Decentralisation Issues: The Economic Value and Carbon Dioxide Emission Implications of Community Heating Network versus Micro Combined Heat and Power Energy Provision in the UK

Adam Hawkes and Matthew Leach, Imperial College

Community heating (CH) provides a potentially economic and efficient means of supplying heat to a number of buildings.  It has been a successful method of integrating high-efficiency fuel-flexible combined heat and power (CHP) in the energy supply system in countries such as the Netherlands and Denmark, and is attracting renewed interest in the UK.  This paper compares the cost and carbon dioxide emissions of meeting energy demand for a group of residential dwellings using three different methods of delivery; conventional, separated production of electricity and heat (i.e. grid electricity and household boilers), residential micro-CHP, or a single large CHP generator combined with a CH system.  As capital costs of CH distribution systems are highly scheme dependent, the analysis focuses first on modelling difference in annualised costs (operating cost plus annualised generating equipment cost) between the three options without adding the cost of the CH system. This allows identification of the ‘break-even’ capital cost for the CH system (i.e. the capital investment for the CH system that results in its total net present cost being equal to the assumed do-minimum case).  These figures are compared to the estimates of CH system capital costs found in the literature, and comment is made regarding the relative merits of different routes to meeting the energy demands.  Sensitivity analysis is performed on prices to provide a broader picture of possible outcomes.