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IX.a Domestic space heating and hot water costs

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Showing just the changes made in the edit by Michael Clark at 2011-08-08 16:08:28 UTC

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Title: IX.a Domestic space heating and hot water costs

Content: h1 Costs Summary

The cost of supplying households with hot water, heating and air conditioning and the cost of reducing energy demand through insulation and new building designs.

h2 Technologies costed in this sector

This sector covers 4 choices in the Calculator: average home temperature, housing thermal efficiency (includes retrofit insulation and new building efficiency), heating systems electrification and non-electric fuel direction, which sets a single trajectory. This is split into three types of technology cost, which are explained below:

* Insulation 
* New building
* Heating and cooling systems

Exclusions: The cost of reducing average internal temperature of homes is not included. This could be met through behaviour change, perhaps supplemented by technology to allow smarter heating. This would most likely be considered a welfare loss, which is not covered in the scope of the costs captured please see: METHODOLOGY FOR COSTS CALCULATOR

h1 Costs Methodology

This section has been split into the three types of costs discussed above. However, firstly we set out the global assumptions for number of households, which is a key driver of demand and cost. Note: the number of households is a variable that can be adjusted within the Calculator, which will change the costs of new build and heating and cooling systems. It will not change the costs of heating and cooling systems, which are determined in a separate model.

h2 Housing assumptions

Total UK households in millions:

| Description      | 2007 | 2010 | 2015 | 2020 | 2025 | 2030 | 2035 | 2040 | 2045 | 2050 |
| Total households | 26.0 | 26.9 | 28.5 | 30.0 | 31.4 | 32.7 | 34.4 | 36.2 | 38.0 | 40.0 |

* Demolition rates are assumed to be 0.1% of housing stock, roughly 25,000 dwellings per annum
* New build assumed to be approx. 1.1% per annum, based on an annual growth rate of total households of 1% plus replacing demolished stock 0.1%

h1 Insulation

h2 Cost ranges

* Solid wall insulation cost data
* Cavity wall insulation cost data
* Floor insulation cost data
* Superglazing cost data
* Loft Insulation cost data
* Draughtproofing cost data

h2 Methodology Used

The scenarios for average heat loss per home under 4 scenarios of retro-fitted insulation and new build standards were developed in a separate heating model. The costs represented here put a unit cost on the insulation technologies deployed from 2007-2050 to achieve the thermal leakiness assumptions in the Calculator (see below for new build costs). 

Therefore, once the user defines the level of insulation deployed (and therefore the average thermal leakiness per home) the cost of each insulation measure is multiplied by the deployment of the insulation in that year. For example, Level 2 household thermal efficiency requires approximately 2 million homes to have solid wall insulation retrofitted by 2025. These are defined in 5 year blocks, so the cost of solid wall insulation in 2025 for level 2 is the average annual new installation (difference between 2025 and 2020 installations divided by 5) multiplied by insulation cost assumptions.  

All insulation costs are treated as a one-off investment cost, these costs can be ammortised (spread out over time through borrowing) depending on the users assumptions on loan periods and cost of borrowing. Many of the costs of insulation could be financed through borrowing, for example through the green deal, but within the Calculator we have kept the flexibility to allow users to explore cash flows, as well as costs including financing assumptions, please see: METHODOLOGY FOR COSTS CALCULATOR (Treatment of Capital).

h2 Technical assumptions

Impact of insulation measures

| Insulation measure          | Assumed average U-value (W/m2.°C) before measure | Assumed average U-value (W/m2.°C) after measure |
| Solid wall insulation       | 2.2                                              | 0.35                                            |
| Cavity wall insulation      | 1.6                                              | 0.35                                            |
| Floor insulation            | 0,6                                              | 0.16                                            |
| Superglazing                | 2.2                                              | 1                                               |
| Loft insulation up to 270mm | 0.29                                             | 0.16                                            |
| Draughtproofing             | 15                                               | 5                                               |

* Lifetime =  No renewal of retrofit insulation, therefore no replacement assumed up to 2050

h1 New building

h2 Cost ranges


Note: We believe the costs above look very far out and are put in as an initial estimate but they look too high.

h2 methodology

New build to 2050 sees an increase from 26m to 40m houses in 2050. This is a fixed assumption and new build is assumed to be simply the difference in each time period plus 0.1% annual replacement of existing stock (roughly equivalent to a 1.1% increase per annum, see above). The number of new build is then multiplied by the costs set out in the ranges above. The costs are expressed as the extra materials and labour cost compared to pre-Zero Carbon home baseline standards[Building Regulations 2006, Part L (Conservation of Fuel and Power), as amended.] therefore unlike other costs in the Calculator, the figure is net of baseline standards rather than a gross cost per household. 

Most other sectors show gross costs rather than incremental to allow comparison between any combination of scenarios within the Calculator, however we have not attempted to estimate the technology/raw material cost of a current home here since although this clearly impacts on energy demand it is a second order influence compared to products that directly consume energy (the majority of costs captured within our methodology). It is also for simplicity and will not effect cost comparisons between pathways.

All costs are assumed to be one-off investment costs (per home) and finance costs are a user variable within the calculator for this investment, see: METHODOLOGY FOR COSTS CALCULATOR (Treatment of Capital).

h2 Technical assumptions

| New build fabric Scenarios                                | 2050 Calculator Level | Window U-value | Floors U-value | Walls U-value | Roof U-value | Air permeability/ m3/ @10 Pa |
| Part L 2006- ZCH Baseline                                 | Level 1               | 1.8            | 0.2            | 0.28          | 0.16         | 10                                |
| EST APEE minus triple glazing minus air permeability of 1 | Level 2               | 1.2            | 0.15           | 0.15          | 0.11         | 3                                 |
| EST APEE minus triple glazing minus air permeability of 1 | Level 3               | 1.2            | 0.15           | 0.15          | 0.11         | 3                                 |
| PassivHaus equivalent                                     | Level 4               | 0.8            | 0.1            | 0.1           | 0.08         | 1                                 |

* No new build is replaced before 2050

Please see cost ranges above for more detail

h1 Heating/cooling systems

h2 Cost ranges

* Gas Boiler Cost Data
* Electric heating Cost Data
* Solid Fuel Boiler (inc Biomass) Cost Data
* Oil fired Boiler Cost Data
* Micro CHP Cost Data
* Air Source Heat Pump Cost Data
* Ground Source Heat Pump Cost Data
* Geothermal Heat Cost Data
* Gas (Natural or Biogas) CHP Cost Data
* Solid Fuel CHP Cost Data
* Heat exchanger for District heating Cost Data
* District heating network Cost Data
* Air Conditioning Cost Data

! Note: all costs are in £/KW of heat provided not £/KW of electricity, the heat to power ratios for CHP are based on the technical assumptions of the Calculator shown below in 'technical assumptions' !

h2 Methodology

h3 Defining trajectories

Users, through their combined choice of heating electrification and fuel direction, define the share of hot water and space heating demand serviced by heating systems in 2050. To get to this result in 2050, we have assumed a decreasing/increasing linear share met by heating systems from the period 2015 to 2050. The number of heaters in homes (see number of households assumptions above) is assumed to be proportional to the space heating and hot water demand serviced. For example if 50% of demand is serviced by heat pumps, we have assumed 50% of homes will have heat pumps installed.  

h3 Investment cost for heating systems Calculation

Investment costs capture all new heating systems resulting from the trajectory and through natural replacement. All heaters and cooling systems are replaced after 15 years giving 33% scrappage every 5 years. Heating systems in each 5 year block are defined by the trajectory chosen by the user. The costs are the new heating systems needed between period t+1 (e.g. 2020) and period t (e.g. 2015) given a third of all technologies in period t are scrapped. Fixed operating costs are the cost of those heating systems used in the particular time period. Please note electricity, fossil fuel and biofuel costs are accounted for elsewhere in the Calculator but the energy demand is accounted for in this sector.

To convert costs from £/KW to £/household, we have assumed a certain KW capacity needed per household to meet peak demand. We have used an average of 20KW for a gas boiler as our starting assumption. The capacity assumed per household for all heating systems is shown below:

| Heating and hot water tech     | Size per household (KW) |
| Gas boiler                     | 20                      |
| Resisitive heating             | 20                      |
| Oil-fired boiler               | 20                      |
| Solid-fuel boiler              | 20                      |
| Stirling engine ?CHP           | 20                      |
| Fuel-cell ?CHP                 | 20                      |
| Air-source heat pump           | 14                      |
| Ground-source heat pump        | 11                      |
| Geothermal                     | 20                      |
| Community scale gas CHP        | 20                      |
| Community scale solid-fuel CHP | 20                      |
| Electric air conditioner       | 4                       |

Note: we have assumed an installation size of 20KW for all technologies, the 20KW includes both space heating and hot water demand. Heat pumps have a lower installation size due to their >100% efficiencies (from electrcity to heat).

h3 District Heating network costs

Finally, for community scale CHP and district heating from power stations, we have included the (distribution) cost of district heating networks additional to the (transmission) cost of the large piping from power plants (see XVII.a DISTRICT HEATING EFFECTIVE DEMAND COSTS) and the CHP plants themselves. We have assumed these networks do not need to be replaced over 2015-2050.[District heating network Cost Data]

h3 Cooling system costs

Demand for cooling is set by user choices on heating/cooling comfort level. For each of the levels we have assumed:

* Level 1 - Every household has an air-conditioning system [See July 2010 report page 99]
* Level 2 - 62% of households have air-conditioning by 2050
* Level 3 - 27% of households have air-conditioning by 2050
* Level 4 - No additional air-conditioning units are installed

A linear trajectory of cumulative installations is drawn from 2010 to 2050 and we have assumed units last 10 years, therefore the cost of replacements is also captured.

h2 Technical assumptions

| Heating system                 | Hot water efficiency | Space Heating efficiency | Electricity supplied to grid |
| Gas boiler (old)               | 76%                  | 76%                      | -                            |
| Gas boiler (new)               | 91%                  | 91%                      | -                            |
| Resisitive heating             | 100%                 | 100%                     | -                            |
| Oil-fired boiler               | 97%                  | 97%                      | -                            |
| Solid-fuel boiler              | 87%                  | 87%                      | -                            |
| Stirling engine ?CHP           | 63%                  | 63%                      | 23%                          |
| Fuel-cell ?CHP                 | 45%                  | 45%                      | 45%                          |
| Air-source heat pump           | 200%                 | 300%                     | -                            |
| Ground-source heat pump        | 300%                 | 400%                     | -                            |
| Geothermal                     | 85%                  | 85%                      | -                            |
| Community scale gas CHP        | 38%                  | 38%                      | 38%                          |
| Community scale solid-fuel CHP | 57%                  | 57%                      | 17%                          |

Note: Conversion losses are equal to 100% - hot water efficiency (or space heating efficiency) - electricity supplied to grid.

Heat to power ratios are found from either hot water or space heating efficiency ratio to electricity supplied to grid. For example, for Gas CHP the ratio of heat to power is assumed to be 38%:38%, therfore 1:1.

* Lifetime - All are assumed to last for 15 years
* Rosie says: talk to Hunter about the boiler efficiency issue (the numbers you have are overestimates in practice) and to Hunter/Penny about lifetimes, as parts of a heat pump can last 30-40 years with only some parts needing a more frequent replacement*

h1 Questions to stakeholders

* The costs of new build look very high, could you provide any evidence on the additional cost of greater thermal performance standards modelled in the 2050 Analysis?
* Should we calculate material and labour costs of all new build, including today's standards (the baseline) rather than just additional? Or will this increase the scope of 'costs' in the Calculator too far?
* We have assumed a constant peak size for heating systems, should this fall given greater thermal efficiency of houses or would this have to also take into account significant behaviour change in spreading demand or require additional storage? We could do this through ratios of thermal leakiness reduction, could you suggest another methodology?
* Most heating systems are between 15 and 20 years although we have a fixed assumption of 15 years. Does this bias against low carbon technologies with a longer life (larger scale heating, heat pumps etc)? Or is it a realistic assumption that economic lives of technologies are unlikely to differ significantly?
* Should we differentiate between a 1st time investment cost e.g. of converting from a gas boiler system to a heat pump system and a replacement cost once this has occured or is this largely covered within the range?
* Have the right technologies for Micro CHP been chosen, which reflect the technology assumptions in the calculator?


* What are reasonable (or past) assumptions for the distance between power stations and a distribution network for district heating? 
* Similarly for 10MW dedicated CHP we have assumed no transmission piping cost, what would the distance be? 1 mile was previously mentioned
* We have assumed no cost in adjusting power plants to use the waste heat (except a loss in electricity produced). Is this assumption fair?
* Does the district heating distribution network cost cover the extra cost of heat exchangers and converting homes with gas boilers to be suitable for district heating?

h1 Changes to the model since March 2011

2007-2015 we have assumed every new heating system is Gas, from 2015-2050 there is a linear trajectory based on the trajectory choice for the 2050 target. The number of new installations are calculated simply by any positive difference (i.e. we're not counting scrapped boilers) over the previous 5 year time block.

h1 FAQ

Where do you consider the benefit of additional electricity from CHP?

The electricity is counted and therefore reduces cost in power generation when CHP heat is chosen, since it is either displacing fossil fuel generation or is assumed to earn income from export.

The Green deal will surely reduce the cost of these measures through financial support?

The green deal will ammortise the costs i.e. spread the investment cost, which is an option that can be chosen when the costs are added up to give a total for the sector. We have not hard-wired in financing costs or discounting because we want people to explore the effects of these variables on costs.

Surely a lot of insulation has already been taken up, how do you account for this?

We have revised our insulation trajectories in March 2011, following the Call for Evidence. Our level 1 includes current policy to 2012 (this will not include the Green Deal) and we have assumed BAU uptake thereafter.

h1 Admin

2050 Costs team lead - Michael Clark, Rhys Howell

Working-level analyst - Robert Towers (DECC), Rosie Cornelius (CLG), Alistair Rennie (DECC)

Category: Sector by sector cost assumptions

User: Michael Clark

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