Agenda item

Resolved: to note the contributions to the review.

5.1      Peter North (Programme Manager, Sustainable Energy, Greater London Authority) introduced a presentation; the following key points were noted:

• A third of London’s CO₂ emissions were generated by heating.
• More energy was used to heat buildings in the UK than was used for transport or electricity generation. So in order to deliver reductions in CO₂, in buildings it would be necessary to increase the energy efficiency of buildings and how the energy is supplied.
• London had a target of 60% reduction in 1990 levels of CO₂ by 2025 alongside a target to supply 25% of its energy from local decentralised sources.
• The carbon content of electricity generation would be an important part of future work in this area.
• A public role was required in order to enable district energy.
• There were three main categories of decentralised energy projects: single sites utilising small/medium CHP systems; multi-site mixed use schemes: area wide transmission networks with extensive heat pipe systems.
• In 2011 the GLA carried out a decentralised energy capacity study. It was found that London had more capacity potential than the 25% target for decentralised energy set by the Mayor.
• The London Plan contains a range of specific policies to promote the development of decentralised in new developments.
• Insulation was the first and most important part of ensuring the efficient use of energy.
• Generating energy from renewables had proved difficult in the urban environment.
• Densely developed areas were the most suitable for decentralised energy schemes.
• Area planning was an important part of enabling the future connection of new developments to existing networks.
• London boroughs could be involved in the delivery of decentralised energy projects in a number of different ways. They might choose to deliver their own schemes, or they might only act as a planning authority, facilitating delivery by others.
• Development of energy master plans was a long process taking around six months from start to finish, but work had taken place in 10 boroughs to achieve a coordinated policy.
• The GLA’s EU funded technical, commercial and financial advisory services had helped develop a £300m pipeline of projects. The advisory support was running down and the GLA are proposing a successor arrangement that will operate until 2020.
• Two major projects were- Gospel Oak Hospital, and Islington Heat and Power scheme, the later connecting 850 dwellings providing 10% lower energy bills.
• Phase two of the Islington scheme sought to use waste heat from the underground and other sources.
• There were four energy from waste plants in and around the city, that could provide heat for tens of thousands of homes.
• SELCHP was finally providing heating to estates in Southwark after 15 years of operation as a power-only energy from waste facility..
• The future of heat networks would be to utilise heat lost from other processes - each would require technical availability and economic case.
• In order to meet the government’s carbon targets, decentralised energy and communal heating would need to be part of the solution.

5.2      Peter North (Programme Manager, Sustainability, GLA) responded to questions from the committee, the following key points were noted:

• It was recognised that residential units had periods of peak demand; schemes which incorporated commercial units were able to sustain more consistent demand.
• In order to demonstrate commercial viability and bring in private sector money, work had to be done to develop the economic case for decentralised energy schemes.
• Projects had to be configured to attract lending and sustainable rates of return for investors.
• Councils could use funds from public loans board, green investment bank, London green fund to get projects started.
• There had been anecdotal information of discontent about some schemes. The detail of which was not available.
• Further analysis of concerns and the associated costs would be required in order to understand how these problems arose and how they might be avoided in future.
• There had been some work carried out to investigate problems with insulation levels of pipework. The lack of effective insulation could lead to overheating and excessive heat losses.
• There might be different reasons for problems on different schemes – requiring further work in different cases to understand the source of the specific problem or range of problems.
• It was recognised that the levels of fixed charges for some systems, which remained in the summer months, despite reductions in usage, were of concern on some schemes.
• The Housing Association, A2 dominion had a good record of delivering communal heating systems.

5.3      Robin Feeley answered questions from the Committee; the following key points were noted:

• L&Q had 2500 homes in Lewisham, including the new development at Loampit Vale.
• The problems identified were not with communal heating systems, but rather with the ability of developers and housing associations to deliver high quality.
• Developers were in a position where they could walk away once the project had been delivered.
• It was important that housing associations demanded high quality from their construction contracts; commissioning agents should be required to demonstrate the effectiveness of the schemes being delivered.
• There had been two years of ‘blind push’ to install heating systems, the details of the maintenance and operation of these systems was now being unravelled.
• 9 Combined heat and power systems (CHPs) were not working due to low demand.
• 3 year project to look at demand and specification of existing systems.
• Average bills for properties with communal heating systems indicated that they were not always more affordable than traditional schemes.
• At Loampit Vale, for example, there was a £365 standing charge for heating.
• There was also the concern that communal heating systems did not offer any choice for tenants.
• The key to ensuring the effective deployment of these systems was to agree a proper technical specification, using a robust tendering process.
• The cost of the assessment and monitoring work should be built into the tendering process.
• L&Q made no profit on schemes.

5.4      Brian Regan (Planning Policy Manager) advised the committee that:

• Lewisham’s policy was to ask for major schemes (with 10 units or above) to consider the installation of a communal heating system.

5.5      Members also discussed the issues raised; the following key points were noted:

• Concerns about the speed with which communal heating systems were being deployed, despite signs that there were problems.
• The potential lessons to be learnt from the issues at Heathside and Lethbridge, including – the importance of good planning; technical expertise; project and contract management.

5.6      Jonathan Graham (Combined Heat and Power Association (CHPA)) introduced a presentation. The following key points were noted:

• Transparency and fairness should be the driving principles of decentralised energy provision.
• District heat was technology neutral; CHP was one means for providing heat to a shared heating system, amongst others.
• Registered social landlords and local authorities were leading the way in implementing new heating systems.
• CHP provided 2% of UK heat – and was not a new technology.
• However, CHP was being deployed in new places.
• Communal heating systems were popular across Europe.
• Communal heating systems had been delivered in a number of places, and had a number of benefits (such as reducing costs and tackling fuel poverty) when they were done right.
• Reductions could be shown in practice.
• UK was lucky to have cheap natural gas – but this would not last – so alternative sources of heating need to be found.
• There were problems for all modern buildings, which were often the unintended consequence of too much air tightness.
• Common challenges included – network losses and overheating; poor value from electricity generation, low build quality through value engineering, poor communication between partners, and lack of transparency for end users.
• The CHPA would work to offer solutions where problems had been identified. There are two different Code of Practice schemes being delivered in 2015. There is the Code of Practice, developed jointly by CHPA and CIBSE, and there is the Heat Customer Protection Scheme, which will be an independently operated scheme.
• There should be obligations on all parts of the supply chain to improve performance.
• Heat customer protection scheme, required heat to be sold directly to customers – but the industry would build on the foundation to help people supplied by an energy supply company.
• It was intended that there would be transparency for customers on costs & customer protection.
• Gas costs are not the same as heat costs, boiler maintenance and replacement needed to be taken into account.
• Information and clarity are needed around costs and expenditure on the different systems available.
• There was a working communal heating system in Lewisham at The South East London Combined Heat and Power plant (SELCHP), which provided an example of the viability of decentralised energy schemes.
• The Heat Network Code of Practice would soon be in effect, as well as a protection scheme for users.
• In order to maximise the benefits of communal heating and avoid future problems, all parts of the system had to ensure that they were committed to building and operating systems to a high standard.

Standing orders were suspended until the completion of business.

5.7      Jonathan Graham (Combined Heat and Power Association) responded to questions from the Committee, the following key points were noted:

• The Combined Heat and Power Association had over 90 members, ranging from industrial and heat supply companies to local authorities, including Birmingham, Nottingham and Southampton. The list was available on the CHPA website.
• There was an impetus to decarbonise heating.
• Communal heating could be efficiently delivered, but this had not been consistent in every case.
• The CHPA was developing tools to ensure that there were not problems in the future.
• New build developments were different from the communal heating systems that had been in development previously, new rules for insulation in residential buildings and energy efficiency meant that there was an inconsistent level of demand.
• GLA has previously published that 500 is the minimum amount of units to make a system viable. But this was dependent on whether or not a commercial approach to development was being taken.

5.8      Members also discussed the issues raised and noted that: it appeared as though there were sectional interests at every part of the communal heating supply chain, including glazers, boiler engineers, plumber, developers and supply companies; meaning that the end users were frequently an afterthought, when they should be of primary importance.

Resolved: to note the contributions to the review.