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Public Sector Funding for Decarbonisation

The government has launched its latest phase of public sector funding for decarbonisation, dedicating up to £635m for building upgrades to improve energy efficiency and install a range of clean technologies through schools, hospitals, and other public buildings.

Forming part of a wider £2.5bn programme, Phase 3 of the Public Sector Decarbonisation Scheme is providing £1.425 billion of grant funding over the financial years 2022-2023 to 2024-2025. The funding aims to support the government’s goal of reducing emissions from public sector buildings by 75 per cent by 2037, compared to 2017 levels, as set out in the Net Zero and Heat and Buildings strategies.

As the government looks to tackle soaring energy costs, it is intended that the funding will support a wider reduction in energy bills, to the tune of up to £650m a year over the next 15 years. As we have outlined, reducing emissions and energy costs do not necessarily go hand in hand, especially if working with heat pumps to supply hot water.

According to The Department for Business, Energy, and Industrial Strategy (BEIS) 734 grants had been awarded to public sector organisations across England to date, with phase one of the scheme supporting up to 30,000 jobs in the clean heating and energy efficiency sectors.

Applications for public sector funding for decarbonisation open from September and the government has issued guidance on how public bodies can apply for the latest wave of funding to be delivered on behalf of the government by Salix Finance, which also provides financing packages to help public sector bodies undertake energy-saving projects.

Salix Finance chief executive, Annie Shepperd, has urged public sector organisations across the country to move quickly to curb their energy use ahead of the significant increases in energy costs that are widely expected this winter.

“There is no time like the present to push forward with the decarbonisation agenda as our country must meet its ambitious targets to reduce our carbon footprint and reduce our consumption of very costly energy,” she said. “This vital work is driving down our carbon footprint and making these buildings better places for people to work in and for the public to use.”

Business and Energy Minister Lord Callanan said, “By helping even more public sector bodies ditch costly fossil fuels, we are taking an important step towards a more sustainable future while driving economic growth across the country and continuing to support tens of thousands of jobs.”  He also claimed that the scheme was already delivering upgrades to “hundreds of public buildings across England, making them cheaper to run and saving taxpayers millions of pounds each year”.

While such claims relating to public sector funding for decarbonisation should be appropriate to new build structures, upgrading existing buildings is a far more complex activity than these statements suggest. The focus on decarbonisation to address climate change is the only clear guaranteed deliverable at this time with the technology being promoted, which is predominantly heat pumps. Further work needs to be done by the government to push other technology opportunities, such as solar systems and especially solar thermal for water heating which has become an increasingly cost-effective and proven approach and hydrogen blend in the grid if cost savings are to be factored into the argument for embracing green initiatives at a commercial grade.


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The Path to Decarbonising UK Cities

At the time of publication of the 1.5°C Plan, the UK’s ambition was to achieve an 80% reduction in emissions by 2050. Since then, both national and local climate ambition has increased in terms of decarbonising UK cities to lead reduction.

At a national level, the UK has committed to reach a 68% reduction in emissions by 2030 (relative to 1990 levels) and to reach net zero emissions by 2050. For London, the quoted aim is to commit to moving that net zero target from 2050 to 2030.

Successfully decarbonising UK cities before 2050 could follow several potential pathways, with London defining likely routes to achieving net zero early.

Two scenarios, high electrification, and high hydrogen are closest to current UK-wide targets, with a target 68% reduction in emissions by 2030 relative to 1990 levels. High electrification favours electrification of heat and transport, whilst high hydrogen assumes that hydrogen is available at scale in the long term. With a commitment to a more ambitious retrofit programme, these scenarios represent the maximum level of residual emissions considered to be still compatible with a 2030 Net Zero target.

High electrification and high hydrogen slightly exceed national targets, with high electrification modelled to decarbonise faster (27% residual emissions in 2030) due to the reliance of high hydrogen converting the gas grid which happens after 2030 (30% residual emissions in 2030). The high hydrogen scenario is the most optimistic about the role that hydrogen will play in that it assumes there will be a conversion of the existing gas grid to hydrogen in the post-2030 period. Conversion in that scenario begins in the early-to-mid-2030s, with completion by 2045, and total demand reaching 26 TWh/year in 2050 (compared to the current demand of close to 60 TWh/year natural gas). Both scenarios only reach 10% emissions in the early 2040s.

Accelerating the process of decarbonising UK cities successfully requires local authorities, the private sector and public bodies to all engage in a proactive role in driving the transition to net zero. These scenarios are therefore further refined under ‘no constraints’ or ‘accelerated green’ delivery.

With no constraint over the short timeframe from costs or local influence to implement challenging policies, such as early scrappage of boilers and vehicles, a significantly accelerated decarbonisation pathway is opened to meet the minimum achievable residual emissions by 2030. Due to the pace of decarbonisation required, technology options will necessarily be limited to those that are currently available or will certainly be available by the late 2020s, with a high reliance on widespread electrification. Modelling shows that 14% residual emissions (relative to 1990 levels) are achieved by 2030, falling to 10% shortly after, in 2033 when there are no constraints. This is considered the maximum level of emissions reduction possible by 2030 (minimum residual emissions) and relies on the deployment of very ambitious levels of behaviour change toward electrification of heat and transport, supported by significant supportive policy at the national and regional levels.

The accelerated green scenario represents an intermediate option which aims to reach the lowest possible residual emissions by 2030 without boiler and vehicle scrappage. The city would decarbonise as rapidly as possible while leaving long-term technology options open. This would mean allowing some heating systems to remain connected to a blended (hydrogen and biomethane) gas grid and a moderate share of pure hydrogen in selected applications.

Without requiring widescale scrappage, the accelerated green approach reaches 22% residual emissions by 2030 and achieves 10% residual emissions in the late 2030s, four years later than the unconstrained approach.

In all scenarios, most remaining emissions in 2030 come from Buildings (40-50%, depending on the scenario) and Transport (38-40%).  Under the published 1.5°C Plan all four scenarios decarbonised less rapidly, such that around 40% of emissions would still remain in 2030.

All scenarios assume varying degrees of hydrogen use. The current technological immaturity of hydrogen production and the need to deploy the Hydrogen that is available to strategically important sectors represents a significant risk factor in the high hydrogen scenario, both in terms of the uncertainty of availability, emissions intensity, and future costs. In all scenarios hydrogen therefore only plays a small but strategic role in meeting the net zero by 2030 target.

Without constraints, early action on decarbonising UK cities ultimately offers the lowest cost pathway by 2060 with the added benefit of lower ongoing fuel costs than in other scenarios. But without the full support of all key players, expectations are likely to fall in favour of the lowest cost and least disruptive scenario presented.

Without carbon costs, high hydrogen is the lowest cost scenario, largely due to lower technology costs associated with gas boilers (H2 or biomethane) compared to heat pumps. Despite the lower CAPEX costs in the high hydrogen scenario, the perceived higher fuel costs expected to heat a building using a hydrogen boiler over a heat pump, mean that the cumulative costs for high hydrogen will eventually increase above the other scenarios. But familiar boiler/water heater technology, less installation disruption and the potential for future capping of costs on green hydrogen continue to drive the positive outlook for the technology as a means of achieving early success in decarbonising UK cities.

 

Source: Element Energy Report, 2022 – Analysis of a Net Zero 2030 Target for Greater London

UK Progress Towards Net Zero

There has been a great deal of talk about the decarbonisation of this country but what has been the UK progress towards net zero so far?

A new progress report by the independent Climate Change Committee (CCC) has been damning. Despite the UK having a solid Net Zero strategy in place, the CCC has identified “major failings” in government delivery programmes designed to achieve climate change in the UK by 2050. The CCC notes that once again emissions are on the rise, up 4% in 2021 compared with 2020, which it directly associates with the economy beginning the process of post-COVID-19 recovery.

From a lack of tangible progress in policy ambition and slow progress on wider enables, the UK is in danger of failure in building on the apparent success of COP26 last November. While the UK presidency of the UN COP26 climate summit strengthened long-term global ambition and introduced new mechanisms to support delivery it has not yet prioritised making those new mechanisms work in practice. Greater emphasis and focus now must be placed on the delivery of the agreed emission path, with the caveat that not all policies will deliver as planned.

In response, the CCC progress report lists more than 300 recommendations that must be addressed between now and 2024 if the UK is to be successful in delivering net zero by 2050.

Following the Heat & Building Strategy for England, the CCC has called for more detail on the modelled pathway for low-carbon heat, and planned breakdown of funding announced in the Scotland Heat in Buildings Strategy; a coherent, long-term strategy for heat and energy efficiency in Northern Ireland; and further work to build on the plans set out in Net Zero Wales Carbon Budget 2. This should include policies to support low-carbon heating across all of the building stock.

In addressing the UK progress towards net zero the CCC identifies the need for a final policy plan for the market-based approach to low-carbon heat. This must include a clear explanation of how the obligation on manufacturers or energy suppliers will work, whether enabling legislation is required, and a timeline for implementation. It should also include details on how the Government will track whether the policy is driving the required market growth, and identify trigger points for further intervention (e.g. funding, regulation) if progress falls behind.

Missing The BUS

The current Boiler Upgrade Scheme, which can be used by small businesses as well as homes, requires an awareness campaign to drive demand, alongside an increase in available funding as required so that those who want a heat pump through the scheme can get one. This mirror’s findings from the Ground Source Heat Pump Association (GSHPA) that show the £450 million scheme is yet to deliver increased demand for heat pumps. According to Ofgem, during the period 23 May to 30 June 2022, only 169 vouchers were redeemed for <45kWth heat pumps (air source and ground source) and biomass heating. Off the back of this scheme, there remains a clear need to grow and upskill the workforce will support the Government’s pathways for low-carbon heat and energy efficiency and fill the skills gap identified in the Heat and Buildings Strategy.

Regulation & Enforcement

What is clear is that achieving change requires policy backed by mandated regulations. These include published targets for the roll-out from now until 2037 of heat pumps that do not use F-gases as a refrigerant, plus plans to phase out boiler replacements in off-grid non-residential buildings from 2024, and consult on introducing an earlier phase-out date for gas boilers in non-residential buildings.

Consultation is also required on a full technical specification for the Future Buildings Standard in 2023 to ensure the new standards are implemented by 2025. The intent is to see the delivery of new buildings which are resilient to climate change impacts, with ultra-high energy efficiency standards and low-carbon heating. This should be supported by improvements to the Energy Performance Certificate (EPC) and Standard Assessment Procedure (SAP) framework to ensure they drive the deployment of the necessary energy efficiency and low-carbon heat. Proposals are also put forward for minimum EPC in owner-occupied commercial buildings. Minimum EPC standards must also be enforced, including consideration of additional measures to monitor compliance of qualified installers, approved inspectors and EPC assessors, and providing local areas with sufficient resources to undertake assessments.

Public Sector Charged With Taking The Lead

To meet ambitious Government targets and show leadership in public sector buildings decarbonisation, public sector organisations, including those not captured by the Greening Government Commitments, must have the information and support they need to: monitor their energy use, set targets and reduce emissions from their estate over the next five years.

All public sector buildings should halve emissions by 2032.

This requires the development and implantation of plans for a zero carbon remit. To do this will require an increase in multi-year funding commitments for decarbonisation in public buildings up until 2025 to match the Government’s ambition for public sector decarbonisation and commit to continuing similar levels of funding beyond 2025. Proportionate mechanisms should be put in place to review overall progress and recurring challenges. To achieve this the government needs to publish the completed carbon and water management plan and the sustainability management plan that is under development. The plan should include clear pathways for reaching Greening the Government Commitment targets for halving emissions from public buildings.

The assessment of whole-life carbon and material use in private and public construction projects should be mandatory by 2025, to enable minimum standards to be set. The whole life carbon assessment should be sought at the planning stage to enable efforts to reduce embodied carbon and materials.

Strategy & Assessment For Small To Medium Commercial Organisations

Small and medium-sized enterprises (SMES) require improved engagement, particularly high-emission, low-engagement businesses. The recommendation is for a package of measures including a one-stop shop for SMEs to get decarbonisation advice with a carbon footprinting tool, develop a strengthened low-carbon advisor/auditor role for SMEs and develop an effective financing strategy to support SME decarbonisation.

This should be driven by a performance-based rating scheme with a published timeline for offices and other building types, outlining how timelines correspond to the expected emissions reduction trajectory of commercial buildings in the 2020s.

The Government needs to rapidly communicate findings on SME energy efficiency from the new research mentioned in the Heat and Buildings Strategy, and outline plans to ensure SMEs are able to invest in retrofit and energy efficiency measures. This research should support the publishing of clear plans to move towards in-use performance metrics for buildings, with clear timescales and responsibilities. The CCC concludes this should lead to the consideration for moving towards Green Buildings Passports.

Green Needs Green

Recognising that the transition needs to scale up over this decade and that stable funding provides certainty to businesses, and public bodies, what is clear from the progress report is that there remains a lack of comprehensive vision to leverage private financing for the retrofit of UK businesses, with consideration to include green stamp duty, green mortgages, energy as a service, and property-linked finance. In order for successful UK progress towards net zero the Boiler Upgrade Scheme, Local Authority Delivery Scheme, Energy Company Obligation and public sector decarbonisation must continue to be fully funded as required beyond the spending review period.

Part L – New Building Regulations For Commercial Hot Water

Introducing changes to Part L of the Building Regulations (Conservation of fuel and power) for England represents a commitment to raising the energy performance of buildings to provide a pathway to highly efficient non-domestic buildings which are zero carbon ready, better for the environment and fit for the future. Although due to be formally released in 2025, the first of a number of interim measures come into force this month.

Whilst the new regulations will have a profound impact on new-build projects, refurbishment works are likely to be initially affected by the introduction on June 15th of new restrictions on the specifying of poor-efficiency direct-gas fired water heaters. Under Part L, new regulations for hot water systems essentially end like-for-like replacement for non-condensing water heaters by imposing new minimum efficiencies (91% for natural gas and 92% for LPG).

Each new fixed building service, whether in a new or existing building, must meet the legislated values set out for efficiency. Replacement fixed services must be at least as efficient, either using the same or a different fuel as the service being replaced with matching or preferably better seasonal efficiency.

If moving over to a new fuel system, such as oil or LPG to natural gas, it should not produce more CO₂ emissions nor more primary energy per kWh of heat than the appliance being replaced. If ageing renewables such as wind or solar are being replaced the electrical output must be at least that of the original installation, except where it can be demonstrated that a smaller system would be more appropriate or effective. And if work extends or provides new fixed building services energy meters will need to be installed.

When specifying a DHW system, sizing should be based on the anticipated demand of the building (based on BS EN 12831-3). The regulations demand systems not be “significantly oversized,” but we would argue any oversizing will have a negative impact on the efficiency and operational costs of a DHW system. So accurate sizing is critical in terms of delivering an optimal thermal efficiency assessment. That assessment will include the heat generator and any integral storage vessel, but will exclude all secondary pipework, fans, pumps, diverter valves, solenoids, actuator and supplementary storage vessels from the calculations.

As a guide the minimum thermal efficiencies for natural gas-based DHW systems, based on gross seasonal efficiency of the heat generator are:

91% –                                 Direct fired for new building with >30kW output*

91% –                                 Direct fired for new building with <30kW output*

91% –                                 Boiler efficiency for indirect-fired systems in new & existing buildings

100% assumed                Electrically heated new & existing buildings

* Product standard BS EN 15502-2-1:2012 for gas-fired boilers and appliances of a nominal heat input not exceeding 1000 kW / BS EN 89 gas-fired storage water heaters for the production of DHW

Adveco carries of range of stainless steel direct-fired condensing water heaters, the AD and new ADplus ranges, and MD boiler range, which all leverage advanced burner control to drive efficiency as high as 106%. Plus glass-lined condensing water heaters such as the AO Smith BFC Cyclone (97% efficient) and Innovo (98% efficient) provide a range of choices that already exceed the latest regulations under Part L and provides a safety net should regulations tighten in the future.

As with the broader regulations relating to space heating, controls form a necessary element of the new Part L regulations for combustion heated DHW systems. These all must incorporate a time control (independent of space heating circuits) and an electronic temperature control.

Additionally, regulations call for fully pumped circulation where compatible with the heat generator for primary hot water circuits. Automatic thermostatic control to shut off the burner/primary heat supply when the desired water temperature is reached, and primary flow if the system temperature is too high for all direct-fired circulator systems, direct-fired storage systems and indirect-fired systems. Direct-fired continuous flow systems should include a heat exchanger flow sensor to control outlet temperatures and detect insufficient flow with burner/heat input shut off. A high limit thermostat is also required to shut off the primary flow if the system temperature is too high.

Point-of-use, local and centralised domestic hot water systems should have automatic thermostatic control to interrupt the electrical supply when the setpoint storage temperature is reached or the system temperature gets too high. If there is an over-temperature trip manual reset should be possible.

Local and centralised DHW systems should have both a 7-day time control and the facility to boost the temperature by using an immersion heater in the cylinder.

Instantaneous water heaters should include a flow sensor to control the rate of flow through the heat exchanger. If the sensor detects insufficient flow, it should shut off the electrical input. Plus, a high limit thermostat is required to shut off the primary flow if the system temperature is too high.

Alongside gas, solar thermal is likely to be applied in the notional building unless heat pumps meet 100% of the actual building’s demand. Solar has been used in calculations in the past to overcome the poor fabric performance of a building. But, given the broad majority of heat pumps are currently used for preheat on commercial DHW applications, at most offsetting 70% of the energy demanded, solar thermal has a valid role to play and it’s a proven sustainable technology. Our expectations are for commercial DHW systems to continue in a familiar manner for the near to mid-term, with gas appliances used to provide cost-effective supply, especially during grid peak hours. Heat pumps and/or solar thermal will be deployed to provide preheat to that system.  As efficiencies improve and higher water temperature (more than 60°C) are achieved through heat pumps we see gas appliances slowly being phased out unless they can be replaced with green gas (hydrogen) alternatives. This naturally leads to the provisioning of hybrid systems for the coming decade, optimising a mix of current technologies that address the latest regulations, reduce emissions and crucially deliver value for money with lower operational costs.

These measures are designed to enforce a move away from fossil fuels to low carbon technology for heating and domestic hot water (DHW) and set a more rapid timeline. There is no doubt these new measures will ultimately represent a seismic shift in thinking when it comes to commercial hot water and heating applications, but a cushion has been built in to allow for the development of systems that are necessarily more complex than would be seen in domestic settings. This brings considerable opportunities for developers and specifiers willing to consider both existing and new technologies in order to deliver compliant applications in the next five years.

Whilst a fabric first approach is encouraged, low carbon technologies are being emphasised. This ultimately means heat pumps for the broad majority of DHW applications where there is a low heat demand. For commercial properties where there is typically a high heat demand gas is still allowed while the industry works to develop suitable alternatives.

One final observation on the implication for the specification and installation of commercial DHW relates to completion requirements. Part L tightens the commissioning requirements to reduce the gaps in performance over design and is intended to deliver improved project handover with accurate energy usage predictions. As a result, we can expect to see revisions of commissioning processes across the industry to help streamline delivery and speed up handover, crucial if government roll-out targets for low carbon technologies to achieve Net Zero by 2050 are to be met and superseded by commercial organisations.

 

Regulation changes take effect on 15 June 2022 for use in England. It does not apply to work subject to a building notice, full plans application or initial notice submitted before that date, provided the work for each building is started before 15 June 2023. Regulation changes do not currently apply to Wales, Scotland or Northern Ireland. 

 

 

 

 

Unlocking The Potential of Hydrogen

For many, unlocking the potential of hydrogen represents a familiar, easier and more cost-effective way to transition to more sustainable heating practices in buildings. It is also increasingly seen as a core shift in the energy trade and critically, in the wake of demands to reduce dependency on Russian oil and gas, the future for regionalisation of energy supply.

In the recent report, Geopolitics of the Energy Transformation, from the International Renewable Energy Agency (IRENA), hydrogen it is estimated will cover up to 12% of global energy use by 2050, with at least two-thirds of total production being green hydrogen (produced with renewable electricity) with the remainder blue hydrogen (derived from natural gas).

Here in the UK, the status of hydrogen remains to be confirmed as part of the government’s push towards attaining net zero by 2050. The Heating and Buildings Strategy published in late 2021 does however begin to give an indication of the growing support for the technologies currently being tested.

The government’s commitment so far extends to the testing and evaluation of the potential of hydrogen as an option for heating workplaces. In partnership with industry, the intent is to “clearly define the evidence needed to make a policy decision about the role hydrogen for heating can play in our future energy system.”

To this end, The Department for Business, Energy and Industrial Strategy (BEIS), supported by Innovate UK and Innovate UK KTN, have launched the Net Zero Hydrogen Fund (NZHF) which was most recently cited in this month’s Energy Security Strategy to focus on unlocking the potential of hydrogen. A funding sum of up to £240m has been made available to explore the development and deployment of low carbon hydrogen production. The funding is intended to de-risk investment and reduce lifetime costs of multiple hydrogen production projects this decade to help ensure a diverse and secure decarbonised energy system that meets the UK government’s stated ambition of 10GW low carbon hydrogen production by 2030, and commitment to reach net zero by 2050.

This investment comes in advance of a declared strategic decision by 2026 on the role of hydrogen in heating buildings. This decision will consider the success of development projects that focus on appliances, such as new gas boilers that can be readily converted to hydrogen (‘hydrogen-ready’) and the testing of conversion of the gas grid. The latter in particular is critical in terms of evaluating the technical and practical feasibility of using hydrogen instead of natural gas for heating. This assessment process is also expected to consider the expected costs, benefits, impacts, and practical delivery implications.

This consultation process will also be a factor in decisions in relation to the future of broader boiler and heating system efficiency and explore the best ways to reduce carbon emissions from our heating systems

According to IRENA, the rise of hydrogen’s potential is linked to the plummeting costs of renewables and electrolysers. This greatly improves the economic attractiveness of ‘green’ hydrogen which also can help deliver on the demands for storage that comes hand-in-hand with greater dependence on wind and photovoltaic (PV) power generation. From this perspective, ‘green’ hydrogen becomes an important technology in the extension of renewable electricity developments.

Although ‘Grey’ hydrogen production, which is solely based on fossil fuels, is expected to be rapidly phased out in the coming decades, ‘Blue’ hydrogen, although also based on fossil fuels, is expected to play a complementary role to ‘Green’ hydrogen, so long as the carbon capture and storage (CCS) is proved viable. As a result, hydrogen and hydrogen-based fuels are now projected to meet a sizeable share of final energy demand in 2050, up from virtually nothing today. To achieve this in the UK, the Heating & Building Strategy report outlines the key processes of consultation required for unlocking the potential of hydrogen beyond 2026.

  • large-scale hydrogen trials: BEIS and Ofgem have liaised with the gas distribution network operators on the conducting of a ‘village’ scale deployment trial by 2025, and a possible town scale conversion project before the end of the decade.
  • Hydrogen blending in the gas grid: to develop the safety case, technical and cost-effectiveness assessments of blending up to 20% hydrogen (by volume) into the existing gas network. This has the potential to deliver up to 7% emissions reductions from the grid. The assessment of indicative cost and value of blending hydrogen is intended to be delivered this Autumn, with the possibility of a policy decision in 2023. This in particular would represent a major first step towards integrating hydrogen in the grid at a potentially national level, but would not require building projects to replace existing natural gas boilers/water heaters.
  • Hydrogen-ready boilers: Consideration will be given to the case for enabling, or requiring, new natural gas boilers to be easily convertible to use hydrogen (‘hydrogen-ready’) by 2026 (in domestic projects). This consultation would also test proposals on the future of broader boiler and heating system efficiency and explore the best ways to reduce carbon emissions from gas heating systems over the next decade. The Heating & Buildings strategy makes clearer the commercial implications where, for the moment, if your business uses gas, then you can upgrade to new gas appliances up until 2035, with hydrogen-ready options extending that window well into the 2040s based on current appliance lifespan.

The local trials and planning, research and development and testing outlined will help develop necessary evidence on the role hydrogen can play in the heating of buildings, enabling strategic decisions to be taken on the role of hydrogen in heating buildings in 2026. This timeframe, and the necessity of its elements, are very important to remember when the media is constantly calling for a decision to be made more rapidly. The implications of a transition to a hydrogen grid are immense, but so are the challenges. It cannot be rushed and it cannot fail if net zero is to be realistically attained, especially across the commercial & public sector built environment.

On the global stage, green hydrogen may strengthen energy independence, security, and resilience by cutting import dependency and price volatility.  However, the raw materials needed for hydrogen remain exposed to shortages and price fluctuations that could negatively affect hydrogen supply chains, cost and revenues. For this reason, hydrogen, if it is green-lit as a core contributor to the UK’s net zero delivery will not do so in isolation. Just as most buildings will currently rely on both gas and electricity, net zero ‘ready’ organisations will most likely have embraced a mixed approach. This will leverage the advantages of air source heat pumps (ASHP), proven solar thermal and natural gas with a hydrogen blend as a redundancy/peak demand back-up through the 2030s and early 40s. Hydrogen ready’’ adoption should be a necessity by the early to mid-2030’s. Then the UK could look forward to full transition to ‘Blue’ then ‘Green’ hydrogen from the late 2030s and throughout the 2040s at a national scale. Regional rollouts will of course redefine these timelines, but, if the policy supports the adoption of hydrogen from 2026, the technology usage path should remain fairly clear for commercial projects looking at unlocking the potential of hydrogen as a part of their corporate drive toward net zero sustainability by 2050.

Solar thermal heating for public sector from Adveco

Public Sector Decarbonisation Of Hot Water & Heating

Public sector decarbonisation is a core facet of the government’s Heat & Building Strategy, which has been published to outline how the UK can achieve net zero by 2050. By decarbonising public sector buildings, the government aims to demonstrate leadership and to encourage action in other sectors to make a direct contribution to net zero.

With around 40% of UK greenhouse gas emissions being accounted for by heating, cooling, and lighting the built environment, the government has said it is ‘essential that the public sector demonstrate leadership and drive down emissions by using credible and consistent approaches to decarbonise the public sector estate.’ The aim is to reduce direct emissions from public sector buildings by 75% against a 2017 baseline by the end of carbon budget 6.

Addressing decarbonisation within both new construction or refurbishment of existing properties has now become a key deliverable throughout the public sector which will need to be shown to be leading the way in decarbonising UK buildings in the 2020s.

What is the government doing to support the public sector?  

The government’s £1 billion Public Sector Decarbonisation Scheme was initially announced in 2020 to provide funding until this year. Conceived to support the public sector in finding answers to heat decarbonisation additional funding was allocated to make public buildings greener and the second phase of the Public Sector Decarbonisation Scheme was launched last April with an additional £75 million of funding into this year. The government has subsequently committed to investing a further £1425 million for the Public Sector Decarbonisation Scheme between now and 2025. This funding is intended to provide public sector organisations with grants to fund energy efficiency and heat decarbonisation measures and supports the decarbonisation of the public sector in line with the government set net zero targets.

The funding will aim to deliver energy efficiency and heat decarbonisation improvements to organisations such as schools, hospitals and public sector offices, and present an opportunity to build wider support and acceptance for transformation of how the UK heats buildings. The government has stated it is committed to the continuation and extension of the scheme to “ensure that public sector bodies have access to finance to continue decarbonising their estates.”

What does the government expect of the public sector?

The government’s aim is to introduce greater transparency into how the public sector is making practical changes to achieve decarbonisation. At a basic level, the expectation is for “all public sector organisations to be thinking about how they will achieve Net Zero and should be taking steps to start this process now.” As publicly-funded organisations, they should expect to be held accountable to the public by reporting their progress. Through the Greening Government Commitments (GGCs) a framework for reporting against targets to reduce public sector greenhouse gas emissions has already been set in place, and now all public sector organisations will be expected to show leadership by taking steps to reduce direct greenhouse gas emissions. This should include monitoring their energy use and setting targets and plans to reduce emissions over the next five years. Different targets will be appropriate for different organisations, but all public sector organisations are expected to publicly report progress against their plans and targets.

The Heat & Building Strategy specifically calls on public sector organisations to plan to reduce direct emissions from their heating systems by making buildings more efficient. This should be achieved through:

  • improving building insulation
  • switching to low-carbon heating sources when it is time for heating systems to be replaced
  • implementing smart technology
  • installing low-carbon heating in new buildings, which means retrofitting will not be needed

If reporting of public sector emissions on a consistent and coherent basis is not done on a voluntary basis, and, if insufficient progress is made on reducing emissions in the public sector, the government will consider legislation requiring all public sector organisations work toward and report against a legally binding target to reduce their greenhouse gas emissions.

How can Adveco help?

The Heat & Building Strategy accepts that public sector organisations will require new specialist skills and expertise to decarbonise, both through making infrastructure improvements and by better managing operational energy use. As the public sector provides all public services, including education, healthcare, emergency services and social care to name a few, these organisations encompass a large and varied requirement for hot water and heating.

Including everything from showers, washbasins and kitchens, to varied space heating demands,   applications will vary dramatically across each bespoke case, making decisions on decarbonisation all the more complex and difficult without specialist support.

Currently, the government favours air source heat pump (ASHP) based applications for the public sector as the simplest and most cost-effective answer to being greener. But many have queried the expense and relevancy of the technology outside of new build properties. The Government has said it will work with the industry to help meet the goal of reducing ASHP cost, bringing them in line with current fossil fuel options by 2030, ‘with big cost reductions of between a quarter and a half by 2025 expected as the market expands, and technology develops.’

This and the practical benefits of switching to high-efficiency heat pumps to reduce energy consumption, which includes less CO₂ production and lower long-term operational costs, make the technology an important part of the process for achieving carbon-neutral goals on schedule. The high-temperature demands of commercial hot water systems do however curtail the current generation of heat pumps as a singular response, with existing, poorly insulated buildings further reducing efficiencies. For this reason, public sector organisations faced with delivering decarbonisation goals within the proposed next five year period will need to consider more complex hybrid systems, or if on gas, look to solar thermalas a practical way to reduce energy use and decarbonise their buildings.

There are a number of available responses and new lower-carbon technologies are under consideration by the government for further support but knowing what is best for your organisation is not always straightforward. Faced with varied building stock, technology options and fluctuating user demands for hot water and heating consulting with Adveco’s expert sales and engineering staff can help you truly understand those needs and the options best suited to your bespoke situation.

Discover more about Adveco’s renewable systems for decarbonising your building hot water and heating.

Fossil Fuels – Their Future In UK Commercial Buildings

The future of fossil fuels is a key issue that needed to be addressed by the government’s Heating & Buildings Strategy report which was published late last year. Statistics (PDF) from the Non-Domestic National Energy Efficiency Data-Framework (ND-NEED) from the Department for Business, Energy, & Industry Strategy (BEIS) defined more than 1,656,000 non-domestic buildings in England and Wales at the end of March 2020. 278,000 or 17% of this building stock is off-gas grid. It is estimated that these non-domestic buildings are responsible for nearly one-fifth of the UK’s carbon emissions, a scenario that will be further exacerbated by a predicted one-third rise in non-domestic floor space by 2050.

A major function of the campaign to Build Back Greener, the report outlines the near and long-term ambitions for phasing out unabated fossil fuels and a transition to low-carbon heat in order to achieve net zero in the UK. The intention is to use ‘natural replacement cycles’ and seek ‘trigger points’ to set long-term expectations within the building sector.

For commercial on-gas-grid buildings, this means putting in place a process to phase out installation of new natural gas boilers from 2035, with a caveat that the costs of investing in low-carbon alternatives have been suitably reduced. To achieve this will require the development of the market for replacement low-carbon sources of heat. The core technology for driving these new markets will be heat pumps, but there is also to be a consideration for other natural gas replacements. By 2026 the government intends consultation to be completed on the case for gas boilers/water heaters to be hydrogen-ready. The process of ‘greening the grid’ is perhaps the most interesting and least disruptive option, improving efficiency and replacing the current supply for those already connected to the gas grid with alternative low-carbon fuels, whether biomethane or hydrogen injection into the gas supply. The government has already committed to enabling the blending of hydrogen in the gas grid (up to 20% volume) and continuing to support the deployment of biomethane through the Green Gas Support Scheme as a method for decarbonising the gas grid.

To support early adopters in the small business space and lure them away from appliances that burn fossil fuels it has been proposed that a new Boiler Upgrade Scheme be launched this year which will support the installation of low-carbon heat pump based heating systems with a payment of £5,000, in line with domestic applications. Given the current additional complexities of commercial systems, with higher temperature demands, this may not be enough to encourage early adoption without the support of higher temperature devices designed specifically to meet commercial DHW demands. To further drive early adoption, the intent is to limit support for the construction of new gas grid connecting heating systems, effective this year. That does not apply to existing legacy structures with a grid-gas connection. Replacement boiler or water heater connections should be, as a minimum, more efficient than those being replaced. This it is proposed will be driven by the application of smart controls and supported by a new Boiler Plus standard that reflects improved efficiency and carbon savings. This should ape conditions set in ERP standards in 2018 for new boilers and emissions set under SAP10. Given that the latest generation of gas-fired condensing boilers and water heaters already greatly exceed the mandated requirements this policy could be seen to be redundant before it ever comes into law.

For the moment if your business uses gas, then you can upgrade to new gas appliances up until 2035, with hydrogen-ready options extending that window well into the 2040s based on current appliance lifespan. If you are considering upgrading a boiler of water heater, you could opt for a natural gas appliance, one that is not considered hydrogen-ready, for at least the next ten years without concerns of breaching new regulations, so long as the new unit is more efficient than the unit being replaced. This provides a safety net while assessing new technology options prior to the 2035 deadline. It would also be well worth considering the implementation of solar thermal preheat for gas-fired systems if you wanted to make sustainability commitments with proven and genuinely renewable technology.

Off-Grid, But Still Being Watched

For the 17% of commercial buildings currently operating off the gas grid, many of which will use LPG variants of boilers or water heaters versus oil, the report proposes phasing out the installation of new fossil fuel heating systems and switching to low-carbon alternatives. Plans would see the introduction of regulations to address large off-gas-grid non-domestic buildings (over 1,000m2) no earlier than 2024, followed by small and medium non-domestic buildings from 2026. Where low-temperature heat pumps cannot be reasonably or practicably accommodated other low-carbon heating options (such as high-temperature heat pumps, and potentially liquid biofuels) may be accepted as an alternative.

The wider aim is to support this near term change with greater investment in heat pump innovation, reducing footprint and making them easier to install. This process is, however, already front and centre for heat pump manufacturers without requesting government support. Better, more efficient, more environmentally and cost-friendly appliances is a clear market driver. At Adveco the recent introduction of the FPi-32 ASHP is a case in point, being extremely compact and better for the environment whilst being more efficient and therefore more cost-effective to operate. Despite being off-grid, potential developments in hydrogen delivery could also be a significant development for the future of fossil fuels, especially in more rural areas, although commercial off-gas grid sites are not uncommon in larger urban areas.

To further encourage this adoption, support for new LPG and oil heating systems could well be refused from this year onwards, with the potential for limited commercial funding support for replacement schemes, depending on scale, coming from the Public Sector Decarbonisation Scheme or the proposed Boiler Upgrade Scheme.

The process of transitioning commercial buildings from fossil fuels to low-carbon will, the report accepts, be gradual. It describes a process similar to the electrification of vehicles, which has depended on a mix of incentives and reducing the cost of entry.

Details of any incentives and clear evidence of where cost reductions are to come from remain hazy. Currently, production and operational costs of heat pumps remain high in comparison to traditional gas appliances that make use of lower-cost fossil fuels. The report, however, anticipates aggressive cost reductions of at least 25-50% by 2025 leading to parity with boilers by 2030. This then anticipates the natural replacement cycles of heating systems throughout the late 2030s and 2040s’ where capital expenditure on low-carbon replacement technology should it believes have lowered substantially. This is why 2035 has been set as the date when all new heating system installations should be low-carbon or hydrogen-ready (at least in those areas where future hydrogen supply has been established) effectively reducing the broad use of fossil fuels across a wide span of the commercial built environment.

New Building Regulations to come into force in June 2022

Under new building regulations, CO2 emissions from new commercial buildings, including offices and shops, must be reduced by 27% under new rules announced by the government to help the country move towards net zero.

In a government statement, which identified that heating and powering buildings accounts for 40% of the UK’s total energy use, the installation of low carbon technology, such as solar panels and heat pumps, was identified as a core opportunity to help cut emissions – “lowering the cost of energy bills and helping deliver the UK’s climate change ambitions.”

All new residential buildings, including care homes, student accommodation and children’s homes, must also be designed to reduce overheating, making sure they are fit for the future and protect the most vulnerable people.

These new Building Regulations, which set the standards in England for the design, construction and alteration of buildings, follow a public consultation and will come into effect from June 2022.

The intent is that the new building regulations will raise standards and will “pave the way for the Future Homes and Buildings Standard in 2025,” which will address making sure new builds are net zero ready, avoiding the need for retrofit.

There will be a six month period before the new regulations come into force on 15 June 2022. Transitional arrangements are in place which means that if a building notice, initial notice, or full plans for building work are submitted to a local authority before 15 June 2022, then provided the building work commences by 15 June 2023, work on that individual building is permitted to continue under the previous standards.

Useful links to the New Building Regulations  

Conservation of Fuel & Power Volume 2: Buildings other than dwellings

Overheating

COP26 – The Impact On Commercial Buildings

COP26 is now well underway with cautious optimism over initial agreements on reducing coal, global methane levels and rates of deforestation. But what does the event mean currently for those focussed on buildings in the commercial sector here in the UK?

Firstly, more than 40 nations representing over 70% of the world’s economy and every region have stated they will commit to ‘turbo-charging’ the uptake of clean technologies by imposing worldwide standards and policies at COP26. The five sectors that the plan will cover at first are steel, road transport, agriculture, hydrogen, and electricity, with the intent of encouraging global private investment in low-carbon technologies. The aim is to draw in trillions of dollars in private finance for cutting emissions, and businesses seeking to export into the EU must reach the same standards, so we can expect this to strongly impact the UK.

The Treasury has also outlined at COP26 new sustainability disclosure requirements (SDR) for large UK businesses. Under these new Treasury rules, financial institutions and companies with shares listed on the London Stock Exchange must come up with net-zero transition plans, which will be published from 2023. These net zero transition plans and sustainability claims must be ‘clearly’ justified to set a science-based ‘gold standard’. The government will set up a Transition Plan Taskforce of industry leaders, academics, regulators and civil society groups. The strategies will need to include targets to reduce greenhouse gas emissions, and steps that firms intend to take to get there. However, the government has admitted there is “not yet a commonly agreed standard for what a good quality transition plan looks like”, and the UK was not “making firm-level net zero commitments mandatory”.

450 firms managing banks, insurers and pension funds controlling 40% of global financial assets – equivalent to £95tn – have though aligned themselves to limit global warming to 1.5C above pre-industrial levels. Such private investment in green technologies over brown investments is vital in the march towards net zero by 2050. An example of this was the announced “Breakthrough Energy Catalyst” programme at COP26, which aims to raise up to $30bn of investments and bring down costs for ‘green’ hydrogen, direct air capture of CO² and long-duration energy storage.

But there still remain unanswered questions over what government support for the commercial sector is going to look like, and when it will materialise?  Non-mandatory regulation changes and dependence on private finance to green economic trajectory in the hope that businesses will decarbonise of their own accord remains questionable, especially outside the realms of big business.

At the start of 2021, there were 5.5 million small businesses that account for 99.9% of the business population (5.6 million businesses) in the UK according to the National Federation of Self Employed & Small Businesses. These companies’ buildings continue to generate a considerable proportion of UK emissions, so further support for them is critical. In the coming week, delegations will try to further raise awareness of the need for greater support if building emissions are to be successfully addressed.

Efforts to achieve large scale decarbonisation of buildings have focussed on new builds and recognising a building’s full lifecycle in terms of its carbon cost. But consider this, 97% of EU buildings are in need of renovation, so tackling existing properties must be addressed, only then can a more holistic carbon plan be put in place to support commercial properties to be more energy-efficient and able to support low carbon hot water and heating. This would not only address issues of embodied and emissive carbon but could help reduce air pollution and contaminants that, according to the World Health Organisation (WHO), contribute to the deaths of 120,000 Europeans a year. This issue is raised in an open letter to those attending COP26 from trade bodies that include the European Heat Pump Association amongst others, calling for action on appropriate air quality, thermal comfort, control and automation systems within buildings.

Read about how Adveco can help support your business to improve the sustainability of its’ buildings through our range of low carbon and renewable hot water applications.

Heat & Buildings Strategy – Commercial Properties

After much delay, the Government this week has published its long-awaited  Heat & Buildings Strategy guide to take the UK towards net zero by 2050. The bulk of the reporting following its release has focused on grants for domestic heat pumps and observation of considerable funding for public sector building projects. But what about the commercial sector? Today we take a deeper dive into the documentation and highlight what this means for those operating commercial buildings.

The Government’s commercial Heat & Buildings element of the  report clearly states the scale of impact commercial and industrial building stock has on the environment, with around 1.5 million commercial and industrial buildings accounting for “around one-third of UK emissions from the total building stock.” The report states that reducing carbon emissions from these buildings will therefore be key to:

  • Meeting the 2017 Clean Growth Strategy ambition to enable businesses to reduce energy use by at least 20% by 2030, which would save businesses £6 billion per year on energy bills
  • Achieving our Nationally Determined Contribution of a 68% reduction in greenhouse gas emissions (compared to 1990 levels) by 2030
  • Meeting the Government’s carbon budgets
  • Delivering Net Zero by 2050

The demands are clear then, but how is this to be achieved?

Regulating For Intensive Energy Use

The impetus for commercial organisations, as set out by the strategy, is the substantial savings on energy bills, and the creation of safer and healthier working environments. The provision of safer and healthier workplaces should already be enshrined in corporate policy, and reducing operational costs is clearly logical, but it is safe to say that current generation low carbon technology and direct electric, certainly when it comes to domestic hot water (DHW) provision is more expensive than gas-based systems. So, the onus is really going to be one of corporate social responsibility in the near term.

The strategy report does recognise the complexity of the sector, pointing out the huge variety across the commercial and industrial building stock in terms of business size, building size (by floor area), use, and tenure

The policy package laid out therefore aims to avoid a “one-size-fits-all approach.” These policies, unlike previous grant packages, will instead be based upon regulatory frameworks “tailored to the size of the building and the businesses operating in that building, function and energy use of commercial and industrial buildings.”

Large Commercial buildings

The report identifies commercial and industrial buildings (above 1,000m²) as the most intensive users of energy commercially, accounting for 64% of the energy consumed by non-domestic buildings in England and Wales, despite only accounting for around 7% of the stock. The government is proposing to introduce a mandatory regulatory requirement for these buildings to obtain a performance-based energy rating based on measured energy data. This will ensure building users are aware of their energy use and where they are on their trajectory to becoming a Net Zero compatible building.

The process to decarbonise heat sources needs to happen through the 2020s. As such, this performance-based framework will work alongside proposals to prohibit new fossil fuel installations in large commercial and industrial buildings which are not connected to the gas grid.

If your business operates in a building over 1,000m2, the Government’s proposed performance-based energy rating will recognise measured reductions in actual energy use and carbon emissions. Accurate metering of usage and data assessment is going to become a necessity if all the factors influencing building performance are to be understood. The strategy believes this approach will help “optimise existing services and systems, drive behavioural changes, and see installations of improved equipment or investment in the building’s fabric efficiency or low-carbon heat.” The proposal would require building owners and tenants to obtain and publicly disclose a rating on an annual basis.

The strategy paper proposes a phased roll-out, starting with commercial offices in England and Wales. The government’s proposal is to use the performance-based approach to set sector-by-sector energy reduction targets which will be in line with the reductions required to meet Government carbon budgets.

These mandated regulations are said to “recognise and reward” actual improvements in energy and carbon performance for the first time.  How businesses will be rewarded, beyond suggested energy savings remains to be seen. Mandated annual publication of investment in energy reduction will almost certainly be used by third-party organisations with climate change manifestos to hold businesses to account in a very public forum.

Evolving The Energy Savings Opportunity Scheme

The strategy document also highlighted the UK-wide Energy Savings Opportunity Scheme (ESOS), which currently requires large businesses to measure their total energy consumption every four years. This process requires an audit covering energy use from buildings, transport and industrial processes. ESOS recommends practicable and cost-effective energy efficiency measures for saving energy in an organisation’s buildings.

A consultation on ESOS has just closed, with the intent of increasing the number of participants that take action to reduce energy use. Considerations for lowering the threshold for ESOS audit to smaller businesses are being considered, but that is likely to be a post-2023 decision for the 2027 iteration of ESOS. That would address loopholes in the system, with larger organisations arranging building stock under separate small businesses, such as care homes, enabling them to currently avoid ESOS audit.

Those auditing and being audited for ESOS (public sector organisations be exempt) have pointed out the current lack of Net Zero commitment in the current version of ESOS, with 5-10% using the ISO50001 instead. So greater consistency is required moving forward. The concern is that large businesses are not doing all they can at the moment, and are not taking the recommended changes ESOS provides forward, even though they clearly show savings for the business.

ESOS splits peoples’ views, it either being an obligation or an opportunity. The government’s heating and buildings strategy is to use ESOS to increase the carbon and cost savings by extending the number and scope of recommendations taken up by participants. These new, stronger standards, which many hope will deliver greater consistency of audit and streamline carbon reporting would be introduced by 2022 for reporting in 2023. To be successful ESOS needs to demonstrate that the energy efficiency recommendations to businesses do translate to the cost savings the Government is suggesting in the Heat & Buildings strategy. Otherwise, the system threatens to become a burden to commercial organisations.

Smaller Commercial Businesses & Buildings

With smaller commercial and industrial organisations using far less energy per building (17% of all the energy used by commercial and industrial buildings in England and Wales), the onus falls to building owners and businesses to understand and optimise their energy performance, but currently without same need for government regulation. While SMEs can significantly benefit from improving the energy performance of their buildings by decarbonisation, the strategy on heat and buildings recognises that they may struggle to invest due to high capital costs.

BEIS is considering policy approaches to this segment of the non-domestic building stock, including whether to adopt minimum energy efficiency standards similar to the private-rented sector approach. Consultation on owner-occupied buildings is set to conclude by the end of this year.  Long-dated regulatory targets based on the EPC, which requires building owners to invest in the quality of their building’s fabric and services, will be introduced for the 2020s.

Landlords of privately-rented commercial and industrial buildings need to improve their buildings to EPC band B by 2030. The caveat to this policy is that it applies “where cost-effective” and this has significant implementation issues that need to be addressed if the policy is going to be a success. The Government still needs to confirm the enforcement processes but believes this approach will potentially save businesses around £1 billion per year in energy costs by 2030. An equivalent long-dated regulatory target is being considered for owner-occupied commercial and industrial buildings. Consultation on both aspects is to take place in early 2022.

The Government Heat & Buildings strategy document states that “If you are a small or medium-sized business, we plan to provide support to help your buildings become more energy-efficient and adopt low-carbon heat.” The nature of this support remains unclear, previously the government has made funds available through grants and development schemes. At this time there has been no announcement of any such replacement programmes in the near term for commercial operations.

For advice, application design and supply of low carbon options for commercial hot water please speak to Adveco.