FOL - Londons energy future-final
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Transcript of FOL - Londons energy future-final
London needs to be more like Copenhagen
Bob FiddikTeam Leader – Sustainable
Development & Energy
19th March 2012
Why…Copenhagen?The 3 objectives of UK energy policy objectives :-
low carbon
secure, diverse
affordable
• 98% of city supplied via DH• 40% carbon reduction against
individual gas boilers• 35% CHP heat from waste or
biomass
• hot water - flexible energy carrier• plant – 36% gas, 31% multi-fuel,
21% coal/oil, 12% waste – all CHP
• DH heat 44% below cost of individual gas boiler
• Authority owned heat companies
A long, and frustrating tale
• Heat supply law passed• Local authorities to
undertake heat planning• Authorities given power to
oblige connections to DH or natural gas
• Must demonstrate economic advantage to consumer
• Ban on electric heating
Post oil-crises1979
North sea gas, energy
privatisation
• Marshall reports on potential of district heating/CHP
• 30% high density urban areas could be supplied via DH/CHP
• Recommend heat strategy & set up of “heat board” to oversee development
But district heating is costly...? Pay for CHP energy plant
But have some ready...and have to build new plant anyway
Need whole new infrastructure
Pay for heat exchangers...but similar to individual boiler cost
The “all electric” orthodox plan... Pay for these & untested CCS
Pay for these to be there but not do much
Upgrade these
Install lots of these
Do lots of this
But getting started is tough...Croydon drivers for town centre DH/CHP schemeCouncil•Helping regeneration happen•Improve environmental standard of existing 70s stock
Developers•Meet council’s Code Level 4 & BREEAM “Excellent” at lower cost
Occupants•Lower heat costs •Low carbon, no CRC (for corporates)
Commercial modellingPhase 1 new build + cluster of
existing public buildings
IRR = 10.8%
Full scheme all new build + 25% existing over 1,000 m2
IRR = 18%
Heat revenues
Construction phasing
new build
existing
Occupancy : use of heat
Phase energy plant investment
Recover capital investment via connection charges
ESCo mitigation
Operating costs follow heat demandFunding gap circa £3- 4 m : ESCo would need a
combination of ...•underwriting of income from phased development•Up-front capital contribution•access to low public sector borrowing rates
Occupancy : use of heat
Someone has to bear the riskConstraint Initial oversizing of energy centre &
heat pipes to supply full scheme
Heat charges must be no more than having own system
Must be lower than meeting targets via onsite measures
So what does the wish list look like...?Policy, regulation & taxation•Danish example is long-term stability & rational energy planning (ministry still employs “experts”) •UK constantly re-invents energy policy, complex market with complex carbon “tweaks” – politically unstable (e.g FITs, “Zero-Carbon”)
For DH/CHP address the heat off-take risk•Danish obligation to connect is most cost effective – but in UK?•Anchors – oblige public sector connections (but estates are shrinking)•Existing buildings - new Building Regulation obligation on boiler replacement•Loan funds at public sector rates – help make connections attractive•Supply side – taxation + incentives for all thermal plant to operate in CHP mode