Energy Bill

Memorandum submitted by Calor Gas Ltd (EN 07)

SUMMARY

I. This submission calls attention to the potential problems that the Green Deal may face in rural areas, and provides a potential solution by the inclusion of efficient gas condensing boilers within the Green Deal pending the introduction of fuel-cell LPG m-CHP boilers in 2014.

II. Rural areas present different and difficult challenges as we move to greening domestic energy efficiency. Heat pumps are not well suited to much of the rural housing stock, are expensive, and EST trials to date show the majority of installed heat pumps failing the sustainability test.

III. In rural areas, there is considerable scope for carbon savings and domestic heating costs by replacing older inefficient boilers with efficient LPG condensing boilers. In fact, the Association for the Conservation of Energy concludes: "Gas condensing boilers supplied by LPG represent the most cost-effective CO2 reductions through to 2030 under the CO2 and fuel price scenarios as modelled."

IV. Looking a little further forward, 2014 will see the introduction of LPG fuel cell mCHP boilers with the capacity to heat homes and produce 80% of the home’s electrical needs. These mCHP units will cut carbon emissions on an average property using oil by up to 50% while reducing household energy consumption by up to 30%, thus exerting downward pressure on fuel bills rather than the upward pressure of many other mooted energy policies.

The Green Deal Framework for Rural Areas

1.1. The nature of the housing stock in rural areas limits the range of low carbon technologies that can be employed. For instance, district heating would be a severe challenge in rural areas, and is not a cost-effective retrofit option. Building new properties in rural areas is relatively limited. So, reducing carbon emissions cost-effectively in rural housing will be predominantly about cutting carbon emissions from the standing housing stock.

1.2. Rural housing stock tends to be older, hard to treat, and is often stone built, with solid walls and floors and no cavity walls. They are often only single glazed, larger and with higher ceilings. In short – rural housing tends to be very energy inefficient. New build – with improved, mandatory energy efficiency standards – will be limited in rural areas. Much of the electricity in rural areas is single phase, limiting the power available for electric powered heating systems to approximately 3.5kW. In turn, this limits the applicability of ground source or air source heat pumps which suffer restricted output on single phase electricity. Besides heat pumps are not best suited for much of the rural housing stock – as the Consultation on Microgeneration Strategy (DECC, December 2010) points out in para. 4.21: "A poorly maintained heat pump in a poorly insulated barn conversion might increase a consumer’s energy bills or not provide sufficient heat in very cold weather". The recent study of currently installed heat pump performance published by the Energy Saving Trust on the 8th September 2010 – "Getting Warmer: a field trial of heat pumps" revealed that the actual performance of heat pumps installed in the UK was surprisingly poor. The study showed that only 1 of the 22 properties with Ground Source Heat Pumps achieved the implicit minimum EU Directive CoP, and only 9 of the 47 sites with air source heat pumps achieved the standard.

1.3. While upgrading the power supply, substations and power lines in rural areas may bring benefits it will be hideously expensive, and probably visually intrusive. Besides, does the National Grid have the balance sheet to carry such a massive investment?

1.4. Caroline Crampton writing in "Total Politics" in January 2011 called attention to a potential flaw in the forthcoming Green Deal: "Some 43% of British homes are currently classified as "hard to treat" for greater efficiency for a variety of reasons such as not having cavity walls or not being on the gas grid. A significant proportion of these are unlikely to qualify for the Green Deal, either because they have little potential for improvements or because their heating bills are too high to allow the measures to have a positive financial impact". If so, rural areas, where fuel poverty is particularly concentrated, could be left high and dry.

Possible low hanging fruit for rural areas

2.1. Possible solutions to rural areas need not depend upon the highly subsidised, and as yet not completely proven technologies that are often touted. The Energy Savings Trust puts it clearly on their website in relation to boiler technology which is well researched and soundly established:

2.2. "Boilers account for around 60% of the carbon dioxide emissions in a gas heated home. By replacing an old G-rated boiler with a new high efficiency condensing boiler and improving your heating controls, you will significantly cut your home's carbon dioxide emissions - saving as much as £225 a year. The current lifespan of a boiler is around 12 years. Fitting an A-rated high efficiency condensing boiler with the correct heating and hot water controls can make a huge difference to your heating bills over time….Costs for replacing a new boiler can vary in each house. It will depend on the type of boiler and system, the labour needed, whether the boiler needs re-siting in the home, or how much remedial work is required. From the recent boiler scrappage scheme, we estimate that on average a new replacement gas boiler costs around £2,500. A replacement oil boiler costs around £3000. "

2.3. The EST has a table showing typical savings which can be achieved by replacing boilers with new A-rated condensing models and installing a full set of heating controls:

2.4. The figures demonstrate that on a installation cost range of £2,500-£3,000 it would be possible for a Green Deal loan to achieve a return over the 12 year lifespan of a natural gas boiler and in rural areas where the main fuel sources are Oil or LPG, the average payback is likely to be 9 years or less.

 

2.5. We would like to highlight findings from a report, "Improving the energy efficiency of off-grid properties – the role of different heating technologies", by the Association for the Conservation of Energy (March, 2011) which is extremely pertinent. Its key results are laid out on p15:

· An insulation package applied to a cavity walled property is the most cost-effective carbon reduction intervention.

· Replacing an old oil boiler with a condensing gas boiler supplied by LPG gives the most cost-effective carbon reduction through heating system replacement.

· Cavity wall insulation packages improve the cost effectiveness of heating systems. Solid wall insulation packages reduce cost effectiveness for most systems. Installed on its own, solid wall insulation offers a less cost-effective solution than solely providing ground source heat pumps (with radiators) or biomass boilers, but more cost effective than air source heat pumps and micro-CHP.

2.6. In graphic form, the supporting data is illustrated on pp. 13 and 14: carbon emission decreases, running cost decreases and initial outlay are analysed for the various available alternative measures off the grid. The data are shown separately for houses with cavity walls and for houses with solid walls.

2.7. There is clearly a lot of scope for improvement by including loans for modern condensing boilers in the Green Deal. The ACE Report has the figures to prove it – the majority of oil/LPG boilers in rural areas are not maximally efficient:

2.8. "In 2007 there were 926,700 households in England using oil as fuel for their heating systems, 733,000 of which were in areas without a gas supply. Of these systems the vast majority used non-condensing standard or combination boilers (96%). Just 3% of households used a modern condensing boiler or condensing-combi….In 2007 135,000 households used LPG as fuel to heat their homes. 77% of these households were using either a standard boiler or a non-condensing combination boiler. 23% used either a condensing boiler or a condensing-combi system."

2.9. Note that this report, based on international data, has made assumptions about the Coefficients of Performance (CoPs) of heat pumps: "For GSHPs we assume a lower end COP of 2.3 and a higher end COP of 3.5. For ASHPs we assume a COPs of 2.15 and 2.7 respectively". On this basis all ASHPs would fail the test of being renewable since the qualifying bar for this is set by DECC at 2.9, and would not deliver savings towards the EU targets; some GSHPs would also fail. On this basis either the consumer, the taxpayer, the Green Deal lender or the installer would be dealing with failing technology not worthy of subsidy, and it is unclear upon where the cost of this failure would lie. At the very least it could lead to total market disillusionment with ASHPs as householders realise their expensively installed kit is not delivering and presumably has FITs removed.

2.10. The report concludes as do we: "Gas condensing boilers supplied by LPG represent the most cost-effective CO2 reductions through to 2030 under the CO2 and fuel price scenarios as modelled. Systems such as heat pumps would have to radically improve performance, or decarbonisation of the grid would have to proceed much faster than anticipated if they were to compete on the basis of cost-effective CO2 reduction."

mCHP – the next advance to rural fuel efficiency

3.1. We can also take into prospect the planned advance beyond efficient gas condensing boilers - Calor is working in partnership with companies such as the UK fuel cell manufacturer Ceres Power, and innovative boiler manufacturer Baxi, to bring the next generation of home energy solutions to the rural market. Micro CHP (mCHP) is the process of generating both electrical power and heat from a single source. Electricity is generated at or near the point of use, and when it is needed. mCHP is a low carbon solution which is particularly effective at delivering secure low carbon electricity in to rural areas – even very remote ones. Generating electricity and useful heat locally avoids the wasted energy associated with power stations and transmission systems, whilst also providing greater stability to the power supply and protection against power cuts. This essentially turns a home into a micro power station and takes the pressure off, and actually contributes energy to, the national grid. Generating more electricity at the point of use also significantly reduces CO² emissions compared to centralised electricity generation using fossil fuels.

3.2. The introduction of the LPG fuel cell m-CHP boiler in 2014 will heat properties with a high efficiency condensing boiler, and will also generate up to 80% of the electricity required in a domestic rural property. Generating electricity at the point of use avoids the wasted energy associated with power stations and transmission systems. The local generation will provide a measure of black-out protection since the system can keep the power running during power cuts. A distributed element of electricity generation will help the UK cope with possible shortages of generation capacity. This fuel cell boiler will cut carbon emissions on an average property using oil by up to 50% through an investment of only approximately £3,500 more than a modern condensing boiler. Combined with solar technology and insulation measures a fuel cell boiler should be able to achieve the 80% emission targets that government is seeking by 2050. These boilers will be able to be serviced by engineers with existing skills. mCHP units can reduce total household energy consumption by up to 30%. We believe that fossil-fuel powered mCHP is practical, can use the current electricity and fuel supply infrastructure and will be very cost-effective per tonne of carbon saved. For urban areas on the gas mains, an equivalent technology is being developed by British Gas/Ceres that carries the same advantages as the Calor LPG fuel cell boiler.

3.3. Rural householders do not have to wait until 2014 to make their own electricity via LPG mCHP technology and benefit from Feed-In-Tariffs. The Baxi Ecogen unit is a condensing boiler that can meet all a rural home’s space heating and hot water requirements and is available now. Using a Free Piston Sterling Engine, it generates 1kW of electricity per hour that can be used throughout the property, while providing up to 24kW of thermal output for heating and hot water. The unit responds to the initial heat demand of up to 6kW by igniting the heat source for the Free Piston Sterling Engine. This generates 6kW of heat and 1kW of electricity by driving a magnetic piston up and down within a generator coil. If the heat demand goes above 6kW, the supplementary burner will fire up and can offer an additional 18kW of heat. As heat demand falls within the home, the boiler modulates down to as low as 3kW, while still generating electricity. This is technology which is available now and from a reputable British manufacturer. Other manufacturers are in the process of bringing their own Stirling engine mCHP units to the market – whilst they work on their own fuel cell-based equipment.

Recommendation: That the Green Deal be made available in off the grid areas for loans for conversion of old inefficient oil and LPG boilers to new efficient G-rated LPG condensing boilers.  This should be extended to mCHP technologies as soon as the market is established and the performance of installed mCHP appliance has been assessed.

June 2011

Prepared 8th June 2011