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Green heat in the UK

by Dave Elliott

‘Heat is very difficult to decarbonise and no consensus is yet reached on the mix needed for the long term and you will have seen that from the various different reports on the subject.’  So said the then UK Minister of State for Energy, Baroness Neville-Rolfe, at the Heat Summit last December, with the next phase of the Renewable Heat Incentive (RHI) central to the agenda. There certainly are some competing options, including community-wide heat networks, green gas supply networks, biomass and solar home heating and domestic heat pumps powered by electricity.

Heat pumps, part of a green electrification push, have been a  government favourite, but uptake has been proving sluggish, and priorities are changing, in part due to pressure from those backing the other options.  For example, the government has dropped plans to remove solar thermal from the RHI scheme. 92% of submissions to a consultation had not agreed with the plan. Challenges to biomass and biogas have also been seen off, and government support for heat networks seems to be growing, with more funding.

At one point it did look as if solar heating would be abandoned as ‘not good value’ for public support, with the delay in making a decision raising the stakes. But the campaign to ‘save solar’ seems to have paid off. So domestic solar heating will continue to receive the same level of support (19.74p/kWh) as over the last seven years. Solar thermal in industry, up to 200kW in size, will also continue to be supported.  The Department for Business, Energy and Industrial Strategy (BEIS) said While the tariff in support of solar thermal is still high compared to some other tariffs in the scheme, the possibility for continued support to deliver cost reductions suggests the long-term value for money of this support will be better than previously thought. In addition, the role of continued support in maintaining the UK supply chain, particularly with regard to UK-based manufacturing of solar panels, improves the value of continued support’.                               

Biomass tariff reductions are also to be less drastic than in previous proposals, which had included reductions of tariffs by up to 45% for some biomass projects. The tariff for new biomass installations will actually be increased to 6.44p/kWh – the level available between October and December 2015, adjusted for inflation. But the eligibility rules have been upgraded. BEIS says For biogas and biomethane, the reforms will vastly improve the carbon cost-effectiveness of further support. New plant will be required to produce at least half their biogas and biomethane from waste-based feedstocks to receive support for all their production. This will help divert wastes from landfill and make use of available resources’. In addition there will also be ‘a small uplift to tariffs for biomethane injection to support continued deployment alongside these changes’.

However, heat pumps remain in the race. Tariffs for new air source and ground source heat pumps are also to increase, to 10p/kWh and 19.55p/kWh respectively. But there will be capacity caps set for heat pumps (and biomass), and it all falls under an overall RHI budget limit, running up to 2020/21.

The continued support for heat pumps evidently owes much to the need to find a use for all the surplus-to-demand electricity that will be produced at night by Hinkley and the other planned nuclear plants, and by the offshore wind projects. At the Heat Summit, Baroness Neville-Rolfe admitted that there was a problem with the traditional power supply orientation: ‘most energy policy is focused towards electricity when 40% of our energy use is in heat’.  But she added ‘some of that is down to the heat network developing separately from the electricity network’. So now ‘we need to look at how different parts of the energy system connect to each other and that the policies are talking to each other and are interconnected. There are opportunities to look at using waste heat more successfully, for example, but because the system is so complicated and built up in a certain way over a number of years, we haven’t learned to look at it holistically.’ She noted that ‘Germany has given clear direction of travel (in its policy on combined heat and power) and there are a number of EU countries that are really quite committed to making sure projects do use CHP and that heat isn’t wasted. When we talk about bold policy making and putting pressure on companies to make sure those technologies are considered it is something our government could do more of.’ That seems to have been one reason why BEIS has decided to allow a ‘transitional period’ for the RHI changes it was seeking for biomass combined heat and power (CHP) plants:

So it sounds as if CHP, and also heat networks, are in with a chance. Baroness Neville-Rolfe said: ‘the cost of heating flats can be 30% lower than boilers when connected to district heating’. Although she also warned that ‘heat networks, utilising waste heat or other low carbon sources will require good management’. But she added ‘we have made a start with £323m allocated under our ‘central heating for cities’ project’.

She also mentioned the hydrogen option, noting that ‘over the next five years, support schemes will drive uptake of some technologies like hydrogen. When we look at the gas network and we look at the consumer research they like gas – but we have carbon targets to meet so thinking of how you adapt the network for hydrogen comes up a lot in these reports.’

So which way should we go? It’s clear that heat pumps can be expensive and hard to install: they certainly have got a bad press of late. Their widespread use might also require upgrades to local power grids to deliver the energy they would need. As Neville-Rolfe indicated, local heat networks might make more sense in some locations. Certainly some say that heat networks with heat stores, fed by fossil or later green gas-fired CHP plants, would be more effective than the use of direct gas (or power) for heating in urban areas: see this editorial. But Dr Keith McLean from Imperial College London told the Heat Summit he was worried about practicalities of deploying green heat networks: ‘How many roads can we dig up at any point in time? The economic models don’t use traffic and access disruption which we know from gas grid work is a major issue – there is a limit to what you can dig up.’

Sticking with the gas grid, and the widely deployed domestic gas-condensing boilers, might make the most sense, especially if increasingly based on the use of green gas – AD biogas and syngas. ENA Director of Policy and Gas Tony Glover backed the injection of green gas, such as hydrogen and biomethane, into the networks to meet demand for heat: ‘While there are a range of options available to us in meeting the UK’s decarbonisation challenges, the continued role of the gas network will be crucial to delivering an affordable and secure low carbon transition which considers the impact of consumer choice. If we incrementally evolve how we use our gas network we can actually deliver a far more cost-effective low-carbon solution than going down the electricity network which is three times the expense for customers as well as the country itself. Our gas network offers the most easy, frictionless, least disruptive way to get to the low carbon future we want.”

The green heat battle continues, with the focus not only on the basic choice of system, but also on the support systems for them. John Baldwin, Chair of the Renewable Energy Association’s biogas group and Managing Director of CNG Fuels, told the Heat Summit that, although the biomethane tariff reset was welcome, it wasn’t likely ‘to enable many new biogas CHP projects to come forward. With the closure of the renewables obligation, and rapidly falling tariffs for the Feed-In Tariff, this sector still faces many challenges.’ Also see this good, short, OFGEM overview.

Meanwhile, the political fallout from what seems to have been a poorly drafted Northern Ireland RHI, with no caps, continues.

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