Simon Lomax of Kensa Heat Pumps explores innovative ways to access funding streams for heating and renewable energy installations.
Many in the ground source heat pump (GSHP) industry are encouraged by the proposed refinements outlined in the Government’s 2016 response to the Renewable Heat Incentive (RHI) consultation. Sadly, the unexpected General Election put paid to the original launch timetable, but reformed regulations are now imminent and will create significant market opportunities. So, what opportunities are in store?
According to the consultation response: “The Government is keen to support the deployment of GSHPs making use of shared ground loops”. And: “This route (shared ground loops) will improve investment confidence and…will also offer the greatest flexibility, encouraging a broad range of shared loop projects to come forward including new build and mixed use projects.”
Some manufacturers are pioneering the use of shared ground loops in the UK. Very simply, individual heat pumps are installed inside each dwelling linked to a shared ground loop. Crucially, this system architecture qualifies as district heating and so both retrofit and new build installations are eligible for support via the non-domestic RHI. The RHI reforms will introduce a significant change in the nature of this support.
Previously, RHI payments were based upon the metered heat consumption at each dwelling served by the shared ground loop. This requirement forced system owners to install expensive heat meters and engage in an onerous quarterly claims process. Worse, they had no certainty on the level of RHI income as they could only estimate the amount of heat consumed at each property, an estimate that was significantly impacted by occupant behaviour, a factor beyond their control.
This uncertainty discouraged many potential users, so Government embraced industry’s proposal to base payments on the deemed heat consumption (taken from the property’s Energy Performance Certificate); a step which mirrors arrangements in the domestic RHI. Unlike the 7-year payment term for the domestic RHI, the non-domestic RHI pays an index-linked tariff over 20 years, so returns are more attractive.
Of course, the pursuit of subsidy support should never be allowed to trump the technical elegance of any solution, so it is helpful that there are multiple arguments for supporting the use of ground source heat pumps and shared ground loops.
Firstly, the carbon intensity of electricity generation continues to fall. Carbon Brief reported the UK-wide average for 2017 was just 237 grammes of carbon per kilowatt hour, which is marginally higher than the carbon intensity of mains gas. While the carbon intensity will be higher during the winter heating season, as increased demand for electricity will prompt use of less ‘green’ sources, it is still clear that carbon emissions associated with a GSHP installation fall far below those of a gas boiler installation once you have factored in the relative efficiency of the appliances – 300 per cent plus for a GSHP and around 95 per cent for a gas boiler. With proposed reductions in the carbon intensity figures used within SAP, the specification of GSHP’s will simplify compliance with building regulations.
Secondly, conventional district heating systems featuring a large central plant (of any flavour) require costly insulated pipes to protect the heat as it is circulated away from the source, and often impose high bills on householders who have no opportunity to select an alternative heat supplier. In contrast, by using a model in which a ground source heat pump is inside each property, heat is only generated close to the point of use, so the fluid circulating around the distribution pipework (within any housing estate or apartment block) is at ambient temperature, massively reducing the installation cost.
Most importantly, householders can source electricity from their own preferred energy company, switching as required to secure the most competitive tariff. And the circulation pumps within each heat pump move the fluid around the shared ground loop so there is no need for any separate equipment imposing additional running costs. Householders typically benefit from a 300- 350 per cent system efficiency which means running costs are consistent with mains gas, and are far lower than other renewable heat technologies. Ownership costs are also appealing thanks to the remarkable reliability and durability of the technology.
Of course, this system architecture is only practical in situations where there are neighbouring properties who all agree simultaneously to embrace GSHP technology. As such, early installations have focussed on the social housing retrofit and all new build sectors, but emerging financing models are encouraging adoption in private housing.
In these applications, funders will own and maintain the ground array in the same way that the gas infrastructure is owned by entities quite distinct from the householder. By mimicking the established arrangements, there is huge potential for GSHP deployment and the associated reduction in carbon emissions, the driving force behind the Government’s revised RHI regulations.