The EED: genuinely dangerous or just misunderstood?
Inside Housing published an article last week about the “significant costs” that will be imposed on heat network operators (HNOs) as they are forced to install heat meters under new regulations that come into force next month.
Designed to grab the attention of housing associations, the article focuses on the costs of complying with the EU Energy Efficiency Directive (EED) – and it completely ignores the key benefits: huge improvements in energy efficiency, cost savings for DH customers and greater transparency in how these networks are performing.
While I think the Inside Housing article completely lacked balance, I agree that a wakeup call is overdue. A few organisations are planning for the EED but most don’t even know it’s coming. People need to get informed, and fast – because the implications for operators and consumers of district heat are huge.
DECC thinks there are about 210,000 homes and 1,700 non-residential buildings on district heat networks across the UK. But only a quarter of these homes have heat meters, which allow residents to pay only for the heat they use. In the other 75%, residents pay a flat rate or some other apportionment of total heat cost.
The EED is aimed squarely at the 75% of dwellings on heat networks that don’t currently have meters. Under the Directive, operators of district heating schemes will have to install a heat meter (or heat cost allocators) for each dwelling, subject to tests of technical feasibility and cost-efficiency. To be clear, we’re talking about retrofit here.
Who are these HNOs? Pretty much anyone who operates a heat network, including local authorities, housing associations, ESCOs, hospitals, providers of retirement housing, universities and industrial users. If you own or operate a communal heating system, the Directive applies to you.
While “cost-efficiency” sounds like a handy loophole for HNOs, it isn’t. The Directive is clear that cost-efficiency is determined by summing the costs and benefits to all parties – in other words the one who pays (the operator) needn’t be the one who benefits. More on this in the next blog post.
In addition, retrofitting building-level metering will be mandatory “at the point of delivery” to the building. And both building-level and individual meters will be mandatory on all new installations.
Once they’ve carried out the technical and cost-effectiveness tests, HNOs must install individual heat meters (where required by the tests) by the end of 2016.
Once customers have a meter, HNOs must ensure that by 31 December 2014, billing information is accurate and based on actual consumption where it is “technically possible and economically justified.” It will only be permissible to use an estimation of consumption where an actual reading couldn’t be obtained through AMR or from the customer providing a self-read.
By the end of 2016, customers must have the option for electronic billing, as well as like-for-like cost data allowing them to compare their costs to alternatives. That last point is a biggie and probably deserves a blog post of its own.
If billing is carried out by the HNO, it must be provided on a not-for-profit basis. If billing services are provided by a third party, “reasonable costs” can be passed through to the customer.
Clearly there are a lot of costs associated with complying with the EED, but it may be money well-spent. The potential benefits from installing heat metering are massive.
BRE work shows a realistic energy saving of 15-17% from installing a meter, relative to flat rate charging, with potential savings as high as 30%. This makes sense: when people aren’t charged in line with consumption, there’s no reason to save energy. They might as well keep the heat on and regulate the indoor temperature by opening a window. But add a meter and provide accurate billing, and suddenly residents have an incentive to control their own consumption.
Similar to the BRE work, Camden Council saw reductions in heat consumption of 30% when they fitted meters to four blocks of 1960s flats at Kiln Place.
Just taking rough figures, complying with the Directive could result in something like a £200 per annum savings on energy bills for customers on heat networks. That’s big money! Much greater than the £50 per annum savings for which the Conservatives were willing to decimate the energy efficiency industry and obliterate “green crap” like, you know, onshore wind turbines.
In addition, building-level metering will force HNOs to recognise the losses from their networks and make it clear where efficiencies need to be improved.
The costs may be “significant” as Inside Housing say. But so are the benefits. Which outweighs the other? That’s the subject of the next blog post.
carbon limited 
Have you talked to Huw Blackfield at Islignton?
Use a traditional 4-pipe commercial system with recirculating hot water @ 55°C in two of the pipes and space heating water in the other two. Direct connected space heating operated with central weather compensation: the energy centre ensures that the flow temperature to the radiators is only slightly higher than it needs to be to maintain 21°C during the daytime and 18°C at night.
With this arrangement if the tenants open windows the heating power will not increase to compensate, the rooms will soon go cold, and tenants will soon learn to close the window again. Liquid filled TRVs on each radiator prevent any room from overheating and allow tenants to reduce room temperatures. The tenants would have no control over the heating hours and nor could they increase room temperatures. Hot water is not metered.
The bill is added to the service charge and collected by the landlord with the rent.
Why such apparently draconian heating control measures? With current products on the market this is the only way a landlord can implement a “fair use” policy that prevents abuse of the heating system. By implementing such a policy they can then thereby control their costs, and by controlling their costs are able to avoid the significant hassle and expense involved with individual metering, billing, and payment collection.
Re-run the Camden/BRE trials with a communal heating system with this type of control and you won’t see savings of 30%. You won’t see any savings at all in fact: the only way tenants can save is by under-heating their homes and spending the cash on something else.
At this point you’re into “duty of care” considerations: is it the social landlords job to offer an “affordably warm home” at a fixed weekly rent? (inclusive of heat service charge)
Should the social landlord offer a “cold home” at a fixed weekly rent? (then let the tenant choose whether to heat it or not)
Different providers have different attitudes. More than one want to take that decision making power away from their tenants because they see it as their “duty of care” to make financial decisions on behalf of those unable to do so for themselves. (everybody on a prepayment meter)
All sounds a bit Soviet, but if the marginal cost of heat is only 2p (typical of CHP schemes or subsidised biomass) then you’d have to save at least 5,000 kWh/year to make it worth the expense of metering. Very unlikely if your (secondary side) heating system is designed for the purpose.
The private rental sector can accommodate those who want the freedom to be cold. 😉