Navigating the Green Heating Maze
Introduction
Green heat
challenges
Best practices
energy efficiency first
Green heat technology options
Case studies
TOPICS
“The role of efficient and low-carbon heating technologies continues to grow, but fossil fuels still meet over 60 per cent of heating energy demand,” the IEA says. “Yet despite the technologies needed for heating decarbonisation being readily available and mature, significantly faster rates of deployment are needed to get on track with the Net Zero Emissions by 2050 Scenario.”
Introduction: The green heating boom
is just getting started
In recent years hundreds of companies have set net zero targets and sought to deliver on these new emissions goals by pledging to switch to renewable power or transition to electric vehicle (EV) fleets. These commitments have been hugely welcome and have helped drive rapid progress in the roll out of clean energy capacity and the booming EV market. But they have also served to expose a major blind spot in many corporate decarbonisation strategies: heat.
Equally, within the commercial sector there is huge variation. The requirements for an office building are not the same as for a hospital or a leisure centre, the needs of a school are different to those of a manufacturing facility. Some industrial facilities, such as steel, glass and ceramics manufacturers, require large amounts of high temperature heat while premises such as hospitals, leisure centres, and hotels require lower temperature heat, but still need it in large quantities.
While the potential of the sector depends on how quickly costs can be brought down, if the sector were to grow by 25 per cent a year from 2025, DAC capacity could reach around 4.5Gt CO2/year by 2050, Burchett says.
Moreover, the amount of energy required is typically orders of magnitude higher for an office than it is for a home, and to complicate things further commercial properties are likely to require cooling as well as heating capabilities. Replacing a domestic gas boiler with a heat pump can be a sizeable technical challenge, but replacing a fossil fuelled HVAC system with a zero-emission alternative is always going to be a major undertaking.
One of the reasons the commercial green heating market has failed to emulate the rapid growth seen in the domestic green heating market is that the two sectors are very different. When it comes to non-domestic properties, it is not just a case of making bigger versions of the technology used in homes - the demand profile for any non-domestic buildings is quite different both to residential demand and to other commercial properties. By definition, commercial premises tend to operate during working hours, while homes experience their peak demand at the start and end of the day.
Green heat challenges: How commercial property requirements differ to the domestic market
“There is a lot more diversity in commercial space, so it is not as easy to come up with a standardised approach,” says Kas Mohammed, vice-president for digital energy at engineering and technology giant Schneider Electric UK and Ireland.
Meanwhile, the technical challenges created by the UK’s hugely varied housing stock are further amplified for the non-domestic market. “The UK has such a chaotic building stock – it’s all different ages, with different energy efficiency, different kit installed and multiple different heating sources,” explains Lowes. For many buildings, plans to switch out a fossil gas boiler and replace it with a cleaner alternative are further complicated by the need to enhance the building’s energy efficiency at the same time - a challenge that can be made more acute by planning rules for older properties.
Introduction
A range of technologies exist that can slash emissions from HVAC systems and lay the groundwork for full decarbonisation down the line. The approach companies take to selecting and deploying these technologies will vary significantly due to the huge variation in budgets and buildings, but there are common best practices any business looking to decarbonise their heating systems would be advised to consider.
Best practices for deploying commercial green heating systems
“For too long in the UK, society has accepted the energy inefficiencies built into the infrastructure of commercial properties, causing excessive energy demand, costs, waste and carbon emissions,” says Grundfos’ Williams. “74 per cent of UK business owners are interested in making their heating systems more energy efficient, yet a quarter of business owners have not had an energy efficiency check for more than five years. It is time to empower businesses with the awareness, agency and action required to boost energy efficiency to ensure that businesses can reach their net zero ambitions. Only by tackling energy inefficiency at the root will businesses be able to play a role in making net-zero a reality.”
The foundation stone for any green heat technology project should be energy efficiency. There are a number of technologies that can help decarbonise businesses’ use of energy heating (more of which later), but the first move every company should make before deploying them is to use less energy by implementing efficiency measures.
Energy efficiency first
The Carbon Trust has just moved to a new office, Arbor, which is part of the £2.5bn Bankside Yards development in Southwark, London. The building itself is 100 per cent electric and net zero carbon in operation. It has an innovative optimised façade system which includes triple glazing and blinds that automatically react to the light coming into the building to reduce solar heat gain. The building will use 30 per cent less energy than a conventional building and smart technology will allow tenants to monitor their energy use in real time and react to changes in temperature through an app.
Case studies
the world’s first and largest climate-positive direct air capture and storage plant
The system, which uses CHP plants, biomass incineration, and geothermal energy as well as waste incineration, was recently upgraded with the addition of a new heat pump that will extract heat from a sewage water purification plant, adds capacity to provide heat for the equivalent of an extra 100,000 households and will mean that around half the heat used across the network comes from waste heat, be it from power plants, industrial facilities or the burning of waste. The first stage of the project comes online in 2023, and it will be fully completed in 2027.
It was already a niche technology particularly well suited for sites with a high heat demand, such as hospitals, universities, and leisure centres, but large-scale CHP units can also be used effectively in district heating schemes.
Once energy efficiency has been optimised and the business case made, attention can finally turn to which green heating technology is right for a given building. A range of options are available, but five approaches tend to dominate the nascent market, each with their own pros and cons:
Producing boilers that can run entirely on hydrogen and upgrading the gas network to transport hydrogen around the country is technically possible and much effort has been expended by energy companies to persuade policymakers and regulators to help make this a reality, not least because it could create a new market for fossil gas that could be used in conjunction with carbon capture and storage technologies to produce low carbon hydrogen.
Combined Heat and Power
Green Heat Technology Options
Hydrogen
Heat pumps are arguably the key technology for decarbonising heating over the coming decades. The technology, which effectively works like a fridge in reverse, uses heat exchangers and compressors to extract ambient heat from the air, ground, or even water and then amplify and transfer it into the property. The approach is inherently efficient and in recent years concerns over the technology’s performance in cold temperatures have been alleviated, as real-world evidence from the Nordic countries has stacked up, confirming that heat pumps work just fine in even the most hostile of climates. Fears that heat pumps cannot keep properties sufficiently warm are fading by the day.
Heat pumps
Meanwhile, venture capitalists and investors are also looking to get in on the act. For example, Canada’s CarbonCure Technologies, which has developed a way to mineralize CO2 by injecting it into concrete, recently announced $30m of funding from two companies – Invert, an investment firm, and cryptocurrency firm Ripple – while Heirloom recently raised $58m from investors including Carbon Direct Capital Management, Ahren Innovation Capital and Breakthrough Energy Ventures, along with the Microsoft Climate Innovation Fund.
Another grouping, the Coalition for Negative Emissions, is bringing together fledgling DAC operators, nature-based carbon offset providers, landowners and environmental stewards, carbon traders and financiers, and carbon intensive firms that are likely to provide demand for providers of negative emissions. Members range from Airbus to Bank of America to Heathrow and International Airlines Group, as well as key industry players.
The fund is looking to finance solutions that can deliver a cost of $100/ton and scale up to at least 0.5 gigatons a year of additional CO2 removal.
Most notably, the Frontier fund, started by payments company Stripe and backed by a host of technology giants, including Meta, Shopify, McKinsey, and Alphabet, this year launched a $925m “advanced market commitment”, building on an idea borrowed from vaccine development. This commitment aims to accelerate the development of carbon removal technologies by guaranteeing future demand for developers who can deliver successful projects. “The goal is to send a strong demand signal to researchers, entrepreneurs, and investors that there is a growing market for these technologies,” the fund states. “Importantly, Frontier aims to help create net new carbon removal supply rather than compete over what exists today.”
A new Frontier
A growing number of businesses are investors are clearly convinced DAC has a big and important future ahead of it.
However, the DAC Coalition now boasts 25 member companies from all around the world:
Key players
The IEA reported that, as of April 2022, there were 18 projects operating – in Canada, the US and Europe – with Climeworks’ 4,000-ton Orca project the biggest. In a sign of the sector’s exponential growth, the first large-scale DAC plant being financed and developed in the US by 1PointFive is set to use Carbon Engineering’s liquid DAC technology to capture up to one MtCO2 per year and could come online as early as 2024. Storegga is another company using Carbon Engineering’s technology, highlighting how the sector is likely to develop with technology providers licensing or selling their technology to project developers.
Canada
Carbon Cantonne TerraFixing
Carbon Engineering
RedoxNRG
estonia
Soletair Power
Finland
BlancAir DACMa NeoCarbon
Germany
RepAir Carbon Capture
Israel
Octavia Carbon
Kenya
Carbyon
Skytree
netherlands
Nordic DAC Group
Sweden
Mission Zero Technologies
UK
Parallel Carbon
Air Capture
AirMyne
Aircela
Carbon Blade Carbon Reform Global Thermostat Hago Energetics Heirloom Carbon Noya
Sustaera
US
This is a sector where new players are emerging all the time. The biggest companies in the nascent industry are Climeworks, based in Switzerland, and Canada’s Carbon Engineering, which says it is “engineering facilities capable of capturing one million tons of CO2 annually”.
Net zero corporates - Companies that have made net zero commitments and want to decarbonise their Scope 3 value chain emissions themselves, such as real estate investors, retail, pharma, and the big consultancies, may look to offset their emissions through DAC as they continue with the multi-decadal effort to curb their supply chain emissions.
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These investors confident there are multiple avenues by which they can generate a return. Storegga’s Parekh reckons there are four key markets for carbon credits issued by DAC projects:
The business case for DAC needs to be set out clearly, both to build interest among prospective buyers and to attract investors for what are capital intensive projects.
Building the business case
Already, organisations such as Breakthrough Energy Ventures, Prelude, and Lower Carbon Capital have invested in the sector, while programmes such as the XPRIZE - which offers up to $100m for promising carbon removal proposals - and Breakthrough Energy’s Catalyst Program, which raises money from philanthropists, governments and companies. Developers have also raised significant amounts – Climeworks raised $110m in 2020, for example, while Heirloom recently raised $53m.
Hard-to-abate sectors such as long-range transportation, heavy industry, and construction – these industries face a major challenge cutting emissions at source, and as such carbon credits from DAC projects could become a component of their decarbonisation plans.
Marketplaces and resellers – Carbon traders could see a potential new source of high quality carbon credits from DAC projects that could have value on the voluntary carbon market and regulated markets such as the EU ETS.
Climate leaders - Companies that want to show stakeholders they are at the forefront of the attempts to stabilise the climate and can attract kudos by supporting cutting edge clean technologies. The large tech companies are a good example of this segment.
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There is no way to get to net zero emissions without decarbonising heat, and as such every credible corporate net zero strategy should address how emissions from heat are going to be tackled.
Conclusion: Green heat is coming, but how fast?
However, while it is relatively easy to set a target for switching to renewable power or electric vehicles, decarbonising heat is a significant technical challenge. Technologies exist that can deliver green heat and it is highly likely that the heat pump market in particular will grow rapidly in the coming years, providing both emissions and cost savings. But installing a commercial scale heat pump, connecting to a district heating network, or pioneering a hydrogen boiler is a substantial engineering project.
Businesses will have to undertake such projects at some point over the next 20 years or so. The question is when they should press go on the green heat transition and which technology to opt for.
As ever in the net zero transition there is value in being an early adopter, but equally, taking the plunge before the green heat market has had the chance to exploit economies of scale brings with it risks.
What is clear, however, is that green heat is coming. The relevant technologies are maturing fast and promise significant emissions, air quality, and running cost savings. Various policies and grants should bolster the business case for investing in green heat technologies. In contrast, replacing an aging gas boiler with another gas boiler brings with it substantial stranded asset risks. The case for exploring your green heat options is getting more compelling by the day.
Predictions that heat pumps will come to dominate the green heat market are not universally accepted.
The government is considering plans to blend some hydrogen with the fossil gas distributed through the gas network so as to reduce emissions from conventional boilers. Critics argue this approach will prove to be expensive and will see valuable hydrogen that could be used to decarbonise industrial processes used for heating. But advocates of blending hydrogen into the gas network insist it would reduce emissions and pave the way for a fully hydrogen-based gas network.
Green heat
challenges
Best practices
energy efficiency first
Green heat technology options
Case studies
However, while hydrogen faces an uphill battle if it is to carve out a share of the domestic market there are reasons it could enjoy more success in the commercial market. One of the downsides of heat pumps is they struggle to deliver higher temperature heat that can be required in commercial properties and factories. In contrast, hydrogen can play a role in decarbonising industrial processes and if a site is using hydrogen to provide industrial heat it could make sense to also use it for space heating.
Mike Scott is the founder and CEO of Carbon Copy Communications. He has more than 30 years’ experience of covering environmental and business issues and won the Contribution to Climate Change Journalism prize at the 2021 Sustainability Media Awards.
About the author
Bankside Yards aims to be the UK’s first net zero major mixed-use development. The eight buildings in the development will be linked by a low temperature (20C-25C) network of pipes enabling waste heat from one building to be used to heat another, using air source heat pumps to heat the water to 60C. The approach allows the system to recover low grade head from sources such as cooling systems in offices and electrical transformers that are not useful in higher temperature systems. The developers say the “fifth-generation” network will be 50 to 60 per cent more efficient than a CHP system, which distributes heat at 90C.
The recent ‘Green Day’ package of policy announcements maintained Ministers’ position that they could foresee a “major” role for hydrogen heat in the future. But a final decision on whether to proceed with hydrogen blending into the gas network is not scheduled for several more years and plans to trial a hydrogen gas network in a number of communities have run into controversy as residents have pushed back against the proposals.
While lobbyists and policymakers debate the relative merits of heat pumps and hydrogen, other more established green heat technologies are in danger of being ignored
Combined Heat and Power (CHP) plants have long been recognised as a more efficient alternative to gas boilers because they use the waste heat from a gas turbine power generator to provide space and water heating. The technology is estimated to have an efficiency of about 80 per cent and can cut emissions by 30 per cent compared to generating power and heat separately.
Vienna, the capital of Austria, has one of the largest heating systems in Europe. With more than 1,300km of pipeline, it provides heat and hot water to around 420,000 homes and more than 5,000 large energy consumers, and saves around 1.5 million tonnes of CO2 a year.
Again, attempts to improve a building’s thermal efficiency will vary considerably depending on the type of property, available budget, and planning restrictions, but a range of common improvements tend to be widely available. Insulation can deliver the biggest savings, alongside double or triple glazing. Meanwhile, simpler improvements such as lagging pipes, draught-proofing, optimising air conditioning to ensure it is not competing with heating systems, and even ensuring doors are closed can all deliver substantial energy savings at low cost. It is also important to recognise that when deployed as part of a green heating project energy efficiency measures can deliver dual cost savings, as they both reduce energy bills and can help ensure a smaller heat pump or combined heat and power systems is needed in the first place.
The good news is that these myriad challenges can and are being overcome, albeit at a rate that is as yet nowhere near fast enough to meet net zero targets
Incorporating heating into net zero strategies is essential, given the huge scale of heat-related emissions. According to the International Energy Agency (IEA) almost half the energy consumed in buildings was used for space and water heating in 2021, leading to 2,450Mt of direct CO2 emissions. The UK Green Building Council similarly reports that buildings are the second-biggest source of greenhouse gas emissions after surface transport, with the built environment responsible for a quarter of the country’s total emissions. For an individual building, heating, ventilation, and cooling (HVAC) can contribute up to 60 per cent of the carbon footprint.
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James Murray
Replacing fossil gas boilers with low and zero carbon alternatives remains a significant challenge, but ultimately it is one all businesses are going to have to take on if they are to deliver on their net zero promises. And as this whitepaper makes clear and recent developments underscore, the solutions are now available.
Our latest BusinessGreen Intelligence Whitepaper provides an overview of this fast-evolving trend, as well as invaluable guidance on how to develop an effective heat decarbonisation plan that can feed into an organisation’s overarching net zero goals.
However, challenges remain. Businesses looking to decarbonise their heating need to consider a range of technology options, develop a compelling business model, and then navigate the various financing, regulatory, and practical barriers green heat projects can face.
Thankfully, that is now changing as green heating technologies mature, businesses recognise the importance of tackling emissions from heating systems, and trail-blazing projects demonstrate the benefits of fully ending their reliance on fossil gas.
It is self-evident that corporate net zero targets cannot be met unless businesses work out how to decarbonise their heating systems. And yet for years this key plank of the net zero transition has been largely ignored as corporates focus on switching to renewable power, deploying electric vehicle fleets, and tackling emissions in their supply chains.
This surge in activity is also quietly extending to the business community, correcting a blindspot that has been allowed to persist for too long.
Exciting developments are belatedly underway in the world of green heating. Across Europe sales of heat pumps are soaring; investors are responding, with Octopus Energy and Legal and General’s £70m investment in ground source heat pump specialist Kensa Group just the latest example; and policymakers are deploying the targets, grant schemes, and tax breaks that can help tilt the market in favour of low carbon technologies. Flagship projects to drive down the cost of heat pumps, install district and geothermal heating systems, and pilot the use of hydrogen for heating are all advancing. Targets to end the sale of fossil gas boilers by the mid-2030s at the latest suddenly look feasible.
Introduction
Conclusion: Green heat is coming, but how fast?
Conclusion: Green heat is coming, but how fast?
Now, as confidence builds that the decarbonisation of the power and transport sectors is poised to accelerate, heating and cooling is increasingly moving into the spotlight as the next major front in the global effort to build a net zero emission economy.
Policymakers and clean tech developers in a number of leading markets are responding to this challenge. Governments across much of Europe have set target dates for ending the installation of fossil fuel boilers in new homes from the mid-2020s and then in all properties from the mid-2030s onwards. These target dates have been accompanied by grants and tax breaks to incentivise the roll out of heat pump technologies that promise to slash emissions and enable full decarbonisation once the power grid transitions to net zero emission electricity.
In the UK, the government has set a target for 600,000 heat pumps a year to be installed from 2028 and has launched a grant scheme to incentivise the take up of ground and air source heat pumps in the form of the Boiler Upgrade Scheme, which offers grants worth between £5,000 and £6,000 to households installing air or ground source heat pumps. Last year, UK heat pump sales rose 40 per cent, albeit from a low base.
As a result demand for heat pumps is booming with European sales rising 38 per cent in 2022 to around three million units, according to the European Heat Pump Association. Overall, around 20 million heat pumps are now installed across the continent and the technology is the default option in a growing number of markets. More than half a million heat pumps were sold in Italy alone last year, as households took advantage of generous tax breaks. Sales are expected to continue to surge as evidence stacks up that heat pumps can slash emissions, reduce energy bills, and operate effectively even in cold climates.
The expansion of the heat pump market has sparked endless media stories about the pros and cons of heat pumps, as well as a fierce debate over whether or not hydrogen boilers could represent a better long-term bet for decarbonising heat. The government has sought to hedge its bets on the topic, announcing plans to trial hydrogen heating systems and consider proposals to inject hydrogen into the grid alongside the continued support for heat pumps.
However, in the rush to deploy domestic green technologies there is a risk of the commercial market being overlooked. Domestic heating accounts may account for three quarters of UK emissions from heating, but the commercial and public sectors are responsible for the remaining 25 per cent and given their economies of scale could provide a more feasible route for delivering deep emissions reductions in the near term. There is obviously massive potential to cut greenhouse gas emissions from larger buildings, such as offices, stores, schools, hospitals, factories, and universities, by both enhancing their efficiency and deploying low carbon heating systems. “The domestic sector gets people interested,” observes Dr Richard Lowes, senior associate at policy thinktank the Regulatory Assistance Project. “No-one really cares how offices, cinemas or hospitals are heated.”
However, that indifference is going to have to change if businesses are to meet their net zero goals. Companies can switch to renewable power tariffs, purchase offsets, and deploy EV fleets, but they will struggle to achieve true net zero status without decarbonising their HVAC systems.
As George Adams, Director of Energy and Engineering at built environment engineers SPIE UK, notes: "It is clear that companies’ net zero targets, as well as national ambitions, cannot be met without decarbonising heating. Because the technologies and tools that we need exist today, decarbonising heat production has to be a central pillar of a net zero strategy for any organisation that claims it is serious about playing its part in combatting climate change.”
Moreover, businesses will soon be under regulatory pressure to slash emissions from their buildings. In the UK, commercial properties must be rated at least E on their Energy Performance Certificates (EPCs) from April 2023, rising to C by 2027 and B by 2030. In London currently it is estimated that 80-90 per cent of the commercial building stock is rated C or below. EPCs controversially fail to account for how heat is generated currently, focusing solely on building efficiency, but companies looking to upgrade buildings to comply with the new standards would be advised to consider deploying green heating systems at the same time.
Similarly, in the EU, public and non-residential buildings must be improved to at least EPC rating of ‘F’ by 2027 and ‘E’ by 2030 against a revised A-G scale. The recast system aims to accelerate energy-efficient renovations in the worst 15 per cent of EU buildings in support of the bloc’s increasingly ambitious climate goals.
And in the US, the recently passed Inflation Reduction Act includes a tax deduction for commercial property owners to reduce energy use in their buildings, for both new buildings and retrofits. The 179D deduction offers payment for buildings with energy usage lower than a government benchmark, up to $5 per square foot if it uses 50 per cent or less than the benchmark.
Meanwhile, all this activity comes against a backdrop where companies are not only under mounting pressure to decarbonise, but are also facing escalating energy security concerns. Energy bills have soared in the wake of Russia’s invasion of Ukraine and the Kremlin’s weaponization of gas supplies, further underscoring the inherent volatility of fossil fuel prices. Many businesses in the UK would have seen energy bills increase more than three-fold last winter were it not for the government’s multi-billion-pound support package. The Treasury is now rolling back the level of support available, fuelling fears bills could rise sharply again this coming winter.
Consequently, the payback period on energy efficiency upgrades has drastically improved in recent years, while the economic case for switching to more efficient electric heating systems has similarly strengthened, even before climate factors are considered.
It may not have generated many headlines, but pressure on businesses to decarbonise their heating is intensifying on multiple fronts. The good news is the technologies required to slash emissions from heating are maturing fast, while at the same time both the energy market and the policy environment are serving to incentivise their deployment. The big question for businesses and public sector organisations is not whether they should look to decarbonise their heating systems, but how best to navigate what is likely to prove a complex technology transition.
“The heating and cooling needs of commercial buildings will differ from those of residential properties,” says Glynn Williams, UK Country Director at Grundfos. “For starters, commercial buildings require systems that are capable of efficiently heating and cooling larger spaces. As such, there is an added degree of complexity required of the types of systems used in commercial buildings, as they must be designed to meet the varying heating and cooling needs of different areas within the building. It is crucial for businesses to ensure that the heating and cooling systems powering their buildings are running as efficiently as possible.”
And to complicate things further, many businesses do not have the authority to simply upgrade their building. As Patrick Sweeney, partner for projects, infrastructure and construction at law firm TLT, notes, many commercial premises are multi-tenanted sites that require the co-operation of the landlord and other tenants to undertake major green retrofit projects.
The first step in deploying a green heating system is to carry out an energy and carbon audit so you can understand your current and future energy requirements, as well as your current emissions hotspots. This will help identify opportunities to improve energy efficiency and the appropriate low-carbon technology to deploy.
The right technology option will depend on the type of building, your heat (and cooling) requirements, and the energy sources available. As such, it is important to work out what technologies are available in your area and then weigh their pros and cons. Are you near a planned hydrogen hub? Is there a district heating scheme nearby? Or could you access a source of geothermal energy? Such projects are rare in the UK, but it is worth checking if they might be an option alongside more commonplace technologies such as heat pumps and combined heat and power units.
Once you have a short list of options it makes sense to compare their relative costs and performance. Calculating costs is challenging given the inherent volatility in energy markets and uncertainties over future biomass and hydrogen supplies. As such, it is advisable to consider a range of scenarios, while also weighing other factors such as the availability of skilled installers and the various financing packages on offer.
In addition, if you are planning to upgrade your heating systems it can be advisable to consider wider green improvements. Installing a range of technologies as part of one project can help minimise costs and maximise emissions savings by delivering energy efficiency improvements, onsite renewables, and low carbon heat in one hit. Generating power onsite can help reduce running costs and emissions from a heat pump, which in turn has to run less if the building is optimised for efficiency and has smart heating controls in place.
“Deploying green heating systems – or any new technology within a building is always going to be, at its heart, an exercise in collaboration,” points out Michael Anderton, general manager for UK and Ireland for HVAC Building Solutions at Johnson Controls. “It’s key for businesses to work with partners with a detailed understanding of how green heating systems can be deployed, and the unique demands of an individual business. Configuring and optimising any new technological equipment is bound to be a daunting task. The more complex the building, the more complex the data - and it needs to be connected and analysed at every level. This helps us to understand how to run the system as a whole, rather than in siloes.”
Finally, once the project is complete user behaviour is a crucial element in reducing energy waste and boosting emissions savings, so engaging building owners, managers and occupants is essential to ensure buy-in and smooth implementation.
As Adams at SPIE UK points out “making systems more efficient and ensuring that buildings are insulated appropriately to regulate temperature are approaches that remain true across all parts of the built environment”.
The opportunities for savings are huge, with Schneider Electric saying there is potential to cut emissions from buildings by at least a fifth through the use of standard energy efficiency improvements.
Alongside structural improvements, new technologies can also help to improve energy efficiency and reduce bills by capturing waste heat from IT equipment or industrial processes in a factory. Data centre provider Deep Green hit the headlines recently with its eye-catching plan to site a small data centre in a leisure centre and use the waste heat to help heat the swimming pool, while other schemes are recycling heat from the London Underground, water treatment plants and industrial facilities.
Similarly, efficiency is an area that has benefited hugely from digital technologies and the emergence of Building Management Services (BMS) and Building Information Modelling (BIM) platforms. “BIM and BMS are really important,” says Rob McGill, Sustainable Design Leader at global architecture, engineering and design practice HOK. “BIM forces collaboration in the design process. Before that, each discipline was working discretely. It brings co-ordination into the virtual world and gives the client a legacy where they can manage the building better.”
Architects can run multiple variables at once to find the best options for running the building as efficiently as possible using BIM, while BMS systems can pick up any issues in the day-to-day running of the building and deal with them before they become a serious problem. They can also provide a picture of which parts of a building are occupied and therefore need heating and those that do not. As such, the technology can play a critical role in helping to right-size green heating systems before their installation, minimising upfront costs, energy bills, and carbon emissions, while at the same time reducing the risk of performance issues going forward.
The technology’s green credentials have also been evidenced. Correctly balanced heat pumps can play a major part in helping to slashing CO2 emissions and they are also incredibly efficient, since they simply transfer and compress heat rather than generating it. The heat output from a heat pump is often three to four times the amount of electricity used. As such, heat pump’s relatively low running costs have become ever more competitive as the cost of fossil gas has soared.
“The Carbon Trust found that heat pumps have the potential to deliver CO2 savings of up to 70 per cent compared to conventional electric heating, and up to 65 per cent compared to an A-rated gas boiler,” says Johnson Controls’ Anderton. “The huge impact these new technologies can have both in terms of cost saving and in achieving sustainability goals is clear.”
Crucially, because they run on electricity the emissions savings offered by heat pumps are set to increase further as the electricity network becomes more reliant on renewables. “As the grid decarbonises further in coming decades, the carbon savings delivered by heat pumps are expected to increase further towards 90-100 per cent CO2 emissions reduction by 2050,” the Carbon Trust states.
Consequently, most models for exploring how the economy can achieve its net zero goals lean heavily on heat pumps. The Climate Change Committee estimates that 19 million heat pumps will need to be installed by 2050 to achieve net zero goals in the UK.
While the heat pump sector is currently focused on the domestic market, there is a growing school of thought that the technology is well suited to commercial premises, because unlike residential properties, offices, shops, and universities often have a considerable demand for cooling as well as heating. This is only projected to increase as temperatures continue to rise. Modern commercial heat pumps can work in reverse, taking heat out of a building as well as bringing heat in from outside.
“The electrification of heat pumps, driven by renewable sources, makes them a far superior option to outdated fossil fuel boilers in the generation of heat,” says Anderton. “They can now work at higher temperatures, meaning they are a great option for spaces like hotels, hospitals, and leisure centres where there is a high demand for hot water at peak times - removing the need to use a gas boiler.”
Moreover, heat pumps are very flexible in that they can be scaled from heating individual floors of office buildings to being big enough to run district heating networks. And, like air conditioners, they can integrate effectively with modern demand management services, offering businesses the chance to dynamically tweak power use to match peaks and troughs in generation without meaningfully impacting levels of comfort in the building.
Unfortunately, challenges remain, chief amongst them being the high upfront cost of heat pump technologies. The industry is adamant it can drive down costs to a level where they are comparable with gas boilers, but it is not there yet and most commercial heat pump installations require a price premium. That investment can serve to unlock emissions savings and reduced long-term running costs, and as such growing numbers of banks are offering attractive financing packages to support the switch to heat pumps. But financial considerations can still hamper many businesses’ green heating ambitions.
Why, then, isn’t everyone rushing to deploy heat pumps?
In addition, some heat pump projects can face technical challenges. Many buildings have been designed for gas heating, but heat pumps tend to have different space and power requirements. The most complex projects may also require radiators to be replaced and the building’s overall energy efficiency performance to be improved, adding further cost to the project. These challenges are further complicated by skills shortages across the fast-expanding sector.
However, the industry is increasingly confident heat pumps are feasible for the vast majority of buildings – a fact underscored by how the technology has become the default option in a growing number of European markets
Meanwhile, policymakers are working to overcome the financial barriers households and businesses face. The UK’s Boiler Upgrade Scheme is primarily aimed at the domestic market, offering households £5,000 to £6,000 off the price of an air or ground source heat pump, but businesses are also eligible to apply for the grants as long as they own their property. Similarly, the government’s wide-ranging Enhanced Capital Allowance tax break regime also covers some heat pumps, as well as solar thermal systems.
In addition, as part of its recent package of ‘Green Day’ announcements the UK government unveiled plans to shift green levies away from electricity bills and on to either gas bills or general taxation – a move which should further reduce running costs for electric heating systems. And it confirmed it is looking to create an overarching Clean Heat Market Mechanism, which would be designed to provide incentives that can accelerate the heat pump market so as to ensure new gas boilers are phased out by 2035 at the latest.
Similar policies are being adopted across the EU and the US, all of which aim to drive demand for heat pumps and help create the economies of scale that should allow the industry to push down the technology’s upfront costs.
There are alternative technologies available that generate heat by burning hydrogen and a number of leading gas and boiler companies are betting on them ultimately challenging heat pumps and seizing a sizable chunk of the market.
“Hydrogen offers an alternative to traditional fossil fuels for decarbonising heat in commercial properties,” says SPIE UK’s Adams. “It can be used in multiple ways, such as in hydrogen boilers, which are specifically designed or retrofitted for hydrogen combustion, emitting only water vapor as a by-product. Additionally, hydrogen can be blended with natural gas in existing pipelines to gradually reduce carbon emissions, while fuel cells can convert hydrogen into electricity and heat through an electrochemical process with minimal emissions.”
However, as Adams acknowledges hydrogen heating also faces considering challenges “such as infrastructure development, storage, and the cost of producing green hydrogen” all of which need to be addressed.
A number of initiatives are attempting to address these challenges. The government is planning a new policy regime to incentivise the production of green and low carbon hydrogen and grant programmes are available for businesses looking to trial hydrogen boilers and other technologies. The UK’s planned Net Zero Industrial Clusters are expected to rely heavily on hydrogen, alongside carbon capture and storage technologies, to help decarbonise industrial plants.
“If you are using hydrogen for industrial purposes, it makes some sense for those businesses to use hydrogen,” says Professor Martin Freer, Director of the Birmingham Energy Institute. “I expect there will be a series of industrial clusters where there is wind generation capacity and hydrogen will be part of the energy ecosystem.”
But there is a growing view that more broadly hydrogen will play only a niche role in decarbonising heat. “It is widely accepted that hydrogen will not be a solution for heating except where we have hydrogen hubs,” says Jess Ralston, head of energy at think tank ECIU.
Meanwhile, a review by the Regulatory Assistance Project of 32 studies from around the world found that hydrogen is “less economic, less efficient, more resource intensive and associated with larger environmental impacts” when compared to other green heating technologies. That is because if you have renewable energy available to make green hydrogen, it is cheaper and more efficient to use that energy to power a heat pump, which uses only a fifth of the energy.
Hydrogen has multiple potential uses – but decarbonising heating is unlikely to be one of them, except for properties close to facilities producing the gas or businesses with significant industrial heat needs.
Moreover, emissions savings from CHP can be maximised further by switching from fossil gas to biogas, an approach that some organisations are taking to further reduce their carbon footprint.
However, the accelerating rollout of renewable energy technologies means the cost and carbon benefits associated with CHP units are not as big as they once were, according to Lowes. “The falling cost of renewable energy has really killed CHP,” he says. “The savings now are pretty negligible.”
The technology can still play a role for large buildings and district heat networks, especially in conjunction with biogas. But it is likely to face increased competition from commercial scale heat pumps that promise steeper emissions savings and potentially lower long-term running costs given soaring gas bills.
Biomass
Another green heat option that looks set to become increasingly marginalised is provided by biomass boilers.
New biomass heating systems were previously supported through the government’s Renewable Heat Incentive scheme and a number of businesses took advantage of the subsidy scheme to switch to biomass boilers.
The technology promises significant emissions savings compared to fossil gas boilers and can be deployed by businesses with significant heat requirements, such as swimming pools and hotels.
However, biomass energy has proven controversial, with environmental campaigners questioning the sustainability credentials of the woodchips used to generate heat and others expressing concerns over the air quality impact of burning biomass. Emissions savings from biomass heating are only maximised if feedstocks are sourced from sustainably managed and preferably local forests, which has prompted questions about the scalability of the technology
Biomass may continue to have a role in some niche applications, but again the technology is set to face growing competition from heat pumps and has a way to go to convince everyone that it is as sustainable as originally advertised.
District heating is one of the most promising and under-exploited ways to decarbonise heating, offering emissions reductions, lower costs, and reduced maintenance for consumers, along with improved air quality.
District heating
A growing number of developments and districts are being connected to heat networks whereby heat is generated at a central plant that typically makes use of CHP units or captured from an existing heat source, such as a waste to energy plant or factory. The approach maximises efficiency and captures energy that would otherwise go to waste, while emissions savings can be boosted further by switching to biogas or ultimately deploying a large-scale heat pump.
District heating is “in theory, the best friend of waste heat,” Lowes says. In Nottingham, for example, the district heating system captures heat from a waste-to-energy plant which generates power from burning waste. Energy that would otherwise have gone to waste is used to heat water, which is then pumped to surrounding shops, offices and residential buildings. Similarly, in London the Bunhill 2 Energy Centre is using waste heat from the London Underground network to provide heating and hot water to more than 1,350 homes, a school, and two leisure centres in Islington. Meanwhile, a heating network in Southampton makes use of the city’s geothermal resources to provide heat to local homes and businesses.
The technology is proven and effective, and in European countries such as Denmark district heating systems are widespread.
However, district heating is not available for everyone. It is easiest to build a heat network in new developments because significant amounts of infrastructure are needed, including pipework and a central energy centre. In contrast. retrofitting heat networks, particularly for private networks, is a significant technical challenge because it requires a lot of intervention and can prove expensive and disruptive. Planning can also be an issue because of the need to dig up roads and pavements to lay pipes. And once a district heating system is in place effective consumer protection policies are required, as buildings are essentially locked in to a monopoly heat provider.
For a district heating scheme to succeed, it needs a baseload offtaker, such as a leisure centre, hospital or commercial development that requires significant and predictable amounts of heat. In Birmingham, for example, the local authority created a network and connected its own buildings to it to guarantee demand for the energy.
There is a widespread view that, unlike in other countries, the UK government has failed to do enough to encourage heat networks. However, there have been a number of support schemes and a recently launched £288m Green Heat Network Fund aims to accelerate the rollout of heat networks incorporating a range of clean technologies including heat pumps, PV and geothermal energy. It has already awarded its first grants to projects in Hull and Peterborough and more are in the pipeline.
Where district heating networks are available, they offer an attractive and proven mechanism for businesses to slash emissions from heat, while potentially paving the way for full decarbonisation through the use of large-scale heat pumps or even geothermal energy.
Carbon Trust
As a result the system will use less energy, produce fewer emissions, and cost less than heating and cooling each building individually. The system is partly able to use lower temperature heat because of the high degree of insulation in the buildings. The carbon saving impact will be enhanced by the mixed use of the buildings, which include residential tower blocks, a 150-bedroom five-star hotel, retail and cultural venues, and a swimming pool. Excess heat that offices and restaurants are looking to get rid of can be used for nearby residential properties.
There is also the option to connect the system to an underground aquifer, which could then be used to provide cooling in summer and help with heating in the winter.
Vienna District Heating
The €70m project is expected to cut a further 300,000 tons of CO2 from the city’s emissions, and it will be largely powered by a nearby hydroelectric power plant.
The role of efficient and low-carbon heating technologies continues to grow, but fossil fuels still meet over 60 per cent of heating energy demand
There is a lot more diversity in commercial space, so it is not as easy to come up with a standardised approach
74 per cent of UK business owners are interested in making their heating systems more energy efficient
Unfortunately, challenges remain, chief amongst them being the high upfront cost of heat pump technologies.
In addition, a huge amount of new infrastructure would be needed to create a hydrogen network, while heat pumps can be installed in most buildings with an electricity supply.
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