As part of our Future of Heat series, the first blog addresses 4th and 5th generation heat networks.
The future trend in district and community heating is to move towards low temperature heat networks and greener alternatives to natural gas, such as electric heat pumps, waste heat, and hydrogen (in the longer term).
This means transitioning from mainly 3rd generation heat networks – that usually operate at high temperatures and are typically fuelled by gas Combined Heat and Power (CHP) or boilers – to lower carbon 4th and 5th generation systems.
For many years, the UK's 17,000 heat networks have provided a more sustainable alternative to using boilers inside individual properties. However, decarbonisation of the electricity grid is reducing the carbon saving benefits of CHP, especially in residential developments, while opening up new opportunities to use heat pumps powered by renewable electricity.
The heat decarbonisation challenge
Decarbonising heat is a big and complex challenge, but the growth of low carbon heat networks is critical to delivering on this goal. The latest UK energy trends statistics show that domestic energy use contributes approximately 18% of CO2 emissions, which come mainly from natural gas used for heating, hot water and cooking.
A key challenge for the sector is to improve heat network efficiency, which includes replacing gas on existing systems as soon as possible, while also building new schemes using clean alternatives to gas. This might involve connecting your buildings to low carbon district heating or replacing gas boilers and CHP with alternative generation that uses waste heat; heat pumps (air, ground or water source); biomass; green gas CHP, or hydrogen further down the line. There's no single solution, but new generation district and community heating schemes will have a vital role to play in the pathway to net zero.
What are the 3 key types of heat network?
- 3rd Generation Heat Networks
Most of the UK's current heat networks are 3rd generation systems that are usually fuelled by a centralised natural gas boiler or CHP energy centre, with a minority energised by energy from waste and heat pumps. Heat is delivered through insulated pipes to the buildings served by the network and then distributed onwards to the individual units or homes within the buildings. Heat is typically supplied at around 90-70oc. These networks often contain centralised thermal storage and any cooling requirement is met by a separate cooling network or different system.
- 4th Generation Heat Networks
4th generation heat networks are also supplied by a centralised energy centre but differ significantly from previous generations in having lower operating temperatures. Heat is supplied at below 70oc, which generally improves efficiency across all heat networks, but especially those energised by heat pumps or energy from waste, which perform better at low temperatures. Highly insulated pipework is used(usually plastic rather than steel), with large, centralised thermal storage to smooth energy demand and aid plant efficiency.
Although the UK's 3rd and 4th generation heat networks mainly rely on a separate cooling system, there is future potential to follow the continental model, where a single heat network is used to deliver space heating and cooling on a seasonal basis. Hot water is provided separately using a centralised hot water network.
As our climate warms and demand for cooling increases, the UK could use the same approach to deliver cooling more sustainably and cost effectively. After all, it is only in recent years that the UK has moved away from centralised hot water preparation in favour of twin plate heat interface units (HIUs).
Private wire electricity networks and on-site renewable generation, such as solar PV, can be integrated into both 4th and 5th generation networks. This can help reduce costs for customers, while achieving further carbon reduction.
- 5th Generation Heat Networks
5th Generation Heat Networks are radically different from all previous systems. Heat production is decentralised – using heat pumps – in each house or apartment. They operate at low temperatures and generally require supplementary immersion heating for hot water. In addition, cooling is integrated via a 2-pipe interchangeable system of heating and cooling between buildings.
There two types:
- Those that use ambient temperature heat (i.e. the natural temperature of water as it comes out the ground), which is then distributed to heat pumps in each apartment.
- Those that use <25oc heat – where a central heat pump Is used to maintain the distribution system at around 20oc followed by a second lift in temperature by individual heat pumps in each apartment.
On residential schemes, this is a much more expensive way of delivering heat than a 4th generation system, especially on large developments. 5th generation schemes require supplementary domestic hot water cylinders with bulky immersion heaters, which presents space issues. It also involves purchasing power from the grid – often at premium domestic rates. Without using separate metering, there may be a lack of transparency from these hidden costs.
Our modelling shows that 4th generation schemes currently provide a much better option for large residential projects because they can deliver excellent carbon savings much more cost effectively and can use a diverse range of heat sources. They also provide much greater transparency via smart metered data.
We believe that 5thgeneration systems are much better suited to industrial and commercial heat networks where there is more scope to balance heating and cooling demands and more chance of projects stacking up commercially.
This does not mean that 4th and 5th generations cannot be deployed together on large mixed-use sites. This is an interesting opportunity to play to the strength of each system.
Managing the transition to lower carbon heat networks
Even though 4th heat networks are fuel agnostic and can use a range of heat generation solutions, the transition to electric heat pumps won't happen overnight. It will take time to wean the UK away from gas due to the favourable economics of gas heating. It is currently much cheaper to purchase gas than it is to purchase grid electricity (for use in heat pumps). Gas incurs few carbon levies, with electricity bearing the major taxation burden of decarbonising the grid.
Heat pump costs will fall as the industry rapidly scales, but at the present time, the economic viability of using heat pumps in heat networks is extremely difficult to achieve without grant assistance. Financial support from the Heat Network Investment Project and Green Heat Network Fund, which will open in 2022, are easing the transition.
Our own financial model shows using electric heat pumps on 4th and 5th generation schemes results in higher heat tariffs than the Heat Trust cost comparator that is currently based on gas prices. This sets affordable tariff rates for residents in comparison to traditional utilities.
Optimising heat networks for cost and carbon savings
In the transition phase, it is essential to optimise CHP and whole network efficiency, which can deliver dramatic cost and carbon savings, while also achieving lower temperature operation in readiness for conversion to heat pumps.
This also apples to future networks. In fact, efficiency and optimisation are critical to delivering expected performance standards as temperatures reduce and tolerances tighten.
Switch2 is making impressive progress in retrofitting 3rd and 4th generation heat networks to raise them to expected high performance standards – at a price customers can afford. Our artificial intelligence (AI) enabled Optimise technology uses big data and remote connectivity to gain complete visibility of performance
Optimise applies learning algorithms to the data it extracts from across the entire heat network to identify, diagnose and automatically remedy inefficiencies and faults. This informs a proactive ongoing management and maintenance regime – focused on reducing running costs and ensuring that heat schemes live up to the performance expectations in financial models. Our Optimise solution is delivering energy savings of 35% on legacy networks.
We are also applying this innovative technology to our design and build of new generation heat networks.
The CIBSE/ADE Heat Network Code of Practice has contributed greatly to improving standards of heat network development and operation and provides a best practice manual for future decarbonisation success.
Mitigating higher costs
It’s possible to mitigate higher costs of transitioning to lower carbon heat sources by integrating on-site solar generation into projects. This can reduce the cost of powering heat pumps, while also providing an opportunity to stack revenues selling electricity to heat network customers. Thermal stores can also be added to use heat more cost-effectively.
Flexible pathway to net zero
Heat networks provide the ultimate flexible pathway to net zero as they can be adapted to switch to new lower carbon fuels and technologies, as they become commercially viable.
With a coordinated approach to design and delivery and continued government support, the next generation of heat networks can provide affordable and sustainable energy solutions for residents – helping the UK towards net zero.