Combined Heat & Power, District Heating & Cooling, Demand Side Services, Energy Efficiency

Barriers to Waste Heat Uptake

Published on 3 June 2020

Here you can find a summary of some of the barriers to waste heat uptake on heat networks.

Risk barriers to waste heat:

Non-permanency risk: sources of waste heat are not permanent, and the existence of these sources can be contingent on many other factors. For example, energy from waste facilities, whilst a generally long-term infrastructure, may close after a certain period of time. This can leave heat networks stranded without a heat source. This is a risk that must be costed on both sides of the equation. The heat network operator will have to absorb the cost of this risk, and may pass this risk onto consumers. The waste heat provider may be asked by the heat network operator to make assurances around the length of its operation, which in turn creates a contractual risk for the waste heat supplier (see contractual risk below).

Contractual risk: this risk sits on both sides of the equation – but can be managed by the heat network operator.

  1. On the side of the waste heat provider: At present, heat network operators may require commitments around temperature and timing of supply of heat. This may not always fit with the waste heat providers delivery plans. For example, it can prevent industrial processes from reducing production at times of low demand, or shifting demand to respond to electricity grid signals (which can provide an income). This requirement can put waste heat providers off connection, as the contractual risk can be too costly for them to bare.
  2. On the side of the heat network: The waste heat provider not providing heat at the time and temperature that was agreed can create a consumer satisfaction risk and cost risk, as providers may be required to use higher cost peaking generation to meet demand.

Distance and land risk: waste heat sources are often located away from town and city centres. This means that infrastructure is required to reach the waste heat source, meaning that pipework infrastructure may be required to travel a distance. Crossing land to reach waste heat sources incurs risks and costs of its own. Furthermore, the greater the distance of the source from the point of use, the greater the risk associated with managing losses and return temperatures.

Policy risk: a considerable risk for waste heat is the way that waste heat is valued in policy. Waste heat infrastructure is typically long-term infrastructure with long payback periods. The lack of long-term certainty from the government about the way that waste heat is accounted for in government policy can disincentivise its use. For example, even if waste heat is attractively accounted for in, for example, Building Regulations now, the way that it is accounted for could change during the lifetime of the infrastructure. If this changes to be perceived as higher carbon or lower efficiency, then this could incur penalties or create difficulties in recouping cost – for example, if new connections to, or extension of, the network is prevented. The way that heat network losses are accounted for forms part of this risk, particularly given the distance risk.

Timing risk: In particular, with regards to the development of new infrastructure or buildings, if the delivery of these assets does not align, a risk can be created where, e.g. the heat network is developed before the waste heat source is completed. This can lead to the heat network operator having to install temporary generation (which will often be higher carbon), which represents a cost.

Other barriers to waste heat uptake:

It is not business critical: Due to the way that waste heat is currently accounted for in policy, using waste heat is not perceived as business critical. Businesses can afford to expel waste heat. Furthermore, the revenue opportunity for waste heat providers from selling waste heat is often relatively low, and thus not seen as critical to making the revenue streams stack up on the side of the waste heat provider.

Lack of awareness about the existence of waste heat opportunities: heat network operators are not always aware of the existence of waste heat opportunities. Many waste heat sources are not easy to spot (e.g. if they are underground) and may be unfamiliar to the heat network developer.

Waste heat sources are located too far away from points of use: many waste heat sources are not located near points of use. This is often due to the design of the planning system and a ‘not-in-my-back-yard’ attitude from residents. This is linked with a lack of understanding from communities about industrial processes and, in particular, energy from waste, leading to stigmatism and a general distrust of these processes.

Stigmatism and a lack of understanding within communities about the impacts of industry and energy from waste: this is linked with poor community engagement processes.

Lack of understanding about heat network flexibility and lack of thermal storage enabling heat networks to respond flexibility: well-designed heat networks are well equipped to respond to electricity grid signals and turn up (CHP-driven) or turn down (electric-driven) due to the thermal inertia within the network and thermal storage. However, many heat networks do not use their assets flexibly due to factors including a lack of awareness, resourcing, skills, availability and others. A lack of necessary assets on heat networks, in particular thermal storage, can also prevent heat networks making full use of flexibility opportunities. Flexibility allows heat networks to absorb waste heat even when its supply pattern is uneven, because the assets are able to respond flexibly and store or discharge heat as necessary. The ADE has seen examples where, using particular software, heat networks are able to almost entirely flatten heat demand peaks.

The ‘who pays’ question: this is linked to a lack of standardisation of waste heat offtake contracts and lack of clear value within policy for waste heat.

Skills gap: The general skills gap in the heat networks market (currently being explored by ACE-Research, IFF Research and Sweco for BEIS) also prevents the use of waste heat, in particular unfamiliar waste heat. The pool of skills and knowledge around waste heat is more limited, particularly in the UK.

ADE Newsletter