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Archive for the ‘district heating’ Category

Capital contributions, the payments made by ESCOs to developers in exchange for long-term concession agreements, are a hangover from the days when everyone thought onsite generation would be highly profitable.

We’ve since discovered that it isn’t as lucrative as expected. Nevertheless developers continue to demand these upfront payments, leading to higher standing charges, longer contracts and unhappy residents. Isn’t it time for the practice to stop?

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This blog was originally posted on networks.online.

Any heat network operator or customer will tell you that heat losses matter – a lot.

Losses that go unchecked can easily double the cost of heat on the network. But while everyone agrees it’s hugely important to limit losses, the way we talk about heat loss is all wrong. And heat network performance is suffering as a result.

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In the previous post, I described the characteristics we’d want to see in a competitive heat market. In short, we want many heat networks of varying sizes to function as markets that are fast, efficient, accessible, cheap and decentralised. I also tried to show that simply copying the electricity market for heat is a bad idea.

So what model should we adopt? In this post, I propose a new model based on blockchains, the technical innovation that underpins cryptocurrencies like Bitcoin and Ether.

 

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In the previous post, I suggested that creating a competitive heat market could be the best way to deliver value for customers. This would involve breaking up heat network “verticals” into their constituent parts (generation, distribution and supply) with genuine competition in each segment.

Sounds lovely, but there are plenty of devils in the detail. For example, how do you match supply and demand across multiple parties in real time? What happens if a supplier requires more or less heat than they’ve contracted for? What if a generator puts more or less heat into the network than was planned?

To help us deal with these devils, could the electricity market serve as a model for heat?

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A few weeks ago, my business partner and I were walking to a meeting in Stratford when we realised we were surrounded by several heat networks (seven actually): each one standing alone, isolated from its neighbours, each dependent on its own small boilers or CHP, each its own tiny monopoly. Seven networks right next to each other, brazenly missing the opportunity to reduce cost and carbon by linking together.

Here he his, pointing them out:

 

 

The scene on that Stratford street corner highlights a failure of coordination on the part of planners and a lack of incentives to link small heat networks to each other and to larger-scale sources of low-carbon heat.

But what if we put it right? Imagine for a minute that we do stitch together groups of small networks, perhaps using the £320 BEIS funding to do it. Technically it might be straightforward, but what about commercial structure? What do you do with all those little monopolies?

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What... is the efficiency of your district heat network?

What… is the efficiency of your district heat network?

In order for district heating (DH) to fulfil its potential and deliver wide-scale decarbonisation of heat in the UK, it must demonstrate three things:

  • Efficiency: DH networks must transport heat energy from source to customer with low losses.
  • Low carbon emissions: using DH must result in demonstrably lower emission by connecting customers to sources of low-carbon heat.
  • Value for customers:  heat customers must have the means to ensure they’re getting value for their money.

So how are we doing? And what progress have we made in meeting these three challenges so far?

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Here’s a presentation I did at this year’s Utility Week Live about using data to improve the performance of heat networks. In it, I talk about why networks are often poorly delivered and operated and what can be done to put them right. Incidentally, I was also pretty ill and hopped up on flu meds but I think I got away with it.

UWL

 

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