do local factors matter for local energy ? some insights ... · safeguarding existing heating...

www.electricitypolicy.org.uk

Do local factors matter for local energy ? Some insights from CHP-DH in England

Laura Platchkov Michael Pollitt

University of Cambridge

Cambridge, 14.03.2011


Overview

1. Motivation

2. Heat in the UK

3. Research Approach

4. Exploration of the data

5. Preliminary insights & next steps


1. MOTIVATION


Motivation • 47% of UK’s CO2 emissions come from heat (Parliamentary Office of

Science and Technology, 2010)

• Increased policy focus on energy AND heat strategy

• Unrealized potential despite range of benefits (Poyry, 2009)

• Vast amount of (waste) heat available (Euroheat and Power, 2009)

• Coordination, investment & social dynamics (Kelly and Pollitt, 2009)

Why community heating has been implemented in some

areas and not in others? What are the barriers and drivers?

Do local factors matter?


2. HEAT IN THE UK


Heat in the UK

Heat loads Key facts

• 49% of total energy demand

• 47% of CO2 emissions

• Total demand 900TWh

– 70% in dwelling, commercial & public

buildings

– 30% industrial process

• Fuel source:

– 70% gas

– 21% electricity

– 7% oil

– 2% solid fuel

Source:(Parliamentary Office of Science and

Technology (2010)

Source: DECC Heat Map,

http://chp.decc.gov.uk/heatmap/


CHP

Source: DECC CHP Focus website

Constraints:

• Sufficient steady

baseload/anchor load

• Heat load density

• Diversity of load –

smoothing

• High proportion using

electric heating

• High rise flats &

commercial buildings,

swimming pools


Benefits of CHP DH Economics

• Economies of scale

• Load smoothing – lower O&M

• Lower O&M

• Income stream

Environmental

• Improved energy efficiency

• Efficent use of local resources

• Carbon savings (250,000 homes = 0.25-1.25 MtCo2

• Integration of renewables in energy mix

Security of

supply

• Use of local resources/renewables/waste heat & flexibility

• Island mode in case of grid failure

Flexibility • Fuel, technologies

Comfort &

others

• Fuel poverty

• Noise

• Increase living space

• No risk of explosion


CHPDH - Potential & targets • Potential UK (Poyry, 2009; DEFRA,2007;ECI):

3.3-7.9 millions households

Commercial space: 15.6-26.3 million m2

Share of total UK heat demand: 5.8-13.9%

• Current situation (Poyry, 2009): around 2-4% of total heat supply in 2009 (Poyry, 2009; Euroheat &

Power,2009))

Sector Size Social housing 198,000 dwellings (4.4% of total)

Private housing 361,000 dwellings (1.7% of total)

Nursing homes 7.3 million m2

Hospitals 17.63 million m2

Higher and further

education

8.13 million m2

Schools 12.13 million m2

Industrial 37.43 million m2

Source: (Euroheat & Power, 2009), ONS http://www.statistics.gov.uk/downloads/theme_social/Social-Trends40/ST40_2010_FINAL.pdf

http://www.statistics.gov.uk/downloads/theme_social/Social-Trends40/ST40_2010_FINAL.pdf




Policy context • EU level:

– Energy Performance in Buildings Directive (Directive 2002/91/EC)

– Cogeneration directive (Directive 2004/08/EC)

• National level: – Heat Call for Evidence (2008)

– Heat and Energy Saving Strategy Consultation (2009)

– Strategy for Households Energy Management (2010)

– PPS "Planning for a Low-Carbon Future in a Changing Climate“

(2010)

– Code for Sustainable Homes (2007*)

– Localism bill (2010)

• Regional/local level: – London Plan („…require developments to make the fullest contribution to the mitigation of and

adaptation to climate change…./ Safeguarding existing heating networks)


Support measures Category Measure Comment

Fiscal CCL exemption (fuel inputs & electricity

outputs*) & ECA

Since 2001

Enhanced Capital Allowances Since 2001

Business rates exemption

Premium payments Eligible for ROCS if use renewables

FIT (micro & small scale CHP Since April 2010

RHI Since April 2011

Emissions trading EU ETS (Phase II) 2008-2012 (Phase

III?)

CRC

Suppliers obligation Eligible under CERT Until 2012 (then Green

Deal)

Eligible under CESP Until 2012 (then Green

Deal)

Grants Community Energy Programme 2001-2005


Source: (UK-GBC and Zero Carbon Hub, 2010)


Barriers

Sources: DEFRA (2007a); DEFRA (2007b); Poyry (2009); Kelly and Pollitt (2010); DECC (2008)

Type Barrier Description/Comment

Market barriers & failure

Access to capital High up-front costs (plant, infrastructure, connections, meters); lack of grants/funding

Risk Length of payback period; energy prices (spark spread); lack of experience

Uncertainty future heat load; future policy/regulatory framework; technologies becoming more competitive (e.g. electric heating from decarbonised electricity)

Transaction costs/hidden costs

Coordination problems associated with the diversity of stakeholders; lack of supply chain (artificial costs)

Competitiveness Competition against sunk costs of existing networks; Lack of carbon prices

Regulatory Electricity license exports

Simplified licence, but difficulty to access full revenues; unregulated market

Regulation Unregulated market; lack of standardisation in contract structure for developers

Institutional Planning process Variable application planning policies & building regulations; lack of empowerment at the local level

Capacity Lack of capacity, experience & knowledge & expertise

Cultural/ historical

structural high proportion of individual houses; cheap coal & gas, gas networks

policy focus electricity (rather than heat); centralized generation;

Cultural/social lack of familiarity/awareness among public sector and consumers; lack of trust (poor track record); lack of interest/priority


3. RESEARCH APPROACH


Research rationale

Lack of

standardization/

regulatory

framework

role of local factors & social capital ?

Diversity of

loads/anchor

load for

economic

viability

Community

involvement/

agreement

Diversity of

potential

stakeholders

High transactions costs & conflicting interests


Social capital

LA’s, community & issues of trust as key enabler/facilitator

for local energy schemes (Grohnheit and Gram Mortensen, 2003, Burton and

Hubacek, 2007, Kelly and Pollitt, 2011, Collier and Löfstedt, 1997)

Social capital: “features of social life—networks, norms and

trust—that enable participants to act together more

effectively to pursue shared objectives” (Putnam, 1995)

Social capital as outcome, here as independent

Dimensions: trust, values and social networks

Functions: facilitates the (1) processing of information; (2)

assessment of risks and opportunities; and (3) the “checking out”

of situation, individuals and agencies (Spellerberg, 2001, p.10).


Research objectives

• Hypothesis: social capital, given its functions might play a role in the

uptake of CHP-DH, because of the high upfront costs, load diversity, lack

of regulation and hence need for coordination & agreement between a

range of diverse stakeholders with different interests

• Research objectives:

1. Better understand the key drivers and barriers to CHPDH

2. Assess what distinguishes districts that have CHPDH

from those that do not have

3. Shed some light on the role of local factors and social

capital in particular in the uptake of CHPDH


4. DATA


Overview of the data • No definitive data on the number of DH schemes in England

• Available: DECC CHP database + largest established district heating

schemes (literature)

Focus on CHP in the “sector transport, commerce and administration”

(TCA) (exclude industrial CHP) and DH

Geographic coverage: England

• 326 (current local districts); 262 CHP plants; 17 DH schemes.

• Variables on:

– CHP

– Economic/financial aspects

– Social dimensions

– Energy demand (heat loads)

– Housing

– Demography

– Political (soon)


Variables - description Category Variable Description Source

CHP

CHP electrical capacity CHP electrical capacity in kWe (2010) DECC CHP database

CHP dummy Presence or not of at least 1 CHP (2010)

DH dummy Present or not of known large district heating scheme literature review

LA budget expenditures Average service expenditures , £ (2005-8) CLG

HEAT LOAD

Heat loads (1km2 around main LA building)

total heat load from domestic, commercial office, public buildings, hotel and catering, other services, retail, sports, education, health, communication & transport in KW (2010)

DECC Heat Map; National Archives; postcodes

ENERGY CONSUMPTION

Diverse Electricity , gas, coal, fuel consumptions from domestic ; and commercial + industrial sector (2005-8)

ONS

ECONOMIC GROWTH

Businesses entry Total count of birth of new businesses (2004-9) ONS

HOUSING

Tenure 2009 % of dwellings owned by the LA or registered social landlords ONS

SAP rating 2009 SAP rating of dwellings ONS

Decent Homes Standard 2009

DHS of dwellings ONS

POPULATION Population density inhabitants/square km (2009) ONS

Population Inhabitants in districts (2009= ONS


Social capital variables Source: Place Survey 2008-9

DIMENSION COMPONENTS (11) DESCRIPTION

MICRO LEVEL

social network (quality)

sense of local identity/belonging % of respondents feeling that they belong to their immediate neighborhood

social network (frequency)

participation/helping out % of respondents participating (monthly) to volunteering over the last 12 months

shared norms/values pollution (environmental concern/awareness)

% respondent who consider level of pollution as most important in making a good place to live

shared norms/values sense of community % respondent who considercommunity activites as most important in making a good place to live

shared norms/values concern for affordable decent housing % respondent who consider Affordable decent housing as most important in making a good place to live

trust respect and consideration (negative) % of respondents who think people do not treat each other with respect and consideration

MESO LEVEL

social network (frequency)

local decision making involvement Sum of % respondents involved in local decision making

social network empowerment % people feel can influence decisions affecting their local area

trust trust towards LA % of people who believe that public service agencies act on concern of local residents, promote the interest, or treat local resident with respect & consideration

OVERALL QUALITY OF LIFE

area overall satisfaction of local area

home overall satisfaction of home


Summary statistics

CHP by sector, 2010

71%

29%

Transport, Commerce andAdministrationIndustrial, paper, oil, …

CHP presence % districts

45%

55%

non CHP CHP

Total capacity 2436.8 MW

(368 plants)

Total TCA capacity: 166.779 MW

(262 plants)

17 districts with large DH

133 district with TCA CHP (mean capacity 1254Kwe, min 60, max 24346, sd 3072.1)


Large DH versus non DH

Number of TCA CHP

mean p50 min max

No DH 0.666667 0 0 9

DH 3.294118 2 0 12

DHdummy

LA expenditures 05-09

population density

SAP rating

Business birth 04-09

Heat load TCA

number of TCA CHP

TCA CHP capacity

DHdummy 1

LA expenditures 05-09 0.4187 1 population density 0.2182 0.5343 1

SAP rating 0.0998 0.0819 0.1259 1 Business birth 04-09 0.3972 0.6816 0.5949 0.0818 1 Heat load TCA 0.3915 0.4226 0.4936 0.1677 0.5489 1

number of TCA CHP 0.412 0.3886 0.2554 0.0741 0.4664 0.2929 1 TCA CHP capacity 0.4572 0.4379 0.3024 0.0714 0.4981 0.2209 0.4831 1 LA&RSL owned dwelling % 0.2703 0.5374 0.6584 0.2248 0.3949 0.3362 0.1927 0.2639


DH versus non DH - boxplots 0

50

00

00

1.0

e+

06

1.5

e+

06

2.0

e+

06

ave

rSE

RV

ICE

exp

0 1

LA expenditures 2005-2009 TCA CHP capacity

0

50

,000

10

00

00

15

00

00

HL

tra

nspo

rt, co

mm

an

d a

dm

in a

nd

dom

0 1

Heat loads 2010

0

5,0

00

10

,000

15

,000

po

p d

ensity

0 1

Population density 2009

0

5,0

00

10

,000

15

,000

20

,000

25

,000

cap

acity C

HP

TC

A C

HP

da

taba

se

0 1


CHP vs non CHP - boxplots 0

50

00

00

1.0

e+

06

1.5

e+

06

2.0

e+

06

ave

rSE

RV

ICE

exp

0 1

LA expenditures 2005-2009

0

50

,000

10

00

00

15

00

00

HL

tra

nspo

rt, co

mm

an

d a

dm

in a

nd

dom

0 1

Heat Load TCA 2010

0

5,0

00

10

,000

15

,000

po

p d

ensity

0 1

Population density 2009

010

20

30

40

50

pu

blic

, L

A a

nd

RS

L d

we

llin

gs, p

erc

enta

ge

0 1

LA and RSL owned dwellings 2009


Business births

0

10

,000

20

,000

30

,000

40

,000

bu

sin

ess b

irth

s 2

00

4-2

009

0 1

Business births 2004-2009, TCA CHP

0

10

,000

20

,000

30

,000

40

,000

bu

sin

ess b

irth

s 2

00

4-2

009

0 1

Business births, 2004-2009, DH


Social capital variables

correlations

DH dummy

Decent house -0.0034

community -0.0778

pollut 0.126

belong -0.2545

empower 0.1859

helpout -0.1103

decisionmkg 0.1136

trustLA 0.0106

respect -0.1245

population density

mean min max p50 sd

DH 3712.9 241 11876 3275 3326.9

non DH 1494.9 24 14005 545.5 2148.8

Area sqkm

mean min max p50 sd

DH 178.88 3 552 93 176.54

non DH 406.7 12 5013 211.5 563.86

area sqkm mean min max p50 sd

TCACHP 362.592 12 5013 138.5 650.35

non TCA CHP 416.337 3 3563 284 476.1

correlation CHPTCA capacity

decenthouse -0.0118

community -0.169

pollut 0.0939

belong -0.2461

empower 0.145

helpout -0.1271

decisionmkg 0.085

trustLA -0.0407

respect -0.0975

popdensity mean min max p50 sd

TCA CHP 2297.91 24 14005 1405.5 2751.9 non TCA CHP 1149.39 36 10562 393 1745.8


Social capital index - boxplots -4

-20

24

6

Score

s for

com

pon

en

t 1

0 1

DH versus non DH

-4-2

02

46

Score

s for

com

pon

en

t 1

0 1

CHP versus non CHP

• Principal Component Analysis on social capital variables

• Social capital index across subsamples


Preliminary insights & next steps

• Limitations due to data quality/availability

• Heat load is not the main determinant for CHPDH

• Districts with large DH: heat loads, LA’s expenditures,

populations density tend to be larger; social capital index

slightly lower

• CHP capacity positively correlated with the presence of a DH

• Business births larger in districts with CHP/DH

Next steps

• Data: investigate role of political factors & poverty (ONS &

University of Plymouth data)

• Causal analysis: Limited dependent variables (with split

sample - DH/NON DH; CHP/NON CHP)


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ANNEXES


General levels of satisfaction 60

70

80

90

10

0

satisfa

ctio

n w

ith

loca

l a

rea

0 1

Satisfaction area, DH vs non DH

75

80

85

90

95

satisfa

ctio

n w

ith

hom

e

0 1

Satisfaction home, TCACHP

75

80

85

90

95

satisfa

ctio

n w

ith

hom

e

0 1

Satisfaction home, DH

60

70

80

90

10

0

satisfa

ctio

n w

ith

loca

l a

rea

0 1

Satisfaction area, CHP


Principal Component Analysis • Aim: develop an empirically grounded definition of social

capital

• Used to produce a smaller number of summary measures from a set of

correlated indicators (Onyx and Bullen, 2000; Manly,1994; Hotelling, 1933)

• Each component is a linear weighted combination of the initial variables

Component Eigenvalue Difference Proportion Cumulative

Comp1 3.7645 2.00586 0.4183 0.4183

Comp2 1.75864 0.482483 0.1954 0.6137

Comp3 1.27615 0.55676 0.1418 0.7555

Comp4 0.719393 0.232577 0.0799 0.8354

Comp5 0.486816 0.101568 0.0541 0.8895

Comp6 0.385248 0.0857339 0.0428 0.9323

Comp7 0.299514 0.128556 0.0333 0.9656

Comp8 0.170959 0.032174 0.019 0.9846

Comp9 0.138784 . 0.0154 1

Variable Comp1

decenthouse 0.0189

community 0.3477

pollut 0.297

belong 0.3664

empower 0.175

helpout 0.4417

decisionmkg 0.2908

trustLA 0.4027

respect 0.4288

do local factors matter for local energy ? some insights ... · safeguarding existing heating...

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