bcsd-uk decentralised energy guide

what when why how who whereThis section

coverscontext for DE

and the technologies

involved

This section covers

key scenarios for the application

of DE

This section covers

reasons to consider DE

This section covers

key enablers and current business

models

This section covers

which parties you may need to deliver a DE

scheme

This section covers

links to sources of further

information

This guide aims to provide specific and practical information to support your implementation of decentralised energy systems.

The guide will help you understand the right solution for different situations and help you understand which groups of people you

will need for delivery.Use the buttons below to navigate around the guide.

What

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This section provides some introductory information defining the context for decentralised energy and

some of the main technologies involved.

Definition of DE What you need to do first

Technologies ESCo

Definition of Decentralised EnergyThere are many different definitions of “decentralised energy”.The Government takes a broad view using the term “distributed energy” to refer to the widerange of technologies that do not rely on the high-voltage electricity transmission network or the gas grid. This includes:•All plants connected to a distribution network rather than the transmission network.•Small-scale plants that supply electricity to a building, industrial site or community, potentially selling surplus electricity back into a distribution network.•Microgeneration, i.e. small installations of solar panels, wind turbines or biomass/waste burners that supply one building or small community, again potentially selling any surplus.•Combined Heat and Power (CHP) plants, including:

o Large CHP plants (where the electricity output feeds into the transmission network but the heat is used locally).

o Building or community level CHP plants.o ‘Micro-CHP’ plants that effectively replace domestic boilers, generating both electricity

and heat for the home.•Non-gas heat sources such as biomass, wood, solar thermal panels, geothermal energy or heat pumps, where the heat is used in just one household or is piped to a number of users in a building or community.

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Local Generation

Distributed energy schemes use a range of fuels to generate heat and electricity more efficiently by being close to the point of use. The heat is distributed and used in district heating networks, can generate chilled water for cooling and be used in industrial processes. The electricity is sold locally or exported onto the grid.


Energy Efficiency Measures

• Should be the starting point of any energy strategy.• Most important in achieving targets.• Insulation Technology.• Innovative solutions applied to all the micro renewable technologies.• Ongoing source of business opportunity.


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Hierarchy of Energy Efficiency in Buildings

Across our cities and communities these are the routes to lowering carbon emissions, reducing energy use and improving energy security, beyond central generation.


Energy Companies (ESCos)

What is an ESCo? The precise role and responsibilities of an ESCo are tailored to meet the needs of the specific

project or initiative. In general, ESCo’s are used to deliver the following objectives:• CO2 reduction;• Renewable energy projects;• Energy savings;• Energy efficiency services;• Energy advice; or• Tackling fuel poverty.However, this list is not exhaustive and one of the main benefits of an ESCo is

its flexibility.ESCo’s may be used to oversee the financing, construction, operation and maintenance of

the system. However the precise responsibilities of the ESCo will be tailored to meet the needs of the individual scheme.

An Energy Service Company (ESCo) is not a magic wand that makes an unviable project viable, however, an ESCo may take a different view on acceptable rates of return and risk than other companies.


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ESCos 2

ESCo and risk managementAn ESCo can spread the risk by transferring responsibility to those stakeholders best

placed to manage them. In the case of financial risk, an ESCo may choose to enter into a fixed cost arrangement and incur the risk of project overspend.

Not only can an ESCo reduce the risk involved in a project, it can also ensure a much more rapid outcome. By forming a group whose sole purpose is the specified project, it can provide a focussed delivery. In contrast, for example, a local authority has many responsibilities and so time management issues may result in delays to the scheme.

Furthermore an ESCo can ensure that the parties managing the project have sufficient knowledge about the topic. By involving either public or private entities with previous experience implementing similar schemes, the outcome of the project can be much more secure.

In some cases it can be useful to produce a risk matrix containing the risks at all stages of the project. This ensures that all eventualities have been considered, all involved parties are aware of their responsibilities, and that each stage of the project is successful. This matrix will be tailored to the specific project and include only the relevant risks.


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ESCo Case Study 1

Thameswey Energy Ltd (est. 2007)Aim: Install a range of sustainable and renewable energy projects to meet the Council’s Climate Change Strategy objectives. Improve the environment within the Borough of Woking for the benefit of local residents.Mechanism: Thameswey Energy Ltd was established, a joint venture company between Thameswey Limited (a company wholly owned by Woking Borough Council) and Xergi Ltd. The ESCo was setup to finance, build and operate small scale CHP stations, to provide energy services by private wire and distributed heating networks to institutional, commercial and residential customers.Outcome: A CHP system provides heat, electricity and chilled water to district buildings. Further expansions will provide energy to other residents and revenue generated is being invested into similar schemes.

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ESCo

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ESCo Case Study 2

Aim: Improve the local authority’s housing stock and reduce fuel costs for tenants. Find a more energy efficient heating method than mains electricity in the city’s multi-storey blocks.Mechanism: An ESCo was created to manage the scheme, and it in turn employed contractors and consultants to construct and install the CHP plant. Outcome: 288 flats are now connected to the community CHP scheme, which has created an annual cost saving of £83,396 for residents. The carbon savings from the scheme, compared to the existing heating systems, equate to 411 tonnes per year.


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Aberdeen Heat & Power (est. 2000)

ESCo Case Study 3

Aim: That Southampton City Council “must not only advocate sustainable development, but demonstrate its commitment” by investing in energy efficient services.Mechanism: Southampton Geothermal Heating Company Ltd was created in a joint agreement between Southampton City Council and Utilicom (a specialist energy management company). The ESCo is solely owned by Utilicom so as to minimise risk for the local authority.Outcome: A geothermal well is used alongside a CHP generator to provide energy to local residents and businesses. 10,000 tonnes of carbon emissions are avoided annually and the council receive revenue of £10-15,000 a year from the sale of surplus energy.


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Southampton Geothermal Heating Company (est. 1986)

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ESCo Case Study 4

Mill Energy Services Ltd (est. 2003)Aim: Meet the commitment of the developer to ensure that the refurbished apartments are carbon neutral and that carbon emissions from ground floor properties are minimised. Mechanism: An ESCo (wholly owned by the residents and tenants of the building) was created to operate and maintain the renewable energy generating assets, and to create revenue to cover ongoing costs.Outcome: A 50kW photovoltaic system and biomass CHP provide heating, electricity and drinking water to 130 apartments and several ground floor businesses. This results in approximately a 600 tonne reduction in carbon emissions annually. Various energy saving measures, including high specification windows etc, were also installed.


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Biomass Heating

Fuel Cells

Small Scale Hydro

Small Scale Wind

GasificationCombustion

Heat Pumps (Ground & Air)Combined Heat & Power

Technologies

Solar Water Heating

Energy from Landfill Gas

Anaerobic Digestion

Solar Photovoltaic

Combined Heat & PowerHow it worksBurns gas to produce heating and hot water. Uses internal combustion technology. Prime mover is an engine, with heat output a bi-product of electrical generation.Generation & heating equally prioritised (compared to micro CHP which is heat demand lead).Space, noise and output constraints are less of an issue (compared to domestic customers; due to plant room availability).


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We will ensure that your CHP is correctly sized to meet the majority of your demand for heating. It is usually more cost effective to undersize the CHP to provide the majority of your base load and use another appliance (such as a gas boiler) to provide supplementary heating.

Control panel optimises electrical & heat generation.Power unit is a combustion engine. Burns fuel (nat. gas) to drive generator.Heat exchangers extract energy from exhaust and oil to provide useful heating in the premises.

Combined Heat & Power 2SpecificationProduct MicrogenerationProduct Type Combined Heat & PowerClassification Low CarbonOutput 13 kW(e)

29 kW(t)Efficiency% 70% (gas)

26% (electricity)Generation 87,600 kWh(t)/yr

39,426 kWh(e)/yrCarbon Saving 75% reduction compared to Gas alone.

Technology BenefitsLow Carbon – Uses fossil fuels to generate heat and power in a highly efficient manner, ideal for carbon reduction and operational efficiency improvements. If fuelled by a bio fuel, then CHP can be considered a renewable or carbon neutral technology.Combined Heat & Power – The plant installed is ideal for high heating and electricity requirements. Leisure centres, schools, hospitals all fit this category. Heat requirement needs to be low temperature (<100 deg); not suitable for chemical or manufacturing processes.



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Combined Heat & Power 3

Typical InstallationsSchools - Good requirement for heat all year (especially with swimming pools) and high electrical demand.Hospitals - High heat and electrical demand throughout the year.Small scale heat networks – high electrical demand throughout the year. Small heat demand in summer but CHPs can be undersized with addition of efficient boilers to ensure electrical demand is sized adequately. NB addition of chiller units will improve heat demand and therefore the options are increased.



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Ground Source Heat PumpsHow it worksSolar energy stored in ground is extracted by ground loop and pumped into compressor.Compressor pressurises low temperature refrigerant to convert into high temperature thermal output for CH and DHW.Carbon & renewable credits can be earned.Government backed with grants and central funding available to offset high capital cost.Recognised in building regs and Code for Sustainable Homes.

PressureTemperature ConnectedVolume

Solar energy is captured by ground loop water and pumped to HeatPlant.Heat transfer vaporises refrigerant in Heat Plant.Compressor compresses vapour into liquid.Low grade energy in vapour is captured as high grade heat.High grade heat is pumped around CH system.



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Ground Source Heat Pumps 2SpecificationProduct MicrogenerationProduct Type HeatClassification RenewableOutput up to 40 kW(t)Efficiency CoP 4.0 CH

3.5 DWHGeneration 25,000 kWh(t)/yrCarbon Saving up to 40% compared to Gas

Technology BenefitsRenewable – Although GSHP uses grid supplied energy to operate; it is collecting solar energy via the ground which acts like a huge battery, storing the energy as heat. If coupled with a renewable energy tariff, or electrical generating renewables; a GSHP could be totally renewable in operation.All electric – A GSHP only requires an electrical connection to operate; ideal for off gas installations. Comparative running costs vs LPG or oil are very favourable.Grant funding applicable – Several grants, including the LCBP Phase 2 are viable for this technology.



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Ground Source Heat Pumps 3

Typical InstallationsSchools – Mainly new build with efficient heat circuits (underfloor or low temp rads).Village Halls – Any requirement to heat large areas with low temperatures.Offices – Any underfloor heating system or low temp circuit is ideal for improved CoP’s.



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Air Source Heat PumpsHow it worksAlternative to Ground Source Heat Pump installationAmbient heat from air is extracted by evaporator in compressor unit.Compressor pressurises low temperature refrigerant to convert into high temperature thermal output for CH and DHWCan work to temperatures of -20 deg.Installation is simpler than GSHP, but efficiency is less.Same technology as GSHP, only different heat source PressureTemperature ConnectedVolume Energy is captured by fan unit from temperature in air.Heat transfer vaporises refrigerant in ASHPCompressor compresses vapour into liquidLow grade energy in vapour is captured as high grade heatHigh grade heat is pumped around CH system



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Air Source Heat Pumps 2SpecificationProduct MicrogenerationProduct Type HeatClassification RenewableOutput up to 14.6 kW(t)Efficiency CoP 3.3 CH

2.3 DHWGeneration 25,000 kWh(t)/yrCarbon Saving up to 30% compared to Gas

Technology BenefitsRenewable – Although ASHP uses grid supplied energy to operate; it is collecting ambient energy via the air which acts like a huge battery, storing the energy as heat. If coupled with a renewable energy tariff, or electrical generating renewables; an ASHP could be totally renewable in operation.Invisible heating solution – Although efficiency isn’t as high as GSHP, the installation costs and ease of integration (no ground loops or boreholes) make ASHP an attractive proposition for retrofit applications.

Typical InstallationsOffices – Mainly for warm air heating systems and air handling systems. (Some heat pumps can provide air conditioning but for this reason ASHP won’t attract grant funding).



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Biomass Heating• Burning biomass does not consume fossil fuels, but it does

release CO2 into the environment. Biomass boilers require management and maintenance, take time to heat up and cool down.

• There is increasing concern that biofuel production may divert land from food production and forestry and this could raise as many sustainability issues as it is trying to solve.

• For small-scale domestic applications of biomass the fuel usually takes the form of wood pellets, wood chips or wood logs.

• The cost for boilers varies; a typical 15kW (average size required for a three-bedroom semi detached house) pellet boiler would cost around £5,000 - £14,000 installed, including the cost of the flue and commissioning. A manual log feed system of the same size would be slightly cheaper. A wood pellet boiler could save you around £750 a year in energy bills and around 6 tonnes of C02 per year when installed in an electrically heated home.



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Biomass Heating 2SpecificationProduct MicrogenerationProduct Type HeatClassification RenewableOutput up to 70 kW(t)Efficiency 90% fuel efficiency.Generation 25,000 kWh(t)/yrCarbon Saving Up to 56% compared to Gas.

Technology BenefitsRenewable – Wood is deemed a renewable source of fuel, especially with short rotation coppice (SRC) sources such as willow.Different Market Conditions – Wood fuel will not follow the gas demand curve and price fluctuations will be driven by different market conditions in short term.Grant funding applicable – LCBP Phase 2 funding of up to 50% project value is available for this technology.

Typical InstallationsSchools, visitor centres, office buildings, civic buildings. Local factors to consider are availability offuel supply and space for fuel storage.



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Biomass Heating 3How it works• Wood pellets are created from waste in manufacturing processes. These are deemed carbon neutral

as they have the carbon content from the photosynthesis process – i.e. the only carbon emitted is the carbon captured while the tree is living (excludes embodied carbon from manufacture, transport, etc.)

• Carbon & renewable credits can be earned • Government backed with grants and central funding available to offset capital cost• Recognised in building regs and Code for sustainable homes.• Best utilised as base load heating with separate appliance to provide peak load heating (such as a gas

boiler).• Large hopper holds wood pellets which are driven into local hopper.• Pellets are slightly heated to remove moisture while in transit to

combustion chamber.• High temperature (initially from a heat gun, but then self sustaining

from combustion) breaks down wood into composite parts.• Combustible material ignites from the heat providing energy to

heat building.• Heat is passed into distribution system via plate heat exchanger.• None toxic Ash is created (<2% fuel volume) and can be used as

a fertiliser.



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Small Scale Wind

• Generally < 50kw. May be only 4-500w.• Ideal way to generate clean, renewable energy.• Established technology.• Normally 3 blades driving a generator.• Stand alone independent often in remote locations.• Grid connected for higher use applications.• Mast and Building mounted Planning issues.• Wind power is a clean, renewable source of energy which produces no carbon dioxide

emissions or waste products. • Larger systems in the region of 2.5kW to 6kW would cost between £11,000 - £19,000

installed.



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Small Scale Wind 2

Technology BenefitsRenewable – Powered by wind; an abundant and renewable source of energy.Multiple Revenue Streams – As well as offsetting grid supplied (and purchased) energy, reducing utility bills; ROC credits can also be sold to utility suppliers, increasing earnings potential.Visible – Visible green endorsement has many CR benefits. Schools can benefit from added curriculum material.Grant funding applicable – LCBP Phase 2 funding of up to 50% of the cost of purchase and installation is available for this technology.

Typical InstallationsSchools – Tend to have plenty of room to maximise energy yield (turbulence from close buildings, trees, etc. has negative impact on energy capture). And can offset capital cost using LCBP Phase 2 funding. Good use as an educational tool and as a visible commitment to renewable energy.



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Small Scale Hydro• Hydro power systems use running

water turning a turbine to produce electricity. A micro hydro plant is one that generates less than 100kW.

• Typically used in hilly areas or river valleys where water falls from a higher level to a lower level.

• Turbine mounted in the flow generates electricity.

• Electricity produced depends on volume and speed of flow.

• For medium heads, there is a fixed cost of about £10,000 and then about £2,500 per kW up to around 10kW - so a typical 5kW domestic scheme might cost £20-£25,000. Unit costs drop for larger schemes. Maintenance costs vary but small scale hydro systems are very reliable.



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Solar Water HeatingHow it worksSolar energy heats collector, transferring heat into heat transfer medium (glycol).Glycol is pumped through distribution circuit through a pump station into a specially designed twin coil solar cylinder.

SpecificationProduct MicrogenerationProduct Type HeatClassification RenewableOutput up to 10 kW(t)Efficiency 50%Generation 6000 kWh(t)Carbon Saving up to 1.2 tonnes compared to electricity alone



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Cylinder is heated by solar coil and any additional heat required is provided by existing heating appliance(gas boiler, etc.) via the upper coil in the cylinder.Temp sensors on plate and in cylinder operate pump sets by detecting when supply and demand are available.Pumps circulate heat from solar panels to lower coil to heat domestic hot water supply.DHW tank stores this energy until a demand is required.

Solar Water Heating 2

Technology BenefitsRenewable – Operated by the most abundant renewable resource – the sun. Ideal for sites with high hot water demand (leisure centres, restaurants).Visible – Visible green endorsement has many CR benefits. Schools can benefit from added curriculum material.

Typical InstallationsSchools – New build or retrofit with access to southern elevations. Can be installed on roof, in roof or even on a building façade.Leisure centres – Has a constantly high demand for hot water and can utilise high yield periods (summer months).Offices – Any offices with central hot water systems and/or catering facilities for hot water demand.



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Solar PhotovoltaicHow it worksSolar Radiation (Photons) strike mono or poly crystalline structure in PV panel.This photon energy ‘excites’ unpaired electrons in atomic structure and some are released from structure, creating electron flow or direct current electricity.DC electricity flows into inverters where it is inverted into grid compliant 230v supply.Inverters are closely sized to the panel to ensure that the system is designed to run efficiently. The Inverter efficiency is key to the overall installation.

SpecificationProduct MicrogenerationProduct Type PowerClassification RenewableOutput up to 26 kW(t)Efficiency 12% at panel

96% at inverterGeneration 14,000 kWh(e)Carbon Saving up to 6 tonnes pa compared to grid supplied electricity



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Solar Photovoltaic 2Technology BenefitsRenewable – Operated by the most abundant renewable resource – the sun. Ideal for all sites with little shading and good electrical demand.Visible – Visible green endorsement has many CR benefits. Schools can benefit from added curriculum material.

Typical InstallationsOffices – Any with good solar yield (i.e. little shading from trees or other buildings). Most offices have high electrical demand in summer due to IT equipment and air conditioning.



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Fuel Cells

• Based on a chemical reaction.• Combines hydrogen & oxygen.• Forms electricity, water & heat.• Silent operation.• Low maintenance.• High efficiencies.• Very low (even zero) emissions.• Commonly reforms natural gas or other fossil fuel.• With operating temperatures as low as 80°C, fuel cells can be installed in private households

and light commercial operations as well as meeting all the energy requirements of large industrial operations.



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Combustion: Energy Recovery Incineration

Combustion of a fuel, most often waste, under controlled conditions in which the heat released is recovered for a beneficial purpose. This may be to provide steam or hot water for industrial or domestic users, or for electricity generation. Combined heat and power (CHP) incinerators provide both heat and electricity. The fuel value (calorific value) of household waste is about one third that of coal.The most widely deployed ERI process is called ‘mass burn’. Waste is burned on a moving grate in a boiler with little or no pre-processing. The boiler and grate system therefore have to be large and robust enough to withstand all conceivable articles in the waste stream.

The basic components of a plant are the:• waste bunker and reception building where waste is delivered

by road, potentially rail, or occasionally by river and stored prior to use • combustion unit(s) which burn the waste • heat recovery and power generation plant • flue gas cleaning equipment which cleans the combustion gases prior

to discharge to air • ash collection facility • exhaust stack which discharges the combustion gases to the air.



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GasificationGasification is a manufacturing process that converts any material containing carbon—such as coal, petroleum coke (petcoke), or biomass—into synthesis gas (syngas). The syngas can be burned to produce electricity or further processed to manufacture chemicals, fertilizers, liquid fuels, substitute natural gas (SNG), or hydrogen. Gasification has been reliably used on a commercial scale worldwide for more than 50 years in the refining, fertilizer, and chemical industries, and for more than 35 years in the electric power industry.

Power Generation with GasificationCoal can be used as a feedstock to produce electricity via gasification, commonly referred to as Integrated Gasification Combined Cycle (IGCC). This particular coal-to-power technology allows the continued use of coal without the high level of air emissions associated with conventional coal-burning technologies. In gasification power plants, the pollutants in the syngas are removed before the syngas is combusted in the turbines. In contrast, conventional coal combustion technologies capture the pollutants after combustion, which requires cleaning a much larger volume of the exhaust gas.

Pyrolysis is the thermal degradation of waste in the absence of air to produce char, pyrolysis oil and syngas. e.g. the conversion of wood to charcoal.



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Anaerobic DigestionAnaerobic digestion is a biological process defined as the breakdown of organic matter

by naturally occurring bacteria in the absence of air into biogas and biofertiliser and at a temperature, either in the mesophilic range (35-42°C) or in the thermophilic range (52-55°C).

There are broadly three uses for biogas:• In a conventional boiler to produce hot water or steam.• In a stationary engine to produce power.• As biomethane for vehicle fuel.



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Anaerobic Digestion 2Food Waste Digesters

• The weekly collection of source-separated food waste is now being recognised by the Waste & Resource Action Programme (WRAP), a Government funded organisation, as being the most successful way of diverting this waste from landfill.

Farm Digestion• Anaerobic digestion has a natural place on the farm, not just as a process within a cows

stomach, but as part of a waste management system enhancing the recycling of nutrients, and as a source of renewable energy.

The emphasis will come from one or a mixture of the following; • Feedstock, for example you may have a specific product to treat that is currently

costing you a lot of money to deal with or you may want to import food waste and charge a gate fee.

• Biofertiliser, for example you may want to enhance the management of your manure producing a more homogenous material to apply accurately to land or alternatively you may want to bring in feedstocks, which contain nutrients that will eventually be utilised on your land making mineral fertiliser savings.

• Energy, for example, you may have high energy requirements on site which could be met using anaerobic digestion, making electricity savings while claiming renewable obligation certificates.



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• Power generation from the gas captured in landfill sites.• Landfill gas is a mixture comprising mainly methane and carbon dioxide, formed when

biodegradable wastes break down within a landfill as a result of anaerobic microbiological action.

• The biogas can be collected by drilling wells into the waste and extracting it as it is formed. It can then be used in an engine or turbine for power generation, or used to provide heat for industrial processes situated near the landfill site.

• Landfill sites can generate commercial quantities of landfill gas for up to 30 years after wastes have been deposited.

• Recovering this gas and using it as a fuel not only ensures the continued safety of the site after landfilling has finished, but also provides a significant long term income from power and/or heat sales.



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When

This section provides some milestones at which a decentralised energy solution could be considered. It also provides some case studies to bring the topic to

life.

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Waste

New Build Refurbishment or Extension

Spatial Planning / Regeneration

Waste

Business and Domestic Waste is an important potential feedstock for Decentralised Energy generation.

When you have a waste stream with a significant calorific value.When the cost of landfill makes DE economically viable.When you have a significant source of waste near to a requirement for energy or heat.


Spatial Planning / Regeneration

Local Authorities should give full consideration to the suitability and application of Decentralised Energy provision in all of their Spatial Planning and Regeneration Strategies.


New Build

DE solutions to provide Heat and Power should be fully evaluated in any New Build proposition for Houses, Schools, Hospitals, Office complexes or Factories.


Refurbishment or Extension

DE solutions to provide Heat and Power should be fully evaluated in any proposition for Houses, Schools, Hospitals, Office complexes or Factories to be extended or refurbished.


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This section identifies some of the key reasons for considering a decentralised energy solution.

why

• Economics, i.e. Energy savings, penalties, charges, taxes, CRC

• Business Opportunity

• Comply with legislation

• Company Image

• Security of Supply

• Increased Demand for Energy

• Climate Change adaptation

Why

How

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This section suggests some key enablers for decentralised energy schemes and suggests specific business models

that others are using in the market place.

how

Business Models

Planning Regulations Grants / Subsidies / Tax

Contracts Steps

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Anaerobic Digestion

Solar

Small / Micro Wind

Not Required

Planning

Planning Small / Micro Wind• Due to legal technicalities the current statutory instrument (SI) does not cover micro

wind. Once these issues have been resolved, it is expected that roof mounted and free standing micro wind turbines will be permitted at detached properties that are not in conservation areas.

• Further legislation is expected later this year. • Until then, you must consult with your local authority regarding planning permission.


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Planning Solar• Solar PV and solar thermal (roof mounted):

• Permitted unless.o Panels when installed protrude more then 200mm. o They would be placed on the principal elevation facing onto or visible from the

highway in buildings in Conservation Areas and World Heritage Sites. • Solar PV and solar thermal (stand alone):

• Permitted unless: o More than 4 metres in height.o Installed less than 5 metres away from any boundary.o Above a maximum area of array of 9m2.o Situated within any part of the curtilage of the dwelling house or would be visible

from the highway in Conservations Areas and World Heritage Sites.



Planning Anaerobic Digestion

As with any industrial facility, anaerobic digestion plants are subject to a number of regulations and administrative procedures designed to protect the environment and human health. Depending on the circumstances of the individual plant, these might include:

• Planning Permission,• Waste Regulations,• Animal By-Products Regulations (ABP) Regulations,• Integrated Pollution Prevention and Control (IPPC) and• OFGEM accreditation.



Planning Not Required

• Permitted development rights.

• In England, changes to permitted development rights for renewable technologies introduced on 6th April 2008 have lifted the requirements for planning permission for most domestic microgeneration technologies.

• The General Permitted Development Order (GPDO) grants rights to carry out certain limited forms of development on the home, without the need to apply for planning permission.

• Biomass boilers and stoves, and CHP:

• Permitted unless: o Flue exceeds 1m above the roof height.o Installed on the principal elevation and visible from a road in buildings in Conservation

Areas and World Heritage Sites. • Ground source heat pumps - Permitted.• Water source heat pumps - Permitted.



RegulationsRenewables Obligation (“RO”)Various Renewables Obligation Orders have been enacted since the original Renewables Obligation Order was introduced in April 2002. In brief the RO was set up by Government to encourage the development of new renewables generation projects in the UK through a market support mechanism. The RO requires licensed suppliers to provide an increasing percentage of their electricity supplies to customers from qualifying renewable sources and this obligation runs until 2027 although proposed legislation if passed will extend this period to 2037. The RO as a support mechanism differs from the feed-in tariff which is used in Germany and Spain to encourage development of new renewables projects.

Energy Act 2008This Act includes provisions strengthening the RO as well as enabling the Government to introduce a tailor-made scheme to support (via feed-in tariffs) low carbon generation of electricity in projects up to 5MW; it also enables a new Renewable Heat Tariff to be introduced to provide a financial support mechanism for renewable heat which has so far been lacking in the UK and its absence has proved a disincentive for the development of renewable heat projects in the UK.[see the website- www.decc.gov.uk for more on this Act].


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Regulations 2Planning and Energy Act 2008This Act enables local planning authorities to include in their development plans requirements for a proportion of the energy used in developments in their area to be from renewable sources; to be low carbon energy from local sources; and for developments in their area to comply with energy efficiency standards exceeding the building regulation requirements.

Planning Act 2008This Act also affects energy developments and how they will be treated within the planning regime. [see the website- www.berr.gov.uk for more on this Act].

Electricity Act 1989This Act sets out the licensing regime for the electricity industry and is important in relation to any DE project development as regards the electricity aspects, most notably the distribution and supply aspects of any such project.


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Regulations 3The Electricity (Class Exemptions from the Requirement for a Licence) Order2001 (as amended)These Orders provide exemptions, in specified circumstances, from the requirement to hold licencesfor generation, distribution and/or supply of electricity which would otherwise be required under theElectricity Act 1989 (as amended). This area has been subject to a large amount of work over recentyears mainly through the Distributed Energy Working Group but a legal case which was decided lastsummer by the European Court of Justice (the Citiworks AG case) has put into doubt the validity ofsuch exemptions which affect third party suppliers’ ability to use networks to supply end customers.The ramifications of this case are still being considered by the UK Government to see if the Orders willremain valid following this decision.

Other Relevant Government Policy Documents Regional Spatial StrategyLocal Government Act of 1999Code For Sustainable HomesSupplement to Planning Policy Statement (PPS) 1 on Planning and Climate ChangeEnergy White PaperLocal Government White Paper


Grants / Subsidies / Tax• It is recommended that, in the very early stages of considering a decentralised energy

scheme, suitable grants, subsidies, tax advantages etc are explored. • Some of the technologies described in this guide are new and are supported in order to make

them comparable to their well-established competitor technologies.• Fiscal incentives of this nature could be related to:o Location – certain regions may attract regeneration funding e.g. Objective 1 funding from

EU.o Technology – some new technologies are subsidised or supported e.g. Low Carbon

Buildings Programme (LCBP).o Who you are – some benefits relate to specific industries, sizes or organisation or, for

example, the public sector.o Local – in addition to regional approaches above (location), there may be specific individual

scheme grants that may be available e.g. from Regional Development Agency (RDA).• A comprehensive list is not provided in this guide, due to its complexity and relatively fast-

moving nature but you may find some of the following resources useful.......


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Energy Performance Contract

Business Models

Implementation of Decentralised Energy Generation – The Energy Performance ContractModel: Energy Performance Contract between ESCO and Energy UserConcept: ESCO designs, pays for, operates and maintains the optimum mix of energy efficiency and decentralised energy generation systems. The ESCO guarantees a level of performance increase based on the difference between the pre and post implementation performance levels.


Key Advantages: 1)End user can retain its capital for its core business purpose rather than energy generation assets2)Operational and performance risk not taken by end user3)Operational and Maintenance resources not required from end user4)Non finance benefits such as internal and external marketing

Energy savings

BeforeContract

DuringContract

After Contract

All costs:Equip.StudiesO&M

Energy consumption

ContractsIntroductionIn relation to any DE project there will be a requirement for a number of contracts and agreements to be put in place.Given that there are an almost infinite number of variations in the type of DE projects which can be set up, this section deals with contracts and agreements which are commonly used in such projects.Alongside the contracts there will be a number of regulatory requirements which will need to be met by any DE project developer or sponsor and these will be dealt with in the section of this Guide entitled “Regulations”.

SPECIFIC CONTRACTS FOR GENERIC DE PROJECTS

1 Land Contracts and allied rights etc1.1 It will almost always be the case that the land on which the DE plant and infrastructure is to be placed will need to be leased or licensed to the DE project sponsor or developer and/or operator. Much will depend on who owns the land and whether this is in public or private hands. At the very least a DE project developer should be looking for rights over the relevant land which are exclusive rights and which will last for at least the duration of the DE project plus a further period to cover any works etc which will need to be carried out after the end of operation of the DE project.


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Contracts 21.2 The typical documents which would be put in place in relation to privately-owned land would include either a lease or some form of licence agreement between the freeholder(s) of the land (and there may of course be instances where the land affected by the project is owned by more than one entity) and the project company/sponsor. It is also usual for relevant easements to be sought from landowners where infrastructure is to pass over, under or through their land. Finally, it is essential to ensure that rights of access are also obtained to enable access to land during both construction and the operational period of the DE project.

1.3 In relation to public land there may in addition be arrangements and rights relating to land set out in the Concession Agreement entered into between the DE project company and the public entity as well as the entry into of specific leases/licence agreements with such entity.

1.4 It is particularly important for DE project developers to ensure that they have acquired the relevant land rights to all land required for the purposes of the project where the project is being to any great extent project financed as the financing entities will require these aspects of the project to be watertight and to cover the full duration of the project’s life.


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Contracts 32 Construction Contracts2.1 Much here will depend on the model chosen for the DE project. Many such projects will involve the setting up of a special purpose vehicle (“SPV”) which will enter into various contracts with contractors for different aspects of the project. A classic case is the letting by the SPV of a Design and Build Contract where tenders will be sought from suitable companies to put together either the main plant for the project or the main plant and allied infrastructure.

2.2 In some cases, particularly where the project sponsor is a public sector entity, the Concession Contract will include an obligation on the sponsor to carry out the entire project and to deliver to the public sector entity specific services (which will generally be the delivery of heat and power to designated buildings at agreed cost levels). In these cases there will be a further series of contracts and sub-contracts between the project sponsor and third parties for the design and construction of the relevant plant and infrastructure.

3 Supply Contracts3.1 One of the main drivers behind DE projects is the provision of cheaper, often sustainable and more reliable energy supplies to customers who are connected to the local DE networks for both heat and power. For this to work there need to be in place contracts for the supply of these services to such customers which enables the SPV or DE project company to charge for such supplies and hence derive income for the DE project. Therefore standard form supply contracts for both electricity and heat supply will need to be prepared.


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Contracts 44. Other Contracts

Various other contracts will need to be prepared depending again on the structure of the project chosen at the outset. Operation and Maintenance contracts may need to be let in relation both to the plant and the allied infrastructure if the SPV or project company does not have the skills in-house to carry out this work. Meter reading and billing arrangements may need to be outsourced as well by the SPV requiring contracts to be entered into with these entities. Finally, contracts will need to be entered into with external suppliers for electricity and heat supplies for periods when the on-site plant is either out of commission for routine maintenance or where there is an unexpected outage of the plant which affects the supply of electricity and/or heat.


StepsSuccess in the implementation of decentralised energy schemes is no more difficult that doing the basic steps in the right order and making the right decisions at the right time. The town-level example of Gussing exemplifies the step by step process.

1. Consider what you want to achieve by implementing a scheme. This could also be described as ‘defining the objectives’ for the project. Objectives could include; securing or sustaining local employment, security of supply, mitigating future energy price rises, consume local waste locally, achieving competitive advantage, regulatory compliance etc.

2. Identify both the local context and local resources. The ultimate solution should ‘fit’ into the locality in terms of scale, desire to have it there, local fuels and organisations. Consider which companies or buildings, commercial or residential, could use or benefit from energy that the scheme produces or could produce resources for the scheme. Consider wider than your individual site to identify other supply or demand factors and to benefit from economies of scale.

3. What are the appropriate technology types and manufacturers? Having established 1. and 2. above, what type of solution(s) are most suitable? Which ones can you eliminate? Focusing on a smaller technology type and, within it, which specific equipment will save time and be easier to communicate.


Who

what when why how where

This section identifies the groups of people that you will need to deliver a decentralised energy scheme. It describes their role in the process. It also provides names of specific organisations, from the BCSD-UK

membership, who are engaged in this activity.

who

Funders

Customers

Technology Providers

Design Engineers

Legal Advisors

Energy Companies

Funders• As the name suggests, funders pay for part or all of the scheme and will recover costs

by:o Retailing downstream energyo Lowering their energy consumption or costo Regulatory compliance and avoiding penalties and fineso Other charges e.g. local taxes etc

• Different funders invest for different motives. Some may be on the project day to day, be a remote ‘investor’ or be a customer.


Technology Providers

• There will always be technology at the heart of a DE scheme. Therefore, there is always a need for a technology provider.

• Some technologies (and their manufacturers) are established and some may be newer, providing often superior performance but without the established customer base.

• Technology providers may or may not take performance risk on the technology – that is take the risk on whether the equipment works, as stated. It is important to ensure that the goals of the technology provider’s are aligned to that of the overall scheme to improve chances of success.

• It is suggested, as per HOW, within the STEPS section, that the specific technology for the scheme is considered as the third step after objectives and resources have been covered. This will ensure that companies are engaged, offering the right technology rather than the promotion of a technology that may not be suitable.

• Technology providers, following the point above, should be engaged early in the scheme so that the equipment is suitable to the required function.


Legal AdvisorsIn relation to all projects which focus on the whole area of “decentralised energy” (“DE”) there

will be a requirement for a thorough understanding of both the regulatory and legal frameworks under which such projects will be developed. This [section] will look at some of the key areas which will be encountered on a journey to a positive outcome in developing a project in the DE arena from a regulatory and legal perspective and will detail some of the success stories with projects which have succeeded. These examples will include certain Energy Service Company schemes (“ESCOs”) which have been set up and which are currently active in the UK.

It will therefore be necessary to enlist the assistance of consultants and/or lawyers who are familiar with the regulatory and legal framework which covers decentralised energy and who have experience in advising on the relatively complex structures which will need to be put in place for a successful project including the raft of agreements and other documentation which will be necessary for the project to reach a satisfactory conclusion.

From experience it is often beneficial to engage consultants in the early stages of any DE project and particularly in relation to ESCO structures and the contractual framework which will need to be considered and then put in place to enable these schemes to function properly.

See also under Contracts within how


CustomersStand alone users of substantial energy and/or heat e.g.Hospitals SchoolsOffice complexesIndustrial applications

Concentrations of Energy Users e.g.• Housing associations• Industrial estates• Communities

Remote sites without grid access e.g.• Farms• Water pumping and extraction


Design Engineers

• There will always be technology at the heart of a DE scheme. Therefore, there is always a need for a technology provider.

• Some technologies (and their manufacturers) are established and some may be newer, providing often superior performance but without the established customer base.

• Technology providers may or may not take performance risk on the technology – that is take the risk on whether the equipment works, as stated. It is important to ensure that the goals of the technology provider’s are aligned to that of the overall scheme to improve chances of success.

• It is suggested, as per HOW, within the STEPS section, that the specific technology for the scheme is considered as the third step after objectives and resources have been covered. This will ensure that companies are engaged, offering the right technology rather than the promotion of a technology that may not be suitable.

• Technology providers, following the point above, should be engaged early in the scheme so that the equipment is suitable to the required function.


Energy Companies• Energy companies are intrinsic to schemes of this nature. They may have a ‘renewable

obligation’ which drives them to generate electricity from renewable sources and certainly have an interest and knowhow in selling the resultant energy to large and residential customers. If an energy company is a generator, they will be used to funding, building and owning operating assets.

• An energy company may seek to be the sole or part owner of an ESCo and may seek to engage in the scheme from start to finish.

• Energy companies have the systems and people to retail to customers for the energy (including heat). This would include; billing, customer service, credit management etc.

• However, energy companies are unlikely to have all the skills required to deliver a DE project end to end. They will need support from others at different stages, especially the early ones.

• A limited role for an energy company may just be to buy the energy that comes from the scheme in a Power Purchase Agreement (PPA) or similar.


what when why how who

This section contains links to sources of further information.

Where

where

BCSD-UK Contributory Organisations

Guidelines / Regulations Further Information

BCSD-UK

• BCSD-UK :www.bcsd-uk.co.uk

• BCSD-UK Midlands branch:www.mebconline.com

• BCSD-UK Yorkshire & Humber branch:www.bcsd-uk.co.uk/Regions/YorkshireandHumberside/tabid/145/Default.aspx

• BCSD-UK Scotland branch:www.bcsd-uk.co.uk/Regions/Scotland/tabid/110/Default.aspx

• World Business Councilwww.wbcsd.org


Contributory Organisations

• www.arup.com• http://www.bcha.co.uk• www.eonenergy.com/sustainable• www.lafarge-cement-uk.co.uk• www.newworldsolar.co.uk• www.selfenergy.co.uk• www.wspenvironmental.com• www.yorkshire-forward.com


Further Information• www.berr.gov.uk/energy• www.bwea.com – The British Wind Energy Association• www.bre.co.uk – Building Research Establishment• www.carbontrust.co.uk• www.chpa.co.uk – Combined Heat & Power Association• www.decc.gov.uk – Department of Energy & Climate Change• www.energysavingtrust.org.uk• www.fuelcellstoday.com• www.gasification.org• www.greenfinch.co.uk• www.lep.org.uk – London Energy Partnership• www.lowcarbonbuildings.org.uk• www.r-e-a.net – Renewable Energy Association• www.tcpa.org.uk – The Town & Country Planning Association• www.wolseley.co.uk


Guidelines / Regulations

Relevant Government Policy Documents• Regional Spatial Strategy• Local Government Act of 1999• Code For Sustainable Homes• Supplement to Planning Policy Statement (PPS) 1 on Planning and Climate Change• Energy White Paper• Local Government White Paper


Case Studies


Biomass Heating

Fuel Cells

Small Scale Hydro

Small Scale Wind

Combined Heat & Power

Solar Water Heating


Anaerobic Digestion

Solar Photovoltaic

Combined Technologies

ESCos

Güssing Eco Village

CS Combined Heat & Power


Combined Heat & PowerTipton Learning Skills CentreOffice block with workshop requiring electricity to offset high usage from workshop heating and power tool usage.Two CHP units offsetting grid supplied electricity and heat output powering wet radiator based central heating system. Heat is further utilised with Absorption chillers, where heat creates chemical reaction to produce chilled water for a chilled water air conditioning system.

CS - Biomass


BiomassType of Building: IndustrialLocation: Sintra (near Lisbon)Type of Technology: Gas reciprocating engine Size (kWe): 800kWInvestment required (€): 1.100.000 €Investment by Self Energy: 85%Projected annual savings in kWh: 7GWh (increase in gas) and 5GWh (electrical savings)Projected annual savings in €: 350.000

Type of Building: HotelLocation: AlgarveType of Technology: Biomass boilerSize (kWth): 300kWInvestment required (€): 120.000 €Investment by Self Energy: 75%Projected annual savings in kWh: Approx 1,6 GWhthProjected annual savings in €: 180.000

CS – Small Scale Wind


Small Scale WindSandwich Technology SchoolSituated on the south coast and has good access to the prevailing wind (South West).A 5kW turbine on a 15m tower will generate 9MWh over the course of a year, saving 6 tonnes of CO2 .

Encraft Warwick Wind TrialsThe report contains case studies of 26 varied sites, enabling customers to examine in depth how a small wind turbine might work for them, and helping inform choices between competing micropower technologies so that you can select the optimum configuration for your site. Read more at www.warwickwindtrials.org.uk

CS - Small Scale Hydro


Small Scale HydroSmall-scale hydroelectric scheme - Garbhaig, ScotlandOperated by Garbhaig Hydro Power Ltd, the small-scale hydroelectric site is within a National Scenic Area, adjoining Loch Garbhaig in Slattadale Forest, south of Lake Maree, Rosshire, Scotland. The water source is natural water storage at Loch Garbhaig, enhanced by a 2-metre weir at the loch’s mouth. From there, it is supplied through 1,400 metres of buried pipeline to the 1,000-kilowatt Newmills Hydro Pelton Turbine, driving a synchronous generator of the same rating.The scheme feeds into the power grid via a 415-volt to 33-kilovolt transformer. By December 1994, it had supplied 9 gigawatt hours to the grid – sufficient electricity to meet the average needs of 750 homes. When compared with the equivalent output from a fossil-fuelled power station, the scheme has saved 2,200 tonnes of carbon dioxide, 130 tonnes of sulphur dioxide and 15 tonnes of nitrous oxide gases.Highland Regional Planning Authorities, Scottish Natural Heritage, the Forestry Commission and the Highland River Purification Board were all involved in planning consultations. Tree screening was used at the turbine house and transformer yard, mounding was used to hide the access road, and local stone was used for the intake structure and access road. Local opinion is supportive – access to a site of natural beauty improved without disturbing the attractiveness of the area. Fishing is unaffected and the loch is more accessible for fishermen.An electricity purchase contract, including a premium for renewable energy, was awarded in July 1991. This enhanced its financial viability and revitalised the original project. Original construction work cost £555,000, with a further £600,000 invested in 1992/93.

CS – Solar Water Heating


Solar Water HeatingGreets Green Partnership's Sustainable Warmth project, SandwellIn 2008 New World Solar installed 75 Solar thermal hot water systems on behalf of Sandwell warmzone, Sandwell Metropolitan Borough Council.

Residents have managed to reduce their water heating costs by up to 45 per cent by converting to solar power.

CS – Solar PV


Solar PhotovoltaicE.ON UK headquarters in CoventryCurrently has one of the largest combined solar arrays in the UK. 84 Schuco premium PV panels installed on a façade kit is providing supplementary power to the building while offsetting 6 tonnes of CO2 through electricity reduction alone.

CS – Fuel Cells


Fuel CellsA hydrogen fuel cell system powered house in Lye in the West Midlands Black Country Housing Group (BCHG), in partnership with the University of Birmingham launched the hydrogen fuel cell system which is powering the homes electricity, water and central heating. The fuel cell unit is housed in a shed in the back garden of one of their newly-built homes in Stocking Street – a quiet residential cul-de-sac.The £2 million project has been jointly funded by regional development agency Advantage West Midlands and the Engineering and Physical Sciences Research Council. This installation uses the natural gas infrastructure. The gas is converted into hydrogen by a reformer and the hydrogen is then used in the fuel cell.Hydrogen produces no carbon emissions unlike coal or gas and is much more efficient in operation. In the future, a hydrogen infrastructure – hydrogen piped to individual buildings and residences – will make this type of technology ideal for domestic use.

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CS – Fuel Cells 2


Fuel Cells 2The University of Birmingham is leading the research project to learn more about hydrogen and fuel cells in a domestic context. By remotely monitoring the equipment at the house, researchers can find out more about the hydrogen fuel cell system, its efficiency, performance, operation, and durability.A supply chain in the West Midlands is also being established to allow small companies to manufacture components for the growing market in this new technology.The new fuel cell is a Baxi Innotech unit that generates 1.5kW of electricity and provides 3kW of heat suitable for domestic heating and hot water that is transferred to a 600-litre water tank heat store next to the fuel cell.The heat is circulated through conventional radiators and to the hot water cylinder in the house, while the electricity generated by the fuel cell powers the house.If the house needs less electricity the extra generated is exported to the National Grid. If the house needs more electricity, the additional amount required is imported from the grid.

CS – Anaerobic Digestion


Anaerobic DigestionProject funded by AWM and by Defra under the New Technologies Demonstration Programme, investigating processes to divert biodegradable municipal waste from landfill.Partnership between Greenfinch and South Shropshire District Council, a collection authority covering 19,000 rural & market-town households.Biowaste digester recycles 5000tpa of sources agregated kitchen & garden waste into pasteurised biofertiliser for local agriculture.Biogas is used to produce electricity & heat.For more information visit www.greenfinch.co.uk

CS – Energy from Landfill Gas


Energy from Landfill GasLandfill site - Greengairs, ScotlandOpened in 1990, Greengairs landfill site is the largest contained landfill site in Scotland. It currently handles 750,000 tonnes of waste a year. Around 55 per cent of this is domestic waste, 30 per cent is commercial or industrial waste, and the remainder is inert waste.Methane is produced as the biodegradable waste within the landfill site breaks down. This is collected and used as the fuel source for the site’s power station. The power station also exports 3.8 megawatts of power to Scottish Power’s electricity network. This is due to increase by about 2 megawatts as the plant develops.The gas collection system is designed to take the maximum amount of gas from the waste, reducing the risk of gas migration from the site and any problems with landfill gas odours in the local village. Three thousand cubic metres of gas per hour is taken from over 60 operational gas collection wells drilled into the waste in fully filled areas of the landfill. These wells are connected to the site’s gas flare compound by over 6,000 metres of underground pipework. The collection system controls the emission of gas from the site, and maximises the quality and volume of gas to be used as fuel for the generators.The landfill gas system at Greengairs works 24 hours a day, 365 days a year, with projected availability of 90 per cent. About £2.5 million has been invested in the gas collection system and the power station.

CS – Combined Tech 1


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Combined Technologies

CS – Combined Tech 2


Combined Technologies 2

CS - Gussing


Güssing, South-east AustriaGüssing is a model of decentralised, regionalised economy as well as energy.Peter Vadasz became Mayor of Güssing only 3 years after the Iron Curtain was lifted. He wanted to turn Güssing’s economic situation around. Being a small town on the borders, it did not retain its younger generation or financial economy.The first decision was to build a number of demonstration energy plants in the town and in the region: – bio-diesel, biomass district heating from wood fuel supplying Güssing town and then in 2001 the biomass-steam gasification plant in Güssing built on all new technology.The second step was to do research work on these plants in connection with the University of Vienna. This self sufficiency in energy also benefited the region’s economy.In the town of Güssing this has meant 50 new companies, more than 1,000 new jobs, and total increased sales volume of 13m Euro/year.In the district of Güssing the actual added value with 45% self sufficient use of renewable energies is 18m Euro/year and 37m Euro Potential added value with 100% self sufficient use of renewable energies.An “eco tourist” business has been developed which now sees 1600 visitors per week eager to learn and this contributes directly to the local economy.Güssing has the first photovoltaic panel manufacturing plant in Austria.All public buildings in Güssing are connected to the district heating system.

CS – Eco Village


Summerfield Eco VillageLargest renewable technology retrofit project in the UKThe Summerfield Eco Village project evolved when local residents became concerned about their rising fuel bills and desire to tackle climate change a local level. Between February 2007 to March 2008, solar panels, super insulation, energy efficient heating and lighting were fitted completely free of charge to 329 owner occupier homes to help reduce fuel poverty for people on low incomes. It is estimated that the eco installations will deliver 60% of each household’s hot water per annum and significantly reduce fuel bills. The project also created a number of employment opportunities for local residents.

Eco office & six eco homesPart of Summerfield church hall has been transformed into an eco office, which is now also a community facility for local people and 6 houses in multiple occupation have been converted from flats into much needed large family eco show homes, demonstrating what can be achieved when modernising older Victorian Homes. The first of the deconversions achieved an Eco Homes ‘excellent’ rating and the subsequent 5 homes have achieved code 3 and code 4 of the Code for Sustainable Homes.

CS – Eco Village 2


Summerfield Eco Village 2

Local schoolsThe project also opened up the opportunity to work with children from six local primary schools as part of the City Council’s Housing Education Initiative, helping them to develop an Eco website, Eco radio station and energy advice DVDs.More details are at www.eco-radio.co.uk and www.tntnews.co.uk.Family Housing Association (Birmingham) Ltd www.family-housing.co.uk