provide a range of different use scenarios. High street and local centres have taken data from a range of end uses to provide an average energy demand for the use class.

1

Domestic Use Classes Data References The Government's Standard Assessment Procedure for Energy Rating of Dwellings 2009 edition with correction, May 2010 Energy Savings Trust Information : "Energy Efficiency and the Code for Sustainable Homes" - Level 3, Level 4 and Level 6 2009 BSRIA Rules of Thumb Fourth Edition 2003 Energy Efficiency in Buildings CIBSE Guide F 2004 BRE Domestic Energy Model (BREDEM 8 &12) Zero Carbon Hub establishing a fabric energy efficiency standard 2012

Methodology The baseline regulated energy demands for domestic use classes were primarily calculated using the methodology as set out in The Government's Standard Assessment Procedure (SAP). The baseline unregulated energy demand however was calculated using the methodology set out in the Code for Sustainable Homes. These methodologies enabled a 2013 baseline to be calculated for domestic units directly.

In order to calculate the predicted energy demand for 2013 and PassivHaus the percentage reduction in space heating, hot water heating and electricity that could be achieved was estimated using information set out in the Zero Carbon Hubs "Fabric Energy Efficiency Standard for Zero Carbon Homes". The information in this document enabled sample SAP calculations to be carried out on Flats, Terrace, Semi Detached and Detached Houses and thus the percentage savings in electricity, space heating and hot water heating that could be achieved through base build alone were found.

The unregulated energy demand for residential units was assumed to remain the same as the baseline for the reasons stated above, which follows the BREDEM approach to calculating unregulated supply.

2

Assumptions and Limitations 1. The masterplan energy model is based on published benchmark data. PBA are not responsible for the benchmark data and its quality of collation or quality assurance.

2. The applications of rules of thumb have been used to adjust benchmark data to represent likely changes in the Building Regulations.

Adjustments have been made through the use of industry guides and PBA's experience in structural engineering and M&E engineering. It is recognised that through adjustments such as these a generic approach to energy demand modelling has been created.

3. The masterplan energy model is a generic model and not building specific. The development of detailed energy infrastructure or plant should not be based on high level assessment figures.

4. The domestic energy demand is aligned to the Office of the Communities and Local Government Standard Assessment Procedure. This masterplan energy model is therefore limited by the assumption, number and calculations presented within the SAP. 5. Domestic energy demand reductions are based on Energy Saving Trust guidance as benchmark reductions. The application of energy demand reductions are therefore limited to the standards set by the Energy Savings Trust.

6. The masterplan energy model is limited by the nature of information that is present at the outline planning stage. In this respect the model is based on the masterplan development schedule broken down as use classes where available. Where use classes are not available assumptions have been made to estimate the typology.

7. Use of the Homes and Community Agency's benchmark data for occupation has been utilised to assess the likely water consumption per person within each dwelling.

8. It has been assumed that 33% of water used within a dwelling will be for hot water. Water reduction targets are taken from the CLG Code for sustainable homes standard.

9. A wide variety of factors will influence the final energy demand of a development. Many of these factors cannot be incorporated within a model without significant conjecture. It is recommended that more detailed energy demand modelling is undertaken for the development once more detailed designs are available. Detailed modelling should use both the SAP and Simplified Building Energy Model.

10. Demand profiles have been normalised to enable them to be representative of the likely total energy demand. As such these profiles provide an indication of the energy profile.

5

Heat Masterplan for East Hampshire

Appendix D

Heat Masterplans

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1. Whitehill & Bordon

Site Review Heat Demand: 18,000 MWh Electrical Demand: 18,000 MWh Baseline CO2 emissions: 4,200 tonnes/annum Heat network CO2 emissions: Biomass: 750 tonnes/annum Gas CHP: 4,500 tonnes/annum

Seasonal Heat and Power Demand Profile

Heat Demand

Heat Density

Anchor Loads

Building Ownership

Building Typology

New Development Sites

Existing Energy Infrastructure

Physical Constraints

Network Growth Opportunities

Whitehill & Bordon is EHDCâ&#x20AC;&#x2122;s major strategic growth point with the regeneration of the Louisburg and Prince Phillip Barracks offering a new development of a DHN. The regeneration project will introduce over 2400 new homes, a secondary and primary school, a new town centre and municipal facilities offering both heat density, mixed tenure and typology and anchor loads. There are also onward benefits to the regeneration of a number of business parks close to the area offering network growth opportunities. There is natural gas in the area.

Horndean Urban Extension

Site Review

Heat Demand: 8,000 MWh Electrical Demand: 6,000 MWh Baseline CO2 emissions: 1,700 tonnes/annum Heat network CO2 emissions: Biomass: 300 tonnes/annum Gas CHP: 1,800 tonnes /annum Seasonal Heat and Power Demand Profile

Heat Demand

Heat Density

Anchor Loads

Building Ownership

Building Typology

New Development Sites

Existing Energy Infrastructure

Physical Constraints

Network Growth Opportunities

Outline planning consent has been given to Cala homes to develop a 750 home sustainable urban extension to Horndean offering a new development of DHN. The development is a low density residential led new community with a local centre and primary school offering anchor loads, mixed typology, heat density and demand.

Network growth opportunities are present but the major road A3(M), privately owned heat sources and the presence of gas may limit this.

South West Alton

Site Review

Heat Demand: 5,000 MWh Electrical Demand: 1,000 MWh Baseline CO2 emissions: 1,200 tonnes/annum Heat network CO2 emissions: Biomass: 200 tonnes/annum Gas CHP: 1,000 tonnes/annum Seasonal Heat and Power Demand Profile

Heat Demand

Heat Density

Anchor Loads

Building Ownership

Building Typology

New Development Sites

Existing Energy Infrastructure

Physical Constraints

Network Growth Opportunities

EHDC have plans to redevelop the Alton leisure centre which offers a potential anchor load to base a heat network around. Immediately surrounding the site is a community hospital and a proposed 250 home development offering heat density, demand and varied typlogy. The wider Alton area also offers the potential for heat network expansion based on the wider growth of the town, and the â&#x20AC;&#x2DC;olderâ&#x20AC;&#x2122; nature of the buildings within the town that could benefit from low carbon heating solutions. However, there is gas supply to Alton town and a railway line may prevent expansion.

Petersfield, Penns Place

Site Review

Heat Demand: 4,000 MWh Electrical Demand: 1,000 MWh Baseline CO2 emissions: 1,000 tonnes/annum Heat network CO2 emissions: Biomass: 200 tonnes/annum Gas CHP : 800 tonnes/annum Seasonal Heat and Power Demand Profile

Heat Demand

Heat Density

Anchor Loads

Building Ownership

Building Typology

New Development Sites

Existing Energy Infrastructure

Physical Constraints

Network Growth Opportunities

Penns Place is the location of both EHDC main offices and the Taro Leisure Centre providing heat demand, density and anchor points. EHDC’s offices were built in the early 1970’s and it is understood due for major refurbishment. The leisure centre contains a swimming pool which is heated through gas boilers but this poses an issue as gas is present. Both these buildings offer permanent and existing anchor loads for a heat network. A proposed 89 home development on the ‘Penns Field’ site is located a short distance away and provides network growth potential.

Rural Network Example - Langrish

Site Review

Heat Demand: 1,000 MWh Electrical Demand: 100 MWh Baseline CO2 emissions: 200 tonnes/annum Heat network CO2 emissions: Biomass: 40 tonnes/annum

Seasonal Heat and Power Demand Profile

Heat Demand

Heat Density

Anchor Loads

Building Ownership

Building Typology

New Development Sites

Existing Energy Infrastructure

Physical Constraints

Network Growth Opportunities

A large proportion of East Hampshire is not connected to the gas grid providing an opportunity of DHS. Typically properties not connected to gas in the region burn oil or use electrical heating solutions. With the price of oil uncertain in the near and long term future, and the high carbon cost of oil investment into wood led heating systems offer rural community a number of benefits. Villages are also typified by a number of use classes that may benefit from connection to small community heat networks such as hotels, primary schools, and large houses. The village of Langrish has been used as an example of a rural community with a number of heat demands that may offer the potential for a small biomass led community network. Anchor points and heat density are present but due to the isolated nature of the site expansion to new opportunities in the future isnâ&#x20AC;&#x2122;t especially as no development is planned for the area.

Village Growth Example - Bentley

Site Review

Heat Demand: 1,000 MWh Electrical Demand: 400 MWh Baseline CO2 emissions: 200 tonnes/annum Heat network CO2 emissions: Biomass: 30 tonnes/annum

Seasonal Heat and Power Demand Profile

Heat Demand

Heat Density

Anchor Loads

Building Ownership

Building Typology

New Development Sites

Existing Energy Infrastructure

Physical Constraints

Network Growth Opportunities

Within EHDCâ&#x20AC;&#x2122;s strategic housing land allocation assessment (SHLAA) a number of villages around East Hampshire for growth have been allocated. Rural villages are typically either at the edges or not connected to gas networks. Gas networks will therefore have to be reinforced at potentially significant cost. An alternative is to deliver a biomass driven heat network to avoid the need to connect to a gas network. The village of Bentley has been used as an example of village growth with an expected 100 homes of development presented within the SHLAA. The village and planned expansion provides network growth, heat demand and typology in the area. The major road to the south may be a constraint to expansion in this direction.

Heat Masterplan for East Hampshire

Appendix E

Economic Model Assumptions

Gas Boiler Efficiency Table 1 - Recommended minimum energy efficiency standards for building services, contained within the Non-domestic Building Services Compliance Guide (2013 edition) states that the seasonal efficiency of gas boilers is between 91% and 86% Biomass Boiler Efficiency Table 1 - Recommended minimum energy efficiency standards for building services, contained within the Non-domestic Building Services Compliance Guide (2013 edition) states that the seasonal efficiency of biomass boiler in new buildings is 75% Build Rate Where the build rate is not known this has been assumed to be 100 dwellings per annum Boiler Size and CHP Size on gas networks The split between the space heating and hot water demand of the developments are assumed to be 60% and 40% respectively. Where there is a larger heat source such as a swimming pool, this has been recalibrated to be 20% and 80%, due to increased hot water demands.

CHP Efficiency The thermal and electrical efficiencies of the CHP system have been taken from the Department of Energy & Climate Change - CHP Technology - A detailed Guide for CHP developers 2008.

Biomass fuel cost This figure has been taken from data available on the Biomass Energy Centre website (accessed July 2015).

Heat sales price This has been assumed to be 6 pence per kilowatt therm. This has been assumed based on data taken from DECC and the Domestic Renewable Heat Incentive â&#x20AC;&#x201C; Domestic RHI payment calculator report. Calculator (available from https://renewable-heatcalculator.service.gov.uk/).

Purchase prices of gas (from major power producers) This has been assumed to be 3.5 pence per kilowatt hour.

This is to provide some flexibility due to the difference in price per kilowatt hour paid domestically (5p/kWh) and commercially (2.5p/kWh).

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Purchase price of electricity (from major power producers) The purchase price of electricity has been assumed to be 10 pence per kilowatt hour.

This is to provide some flexibility due to the difference in price per kilowatt hour paid domestically (15p/kWh) and commercially (9p/kWh).

Wholesale price of electricity (from electricity generated from the CHP) The heat sale price of electricity has been assumed to be 4 pence per kilowatt hour, this has been taken from www.apxgroup.com, who are one of Europe's premier providers of power exchange for the wholesale market.

When there is an opportunity to utilise the electricity generated from the CHP within a Local Authority owned/operated building, the sales price in the model is increased to match that of the purchase price, as It is assumed that the electricity will be sold through a 'private wire' agreement.

Operation and Maintenance costs These have been fixed at 1% of Capex for all of the models. It should be noted that this is highly likely to increase within the biomass scenarios due to a greater likely of locally fluctuating fuel prices when compared to national grid gas prices.

Non-Domestic Connection Charges CIBSE Guide F – Energy Efficiency in Buildings Good Practice 2012 the energy consumption for a typical office building is 97/kWh/m2. Which when combined with an assumed load factor of 20% (rentable space/usable space) and a boiler cost of £90.93/kWh provides a connection charge of £9.25/m2. This has been taken from University of Exeter CHP study.

Domestic Connection Charges These are a variable which can be altered within the model. To enable a comparison between each of the models, a £3000 connection charge per household has been used.

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Appendix F

Stakeholder Workshop

Heat Mapping and Masterplanning â&#x20AC;&#x201C; Stakeholder Workshop 4th August at East Hampshire District Council offices, Penns Place, Petersfield A workshop was held on the 4th August hosted by EHDCâ&#x20AC;&#x2122;s Energy team with stakeholders invested from other Council departments and selected representatives from the wider district (see invitee list below).

The aim was to present the findings of the heat masterplanning work to date including case histories of the 6 opportunities which had been modelled as part of the work.

Stakeholders were invited to make comments on the opportunities as presented in terms of Strengths/Weaknesses/Opportunities/Threats.

List of Stakeholders invited

Charlotte Lazaros Bob Bruce Angela Jane Ele Pennie Noni John Robert Caroline Natalie Jonathan Clare

Large Exarchakos Coleman Collinson Kiwanuka Devlin Evans Brown Entwishitle Hubbard Hutchinson Parker Fellows Riggall Saunders

DECC DECC EHDC EHDC EHDC EHDC EHDC EHDC EHDC Energy Alton Hampshire Energy Forestry Commission South Downs NPA PBA CS Ltd

Heat Network Delivery Unit Heat Network Delivery Unit Communities Energy and Environment Economic Development Energy Strategy Planning Sustainability Officer Leisure Centres Renewable energy Renewable energy Communication Planning Consultant Consultant

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