District heating industry representative body CHPA will today present a “Big Offer” to Energy Secretary Ed Davey, the aim being to boost the amount of district heating in local communities. Several thousand jobs will be created in the construction phase, claim CHPA.
The Big Offer aims in the short term to initiate the building of more district heating schemes under current market conditions. In the longer term, CHPA wants to substantially increase the market for district heating by reducing the cost of capital and increasing the quantity of finance available, with the help of state-backed loan guarantees.
“There is a lot of interest in district heating and our proposals are about turning that into real projects” said CHPA deputy director Ian Manders.
CHPA is advocating that DECC provide some short-term (two to three years) of support in the early development phase, based on several years experience gained in London, where successive Mayors have provided such support for local authorities.
CHPA estimate that for a “modest spend” by DECC in development work, district heating projects worth £300 million pounds in capital investment should be expected, leading to the creation of over 7,000 jobs, mainly in the construction phase. Customers’ carbon emissions will be reduced, and their energy bills will be stabilised.
In the longer term, CHPA wants to substantially increase the market for district heating by reducing the cost of capital and increasing the quantity of finance available, via state-backed loan guarantees. This will make far more projects viable, and enable city-wide schemes as seen on the Continent and several North American cities.
Manders added: “While capital grant programmes have made an impact in the past, they’re unlikely to be repeated by a Government pledged to cut Government borrowing. So instead, we propose state-backed infrastructure loan guarantees so that low rate, low risk institutional finance can invest at the scale required.”
In response to actions which will in the long-term create a third energy utility, CHPA will set up a form of self-regulation in terms of a domestic heat customer protection scheme with an independent adjudicator.
The seven elements of the Big Offer are:
For further information or to request an interview, please contact:
Deputy Director, CHPA
T 020 7828 4077
M 079466 12508
Notes to editors:
About the CHPA
The Combined Heat and Power Association (CHPA) is the leading advocate of an integrated approach to delivering energy services using combined heat and power and district heating. The Association has over 100 members active across a range of technologies and markets and is widely recognised as one of the leading industry bodies in the sustainable energy sector. For more information about the CHPA see: www.chpa.co.uk.
About District Heating
A district heating scheme comprises a network of insulated pipes used to deliver heat from the point of generation, in the form of hot water or steam, to an end user. District heating networks provide the means to transport heat efficiently. Heat networks can be supplied with heat from a diverse range of sources including power stations, waste-to-energy facilities, biomass boilers and CHP plants, gas-fired CHP units, heat pumps, electric boilers and even solar thermal arrays. Click here for more information about district heating and here for case studies.
About the Big Offer
CHPA’s Big Offer is a series of practical proposals to build district heating at a scale to achieve national objectives. The Big Offer is a response to the DECC Heat Strategy, which outlines a strategic role for district heating in decarbonising the energy used in buildings. Whilst the Heat Strategy did not quantify a specific target for district heating, it indicated that as much as 50% of buildings in the UK are in areas of suitable density for district heating.
Following the release of the Heat Strategy, the UK Government is working to develop heat policies that support the decarbonisation of heat. These are due for publication in the period January to March 2013. To contribute towards this process, CHPA set up a working group of members and others with interests in district heating to develop the practical proposals contained within this document. These are presented to DECC for consideration and CHPA will continue to work with DECC over the coming months as the Government’s policy and action plan evolves. A similar set of proposals will be presented to the Scottish Government for consideration.
Research commissioned by Government indicated that between 3 to 8 million dwellings and a major share of commercial and public buildings can be connected to district heating at reasonable cost. The Big Offer documents set out the how the district heating industry in the UK proposes to prepare for this level of expansion in the short-term and the cooperation with Government required.
Two actions are required to bring down the cost of capital to utility investment interest rates. The first is the de-risking of the investment to attract institutional investors; and the second is creating sufficient volume and commonality in district heating investment that individual schemes are effectively ‘commoditised’ for lenders and institutional investors. To enable these to happen, the following proposals make up the Big Offer: