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
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Overview
1. Motivation
2. Heat in the UK
3. Research Approach
4. Exploration of the data
5. Preliminary insights & next steps
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1. MOTIVATION
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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?
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2. HEAT IN THE UK
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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/
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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
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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
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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
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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)
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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
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Source: (UK-GBC and Zero Carbon Hub, 2010)
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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
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3. RESEARCH APPROACH
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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
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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).
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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
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4. DATA
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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)
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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
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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
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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)
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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
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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
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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
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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
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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
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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
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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
www.electricitypolicy.org.uk
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
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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