Delivery and Site Allocations DPD – Evidence to Support ... and Site Allocations DPD – Evidence to Support Sustainable Construction ... FEED–IN-TARIFF AND RENEWABLE HEAT INCENTIVE

Delivery and Site Allocations DPD –

Evidence to Support Sustainable

Construction

Volume 1: Percentage Energy Requirement

A Report to Wycombe District Council

Final Report

March 2010

2 of 89

3 of 89

Table of Contents

EXECUTIVE SUMMARY 5

1 Introduction 12

2 Background 13

3 Methodology and Approach 16

INTRODUCTION 16

PRICE SCENARIOS 18

ASSUMPTIONS 19

FEED–IN-TARIFF AND RENEWABLE HEAT INCENTIVE 20

4 Case Studies 23

INTRODUCTION 23

CRESSEX ROAD 24

CASTLE STREET 33

TERRIERS SCHOOL 40

ERCOL SITE, PRINCES RISBOROUGH 49

5 The Code for Sustainable Homes (CSH) 57

6 Market Issues 59

7 Summary and Conclusions 63

RECOMMENDATIONS 70

8 Appendix A – Technologies 72

BIOMASS HEATING 72

GROUND SOURCE HEAT PUMPS 74

AIR SOURCE HEAT PUMPS 76

SOLAR PHOTOVOLTAICS 77

SOLAR THERMAL 78

BUILDING MOUNTED WIND TURBINES 80

FREE-STANDING WIND TURBINES 81

9 Appendix B – Market survey 83

10 Appendix C – Cash flow analysis for case studies 85

4 of 89

5 of 89

Executive Summary

The Blewburton Partnership (BBP) has been commissioned to provide an assessment of

the viability of the inclusion of a required percentage of energy to be sourced from on-site

low and zero carbon energy technologies (LZCs). This follows the introduction of a

requirement for 10% of site energy demand to come from LZCs in 2009 and a

consultation on extending the requirement to 15% of energy demand, with the possibility

of further extensions in the future as the Code level required increases and the target date

for all new homes to be zero carbon approaches.

The key objective of the work is to provide an evidence base to support a proposed

increase in the requirement for new developments to source 10% of energy from LZCs to

15% and for further potential increases to 20% and 25%. The approach is to use case

studies of actual consented projects selected by the client from within the WDC area.

The data available is that which was supplied on application for planning consent. In

each case the following approach is taken, which reflects that which is taken by

developers in identifying the best solution and the evidence that is required to

demonstrate compliance:

1. Assess energy demand – the energy demand for each unit is assessed using

recognised benchmark figures published by Energy Saving Trust (EST), as

recommended in the London Renewables Toolkit, and, for the commercial site

and locations, the benchmark figures published by CIBSE

2. Calculate the renewable/low carbon technology requirement – in each case

the amount of energy required to meet a 10%, 15%, 20% and 25% contribution to

annual site energy demand will be calculated

3. Review the technical potential for each of the following technologies (where

applicable) to meet the calculated requirement:

a. Solar photovoltaics

b. Solar thermal

c. Air source and ground source heat pumps

d. Biomass

e. Wind

4. Examine the potential for combinations of technologies (where appropriate)

to meet the requirement – the use of combinations of technologies can be the

optimal solution

5. Identify optimal solution for each % requirement

6. Assess financial viability

The case studies provided by the council are:

• Backland residential development – 155-161 Cressex Road, High Wycombe, a

development of 22 new homes including a block of 6 flats

6 of 89

• High density flatted scheme with A1/A3 provision and underground car park –

Edric House, Castle Street, High Wycombe, a development of 24 flats and 2 retail

units

• Suburban scheme – Terriers School, High Wycombe, a sizeable development of

59 residential units comprising 10 flats, 1 detached house, 30 semi-detached

houses and 18 terraced houses

• Commercial scheme – Ercol Estate, Princes Risborough, a mixed development of

office, warehousing and light industrial units, in 5 blocks totalling 7766m2 of

floor-space.

Percentage energy requirement viability

The analysis of the case studies demonstrates that when a requirement is expressed in

terms of securing a reduction in energy demand through the use of renewable and low

carbon technologies the least cost solution will almost invariably be to install Air Source

Heat Pumps in however many units are required. As well as being the least costly

solution ASHP technology offers a number of other advantages:

• Ease of installation;

• Easily maintained;

• May qualify for the Renewable Heat Incentive;

• Works very well in highly insulated and airtight homes particularly in conjunction

with mechanical heat recovery ventilation systems; and

• Removes the need to connect to the gas grid.

However, there are, needless to say, some disadvantages;

• Slightly higher running costs than gas fired heating, except in large units;

• Will not qualify for CSH ENE 7 credits;

• Take up space on outside which can be seen as a disadvantage if outside space is

limited; and

• Perception that they are noisy.

The introduction of the RHI would be a very effective measure in removing the cost

disadvantage for ASHP systems. As shown in the financial analysis the RHI improves

the viability to the extent that ASHP should be preferred over gas on the basis of

economics.

The second choice would typically be solar thermal technology, however this is generally

only able to meet a 10% or possibly a 15% energy reduction requirement. The RHI has a

dramatic effect on the economics of solar thermal technology, as can be seen in the

Cressex Road analysis, generating rates of return of over 13%. For non-domestic sites,

this technology will only be a choice if a large hot water demand exists.

Biomass would meet the target in all cases but is expensive and presents operational and

maintenance challenges that make it largely unsuitable for urban or sub-urban residential

7 of 89

development. It would however, be suitable for commercial sites and for rural sites,

particularly where there is no access to the gas network.

Solar PV is too expensive to be considered for meeting an energy requirement, although

it must be recognised that prices for this technology have fallen quite dramatically in the

past 24 months. The introduction of the FIT will be of particular benefit to the economic

viability of PV but only if its benefits are factored into the sales price enabling the

developer to recover costs.

Carbon requirement

Changing the requirement from one expressed in terms of securing a reduction in energy

demand to one expressed in terms of securing a reduction in carbon emissions would

have a significant effect particularly on the technology choices in residential

developments. These are:

• Heat Pumps would no longer be able to qualify except ground source in

substantial sized properties;

• The available choices would largely be limited to solar PV and biomass;

• Both solar PV and biomass are expensive solutions and have other viability

issues:

o Biomass systems require additional space for plant and fuel storage which

runs counter to the trend for new homes being smaller

o PV can be considered to have a negative visual impact, although this is

subjective

In the case of non-residential developments, requirements in excess of 10% can be

challenging and even impossible to achieve through installation of LZC technology as an

isolated solution. In most cases the energy use in commercial units largely comprises

electricity, in order to offset sufficient electricity substantial PV or wind capacity would

be required, which have space implications for PV and acceptability issues for wind

turbines.

Viability

The study demonstrates the viability of the least cost solution from the viewpoint of the

developer. The key measures are cost as a % of the build cost and NPV and IRR. In all

cases the cost as a % of build cost is less than 5%. Table 1 below shows the costs as a %

of build costs. A small survey of developers suggests that it is possible to absorb this

level of additional cost.

% Energy

Requirement

Cressex Road Castle Street Terriers

School

Ercol Site

10 1.59 1.4 0.9 0.09

15 2.39 2.4 1.4 1.3

8 of 89

20 3.18 3.1 2.1 1.46

25 3.72 4.4 2.8 1.82

Table 1 Cost of Meeting each % Requirement as a % of Build Cost

The NPV measures the value of the alternative solution against the conventional gas

fired/mains electricity solution over the lifetime of the equipment. A positive or zero

NPV indicates that the alternative solution is either better than or equal to the

conventional solution. The least cost solution in each case proved to be the installation of

ASHP systems. These resulted in a negative NPV indicating that the cost over the

lifetime would be greater than for a gas fired system. This means that running costs for

occupiers would be more implying that the developer would not be able to recover the

costs in the selling price. However, in the current market, the developer is not able to

recover additional costs due to the lack of knowledge and understanding of the

technologies involved, so a developer will continue to select the least cost option until the

market is able to factor in the value of such investments.

If the RHI is introduced as proposed the ASHP system will become less expensive to run

that gas.

The Code for Sustainable Homes (CSH)

The reduction of carbon emissions is a key element of the Code for Sustainable Homes

and features specifically in two credit issues, ENE 1 and ENE 7. ENE 2 which rewards

good thermal performance is clearly related.

The requirements under ENE 1 for CSH Level 3 compliance can often lead to a similar

result as the requirements for the inclusion of LZCs to meet a 10% energy target and at

Level 4, this will be higher, around the 15-20% mark. However, this category (ENE 1) is

an overall carbon target, not an energy target, so this is more by accident than design.

What this means in terms of WDC’s current energy target and the policy requiring a

minimum CSH level to be achieved is that conditioning a development to achieve a

certain overall CSH level, or specifying a specific level to attain for the ENE 1 category

(be it Level 3, 4, or in the middle), secures the commitment on the part of the developer at

an early stage to consider energy issues and will almost certainly ensure the use of LZC

technology to a level WDC deem suitable.

If the desire is to move to a carbon based approach tied to the CSH policy, then the

simplest option is to condition the attainment of the ENE 7 credits to the 10% or 15%

options available under the CSH. To go beyond these targets could also be stipulated as

the CSH software will demonstrate compliance, but no additional credits will be available

to the developer.

Percentage Carbon or Energy – the pros and cons

The policy to require a percentage of energy demand arising from new developments to

be sourced from on-site renewable or low carbon technologies was a ground breaking

development in the local planning arena. First introduced in Merton in 2003, it quickly

9 of 89

spread throughout numerous local authorities keen to improve the sustainability of new

construction.

As energy policy focused increasingly on carbon, many local authorities changed the

requirement from a % of energy demand, to a % reduction in carbon emissions to be

achieved through the use of renewable or low carbon technologies. Over the same period

other policy instruments have been introduced or are in the process of being introduced

which aim to achieve the same or a similar result, in particular, the introduction of the

Code for Sustainable Homes and feed in tariffs. As such, it is becoming questionable

whether or not any policy of this nature continues to be necessary.

It is the case however that, the programme of CSH introduction, particularly into private

housing and into non-residential development is such that little progress will be made

regarding the uptake of renewable and low carbon technologies in the short to medium

term. This is the most compelling argument for retaining a separate target in either

carbon or energy demand terms

This being the case, policy makers need to determine whether the appropriate measure

should be expressed in terms of carbon or energy demand as currently specified by WDC.

The analysis conducted here helps to shed some light on the advantages and

disadvantages of each approach.

Meeting a carbon target is more challenging and more expensive than meeting a %

energy requirement. The difference increases as the % requirement increases. For

example in many cases a 10% carbon or energy requirement will be able to be met using

solar thermal, a 15% energy requirement can be met using ASHP as the least cost

solution but a 15% carbon target will require the developer to consider the much more

expensive solar PV or biomass options. As the % carbon requirement increases the

technical viability becomes increasingly a matter of the availability of sufficient

roofspace for PV and storage space for biomass fuel. In the future, as district heating,

CHP with private wires networks and even individual single unit CHP units become more

widespread, meeting a carbon target will become easier to achieve. Since the political,

financial and managerial structures are not sufficiently mature in the UK to facilitate this

development in the short to medium term it is our opinion that a high carbon target

unfairly penalises the developer.

The reason why a carbon target is more difficult is because grid electricity is currently

very carbon intensive, since most new dwellings are heated using gas in efficient heating

systems the scope to reduce carbon emissions by offsetting gas is limited, and small in

comparison with the carbon associated with electricity used for lighting and appliances.

As generation from large scale renewable and nuclear stations increases in line with

government targets the carbon intensity of grid electricity will be reduced. However,

with targets of 20% of electricity generation to be from renewable by 2020, this will take

a considerable time to take effect. Nevertheless, it could be argued that since buildings

constructed today will continue to be in use long after this, a reduction in energy use

rather than carbon, secures carbon reductions over the longer period, since there is

unlikely to be the same improvement in the carbon intensity of gas.

10 of 89

Advantages Disadvantages

Carbon • Consistent with CSH and to

some extent BREEAM

• Renders the use of heat pumps

largely redundant until

national grid electricity

becomes significantly less

carbon intensive – this is an

advantage as they are more

expensive to run compared to

gas heating systems (until RHI

begins, so not helping end-

user)

• Will focus developers more on

achieving energy efficiency,

will normally be built in for

the lifetime of the building

• More difficult to achieve so carbon

targets need to be specified more

conservatively than energy targets

• Reduces the technology options

available to the developer, unless

they really focus on energy

efficiency first

• Technology options are generally

the more expensive for developers

at current time, but this may change

in future

• Will create a more challenging

regime for planning as the focus in

the short to medium term will be on

solar PV and biomass, which has

aesthetic and other considerations

Energy • Offers a broader mix of

technologies that comply

• Easier to achieve for

developers – so could set

higher target

• Easier policy for developers to

demonstrate compliance with

and for planning officers to

administer

• Not consistent with CSH, BREEAM

or the general run of wider policy,

which is aimed at carbon savings

• Favours heat pumps – which are

more expensive to run, but do not

deliver significant carbon savings at

moment

• Puts the focus on to bolt-on

solutions which may have a lifespan

significantly lower than that of the

building they serve

Recommendations

Further development of the WBC’s policy in this area concerns two key elements:

• Whether to continue with a requirement expressed in terms of energy generation

or in carbon reduction; and

• Determining the appropriate level at which to set the requirement.

11 of 89

In consideration of these elements a number of factors need to be taken into account:

• The role of other policy instruments – CSH, Building Regulations and ensuring

consistency with while avoiding duplication;

• Ensuring that energy efficiency is given priority;

• Ensuring that any requirement is viable; and

• Being mindful of the future development of national policy.

It is recommended that the council considers imposing a carbon based requirement which

will be more in line with all other policy instruments but is careful not to set a

requirement that is too onerous. A level of 10% or 15% would represent an increase over

the current 10% energy requirement, would be consistent with the CSH ENE 7 category,

and should be viable for developers. A 15% carbon target will be significantly more

difficult than a 15% energy target yet remains within the limits of viability in most cases.

12 of 89

1 Introduction

1.1 The Blewburton Partnership (BBP) has been commissioned to provide an

assessment of the viability of the inclusion of a required percentage of energy to be

sourced from on-site low/zero carbon energy technologies (LZCs). This follows the

introduction of a requirement for 10% of site energy demand to come from LZCs in 2009

and a consultation on extending the requirement to 15% of energy demand, with the

possibility of further extensions in the future as the Code level required increases and the

target date for all new homes to be zero carbon approaches.

1.2 The requirements of the study as specified in the brief are:

• To provide an assessment of the financial viability of renewable across a range of

different sites, including a range of renewable levels;

• To identify the carbon savings that would be delivered in relation to varying

levels of renewable and an assessment against current day costs;

• To identify the likely future costs to developers reflecting changes introduced as a

result of the feed-in-tariff for electricity and heat generation;

• An assessment of the case for carbon emissions instead of renewable targets.

1.3 The DSA DPD provides detailed information on how the Council will implement

the policies it has in place in relation to specific sites and development areas. The

evidence base developed in this study will inform the planning policy and assist in the

evaluation of proposals.

1.4 This document sets out BBP’s findings and is set out as follows:

• Section 2 – sets out the background to the policy

• Section 3 – Sets out the methodology and approach to the analysis

• Section 4 – Sets out the analysis of the case studies

• Section 5 – Discusses market issues

• Section 6 – Summary and conclusions

13 of 89

2 Background

2.1 The council is planning to build on its current policy to improve the sustainability

of construction within the district, in response to requirements set at a national and

regional level. The focal point of these initiatives has been to put in place measures that

will ensure that the UK meets its legally binding Kyoto target of reducing greenhouse gas

emissions to 12.5% below 1990 levels.

2.2 Policy at a national level has been constantly evolving, with arguably, the most

significant first step being the publication of the Climate Change programme in 2000,

which set out how emissions reductions could be achieved across all sectors of the

economy. This document was reviewed in 2004 and has resulted in a steady stream of

legislation, regulatory instruments and market incentives aimed at delivering the

identified emissions reduction. While policy aimed first at the energy supply industry

and the energy intensive industries it has become increasingly focussed on less intensive

activities which nevertheless account for large proportions of the UK emissions of

greenhouse gases. These include the use of energy in buildings, residential and non-

residential, existing and new-build.

2.3 The momentum gathered pace with the passing of the Climate Change Act in 2008

which imposed the requirement for carbon budgets to be set, monitored and reported on,

and the establishment of the Department for Energy and Climate Change, a key

administrative measure bringing together the responsibility for secure, diverse and

affordable energy with the most serious environmental impact of energy use, Climate

Change. Most recently the government has published the Low Carbon Transition Plan

which sets out in some detail how reductions of over 30% over 1990 levels will be

achieved by 2020. Hence, although the plans to set legally binding international targets

for the post Kyoto period did not come to fruition at the 2009 Copenhagen Climate

Change Summit as was hoped, the UK Government is continuing to progress the drive to

a low carbon economy.

2.4 In the case of buildings the measures implemented are largely aimed at meeting the

requirements of the EU Energy Performance in Buildings Directive (EPBD).

2.5 Measures introduced have included the requirement for Energy Performance

Certificates (EPCs), and Display Energy Certificates (DECs) to be provided for public

buildings, all new buildings to meet increasingly stringent emissions standards and the

target for all new homes to be zero carbon by 2016. The government has introduced the

Code for Sustainable Homes (CSH) which, together with Part L of the Building

Regulations, is to be its chief mechanism for delivering the zero carbon home policy.

2.6 The role of spatial planning is seen as pivotal in addressing climate change and the

means to control it. PPS1 ‘Delivering Sustainable Development’ and its supplement

‘Planning and Climate Change’, sets out clearly the government’s view that planning has

14 of 89

a central role to play in delivering its sustainability and climate change objectives.

Mitigating climate change is required to be integral to planning policies at a regional and

local level. In addition, PPS 22, ‘Renewable Energy’, states that planning policies should

seek to encourage and promote the take-up of renewable energy technologies, this

includes large scale developments and smaller, on-site energy projects. These documents

set the context for WDC’s approach to reducing emissions through the use of renewable

technologies.

2.7 This momentum has been reflected in policy development at regional and local

level. In the South East the South East Plan sets a target for the region to reduce carbon

emissions by 20% below 1990 levels by 2010 and at least 25% by 2015 and 80% by

2050. The Plan identifies targets for local authorities and sets out guidance for the setting

of local targets with respect to a requirement for new developments to source a

proportion of energy from decentralised and low carbon technologies.

2.8 It is against this background that Wycombe District Council has adopted a SPD

which extends the target of 10% renewable provision in major residential and commercial

developments set in the South East Plan to minor applications as well.

Wycombe District Council Policies

2.9 In 2009 Wycombe District Council (WDC) adopted a SPD entitled, ‘Living within

our Limits: Reducing the Environmental Footprint of New Development in the Wycombe

District.’ This document sets out the key polices relating to the energy and overall

sustainability requirements of new build. It links to, and practically implements, Policy

NRM11 of the South-East Plan and the adopted WDC Core Strategy policy CS18, both of

which refer to the setting of energy targets for new development.

2.10 Core Strategy Policy CS18 seeks to minimise waste and encourage recycling,

conserve natural resources and avoid pollution. As part of this policy the council requires

developments to contribute towards the goal of reaching zero-carbon developments as

soon as possible by:

• Including appropriate on-site renewable energy features and;

• Minimising energy consumption by measures including the use and appropriate

layout an orientation, building form, design and construction, and design to take

account of microclimate.

2.11 The draft Delivery and Site Allocations DPD currently under development seeks to

formalise and strengthen these requirements.

2.12 Annex 1 of ‘Living within our Limits’ states that all residential development of 10

units or more and non-residential development of over 1,000m² must include at least 10%

of their annual energy supply from a de-centralised and renewable or low-carbon sources

such as CHP. Compliance with this policy will be demonstrated through the provision of

an energy statement to be included with or within the Design & Access statement

submitted as part of the planning application process.

15 of 89

2.13 Annex 1 of ‘Living within our Limits’ goes on to state that it is ‘desirable’ that all

residential development of under 10 units and non-residential development of under

1,000m² must include at least 10% of their annual energy supply from a de-centralised

and renewable or low-carbon sources such as CHP. Again, compliance would be

demonstrated through the provision of an energy statement at the planning application

stage.

2.14 With regard to the CSH and BREEAM requirements, Annex 1 of ‘Living within

our Limits’ states that all residential development of 10 units or more must achieve a

CSH Level 3 rating (increasing to a Level 4 rating after 2013) and non-residential

development of over 1,000m² must achieve a ‘Very Good’ rating. Compliance with the

CSH will be shown through submission of a post-completion certification demonstrating

CSH Level 3, or above, before occupation of the building, in accordance with the

planning permission and for BREEAM registered schemes, a BRE quality assurance

certificate stating the design has been assessed as meeting a ‘Very Good’ or above

standard of BREEAM at the planning application stage, to be followed by a certificate

post completion, before occupation, stating that the building has met the respective ‘Very

Good’ or above, standard required, in accordance with the planning consent. For minor

residential development of under 10 units and non-residential development of under

1,000m² the CSH and BREEAM targets are the same, but only deemed ‘desirable’, not

mandatory. Verification under the CSH is the same as described above for mandatory

sized developments, but slightly relaxed for BREEAM schemes as only BREEAM

certificate as evidence of registration of the building design on the BREEAM database is

required at the application stage.

16 of 89

3 Methodology and Approach

Introduction

3.1 The key objective of the work is to provide an evidence base to support a proposed

increase in the requirement for new developments to source 10% of energy from LZCs to

15% and for further potential increases to 20% and 25%. The approach is to use case

studies of actual consented projects selected by the client from within the WDC area.

The data available is that which was supplied on application for planning consent. In

each case the following approach is taken, which reflects that which is taken by

developers in identifying the best solution and the evidence that is required to

demonstrate compliance:

7. Assess energy demand – the energy demand for each unit is assessed using

recognised benchmark figures published by Energy Saving Trust (EST), as

recommended in the London Renewables Toolkit, and, for the commercial site

and locations, the benchmark figures published by CIBSE

8. Calculate the renewable/low carbon technology requirement – in each case

the amount of energy required to meet a 10%, 15%, 20% and 25% contribution to

annual site energy demand will be calculated

9. Review the technical potential for each of the following technologies (where

applicable) to meet the calculated requirement:

a. Solar photovoltaics

b. Solar thermal

c. Air source and ground source heat pumps

d. Biomass

e. Wind

10. Examine the potential for combinations of technologies (where appropriate)

to meet the requirement – the use of combinations of technologies can be the

optimal solution

11. Identify optimal solution for each % requirement

12. Assess financial viability

3.2 In each case the resulting preferred solution will take into consideration a range of

indicators as well as technical feasibility:

• Aesthetics

• Operational and maintenance requirements

• Land use implications

• Noise

• Financial viability

• Local emissions

3.3 The case studies provided by the council are:

17 of 89

• Backland residential development – 155-161 Cressex Road, High Wycombe, a

development of 22 new homes including a block of 6 flats

• High density flatted scheme with A1/A3 provision and underground car park –

Edric House, Castle Street, High Wycombe, a development of 24 flats and 2 retail

units

• Suburban scheme – Terriers School, High Wycombe, a sizeable development of

59 residential units comprising 10 flats, 1 detached house, 30 semi-detached

houses and 18 terraced houses

• Commercial scheme – Ercol Estate, Princes Risborough, a mixed development of

office, warehousing and light industrial units, in 5 blocks totalling 7766m2 of

floor-space.

Viability

3.4 The analysis outlined above results in the identification of a recommended solution

on the basis firstly, of technical feasibility, with those that are not deemed technically

suitable for the site discounted at an early stage, and secondly, on cost to the developer.

3.5 While each of these indicators is important many are, to some extent, intangible,

namely the aesthetic, land use and noise implications. In these cases advantages and

disadvantages are highlighted and guidelines provided for assessment.

3.6 Financial viability is assessed using the following methodology:

• Identify the costs of the identified solution

• Calculate the additional costs of the solution over what would have been in place

without the % requirement

• Assess the Internal Rate of Return (IRR) and Net Present Value (NPV) at 3.5%

discount rate of each solution

• Assess the additional cost as a proportion of the total build cost

3.7 The two key measures of viability are the IRR and the NPV. These are standard

measures of the value of an investment. The NPV is the sum of all future cash flows – in

this case cost savings/increases as a result of the investment compared to the conventional

gas fired option – minus the initial investment – in this case the additional cost over the

cost of a conventional system. The NPV is discounted to reflect the time value of money,

to the extent that money in hand today is worth more than the prospect of money in the

future. The choice of discount rate is the subject of much debate, however it is generally

accepted that for the public sector the Treasury Rate as published in the Green Book is

appropriate. The current treasury rate is 3.5%.

3.8 The NPV is generally used in comparing investments where capital is rationed –

those with the highest value are likely to be developed first. Unlike the IRR it provides a

measure of the size of project as well as its profitability. In the analysis undertaken here

the NPV is used to compare the lifetime costs of the solution required to meet the

condition with the solution that would be otherwise adopted, that is a conventional gas

18 of 89

fired heating system and mains grid electricity. This gives an indication of the additional

cost or benefits to the developer and the occupier.

3.9 The IRR is the discount rate at which the NPV returned is zero, many investors will

set a hurdle IRR which has to be achieved before an investment is considered. It

measures the profitability of a project but does not indicate its size or overall value. It

could loosely be described as the interest rate at which the investor would be unable to

decide between investing in the project or leaving the money in the bank.

3.10 In broad terms a solution will be deemed to be viable where there is a positive net

present value and therefore a positive IRR. A positive NPV and IRR indicate that

payback is achieved within the lifetime of the investment. It is generally felt that if

payback is achieved within the lifetime of the device it is financially viable. However,

while this may be the case when the investor (i.e. the developer) is also the beneficiary of

the returns, it is not necessarily so when the investor receives no benefit from the initial

outlay. If the NPV is positive then a rational house purchaser should be prepared to pay

more for the home than they would if it did not have the LZC technology included. If

the NPV returned is negative then it is more costly over its lifetime than the alternative

solution. In the case of LZC technologies on new homes this would mean that a rational

purchaser would expect to pay less than for a home without it.

3.11 Consequently, in assessing the financial viability it is essential to identify where the

burden of cost falls and where the benefits are received. In most cases a developer will

bear the cost but the benefit will be received by the resident in the form of reduced energy

costs. The viability for the developer will then depend on the extent to which the costs

can be absorbed in the build cost and the extent to which it can pass on the cost to the

purchaser or even back to the land seller. This issue is considered in Section 6, Market

Issues.

3.12 This analysis is only concerned with the financial impact of the additional cost on

the developer and the occupier and does not address the value that an occupier or the

wider community places on measures that reduce harm to the environment.

Price Scenarios

3.13 The financial analysis is undertaken under two price scenarios. The first assumes

that prices remain at the current level in real terms with electricity at £0.12/kWh and gas

at £0.03/kWh. The second scenario assumes that prices rise throughout the period at a

steadily increasing rate – between 3% and 7% per year in real terms. The rising prices

scenario anticipates rising costs of fossil fuels perhaps brought about by the introduction

of market mechanisms to reduce carbon emissions or by increasing pressure on supplies

in world markets. Rising real energy prices have been a feature of the economy over the

past decade. The use of a rising price scenario provides an illustration of the impact

rising prices can have on the value of measures taken where viability is heavily

dependent on the price of energy in the future. The price scenarios are shown in Figure 1

below.

19 of 89

0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21

£/k

Wh

Price scenarios

Flat Prices - electricity Flat prices - Gas Rising Prices - Electricity Rising Prices - Gas

Figure 1: Price Scenarios

Assumptions

3.14 The case studies are undertaken from the developer’s perspective. Therefore the

least cost solution is always the preferred solution. This may not always be the case since

other factors may influence the choice, in particular, public acceptability and ease of

installation. In undertaking the case studies a number of technical assumptions have been

made. For the most part these assumptions are consistent with industry practice.

3.15 Assumptions are set out below:

• Carbon factors - the carbon content of fuels assumed for the analysis are

o 0.19 for Gas

o 0.43 for imported electricity

o 0.568 – for electricity offset

• Coefficients of performance (CoP) for heat pumps. For GSHP the CoP is

assumed to be 4.0, for ASHP the CoP is assumed to be 3.0. These are

conservative figures given the improvements that have recently been made to

these technologies

• It is assumed that 50% of annual hot water requirements can be supplied from

Solar Thermal systems where the aspect is southerly and adjustments are made for

non-southerly aspects – see figure 2 below

• Generation capacity of 1kWp PV at optimum conditions is assumed to be

900kWhs per annum where the aspect is southerly and adjustments are made for

non-southerly aspects – see figure 2 below

• Developers will install LZCs on the largest units in a development first

20 of 89

Figure 2: % performance of solar technologies at differing angles and aspects

3.16 Assumptions have been made regarding the installed costs of the various LZC

systems. These are outlined below:

Individual wood pellet boiler system £10,000

ASHP system £6,000

GSHP system (borehole based) £12,000

Solar Thermal system £2,000

Solar PV array £4,000/kWp

These assumptions are based on BBP’s extensive knowledge of renewable energy

systems, gained through a continued need to seek out quotes and develop specifications

for the technologies outlined above for an array of clients with whom we work. As such,

we believe they are up to date and accurate reflections of basic system costs. It is

recognised that there may be site specific issues for all of these technologies that could

render these assumptions to be either conservative or excessive in price and they are

specified above as broadly ‘average’ costs.

3.17 Where conventional heating systems are avoided a cost of £1,500 is deducted from

the cost.

3.18 All technologies are assumed to have a 20 year life.

Feed–in-Tariff and Renewable Heat Incentive

3.19 In April 2010 the UK government will bring into effect the Feed-in Tariff covering

the generation of electricity from renewable sources. This will bring the UK in line with

21 of 89

many European countries which already have a feed-in tariff. In Germany, Spain, France

and Italy the introduction of a feed-in tariff for renewable electricity has resulted in a

massive growth in the installation of solar PV, wind and other renewable energy systems

both for domestic and commercial systems. It is anticipated that we will see a similar

effect on the UK renewable energy market. The Feed-in Tariff (FIT) is only applicable to

renewable electricity and is applicable to the following technologies:

• Hydro

• Solar PV

• Wind

• Biomass

• Anaerobic Digestion

• Micro CHP

3.20 The FIT only applies to installations up to 5MW. It is funded by a levy on all users

of electricity. It is anticipated that the FIT will add between 1% and 2% to the cost of

electricity for every user. The table below summarises the current FIT rates.

Table 2 Feed-In-Tariff Rates

3.21 The FIT for new projects of some technologies will reduce year on year, although

for the first two years it remains the same. This suggests the rates will be reviewed from

time to time as technologies change. This could mean they reduce quicker or for new

projects the rates are lower than existing projects. Once a system is registered for the FIT

it is locked into the current rate. The tariff is index linked (using RPI) and guaranteed for

a set number of years depending on technology. Unlike other countries no cap has been

set on the amount of generation that will qualify for the FIT, but the levels have been

chosen to achieve a target of 2% of electricity generated by small scale renewables by

2020.

22 of 89

3.22 The Renewable Heat Incentive (RHI) is proposed to provide a financial support

mechanism for heat from renewable sources in a similar way that the FIT does for

electricity. This scheme, if adopted, will be groundbreaking since no other country in the

world offers a scheme for renewable heat on this scale. The RHI is proposed to come

into effect on April 2011, however, as this report is being written, the proposals for the

scheme are under public consultation (this period ends 26th

April 2010).

3.23 The proposed rates are shown in the table below:

Table 3 Renewable Heat Incentive Rates

23 of 89

4 Case Studies

Introduction

4.1 The analysis of the case studies is a central element of the work. Each development

is assessed on an individual basis in the same way as it would be in order to meet the

requirements of the existing WDC policy. The policy is framed such that a percentage of

the energy demand arising from the site is to be met from LZC technologies. At present

the required percentage is set at 10% of calculated annual energy demand, however, it is

likely that future developments in the policy will set the requirement at higher levels so

the case studies examine the options for meeting requirements set at 10%, 15% 20% and

25%. In addition, while the current policy sets the required percentage on the basis of

annual energy demand, the focus is increasingly on the carbon impact of energy use,

consequently, the case studies also examine how the requirement would be met if the

basis were changed from energy to carbon.

4.2 In accordance with the policy the potential for all LZC technologies is considered

for each site. A recommendation to meet each of the required levels is made for each site

as would be the case in a feasibility study. The recommended option is based first on

what is technically feasible and then on what is the least cost option from the developer’s

perspective. In practice the least cost option may not be preferred by the developer’s

since other factors may favour more costly solutions. These could include aesthetics,

ease of installation and simply the developer’s familiarity with the technology. However,

for the purposes of this analysis it is assumed that the least cost solution will be selected.

4.3 Energy demand is assessed using published benchmarks. These provide estimated

annual demand figures based on the floor areas of typical build types. The benchmarks

assume that the building complies with 2005 Building Regulations. In recent years

standards of thermal performance have increased substantially and, especially with the

introduction of the CSH which includes a mandatory requirement to exceed Building

Regulations standards, it is likely that these benchmarks overstate the level of demand.

However, it is not sensible to attempt to consider and adjust for this in the analysis for a

number of reasons. In particular, the requirements of the CSH can be met in a number of

ways including the installation of renewable/sustainable energy technologies, and where a

local authority imposes an energy percentage target, such as that in WDC’s case, this

requirement this will undoubtedly be the case – if we were to adjust the demand figures

we could end up with spurious results.

24 of 89

Cressex Road

General Description

4.4 The Cressex Road development involves the erection of 22 new homes in an

established residential area on a site which originally contained four residential units.

The site will provide intensive residential accommodation in the following schedule of

units:

• 3 x 3 bedroom detached dwelling

• 4 x 3 bed semi-detached dwellings

• 6 x 2 bed semi-detached dwellings

• 7 x 2 bed flats

• 2 x 2 bed flats over parking

Energy Demand

4.5 The energy demand for the houses in this development has been derived using

calculations undertaken by the Building Research Establishment (BRE) for similar design

properties. This data is published in the EST document CE190, ‘Meeting the 10% target

for renewable energy in housing – a guide for developers and planners’ and extrapolated

according to the respective property floor areas. Table 4 below shows the energy demand

by end use for all unit types in the development.

Floorspace - ALL units

Site/units m² SH DHW L&A Cooking Total

SemiA/ 1 & 2, 17-22 403.2 20808 20744 18584 7992 68128

SemiB/8 & 9 172.6 7389 6245 6034 2301 21969

Det/ 3, 4 & 7 258.9 11083 9367 9051 3451 32952

FOG/ 5 60.38 2247 2785 2179 1161 8372

FOG/ 6 57.12 2134 2644 2069 1103 7950

Flat/ 10 64.64 2406 2982 2333 1243 8964

Flat/ 11 67.92 2542 3151 2465 1314 9472

Flat/ 12 & 15 119.6 4449 5513 4314 2299 16575

Flat/ 13 62.03 2315 2869 2245 1196 8625

Flat/ 14 & 16 146.76 5448 6751 5282 2815 20296

TOTAL 1547.55 60821 63051 54556 24875 203303

Energy demand (kWhs/yr)

Table 4: Cressex Road – Energy Demand 1

1 Abreviations used in tables: SH – Space Heating, DHW – Domestic Hot Water, L&A – Lights and

Appliances.

25 of 89

4.6 The energy demand has been used to derive carbon emissions arising from each

end use type across the site using the standard coefficients for each of the fuel types, gas

for space and water heating and electricity for lights and appliances. Cooking use is split

between electricity and gas in equal parts. The resultant site wide carbon emissions are

shown in Table 5 below.

SH DHW L&A Cooking* Total

Total Site 11.56 11.98 23.46 7.71 54.71

Carbon (t/CO2/yr)

Table 5: Cressex Road – Total Site Carbon Emissions

Contribution Required from LZC technologies

4.7 The requirement is that a percentage of the energy demand arising from the site is

met by LZC technologies. This requirement is calculated from the energy demand

figures in Table 4 and is shown below in Table 6.

Contribution by LZC10% 15% 20% 25%

Total site 20330 30495 40660 50825

Required Energy reduction (kWhs/yr)

Table 6: Cressex Road – Contribution required by LZCs by Required Energy Reduction %

4.8 As discussed above the policy is currently framed on the basis of energy demand.

Table 7 shows what the required reduction would be if expressed in terms of carbon

emissions.

Contribution by LZC

10% 15% 20% 25%

Total site 5.47 8.21 10.94 13.68

Required Carbon Reduction t/CO2/yr

Table 7: Cressex Road – Contribution required by LZCs by Required Carbon Reduction %

Assessment of LZC technology options

4.9 The potential for the deployment of a range of renewable energy technologies on

the site has been examined. Estimated installed costs are presented net of VAT and any

grants that may be available – none currently available for speculative house builders.

Biomass heating

4.10 The use of wood to fuel space and water heating for the Cressex Road development

would be a very effective means of meeting the requirement. As shown in Table 8 the

current target can be met by installing pellet fuelled biomass heating systems in just three

specific units. Increasing the target to 15% will require a further two specified units to be

included. In order to reach a 20% contribution the best solution would be to install a

communal system for the flats and individual heating systems for one of the houses. The

25% target would require the block of flats and two further units to be heated using

biomass.

26 of 89

10% 15% 20% 25%

Total site 20330 30495 40660 50825

Units 3,4 and 7 20450

Units 3,4 , 7,8 and 9 34080

Units 10-16 and one other 45202

Units 10-16 and two others 52018


Meeting each percentage using biomass

Table 8: Meeting the % Energy Requirements using Biomass

Carbon

4.11 If the target were to be in terms of a percentage reduction in carbon emissions,

more units would need to be provided with biomass heating systems. Table 9 shows that

a 10% carbon reduction target would require five specified units to have biomass heating

systems, as the percentage requirement increases the number of units increases to a level

greater than required for a target based on energy. This is because biomass displaces gas

which has a lower carbon content than electricity.

10% 15% 20% 25%

Total site 5.47 8.21 10.94 13.68

Units 3,4,7,8 and 9 6.47

Units 10-16 and one other 8.6

Units 10-16 and two others 11.2

Units 10-16 and four others 13.8



Table 9: Meeting a % Carbon Emissions Reduction Target using Biomass

Feasibility for Cressex Road

4.12 Biomass is not considered an appropriate solution for meeting any of the

percentage requirements for the following reasons:

• High additional cost

• High ongoing fuel costs

• Lack of space for fuel storage

• Lack of public acceptability given operation and maintenance issues

Ground Source Heat Pumps (GSHP)

4.13 It is technically feasible for GSHP systems to meet the requirements. There is

sufficient space for one trench based system but all others would need to be borehole

based, which involves considerable added cost. As can be seen in Table 10 the current

10% requirement can be met by installing a GSHP system in four of the larger units. In

the case of GSHP it is most economical to install in the largest units first. This is because

the difference in cost between the range of system size is not significant, so it is best to

install where the greatest energy offset can be achieved. A 15% requirement would

27 of 89

require all the larger units and two of the smaller houses to be included. However, it is

possible to meet even the 25% requirement without including the block of flats which

would be the most difficult and costly units to heat using the GSHP, since each unit will

require its own heat pump, or a communal system would need to be installed, operated

and managed, which brings additional issues that are currently unattractive to developers.

10% 15% 20% 25%

Total site 20330 30495 40660 50825

Units 3,4,7 and 8 20448

Units 1,2,3,4,7,8, and 9 31968

Units 1,2,3,4,7,8,9,17, and 18 41144

Units 1,2,3,4,7,8,9,17,18,19,20,and 21 52832

Meeting each percentage using GSHP


Table 10: Meeting the % Energy Requirement using GSHP

Carbon

Use of GSHP involves replacing heat provided by gas with heat generated partially from

electricity. Electricity has a CO2 coefficient of 0.43 where gas has a coefficient of 0.19.

As such, the GSHP partially replaces a fuel with a low carbon content, with a fuel with a

much higher carbon content. The net carbon benefit in the larger units on this

development is 0.5tCO2/yr. As shown in Table 11 the 10% carbon target can be met if all

the larger units and the flats were provided with GSHP systems. It may be that the most

suitable approach would be to install a communal GSHP system for the flats, although

this would require a communal heating system, probably managed by an outside agency,

which may not be easy for the developer to secure. Meeting a 15% carbon target would

require the whole development to have space and water heating provided by GSHP.


10% 15% 20% 25%

Total site 5.47 8.21 10.94 13.68


Units,3,4,7,8,9,10-16 5.98

Whole development 10.5

Only 15% carbon reduction possible with

GSHP

Table 11 Cressex Road - Meeting a Carbon Target using GSHP

4.14 GSHP is an effective technology in reducing carbon in large units and where the

displaced fuel is either oil or 100% electricity, due to the higher carbon content of these

fuels.

28 of 89

Air Source Heat Pumps (ASHP)

4.15 The use of ASHP is an effective means of reducing total energy consumption on

the Cressex Road site. It is one of the least costly and easier to install low carbon

technologies, however, as with GSHP, because it displaces gas with electricity, which

has a higher carbon content, and has a lower CoP than GSHP so this effect is greater, it is

unable to generate significant carbon savings. Consequently, the maximum target that

could be achieved using ASHP in this case is a 10% reduction in site-wide carbon

emissions.

10% 15% 20% 25%

Total site 20330 30495 40660 50825

Units 3,4,7,8,9 and 17 23038

Units 3,4,7,8,9,1,2,17 and 18 33427

Units 3,4,7,8,9,1,2,17,18,19,20,21 43816

Units 3,4,7,8,9,1,2,17,18,19,20,21,5 and 6 53820


Meeting each percentage using ASHP

Table 12: Meeting the energy requirement using ASHP

Carbon

4.16 It is only possible to meet a 10% carbon target using ASHP.

10% 15% 20% 25%

Total site 5.47 8.21 10.94 13.68


Only 10% carbon reduction possible with ASHP



Table 13: Meeting a carbon target using ASHP

Solar photovoltaics (PV)

4.17 The effectiveness of PV is dependent on the availability of sufficient southerly

facing roof space. In this development the units deemed to have suitable roof space are

1-5, 7-9 and 15 (top floor flat). It is possible to meet a 10% energy target by installing a

2.5kWp system on each of these units. This would require a minimum of 15m². Meeting

higher energy based targets is not possible without installing on roofs that have less than

optimal orientation.

29 of 89

10% 15% 20% 25%

Total site 20330 30495 40660 50825

Units 1-5, 7-9, 15 2.5kWp/each

further gains not possible due to lack of roofspace


Meeting each percentage using Solar PV

Table 14: Meeting an energy target using solar PV

Carbon

4.18 PV performs very well in terms of carbon, by offsetting the most carbon intensive

fuel used in the development. In addition, the carbon coefficient for displaced electricity

is greater at 0.568kgs/kWh than for supplied electricity at 0.43kgs/kWh. Consequently

this development could achieve a carbon target using PV with lower rated installations on

the identified units. A 25% reduction in carbon may not be possible due to the amount of

roof space that would be required.

10% 15% 20% 25%

Total site 5.47 8.21 10.94 13.68

Units 1-5,7-9,15 1.19kwp/each






Table 15: Meeting a carbon target using PV

Solar thermal

4.19 Solar thermal systems are able to provide at least 50% of domestic hot water

requirements dependent on the availability of suitably oriented roof space. On this basis,

it is therefore, possible to meet the 10% energy target using solar thermal on all the

houses and the flats over garages. This is the maximum that this technology can achieve.

If a carbon target were introduced, all units in the development would require solar

thermal installations in order to achieve a 10% carbon reduction.

10% 15% 20% 25%

Total site 20330 30495 40660 50825

All houses and FOGs 20892


Meeting each percentage using Solar thermal

Table 16: Meeting the energy requirement using solar thermal

30 of 89

10% 15% 20% 25%

Total site 5.47 8.21 10.94 13.68


Only 10% carbon reduction possible with Solar thermal



Table 17: Meeting a carbon target using solar thermal

Wind turbines

4.20 Wind turbines would not be suitable for this development, due to the built up nature

of the surrounding area, which render this technology in-effective.

Summary of results and assessment of optimal solution

4.21 The costs associated with each of these options are shown in Table 18 below.

Costs are derived using the assumptions set out in Section 3. This shows that the

cheapest option to meet the 10% energy target is to install biomass (pellet) heating

systems in three of the largest units. However, installing a biomass system would

probably not be the preferred option for developers since it would result in a substantial

increase in the running costs for the occupiers over a gas fired system. At this stage it

would also be regarded as having a negative impact on the ability to market the homes.

4.22 The next cheapest option is ASHP technology in six of the units, which would cost

an additional £2,200 (over the biomass option). In comparison to a conventional gas

based system, ASHP systems are also more expensive to run, but the difference is very

slight at approximately £35/unit more per year.

4.23 Meeting the 10% energy target could also be achieved using solar thermal systems

on all the houses and FOGs. Solar thermal would yield savings for the occupiers, but

would be more expensive for the developer. For this reason, in this case it is assumed

that the preferred solution is the ASHP for each energy percentage requirement.

However, it is recognised that the developer has a difficult choice and would need to

balance issues of cost against market acceptability, ability to recover costs and ease of

installation.

31 of 89

10% 15% 20% 25%

Units 3,4 and 7 25,500

Units 3,4 , 7,8 and 9 42,500

Units 10-16 and one other 59,500

Units 10-16 and two others 68,000

Units 3,4,7 and 8 37,000

Units 1,2,3,4,7,8, and 9 59,500

Units 1,2,3,4,7,8,9,17, and 18 76,500

Units 1,2,3,4,7,8,9,17,18,19,20,and 21 102,000

Units 3,4,7,8,9 and 17 27,000

Units 3,4,7,8,9,1,2,17 and 18 40,500

Units 3,4,7,8,9,1,2,17,18,19,20,21 54,000

Units 3,4,7,8,9,1,2,17,18,19,20,21,5 and 6 63,000

All houses and FOGs 30,000

Units 1-5, 7-9, 15 90,000

Additional cost to developer of meeting each percentage using ASHP

Additional cost to developer of meeting each percentage using Solar thermal

Additional cost to developer of meeting each percentage using Solar PV

Additional Cost to developer of meeting each percentage using biomass £

Additional cost to developer of meeting each percentage using GSHP

Table 18: Costs of Meeting % requirement

Financial viability

4.24 The financial analysis shows that while the ASHP option is the cheapest for the

developer, it involves extra running costs of approximately £35/yr at current prices for

the occupier over a conventional gas fired system. This would mean that it would be

difficult to justify imposing a premium price on those units with the ASHP installed. In

each case the additional cost of an ASHP system over a gas fired system cannot be

recovered over the lifetime of the equipment. This could only happen if gas prices were

to increase at a higher rate than electricity prices. Since there is a close link between gas

prices and electricity prices this is unlikely to take place over the short to medium term.

4.25 In each case therefore the IRR is negative, payback is not achieved and the NPV at

a 3.5% discount rate is greater than the original cost. This implies that rational

purchasers would expect to pay less for a property with an ASHP system than for a

property with a gas fired system. In the case of the solar thermal 10% option the NPV is

less than the cost of the installation to the developer. On this basis the developer could,

theoretically, charge at least half the additional cost to the purchaser.

4.26 If the RHI were to be introduced as proposed the solar thermal solution offers

considerable benefits to the occupier and, assuming this was well understood, the

developer should be able to recover the costs of installation in the selling price. Even the

32 of 89

ASHP system ceases to be more costly than a conventional gas system under the

proposed RHI scheme.

Energy

Requirement

from LZCs

Cressex RoadNPV £

@3.5% DR IRR%

NPV £

@3.5% DR IRR%

NPV £

@3.5% DR IRR%

NPV £

@3.5% DR IRR%

No RHI

ST Flat prices -21092 0.00%

ST Rising Prices -17564 0.00%

ASHP Flat Prices -30274 0.00% -45250 0.00% -60227 0.00% -70649 0.00%

ASHP Rising Prices -31570 0.00% -47132 0.00% -62693 0.00% -73679 0.00%

With RHI

ST Flat prices 32354 13.50%

ST Rising Prices 35883 14.00%

ASHP Flat Prices -5717 1.00% -9619 0.70% -13522 0.50% -13281 1.00%


10% 15% 20% 25%

Table 19: NPV at 3.5% DR for ASHP and Solar Thermal for Cressex Road Development

Compliance costs as a percentage of build costs

4.27 Although the financial viability of the additional investment is important, its

significance in terms of the proportion of total build costs gives a clearer indication of the

burden on the developer.

4.28 Clearly the cost of building new dwellings will depend on a number of factors

including the standard of specification, size of development, local labour costs, additional

contributions and location. However, according to the Homes & Renovation Average

Build Cost Guide the average price varies from £781/m² to £1671/m². This guide is

principally for self builders building single dwellings. The average build cost for

developers is quoted as £1200/m².

4.29 The total floor area of the Cressex Road development is 1413.15m². The build cost

will therefore be £1.7 million. The cost of compliance with the percentage energy

requirement is as shown in Table 20, below:

% Requirement Solution Cost

Cost as % of

total build

cost

10 ASHP in 6 units 27000 1.59

15 ASHP in 8 units 40500 2.39

20 ASHP in 12 units 54000 3.18

25 ASHP in 14 units 63000 3.72

Table 20: Cressex Road development cost of compliance with percentage energy targets

33 of 89

Castle Street

General Description

4.30 In this case a development of 24 flats is to replace an existing building. The

development comprises a single four storey block providing the following

accommodation:

• 6 x 1 bed flats

• 14 x 2 bed flats

• 4 x 3 bed flats

• 2 x retail units on the ground floor with frontage onto Castle Street.

Energy Demand

4.31 The energy demand for the dwellings in this development has been derived using

calculations undertaken by the BRE for similar design properties. This data is published

in the EST document CE190, ‘Meeting the 10% target for renewable energy in housing –

a guide for developers and planners’ and extrapolated according to the respective

property floor areas. Table 21 below shows the energy demand by end use for all unit

types in the development. The energy demand arising from the retail units and car park

lighting is 30,932kWhrs/yr.

Castle St Flats Floorspace - ALL units


1 54.84 2043 2532 1981 1056 7612

2 59.08 2202 2729 2135 1138 8204

3, 4, 10 & 11 46.5 6901 8552 6691 3566 25710

5, 12, 17 & 18 82.72 12167 15078 11797 6287 45329

6, 7, 9, 13 & 14 106 19749 24473 19149 10205 73576

8 & 22 97 7219 8945 6999 3730 26893

15 85.12 3178 3938 3081 1642 11839

16 93.12 3473 4304 3368 1795 12940

19 & 20 80.77 6038 7483 5855 3120 22496

21 89.87 3360 4163 3257 1736 12516

23 & 24 73.69 5493 6807 5326 2839 20465

TOTAL 1931.81 71823 89004 69639 37114 267580

Fossil Fuel Elec

A1/A3 unit 1 4357 4912 9269

A1/A3 unit 2 4811 5422 10233

TOTAL 9168 10334 19502

Car park lighting 762 0 11430 11430

TOTAL 298512


Table 21: Energy Demand for Castle St Development

34 of 89

Contribution Required from LZC Technologies

4.32 The contribution required to meet the percentage targets is shown in Table 22

below.


Total site 29851 44777 59702 74628


Table 22: Castle St. – Contribution required by LZCs by Required Energy Reduction %

4.33 Table 23: shows the required reduction in terms of carbon emissions.

SH DHW L&A Cook Total

Total Site 15.39 16.91 39.29 11.51 83.1

Carbon (t/CO2/yr)

Table 23: Castle St. – Contribution required by LZCs by Required Carbon Reduction %

Assessment of LZC energy technology options




Biomass

4.35 Flatted developments can be suitable for the application of biomass heating. A

communal boiler would be installed supplying both space and water heating to individual

flats. Each flat would be supplied with a heat meter and would be charged on the basis of

the number of units of heat used, or on a flat fee basis, dependent on apartment size. The

boiler system could be solely fuelled by wood chip or pellet or by a combination of wood

and gas. Given that storage is likely to be limited, a pellet system would be more suitable

in this instance. Table 24 shows that using biomass for 33.3% of the heat demand would

meet a 15% energy target, whereas meeting over 66% of the heat demand using biomass

would meet a 25% target. Such systems would work in conjunction with gas boilers and

these sizes are deemed to be realistic, with the biomass portion acting as base load.

4.36 If the target were based on carbon offset, rather than energy reduction, a target as

low as 10% could be met with a biomass system supplying 33.3% of the energy demand.

4.37 The costs of a system of this kind are difficult to determine at this stage. The

equipment required within the flats would cost a similar amount to the installation of

individual conventional gas fired heating systems in each flat. There would be a

substantial saving in not having to connect each flat to a gas supply. The additional cost

would therefore be the cost of the heat plant, buffer tank and heat riser to the flats, less

the cost of connecting individual units to the gas main. This is estimated to be £85,000.

The cost of heat would depend on the cost of fuel and the mix between gas and biomass

but is likely to be more expensive than heat from individual gas boilers.

35 of 89

4.38 A system of this nature would require a significant area for sitting the boiler, buffer

tank and fuel storage facilities. In this case there is no space available unless the parking

area is reduced or additional underground space provided. Fuel storage would need to be

accessible for fuel delivery.

10% 15% 20% 25%

Total site 29851 44777 59702 74628

100% SH & HW 169995

66.6% (base load) 113319

33.3% (50% base load) 56660



Table 24: Castle St. – Meeting the Energy Requirement using Biomass

10% 15% 20% 25%

Total site 8.31 12.47 16.62 20.78

100% SH & HW 32.3

66.6% (base load) 21.53

33.3% (50% base load) 10.77



Table 25: Castle St. – Meeting a Carbon Requirement using Biomass

Ground Source Heat Pump

4.39 A GSHP is not technically feasible for this site. There is not sufficient space for

either a trench or a borehole collector to be installed.

Air Source Heat Pumps

4.40 As shown in Table 26, the use of ASHPs to provide heat would be an effective

means of meeting the energy percentage requirements. The most suitable system would

be one that combined mechanical ventilation, and exhaust air heat recovery with the

ASHP, together with a very high specification in terms of building thermal performance.

4.41 However, as shown in Table 27, it is not possible to meet a 10% reduction in

carbon emissions even if ASHP systems are installed across the whole development.

36 of 89

Castle Street

10% 15% 20% 25%

Total site 29851 44777 59702 74628

Units 1 and 19-24 30667

Units 15-24 46627

Units 1 and 13-24 61430

Units 1-5, 10 and 13-24 76984



Table 26: Castle St. – Meeting an Energy Requirement Using ASHP

10% 15% 20% 25%

Total site 8.31 12.47 16.62 20.78


Cannot achieve 10% CO2 saving at this site with ASHP



Table 27: Castle St. – Meeting a Carbon Requirement using ASHP

Solar Thermal

4.42 The contribution that can be made by solar thermal can be limited in flatted

developments. This is because the amount of roof space/unit of floor area is considerably

less than for houses. It can also be difficult to distribute to the heat to flats on lower

floors without avoiding losses through long pipe runs.

4.43 Table 28 shows that solar thermal could not be used to meet a 10% energy

requirement by supplying only to flats on the second and third floors. In order to meet

the requirement further first floor flats would need to be included. It is not considered

technically attractive to do this.

10% 15% 20% 25%

Total site 29851 44777 59702 74628

Communal to all 44502

Units 13-24 (2+3/F only) 24248



Only 10% energy reduction possible with solar thermal if

communal, almost 15%

Table 28: Castle St. – Meeting an energy Requirement using Solar Thermal

37 of 89

4.44 Installing a solar thermal system on the whole development would offset

4.61t/CO2/yr which would result in just a 5.5% reduction in site wide carbon emissions.

Solar PV

4.45 If there is sufficient suitably orientated roof space then PV is a very effective means

of meeting energy and carbon targets in flatted developments. In this case however, the

roof space available is approximately 295m² which is only able to accommodate a PV

array of approximately 40kWp. This enables the 10% energy and a 20% carbon

requirement to be met. Table 29 and Table 30 show the contribution that PV can make to

offsetting energy and carbon in this development.

10% 15% 20% 25%

Total site 29851 44777 59702 74628

36.85kWp array

Roof space only allows for this tech option and only to 10%



Horizontal roof integrated

product at 258m/sq

Table 29: Castle St. – Meeting the Energy Requirement using PV

10% 15% 20% 25%

Total site 8.31 12.47 16.62 20.78

Cassette mounted system at 114m/sq 16.28kWp

As above 171m/sq 24.42kWp

Horizontal roof integrated product 253m/sq 36.17kWp

Not quite possible to hit 25% due to lack of roof space



Table 30: Castle St. – Meeting a Carbon Requirement using PV

Wind Turbines

4.46 The site is in an urban location where wind speed is typically below 4m/s. It is not

technically feasible to install wind turbines on this site.


4.47 The technical options for meeting the energy requirement in this development are

limited. It would be possible to install solar thermal for the upper flats but this would not

be sufficient to meet the 10% requirement. It may be the case however, that once the

actual, as opposed to theoretical energy demand for the development were calculated that

it would be possible to use solar thermal to meet the requirement. However, installing

solar thermal systems for all flats would present technical challenges.

38 of 89

4.48 The 10%, 15% and 20% energy requirements would best be met by installing

combined ventilation and heat recovery units tied to ASHP units – particularly if the flats

are built to deliver high standards of thermal performance.

4.49 The most cost-effective means of meeting a 25% energy requirement would be to

install a communal heat plant fuelled by a combination of gas and biomass. However, it

may be considered preferable to install the ASHP solution on all units removing the need

to connect the development to the gas network. Bulk purchase of ASHP units may also

yield further savings. An alternative would be to install a combination of ASHP systems

and PV.

Castle Street

10% 15% 20% 25%

Total site 8.31 12.47 16.62 20.78

100% SH & HW 85,000

66.6% (base load) 85,000

33.3% (50% base load) 85,000

Units 1 and 19-24 27,000

Units 15-24 45,000

Units 1 and 13-24 58,500

Units 1-5, 10 and 19-24 81,000

Units 13-24 (2+3/F only) 24,000

Only 10% energy reduction possible with solar thermal

65,000

further gains not possible due to lack of roofspace

Additional cost to developer of meeting each % using Solar thermal £

Additional cost to developer of meeting each % using solar PV £

Horizontal roof integrated

product at 258m/sq


Additional Cost to developer of meeting each % using Biomass £

Additional cost to developer of meeting each % using ASHP £

Table 31: Costs of meeting % energy requirement

Financial viability

4.50 As with the previous case study, Cressex Road, the preferred option from the

developer’s perspective would be to install ASHP systems in as many units as required to

meet each energy percentage requirement. Unless the RHI is put in place this will mean

increased running costs for occupants, which means that the developer would not be able

to recover additional costs in the selling price. This is demonstrated in Table 32, below:

39 of 89

Energy

Requirement

from LZCs

Castle StreetNPV £

@3.5% DR IRR%

NPV £

@3.5% DR IRR%

NPV £

@3.5% DR IRR%

NPV £

@3.5% DR IRR%

No RHI

ASHP Flat Prices -31358 0.00% -51626 0.00% -66730 0.00% -91941 0.00%


With RHI

ASHP Flat Prices 1331 4.00% -1925 3.00% -1249 3.30% -9881 2.10%


10% 15% 20% 25%

Table 32: Castle St. – NPV and IRR

4.51 The additional cost is however, a relatively small proportion of the total build cost

– see Table 33 below.

% Requirement Solution Cost £Cost as % of

total build cost

10 ASHP in 7 units 27000 1.40

15 ASHP in 10 units 45500 2.40

20 ASHP in 13 units 58500 3.10

25 ASHP in 143units 81000 4.40

Table 33: Castle St. – Costs as proportion of build costs

40 of 89

Terriers School

General Description

4.52 A suburban development of 59 residential units comprising the following:

• 2 x 2 bed flats

• 8 x 2 bed flats with bin and cycle stores

• 1 x 3 bed detached house

• 2 x 5 bed semi-detached houses


• 22 x 3 bed semi detached houses


• A terrace of 5 x 3 bed houses and 1 x 1 bed house

• 2 x terrace of 2 x 3 bed and 1 x 2 bed houses

• A terrace of 6 x 3 bed houses.

4.53 The development includes 12 units allocated for rented social housing and 8 units

for shared ownership.

Energy Demand

4.54 The energy demand associated with each of the unit types is shown in Table 34.

41 of 89

Terriers School Floorspace - ALL units


Flat/1 67 2497 3094 2421 1290 9302

Flat/2 70.4 2633 3263 2553 1361 9810

End Tce/3 + 8 210.6 7753 8651 7287 3388 27079

Mid Tce/4 - 7 210.6 11964 17302 14574 6775 50615

Semi/9 + 10 196.6 7599 7575 6787 2917 24878

Flat/11 + 12 136.8 5085 6301 4930 2628 18944

Flat/13 136 2542 3151 2465 1314 9472

Flat/14 - 17 268 9988 12376 9684 5160 37208

Flat/18 70.9 2633 3263 2553 1361 9810

Semi/27 + 28 126.6 4861 4845 4341 1866 15913

Semi/29 + 30, 38 + 39 269.4 10406 10372 9293 3995 34066

End Tce/31, 33, 40, 42 253.2 9258 10330 8701 4045 32334

Mid Tce/32 + 41 134.7 3794 5488 4622 2149 16053

Semi/34 + 35 175.2 6778 6756 6053 2602 22189

Semi/36, 37, 43, 44,

52-59, 63 & 64 1233.12 47443 47290 42370 18212 155315

Semi/45 + 46 205.42 7941 7916 7092 3048 25997

Semi/47 + 48 244.48 9447 9417 8437 3627 30928

Semi/49, 50, 65, 66 383.76 14787 14740 13206 5676 48409

Semi/51 94.15 3628 3617 3240 1393 11878

Mid Tce/60 88.08 2500 3615 3045 1416 10576

End Tce/61 77.42 2835 3163 2665 1239 9902

Flat/62 60.54 2247 2785 2179 1161 8372

Det/67 94.15 4050 3423 3308 1261 12042

Total 4807.12 182669 198733 171806 77884 631092


Table 34: Terriers School Development Energy Demand


4.55 The amount of energy to be provided by LZCs to meet each percentage

requirement is set out in Table 35 below.


Total site 63109 94664 126218 157773


Table 35: Terriers School - Contribution required by LZCs to meet % Energy Requirement

4.56 Table 36 shows the reduction in carbon that would be required if the policy were

expressed in terms of a required percentage carbon emissions reduction.

42 of 89

Contribution by LZC

10% 15% 20% 25%

Total site 17.03 25.55 34.06 42.58


Table 36: Terriers School – Carbon reduction required by LZCs to meet % Carbon Requirement

Assessment of LZC Technology options




Biomass

4.58 The development could meet any of the percentage requirements by installing

wood pellet fired heating systems in a proportion of the units as shown in Table 37

below. Meeting a 10% energy requirement would require biomass heating to be installed

in 8 units, 15% would require 12 installations, 20% would require 17 installations and

15% would require 22.

Terriers School

10% 15% 20% 25%

Total site 63109 94664 126218 157773

Units 45-50 + 65-66 64248

Units 45-50 + 57-60 +

65-67 98137

Units 45-58 + 65-67 126335

Units 45-61 + 63-67 158,749


Meeting each percentage using biomass Kwh/yr

Table 37: Terriers School Site – Meeting the % Energy Requirement Using Biomass

4.59 A percentage requirement in terms of carbon emissions could be met with pellet

boilers as shown in Table 38. In each case, more units would require biomass heating

systems to be installed. In the case of a 25% carbon emissions reduction, installations in

30 units would almost meet the target. Consequently it is assumed that, instead of

installing in another unit it would be supplemented by a small amount of PV. This is

realistic since once the thirty largest units have been assumed to have biomass heating

systems only smaller units remain which have less space for the required equipment and

are less cost-effective to install.

43 of 89

10% 15% 20% 25%

Total site 17.03 25.55 34.06 42.58

Units 45-50 + 57-60 +

65-67 17.23

Units 45-58 + 65-67 26.45

Units 4-7 + 45-61 + 63-

67 35.72

Units 3-8 + 40-42 + 45-

61 + 63-67 + 2kWp PV

array

42.00

(42.6

with PV

array)



Table 38: Terriers School – Meeting a % Carbon Requirement Using Biomass

Ground Source Heat Pumps

4.60 It would be possible to meet all levels of the energy requirement GSHP systems in

a proportion of the units. It is likely that the installations would involve a combination of

‘slinky’s and boreholes dependent on the ground space available. 12 units would be

required to have GSHP to meet a 10% energy target, 17 units for 15% target, 24 for the

20% target and 28 to meet a 25% energy target. Notably the maximum percentage

requirement would require less than half the total number of units.

Terriers School

10% 15% 20% 25%

Total site 63109 94664 126218 157773

Units 41, 45-50, 57-60 & 67 66010

Units 45-58 & 65-67 94,751

Units 36-37, 45-61 & 63-67 129,212

Units 3-8, 40-42, 45-61 & 63-64 158,534



Table 39: Terriers School – Meeting the % Energy Requirement using GSHP

4.61 However, it would not be possible to meet a carbon target using GSHP systems. If

all units were provided with GSHP systems the total carbon savings would amount to

10.32tCO2/yr, which equates to 6% of total site wide emissions.


4.62 As with the GSHP system options laid out above, it is possible to use ASHPs to

meet an energy target but not a carbon target. Since the CoP is less favourable than for

GSHP systems the number of units required to meet each of the levels is greater, as

shown in Table 40. Meeting a 10% energy requirement would involve 16 units while

meeting a 25% requirement would involve installations in 37 units.

44 of 89

Terriers School

10% 15% 20% 25%

Total site 63109 94664 126218 157773

Units 45-50, 57-60 & 65-70 65425

Units 9-10, 41, 45-58 & 65-

67 97433

Units 3-7, 45-61 & 63-67 130,812

Units 31-61 & 63-67 159071



Table 40: Terriers School – Meeting a Energy Requirement using ASHP

Solar Thermal

4.63 With all roofs having a south-east or south-westerly aspect, this development is

well suited to roof mounted solar thermal systems. It is possible to meet a 10% and a

15% energy requirement using solar thermal and a 10% carbon emissions reduction

requirement.

Terriers School

10% 15% 20% 25%

Total site 63109 94664 126218 157773

Units 27-67 63535

All units 94398



Table 41: Terriers School – Meeting an Energy Requirement using Solar Thermal

Terriers School

10% 15% 20% 25%

Total site 17.03 25.55 34.06 42.58

All units 17.94



Table 42: Terriers School – Meeting a Carbon Requirement using Solar Thermal

Solar PV

4.64 PV can be used to meet both an energy requirement and a carbon requirement.

Less PV is required to meet a percentage carbon requirement than a percentage energy

requirement. It has been assumed that all units will have PV installed with the amount

increasing with each level of percentage requirement. An alternative could be to install

larger units on a smaller number of dwelling types. This could reduce the costs to some

extent since the amount of additional ‘back-of-house’ system equipment required would

45 of 89

be fewer. However, it is equally possible that the developer would prefer to have all units

the same from a marketing viewpoint.

Terriers School

10% 15% 20% 25%

Total site 63109 94664 126218 157773

Total PV at 73.81kWp

All at

1.25kWp


All at

1.88kWp


All at

2.5kWp*


All at

3.13kWp*



*may not be feasible due to roof space requirement

Table 43: Terriers School – Meeting an Energy Requirement using PV

Terriers School

10% 15% 20% 25%

Total site 17.03 25.55 34.06 42.58

Total PV -

35.11kWp

35 units

at

1.00kWp

Total PV -

52.67kWp

52 units

at

1.00kWp

Total PV -

70.22kWp

22 units at

1.5kWp and

37 units at

1.00kWp

Total PV -

87.78kWp

All units

at

1.5kWp



Table 44: Terriers School - Meeting a Carbon Requirement using PV

46 of 89

Wind Turbines

4.65 The Terriers School site is not suitable for wind turbines due to the built up nature

of the surrounding area.


4.66 The results show that a reduction in energy demand of 10% or 15% could be

achieved using biomass, ASHP, solar thermal or solar PV. A 20% or 25% reduction

could be achieved using biomass, ASHP and solar PV. Of these it is unlikely that a

developer would opt for biomass partly because of the ongoing operation and

maintenance issues but mostly because a wood pellet system is likely to prove difficult to

market.

4.67 The most likely solution a developer will choose is to install ASHP systems in the

required number of units, or perhaps a combination of solar thermal and ASHP.

Although the least costly solution is ASHP the developer may choose to install solar

thermal as it offers better returns for occupiers and should therefore be more marketable.

Financial viability

4.68 Table 45 shows the additional cost to the developer of each technically viable

solution. Clearly the least cost option to the developer would be to install ASHP in the

required number of units to meet each level of requirement. However, at current prices

the running cost of an ASHP system will be more than a gas fired system for the

occupier.

47 of 89

Terriers School 10% 15% 20% 25%

Units 45-50 + 65-66 68,000

Units 45-50 + 57-60 + 65-

67 102,000

Units 45-58 + 65-67 136,000

Units 45-61 + 63-67 195,500

ASHP in units 45-50, 57-

60, 65-67 54,000


58, 65-67 81,000


61, 63-67 121,500


67 162,000

Units 27-67 82,000

All units 118,000

1.25kWp all units 295,000




Additional Cost to developer of meeting each percentage using biomass £

Additional cost to developer of eeting each percentage using ASHP £

Additional cost to developer of meeting each percentage using STHS £

Additional cost to developer of meeting each percentage using Solar PV £

Table 45: Terriers School – Additional Cost to developer of meeting % Energy Requirement

4.69 The financial analysis reinforces the importance of the RHI in reducing costs to

occupiers, thereby potentially enabling the developer to recover some costs in the selling

price. This is shown below in Table 46. Under the RHI a positive NPV and an IRR of at

least 1.5% is generated in each case.

Energy

Requirement

from LZCs

Terriers SchoolNPV £

@3.5% DR IRR%

NPV £

@3.5% DR IRR%

NPV £

@3.5% DR IRR%

NPV £

@3.5% DR IRR%

No RHI

ASHP Flat Prices -63298 0.00% -94846 0.00% -140092 0.00% -184607 0.00%


With RHI

ASHP Flat Prices 6441 4.00% 9010 4.70% -655 3.40% -15048 2.40%

ASHP Rising Prices 2758 4.10% 3526 4.00% -8019 2.70% -24003 1.70%

10% 15% 20% 25%

Table 46: Terriers School – IRR and NPV

48 of 89

The total build cost of the development is estimated to be £5.77 million. Table 47 shows

that the cost of compliance is a small proportion of the build cost at between 0.9% for a

10% energy requirement to 2.8% for a 25% energy requirement.

% Energy Requirement Cost £

% of Build

Cost

10 54,000 0.9

15 81,000 1.4

20 121,500 2.1

25 162,000 2.8

Terriers School

Table 47: Terriers School – Cost of Compliance as % of Estimated Build Cost

49 of 89

Ercol Site, Princes Risborough

General Description

4.70 The final case study is a commercial development of a range of light industrial

units and offices known as the Ercol Site. Total floor space amounts to 7766m2. The

development lies in Princes Risborough, a small rural market town.

Energy Demand

4.71 Energy demand has been calculated using benchmarks developed by CIBSE and

published in CIBSE Guide F – Energy Efficiency in Buildings and are shown in Table

48.

Ercol site Floorspace - ALL units

Block/unit type m² Fossil Fuel Electric Total

A - Office (openplan/nat. vent.) 347.6 27460 18770 46230

A - Light manufacturing 2086.08 187747 60492 248239

B - Office (openplan/nat. vent.) 113 8927 6102 15029

B - Warehousing 501.78 40142 9032 49174

B - Light manufacturing 501.78 45160 14552 59712

C - Office (openplan/nat. vent.) 272.4 21520 14710 36230

C - Warehousing 666 53280 11988 65268

C - Light manufacturing 666 59940 19314 79254

D - Office (aircon/standard) 1564 151708 200192 351900

E - Office (aircon./standard) 1248 121056 159744 280800

TOTAL 7766.64 716940 514896 1231836

Car park lighting* 8134 8134 8134

TOTAL 1239979


Table 48: Ercol Site – Energy Demand

4.72 This energy demand results in carbon emissions as shown in Table 49.

Ercol Site

Fossil Fuels Electricity Total

Total Site 136.22 224.9 361.12

Carbon (t/CO2/yr)

Table 49: Ercol Site – Carbon emissions

50 of 89


4.73 The contribution required from LZCs in order to meet each percentage level is

shown in Table 50.

Contribution by LZC

10% 15% 20% 25%

Total site 123998 185997 247996 309995


Table 50: Ercol Site – Contribution from LZCs for each % requirement

4.74 If a requirement were expressed in terms of a required reduction in carbon

emissions LZCs would be required to offset carbon as shown in Table 51.

Contribution by LZC

10% 15% 20% 25%

Total site 36.1 54.15 72.2 90.25


Table 51: Ercol Site – Contribution to carbon emissions reduction required by LZCs

Assessment of LZC Technology Options

Biomass

4.75 Providing heat through the use of wood pellet fired systems would enable both

energy and carbon requirements to be met. In terms of energy the 10% requirement

could be met by installing a biomass system in Block C while a 25% requirement would

necessitate blocks A and E. More of the site would need to be included with each

percentage level of a requirement expressed as a reduction in carbon emissions. The

blocks have been chosen with a view to minimising the number of blocks and the size of

system required to meet each percentage level. With more information about the

buildings it may be that alternative combinations would be preferred by the developer.

Table 52 and Table 53 show the details.

4.76 The use of biomass for residential sites currently faces issues of public acceptability

and operation & maintenance. However, in the case of commercial sites these issues do

not present such difficulties. In part this is because the systems required would be larger

and therefore can be more automated, storage is likely to more readily available and the

issues of delivery more acceptable in a commercial environment than in a residential one.

Ercol Site Required Energy reduction (kWhs/yr)

10% 15% 20% 25%

Total site 123998 185997 247996 309995

Block C 134740

Block A 215207

Blocks C & E 255796

Blocks A & E 336263

Meeting each percentage using biomass kWh/yr

Table 52: Ercol Site – Meeting the Energy Requirement using Biomass

51 of 89

Ercol Site Required Carbon Reduction t/CO2/yr

10% 15% 20% 25%

Total site 36.1 54.15 72.2 90.25

Block A 40.98

Blocks A & B 58.67

Blocks C, D & E 77.43

Blocks A, D & E 92.71


Table 53: Ercol Site – Meeting a Carbon Reduction Requirement using Biomass


4.77 The Ercol site would be technically suitable for the installation of a GSHP system

for some or all of the blocks. There is sufficient space for trench based systems assuming

the car parking and green space area can be used. As shown in Table 54, only one block

would be required for a 10% energy requirement whereas three blocks would be required

to meet a 25% energy requirement.

Ercol Site

10% 15% 20% 25%

Total site 123998 185997 247996 309995

Block A 161405

Blocks C & E 191847

Blocks A & E 252197

Blocks A, B & C 332659


Meeting each percentage using GSHP kWh/yr

Table 54: Ercol Site – Meeting the Energy Requirement using GSHP

4.78 Assuming all blocks have GSHP systems the carbon emissions reduction would be

25.7t/CO2/yr, which amounts to 7% of annual emissions. It is not possible to use GSHP

to meet a carbon emissions reduction requirement.

Air Source Heat Pump

4.79 ASHP systems would be a suitable technology to meet the percentage energy

requirement. Table 55 shows how each level could be met. Note that the 20% target

could be met by installing ASHP in blocks A and D and in the offices in block B. Clearly

this may not be a sensible solution if the rest of units B1 and B6 required heating with an

alternative system, however this serves to illustrate how to meet the requirement with the

minimum coverage.

52 of 89

Ercol Site

10% 15% 20% 25%

Total site 123998 185997 247996 309995

Block A 143471

Blocks A & B 205853

Blocks A & D & Office in B 248678

Blocks A, C & E 314002


Meeting each percentage using ASHP kWhrs/yr

Table 55: Ercol Site – Meeting the % Energy Requirement using ASHP

4.80 It is not possible to meet a carbon reduction target using ASHP.

Solar Thermal

4.81 The demand for hot water in typical units of this type is relatively small.

Consequently it is not possible to meet the requirements using solar thermal. If it could

be shown that the end user of the buildings had substantial demand for hot water then

solar thermal may be a solution.

Solar PV

4.82 The plans available indicate that there is sufficient roof space to accommodate the

area of panels required to meet all levels of the % energy requirement. Table 56 shows

the size of system and area required for each percentage requirement.

Ercol Site

10% 15% 20% 25%

Total site 123998 185997 247996 309995

1015m/sq 145kWp

1523m/sq 217.5kWp

2030m/sq 290kWp

2541m/sq 363kWp



Table 56: Ercol Site – Meeting the % Energy Requirement using Solar PV

Ercol Site

10% 15% 20% 25%

Total site 36.1 54.15 72.2 90.25

525m/sq 74.35kWp

781m/sq 111.5kWp

1041m/sq 149kWp

1301m/sq 186kWp



Table 57: Ercol Site – Meeting a Carbon Requirement using Solar PV

53 of 89

4.83 By offsetting electricity, PV is a very effective means of reducing carbon

emissions. Table 57 shows the amount of PV that would be required for each level of

emissions reduction requirement.

Wind

4.84 The Ercol site is the only case study which is potentially suitable for a wind turbine

installation. It is in a non residential area with wind-speeds within the range of accepted

technical viability. The effectiveness of wind turbines is increased with hub height. The

greater the height the less turbulence is experienced so the flow of the wind is stronger

and more consistent. However, at present, planning policies and public acceptability

have placed constraints on the height of inland wind turbines. In this case, two hub

height options are considered to meet the requirements. As can be seen a single turbine

with a hub height of 45m will meet the 20% requirement whereas seven turbines of 18m

hub height will only meet the 10% requirement. Clearly there will be several models

available with different ratings at different hub heights so this analysis can only serve as

illustrative.

4.85 Where a requirement is in terms of a reduction in carbon emissions wind can

achieve a 25% reduction using either a combination of small turbines at a low hub height

or a single larger turbine at a 45m hub height.

Ercol Site

10% 15% 20% 25%

Total site 123998 185997 247996 309995

7 x Westwind 20kWp

@ 18m hub height @

4.7m/s 135,800

300000


Meeting each percentage using Wind kWhr/yr

Vestas V25 @ 45m hub height

Table 58: Ercol Site – Meeting the Required Energy % with Wind Turbines

54 of 89

Ercol site

10% 15% 20% 25%

Total site 36.1 54.15 72.2 90.25

4 x Westwind

20kW 44.08

5x above 55.1

7x above 77.14

Vestas V25 170.4


Meeting each percentage using Wind

Table 59: Ercol Site – Meeting a Carbon Requirement using Wind


4.86 There are a number of technically viable options to meeting the requirement at the

Ercol Site. The site is suitable for the use of biomass boilers, although the heat profile is

not suitable for a CHP system. Both GSHP and ASHP systems would be effective and

feasible as would solar PV and even wind. Solar thermal is not an option since the hot

water demand is not sufficient.

Viability

4.87 The cheapest option is to install ASHP systems in the required number of units.

However, while this may be cheaper for the developer it will be more expensive for

occupiers, a factor that commercial property may be more sensitive to. However, should

the RHI be implemented as proposed, the running costs will be no more than if the

heating system were gas fired and, depending on future price levels, could be

considerably less.

55 of 89

Ercol Site

10% 15% 20% 25%

Total site 123998 185997 247996 309995

Block C 99,000

Block A 114,600

Blocks C & E 159,200

Blocks A & E 170,000

Block A 125,000

Blocks C & E 173,000

Blocks A & E 206,000

Blocks A, B & C 253,000

Block A 55,000

Blocks A & B 81,000

Blocks A & D & Office in B 91,000

Blocks A, C & E 113,000

Westwind 20kWp £60k

per turbine installed 140,000

Vestas V25 £285k installed 285,000

3.8 per kWp 551k

As above 826.5k

As above 1102k

As above 1379k

Additional cost to developer of meeting each percentage using ASHP £

Additional cost to developer of meeting each percentage using Wind £

Additional cost to developer of meeting each percentage using Solar PV £


Additional cost to developer of meeting each percentage using Biomass £

Additional cost to developer of meeting each percentage using GSHP £

Table 60: Ercol Site - Additional cost to developer of meeting % Energy Requirement

4.88 Table 61 sets out the financial analysis. It shows that the running costs of the

ASHP do not enable the costs to be recovered over its lifetime compared to a gas fired

system. The negative NPV suggests that, although ASHP is the cheapest option for the

developer, it would not be preferred by occupiers, or those paying the bills. However the

introduction of the RHI will improve the economics to the extent that occupiers will be

better off than they would have been had they had a gas system.

56 of 89

Energy

Requirement

from LZCs

Ercol SiteNPV £

@3.5% DR IRR%

NPV £

@3.5% DR IRR%

NPV £

@3.5% DR IRR%

NPV £

@3.5% DR IRR%

No RHI

ASHP Flat Prices -116173 0.00% -168771 0.00% -197029 0.00% -246882 0.00%


With RHI

ASHP Flat Prices 36757 9.99% 50654 9.61% 68044 10.68% 87823 10.94%

ASHP Rising Prices 12527 6.48% 15888 6.08% 26046 7.21% 34792 7.48%

10% 15% 20% 25%

Table 61: Ercol Site – Financial Analysis

4.89 The build cost for commercial sites is less than that for residential and is assumed

to be £800/m² for the purposes of this analysis. Nevertheless it is still the case that the

cost of meeting the requirement forms a small proportion of total costs as shown in Table

62.

% Requirement Solution Cost

Cost as %

of total

build

cost

10 Block A 5500 0.09

15 Blocks A & B 81000 1.30

20 Blocks A & D & Office in B 91000 1.46

25 Blocks A, C & E 113000 1.82

Table 62: Ercol Site – Costs of meeting requirement as % of total build costs

57 of 89

5 The Code for Sustainable Homes (CSH) 5.1 The reduction of carbon emissions is a key element of the Code for Sustainable

Homes and features specifically in two credit issues, ENE 1 and ENE 7. ENE 2 which

rewards good thermal performance is clearly related.

5.2 ENE 1 awards credits for improvements in the Dwelling Emission Rate over and

above that required for compliance with Part L of the Building Regulations. In addition,

mandatory requirements are set for each star level of the CSH. In the case of CSH Level

3 the mandatory requirement is a 25% improvement over Building Regulations. The

value of the Dwelling Emission Rate is derived from the SAP calculations as used to

demonstrate compliance with Part L. As such the improvement required can be achieved

by a combination of design, materials specification, insulation levels and the use of LZC

technologies. It has been demonstrated that Level 3 can be achieved without the use of

LZC technologies, although this is extremely rare in practice. It is highly unlikely that

Level 4, where a 44% improvement is required could be achieved without some form of

integrated LZC technology energy source.

5.3 ENE 7 is not mandatory but rewards the inclusion of LZC technologies that can be

demonstrated to reduce carbon emissions by either 10 or 15%. The SAP methodology is

again used to demonstrate compliance but requires a number of standard assumptions to

be used to generate the base case, these include a generic gas fired central heating system,

electric secondary heating and a standard sized hot water cylinder and heating controls

package. This standard base case does not specify U values for main building elements –

walls, roofs, floors and openings. This means that the demand calculated in the base case

can include any measures relating to these elements to be included in the actual building

that will reduce energy demand, thereby reducing the amount of LZC output required to

meet a 10% or 15% carbon reduction target. In this way the developer is credited for

incorporating improvements in the thermal performance of the building envelope by

enabling the carbon reduction target to be easier to achieve.

5.4 The requirements under ENE 1 for CSH Level 3 compliance can often lead to a

similar result as the requirements for the inclusion of LZCs to meet a 10% energy target

and at Level 4, this will be higher, around the 15-20% mark. However, this category

(ENE 1) is an overall carbon target, not an energy target, so this is more by accident than

design.

5.5 What this means in terms of WDC’s current energy target and the policy requiring

a minimum CSH level to be achieved is that conditioning a development to achieve a

certain overall CSH level, or specifying a specific level to attain for the ENE 1 category

(be it Level 3, 4, or in the middle), secures the commitment on the part of the developer at

an early stage to consider energy issues and will almost certainly ensure the use of LZC

technology to a level WDC deem suitable.

58 of 89

5.6 If the desire is to move to a carbon based approach tied to the CSH policy, then the

simplest option is to condition the attainment of the ENE 7 credits to the 10% or 15%

options available under the CSH. To go beyond these targets could also be stipulated as

the CSH software will demonstrate compliance, but no additional credits will be available

to the developer.

5.7 The discussion above is focussed entirely on domestic development and ignores the

non-domestic sector. The CSH is part of the wider BREEAM suite of sustainability

assessment methodologies for new buildings and as such, similar targets could be set in

relation to the specific BREEAM tools available to cover this important sector, as

outlined for the CSH above. The key difference between the CSH and BREEAM

schemes is that there are no mandatory energy related credits. This would suggest that a

separate energy policy is essential to achieve the take up of LZC technologies in the

WDC area in non-domestic developments.

5.8 The one caveat is that the BREEAM suite of methodologies is far from

comprehensive for all development types and there may be cases whereby a BREEAM

assessment is not regarded as the best method available for assessment. In this instance

the current approach would need to be continued, at the percentage level desired and

stipulating whether an energy or carbon target is in place.

59 of 89

6 Market Issues

6.1 Meeting a requirement to ensure that a proportion of energy demand or carbon

emissions are reduced through the installation of LZC technologies involves additional

cost to the developer. The financial viability of additional costs depends on the extent to

which the market recognises the benefits of the technologies installed. This depends on

market conditions and on the costs and benefits being well understood by purchaser,

developer and land seller.

6.2 It is recognised that the market will take some time to adjust and that in order for

this to occur, purchasers in particular need to understand the technologies and the benefits

they bring in order to make informed choices about the additional value attached to

properties that have them. A similar process has occurred in the market for electrical

appliances since the EU energy labelling scheme has been introduced. In the early stages

the market was unclear as to how to incorporate the energy performance of appliances

into the price structure, but this has now been resolved and the scheme is regarded as

highly successful in delivering its original objectives.

6.3 Where a technology proves to meet generally accepted financial viability

requirements it should be the case that the market for new homes absorbs the costs.

Rational house purchasers would be prepared to pay more for homes with technologies

that will generate cost savings. Equally house purchasers who value the environmental

credentials of one house over another should be prepared to pay a higher price. In this

way the additional investment made by developers should be at least in part recoverable

through the pricing mechanism. This may be the case in theory but to date it has not been

realised in practice.

Market Survey

6.4 As part of this study a small number of focussed consultations with experienced

participants in the local property market were undertaken in order to gauge the awareness

and experience of marketing properties with respect to energy issues. Consultations were

held with two developers and four estate agents. Although this is a very small sample the

responses were extremely consistent. A list of the questions asked and to whom is

included in Appendix A.

Impact of the Energy Performance Certificate

6.5 Since 2007 it has been a requirement that all properties for sale have an Energy

Performance Certificate (EPC) as part of the Home Information Pack. The EPC provides

details of the energy performance of the property and rates it in the same way as electrical

appliances have been rated under the EU appliance energy rating scheme, as discussed

above. Since the introduction EPCs the property market has experienced a significant

downturn. These issues were reflected in the questions asked in this survey -

1/ Respondents were asked to comment on the impact the EPC has on the marketability

of properties in terms of selling price. In all cases the response was none. The only

60 of 89

exception to this was a comment indicating that European buyers tended to take more

interest in the energy rating – reflecting perhaps a greater awareness within other

European countries.

2/ Respondents were asked whether a poor rating had ever been a major factor in the sale

of a property. Again the response was no and the matter had never been raised by

potential buyers.

3/ Respondents were asked whether a good energy rating had affected a sale. The

response was that it had never arisen in any negotiations.

LZC Technologies

6.6 This section aimed to gauge how LZC technologies are presented in marketing

property.

1/ Respondents were asked to indicate whether they presented the technologies as

positive or negative features of the properties where they existed. The results are shown

in the table below.

Percentage (%) of respondents

Technology Major

negative

Minor

negative

Neutral Minor

Benefit

Major

benefit

Solar PV 100

Solar Thermal 100

Wood fired central

heating

30 40 30

Roof mounted turbine 100

Heating from

communal plant

30 40 30

GSHP 100

ASHP 100

Oil fire central

heating

70 30

Gas fired central

heating

100

Table 63: Marketing of LZC Technologies

Both types of solar technology are viewed very positively whereas the wood fired central

heating and communal heating systems are viewed negatively. Roof mounted turbines

are also viewed negatively.

2/ Respondents were asked whether an additional value could be placed on properties

with these technologies over identical ones without. All except one replied that no

additional value could be placed on these features but that they may make the property

more saleable. The one exception suggested that a solar system could add £5k to the

61 of 89

selling price. In the case of wood fired central heating all suggested that the price would

be less.

Feed-In-Tariff and Renewable Heat Incentive

6.7 Respondents were asked whether they were aware of the feed-in-tariff (FIT) and

the proposed renewable heat incentive (RHI). None of the estate agents had any

knowledge of this, but all the developers did.

Developers

6.8 Developers were asked a few additional questions, given it is they who construct

buildings and bear the costs.

1/ Developers were asked which LZC technologies are preferred and why. The responses

were interesting in that they varied considerably. In one case the preferred solution for

meeting an energy requirement was always ASHP. In another the external space required

and perceived noise levels of ASHP led the developer to prefer solar thermal or PV.

There was a general acceptance that ASHP was best suited to larger units.

2/ Developers were asked whether costs could be passed on in the selling price. The

consensus of opinion was that this was not possible in the current market but that when

the FIT and RHI were in place this could change.

3/ Developers were asked how much additional cost could be absorbed in the build cost.

The responses indicated that a range of 10-15% of build cost could be absorbed without

impacting heavily on profit margins. It was noted that profit margins had been squeezed

recently particularly since there has been little or no flexibility on land prices or Section

106 obligations. The interplay between section 106 obligations and meeting the energy

requirement was not examined in detail. The impression given, over the course of

conversations with a small number of developers was that the costs associated with

Section 106 obligations posed more of a problem than those associated with meeting an

energy requirement as long as the additional cost of the energy requirement did not

exceed 15% of build costs.

Conclusions

6.9 This small market survey demonstrates clearly the stage at which the property

market is in relation to factoring in the costs and benefits of LZC technologies. The

response of Estate Agents indicates that the presence of LZC technologies has little

impact on the saleability or the price of homes in the open market. It clearly

demonstrates the lack of knowledge regarding the technologies on the part of the key

agents engaged in valuing and marketing residential property.

6.10 On the other hand the knowledge among developers is substantially better

developed, of necessity, since developers have been subject to increasingly rigorous

sustainability requirements through the planning process over recent years.

62 of 89

6.11 In addition to a lack of knowledge regarding how the technologies work and what

they can deliver there is a perception that, in most cases, technologies are new, untried,

complicated and involve difficulties in operation and maintenance. Since for the most

part, with the exception of biomass, the technologies concerned require little to no

maintenance and are no more complicated than a conventional heating system this is an

area where information dissemination is key.

6.12 It is clear that in the current situation and under the current challenging market

conditions investment in LZCs in new homes is unlikely to be recovered through a

premium price. However, as initiatives such as the FIT and the proposed RHI bed in and

understanding of them penetrates the market it is likely that the benefits to occupiers will

be factored in.

6.13 In addition, the recently published Government strategy for Household Energy

Management – Warm Homes, Greener Homes – recognises and states that work is and

will be undertaken with the Royal Institution of Chartered Surveyors (RICS) to ensure

the energy performance of homes starts to be better reflected in market value.

6.14 Marketing is a key factor, particularly in respect of achieving a premium status for

homes with improved sustainability. In other markets sustainability has been marketed

very successfully and there is no reason to suppose that the housing market would be any

different. It is undoubtedly the case that if savings in running costs can be demonstrated

this would be an easier feature to market than sustainability. For this reason the FIT and

the RHI are vital instruments in achieving acceptability.

6.15 These findings are consistent with results of other studies carried out in this area.

Two reports were reviewed:

• ‘Eco Chic or Eco Geek? The Desirability of Sustainable Homes’ by the Sponge

Sustainability Network which found that home owners were interested in

sustainable housing as long as it is time and cost-effective and that the lack of

information is the key barrier to driving demand for sustainable homes.

• ‘Is there a ‘Green’ £ in zero-carbon housing’ by the EST which sought the views

of new home buyers on zero-carbon homes and found that once the features were

explained to respondents a large proportion suggested that they would pay a little

more for the property.

63 of 89

7 Summary and Conclusions

Percentage energy requirement viability

7.1 The analysis of the case studies demonstrates that when a requirement is expressed

in terms of securing a reduction in energy demand through the use of renewable and low

carbon technologies the least cost solution will almost invariably be to install Air Source

Heat Pumps in however many units are required. The most notable exception is the

Cressex Road development where a range of technologies demonstrated viability. As

well as being the least costly solution ASHP technology offers a number of other

advantages:

• Ease of installation;

• Easily maintained;

• May qualify for the Renewable Heat Incentive;

• Works very well in highly insulated and airtight buildings particularly in

conjunction with mechanical heat recovery ventilation systems; and

• Removes the need to connect to the gas grid.

7.2 However, there are, needless to say, some disadvantages;

• Slightly higher running costs than gas fired heating, except in large units;

• Will not qualify for CSH ENE 7 credits;

• Take up space on outside which can be seen as a disadvantage if outside space is

limited; and

• Perception that they are noisy.

7.3 The introduction of the RHI would be a very effective measure in removing the

cost disadvantage for ASHP systems. As shown in the financial analysis the RHI

improves the viability to the extent that ASHP should be preferred over gas on the basis

of economics.

7.4 The second choice would typically be solar thermal technology, however this is

generally only able to meet a 10% or possibly a 15% energy reduction requirement. The

RHI has a dramatic effect on the economics of solar thermal technology, as can be seen in

the Cressex Road analysis, generating rates of return of over 13%. For non-domestic

sites, this technology will only be a choice if a large hot water demand exists.

7.5 Biomass would meet the target in all cases but is expensive and presents

operational and maintenance challenges that make it largely unsuitable for urban or sub-

urban residential development. It would however, be suitable for commercial sites and

for rural sites, particularly where there is no access to the gas network.

64 of 89

7.6 Solar PV is too expensive to be considered for meeting an energy requirement,

although it must be recognised that prices for this technology have fallen quite

dramatically in the past 24 months. The introduction of the FIT will be of particular

benefit to the economic viability of PV but only if its benefits are factored into the sales

price enabling the developer to recover costs.

7.7 Larger developments like the Cressex Road development are able to meet the

energy requirement in a number of ways due to its location, orientation and site

characteristics. This highlights the site specific factors that can affect both the technical

and financial viability of meeting the % requirements.

Carbon requirement

7.8 Changing the requirement from one expressed in terms of securing a reduction in

energy demand to one expressed in terms of securing a reduction in carbon emissions

would have a significant effect particularly on the technology choices in residential

developments. These are:

• Heat Pumps would no longer be able to qualify except ground source in

substantial sized properties;

• The available choices essentially would be limited to solar PV and biomass,

although with improved building fabric efficiency, solar thermal technology could

have a role at a lower percentage threshold;

• Both solar PV and biomass are expensive solutions and have other viability

issues:

o Biomass systems require additional space for plant and fuel storage which

runs counter to the trend for new homes being smaller

o PV can be considered to have a negative visual impact, although this is

subjective

7.9 In the case of non-residential developments, requirements in excess of 10% can be

challenging and even impossible to achieve through installation of LZC technology as an

isolated solution. In most cases the energy use in commercial units largely comprises

electricity, in order to offset sufficient electricity substantial PV or wind capacity would

be required, which have space implications for PV and acceptability issues for wind

turbines.

Percentage Carbon or Energy – the pros and cons

7.10 The policy to require a percentage of energy demand arising from new

developments to be sourced from on-site renewable or low carbon technologies was a

ground breaking development in the local planning arena. First introduced in the London

Borough of Merton in 2003, it quickly spread throughout numerous local authorities keen

to improve the sustainability of new construction.

7.11 As energy policy focused increasingly on carbon, many local authorities changed

the requirement from a % of energy demand, to a % reduction in carbon emissions to be

achieved through the use of renewable or low carbon technologies. Over the same period

other policy instruments have been introduced or are in the process of being introduced

65 of 89

which aim to achieve the same or a similar result, or have a degree of policy overlap, in

particular, the introduction of the Code for Sustainable Homes and feed in tariffs. As

such, it is becoming questionable whether or not any policy of this nature continues to be

necessary.

7.12 It is the case, however, that the programme of CSH introduction, particularly into

private housing and BREEAM into non-residential development is such that little

progress will be made regarding the uptake of renewable and low carbon technologies in

the short to medium term. This is the most compelling argument for retaining a separate

target in either carbon or energy demand terms.

7.13 This being the case, policy makers need to determine whether the appropriate

measure should be expressed in terms of carbon or energy demand as currently specified

by WDC. The analysis conducted in this study helps to shed some light on the

advantages and disadvantages of each approach.

7.14 Meeting a carbon target is more challenging and more expensive than meeting a %

energy requirement. The difference increases as the % requirement increases. For

example in many cases a 10% carbon or energy requirement will be able to be met using

solar thermal, a 15% energy requirement can be met using ASHP as the least cost

solution but a 15% carbon target will require the developer to consider the much more

expensive solar PV or biomass options. As the % carbon requirement increases the

technical viability becomes increasingly a matter of the availability of sufficient

roofspace for PV and storage space for biomass fuel. In the future, as district heating,

CHP with private wires networks and even individual single unit CHP units become more

widespread, meeting a carbon target will become easier to achieve. Since the political,

financial and managerial structures are not sufficiently mature in the UK to facilitate this

development in the short to medium term it is our opinion that a high carbon target

unfairly penalises the developer.

7.15 The reason why a carbon target is more difficult is because grid electricity is

currently very carbon intensive, since most new dwellings are heated using gas in

efficient heating systems the scope to reduce carbon emissions by offsetting gas is

limited, and small in comparison with the carbon associated with electricity used for

lighting and appliances. As generation from large scale renewable and nuclear stations

increases in line with government targets the carbon intensity of grid electricity will be

reduced. However, with targets of 20% of electricity generation to be from renewable by

2020, this will take a considerable time to take effect. Nevertheless, it could be argued

that since buildings constructed today will continue to be in use long after this, a

reduction in energy use rather than carbon, secures carbon reductions over the longer

period, since there is unlikely to be the same improvement in the carbon intensity of gas.

66 of 89

Advantages Disadvantages

Carbon • Consistent with CSH and to

some extent BREEAM

• Renders the use of heat pumps

largely redundant until

national grid electricity

becomes significantly less

carbon intensive – this is an

advantage as they are more

expensive to run compared to

gas heating systems (until RHI

begins, so not helping end-

user)

• Will focus developers more on

achieving energy efficiency,

so measures will normally be

built in for the lifetime of the

building

• More difficult to achieve so carbon

targets need to be specified more

conservatively than energy targets

• Reduces the technology options

available to the developer, unless

they really focus on energy

efficiency first

• Technology options are generally

the more expensive for developers

at current time, but this may change

in future

• Will create a more challenging

regime for planning as the focus in

the short to medium term will be on

solar PV and biomass, which has

aesthetic and other considerations

Energy • Offers a broader mix of

technologies that comply

• Easier to achieve for

developers – so could set

higher target

• Easier policy for developers to

demonstrate compliance with

and for planning officers to

administer

• Not consistent with CSH, BREEAM

or the general run of wider policy,

which is aimed at carbon savings

• Favours heat pumps – which are

more expensive to run, but do not

deliver significant carbon savings at

moment

• Puts the focus on to bolt-on

solutions which may have a lifespan

significantly lower than that of the

building they serve

Integrating energy efficiency with LZC technologies

7.16 The case studies have been conducted using energy demand figures generated by

generic benchmarks based on achieving the minimum standards required in terms of

thermal performance to comply with Building Regulations. As far as possible, the most

up to date figures have been used, however, it must be noted that some of the CIBSE

figures are not from recent benchmarking work and that sample sizes, in some instances

are somewhat small. This will negatively affect the results presented.

67 of 89

7.17 By incorporating improvements in insulation, building materials specification and

design, energy demand can be substantially reduced, which, in turn, reduces the

requirement for energy to be sourced from LZC technologies whether that requirement is

expressed in terms of carbon or energy. It is important that any policy encourages this

combined approach – using energy efficiency and LZC technologies to achieve a

reduction in demand and associated carbon emissions.

7.18 In order to do this any planning condition should take into account the energy usage

of the actual building. This is difficult to enforce at the early stages of the planning

process because the required calculations will not be available. It is therefore important

that any initial calculations offered are followed up throughout the design and build

process. This should be welcomed by developers since they should be credited for

improvements in energy efficiency.

7.19 If a policy is based on carbon this is all the more important. Given the difficulties

in achieving a carbon target, allowance must be taken for measures implemented to

reduce demand.

Considerations for the future

7.20 The key policy instruments outlined in this report are evolving at a rapid pace and

are likely to continue to do so in the foreseeable future. In the residential sector the drive

towards achieving the 2016 Zero Carbon Homes target is reflected in a steady increase in

the standards required for Building Regulations and the CSH. In addition national

planning guidance will develop to establish the process by which LAs can use these

instruments and others in defining their own policies.

7.21 Both of these standards will be revised in 2010 and will become more challenging

for developers. The CSH is currently out for consultation regarding the changes

proposed for later this year and a large part of this is in response to the change in Part L

of the Building Regulations, which in theory (but probably not in practice) will be a 25%

improvement on current minimum standards. This will see a major change to how ENE 1

and ENE 2 credits are awarded.

7.22 Improved building fabric standards are at the heart of this which will result in more

credits available under ENE 2, with a reduction under ENE 1. Whilst this will not affect

the suggestions provided above in Section 7.4, it will see LZC technology becoming the

norm when seeking to achieve Part L compliance, although the attention to fabric issues

may reduce the percentage energy supply of these technologies in the short term (until the

next Part L revision in 2013).

7.23 The ENE 7 category will become the ENE 3 category, but will remain unaltered

and will therefore still be usable if a carbon target is selected to replace the current energy

target.

7.24 Again, as mentioned in the section above, this is to focus on the domestic sector

only. Part L revisions also encompass non-domestic buildings and the standards here will

68 of 89

also be lifted later this year. We are not aware, however, of major changes planned for

the BREEAM schemes that cover these buildings.

Draft PPS: Planning for a Low Carbon Future in a Changing Climate

Introduction

7.25 Most recently DCLG has published a consultation on a proposed new Planning

Policy Statement (PPS): Planning for a Low Carbon Future in a Changing Climate. This

new PPS aims to merge and replace the two key PPSs in the field, the supplement to PPS

1, Planning and Climate Change, and PPS 22 on Renewable Energy. The supplement to

PPS 1 is concerned with the role of planning in meeting carbon emissions reduction

targets while that of PPS 22 is to set a positive planning framework to support the

development of renewable energy through the Regional Spatial Strategy and Local

Development Frameworks.

7.26 The objective of the new PPS is to streamline and consolidate the provisions of

PPS1 and PPS22 in light of both new legislation and the experience gained in

implementation. The new PPS will bring the measures in both previous statements in line

with the overarching objective of setting out the role of spatial planning in reducing

carbon emissions to meet national targets and to make those measures consistent with

other policy instruments, in particular, Building Regulations and the code for sustainable

Homes.

Key Measures for Local Authorities

Policy

7.27 From 2013 it will no longer be necessary for local authorities to set authority wide

targets to secure decentralised energy. This is because it is envisaged that the changes to

building regulations and the move to zero-carbon buildings will become the chief driver

of this agenda. (LCF8.1). Local Authorities will still be able to set site or development

specific targets where local circumstances justify this.

7.28 Targets will be set at a regional level within the Regional Strategy. (LCF2.2)

7.29 However, local authorities should assess their area (LCF1.4) for opportunities for

decentralised energy, note that the term decentralised energy is used to refer to all low

and zero-carbon energy technologies, particularly in the context of new development.

This should include up-to-date mapping of heat demand and possible sources of supply.

Together with sustainability appraisal, this should form the policy-making evidence base.

7.30 Local development frameworks and development plan documents are the two key

instruments for authorities to consider with respect to the new PPS:

• The Local Development Framework – ‘support the move to a low-carbon

economy and secure lo-carbon living in a changing climate. This should be

69 of 89

reflected in the vision for how the area and the places within it should develop

and respond to local challenges and opportunities’ (LCF3.1). While safeguards

to avoid adverse impacts should be provided, policies should be designed to

support and not unreasonably restrict renewable and low carbon energy

developments.

• Development Plan Document (DPD) – The DPD should set out local

requirements for decentralised energy relating to the identified development areas

or specific sites. (LCF7.1) This should be derived from the assessment carried

out according to LCF4.1 and should be consistent with giving priority to energy

efficiency measures and should focus on opportunities at a scales which

developers would not be able to realise on their own in relation to specific

developments.

7.31 The focus of the new PPS is on consistency with other instruments aimed at

reducing carbon emissions in the built environment – hence policies should be consistent

with giving priority to energy efficiency measures, with the national policy on allowable

solutions as set out in the zero carbon homes and buildings policy, should complement

building control measures an should ensure that information required by applicants is

proportionate to the scale of the development.

7.32 In setting a local requirement the new PPS does not propose to significantly change

the guidance currently in place. It is still the case that an requirement can be expressed

either as a reduction in CO2 emissions or as an amount of expected energy (LCF7.4)

7.33 The new PPS clarifies the how to determine the acceptability of a local requirement

in relation to decentralised energy, a building’s sustainability or for electric vehicle

charging infrastructure. A requirement will only be acceptable if is demonstrated that it:

• Would not make the new development unviable having regard to the overall costs

of bringing sites to the market, including the costs of any unnecessary supporting

infrastructure;

• Is consistent with securing the expected supply and pace of housing development

shown in the housing trajectory required by PPS3, and does not inhibit the

provision of affordable housing; and

• Will be implemented and monitored without duplication of applicable rating or

assessment systems.

70 of 89

7.34 In terms of the information LAs can require from applicants to demonstrate

compliance, the proposed new PPS appears to suggest that information requirements

should be minimised, however, applicants for major developments should be expected to

demonstrate how the development complies with the criteria through the design and

access statements. Therefore since full demonstration of compliance is required at

application stage little can be done to minimise information required. Perhaps the

requirement can be interpreted as an instruction to streamline and avoid duplication.

7.35 A final comment relates to the policies concerning the management of proposals for

renewable and low carbon energy developments and associated infrastructure. In general

the proposal is to ensure that development management does not prevent, delay or inhibit

proposals for renewable energy developments. Policy LCF14 sets out details including

that many proposals in the Green Belt will be inappropriate and will merit special

consideration. However, no mention is made of any other designated areas such as

AONB/SSIs etc.

7.36 In sum, the new PPS aims to consolidate planning policy relating to renewable and

low carbon energy developments, reducing emissions associated with new development

and preparing for the impacts of climate change. In terms of WDCs policy development

and the preparation of the DSA there is little to inform a change of approach except to be

mindful of the need for consistency with other policies, to make use of other measures

where possible (eg CSH) and to avoid duplication.

Recommendations

7.37 Further development of the WBC’s policy in this area concerns two key elements:

• Whether to continue with a requirement expressed in terms of energy generation

or in carbon reduction; and

• Determining the appropriate level at which to set the requirement.

7.38 In consideration of these elements a number of factors need to be taken into

account:

• The role of other policy instruments – CSH, Building Regulations and ensuring

consistency with while avoiding duplication;

• Ensuring that energy efficiency is given priority;

• Ensuring that any requirement is viable; and

• Being mindful of the future development of national policy.

7.39 It is recommended that the council considers imposing a carbon based requirement

which will be more in line with all other policy instruments but is careful not to set a

requirement that is too onerous. A level of 10% or 15% would represent an increase over

71 of 89

the current 10% energy requirement, would be consistent with the CSH ENE 7 category,

and should be viable for developers.

72 of 89

8 Appendix A – Technologies

8.1 This section provides general information about each of the technologies

considered in assessing how to meet the energy percentage reduction requirement.

Biomass Heating

Background

8.2 The CO2 that is released when wood fuel is burnt is equivalent to that taken from

the atmosphere through photosynthesis during tree growth. Even allowing for CO2

generated during planting, harvesting, processing and transport of the wood, replacement

of fossil fuel with wood fuel will typically reduce net CO2 emissions by over 98%,

assuming that the wood is managed sustainably. Whilst wood fuel has been utilised for

centuries, technological applications for its use have progressed rapidly in recent years,

with Austria and the Scandinavian countries leading the way.

8.3 Wood fuel can be broadly split into three categories; wood chips, wood pellets and

logs. Woodchips arise mainly from woodland management or dedicated wood-fuel

crops, such as short rotation coppice willow. Wood pellets are mainly produced from

untreated wood waste, such as sawdust, pulverised pallets or reclaimed timber. Logs are

a well known fuel and tend to be used in smaller domestic systems.

Wood Fuel Boiler Systems

8.4 Wood fuel heating can be undertaken in one of two ways; district/communal

heating for a large development or block of flats, or individual property based boilers.

8.5 Wood fuel heating systems typically comprise the boiler (and flue); in some

instances, particularly larger systems, a buffer tank; a circulation/distribution pump &

associated mechanical services; electrical services; controls package and a fuel storage

facility connected to the boiler, either internal or from a hopper/bunker/underground store

via a screw feed auger.

8.6 On an individual basis, system set up is essentially the same as for a conventional

domestic boiler, with a programmer controlling when heat comes on and off and

thermostatic controls as per standard domestic set-up. Even for a district

heating/communal system, the occupant has the ability to stipulate where and when heat

is delivered into the home. Therefore, the key issues that need addressing at the earliest

stage of design are whether to install a buffer tank and how/where fuel will be stored and

fed into the boiler.

8.7 If a buffer tank is included, it will act as a thermal store and allow the boiler to

operate efficiently during the periods when the heat demand is low or experiences

unpredictable peaks. Most biomass boilers tend to operate at their maximum efficiency

when they are working at full load, therefore, a heat distribution with many peaks is not

73 of 89

conducive to optimum operational efficiency. Inclusion of a buffer tank is not always

essential (only preferable for more efficient use in most cases) and some domestic pellet

boilers will not require them, operating as a conventional boiler, feeding a standard hot

water tank and radiators/under-floor heating in the traditional manner.

Figure 3: Standard domestic pellet boiler

8.8 There are a number of options for fuel storage and these are governed by space

restrictions. In most cases a prefabricated hopper located adjacent to the house (and

boiler) filled by a tanker blowing pellet in directly or, an excavated bunker fed the same

way would be the preferable solutions. Pellets can also be delivered in bags, often on a

pallet and need storage, either within a boiler room or in an external shed/garage.

Figure 4: External domestic storage hopper Figure 5: Wood Pellet Delivery Vehicle

74 of 89

Fuel Supply

8.9 Pellet supply is a rapidly developing market and supply is not a problem. Bulk

purchase has good economies of scale over regular deliveries, but additional storage is

then required.

8.10 Wood chip, should it be required, most likely for a large, district heating scheme, is

also plentiful within the area, with the Chiltern Hills being one of the more wooded

locations within in England and a number of local wood chip suppliers already being in-

situ.

Operation and Maintenance

8.11 Individual systems will need servicing twice a year and if fuel is not delivered via a

tanker, then manual filling of hoppers will be required every few days through the heating

season. Ash removal will probably be limited to a monthly timeframe and can be

disposed of within in general household waste.

8.12 Communal or district schemes will usually be managed and operated by a third

party, removing any operational or maintenance issues from the dwelling occupants, with

these services built into the heating tariff structure.

Ground Source Heat Pumps

Background

8.13 In the UK, the earth at a depth of 10 metres and below keeps a constant temperature

of around 11-12 ºC throughout the year. Because of the ground’s high thermal mass, it

stores heat from the sun during the summer. A ground source heat pump (GSHP) can

upgrade this heat from the ground into a building to provide space heating and, in many

cases, pre-heating for DHW. For every unit of electricity used to generate the useful

heat, 3-4 units of heat are produced. As well as GSHPs, air source (ASHPs) and water

source heat pumps (WSHPs) are also available, utilising ambient temperature and water

temperatures as their respective heat sources – see section 3.3 for more information on

ASHPs.

8.14 Whilst not truly a renewable energy technology because of the requirement to input

electricity, heat pumps can still have a significant impact in reducing CO2 emissions and

are cost competitive against direct electricity, oil and LPG fuelled systems and in some

instances mains gas. They can therefore be regarded as a sustainable energy solution.

The Technology

8.15 In the case of GSHP systems there are three important elements to consider (two

for an ASHP as the ground loop is removed from the equation) –

• Ground loop - comprises lengths of plastic pipe buried in the ground, either in

vertical boreholes or horizontal trenches. The pipe is a closed circuit and is filled

75 of 89

with a mixture of water and antifreeze, which is pumped round the pipe absorbing

heat from the ground.

• Heat pump – these are familiar to us in the form of refrigerators and air

conditioners. By vaporising and condensing a refrigerant a heat pump is able to

move heat from one place to another.

• Heat distribution system – GSHPs are suited to low temperature heating systems

as less energy is needed to upgrade from the source temperature. Under-floor,

ducted warm air and low temperature radiator heating systems are therefore

particularly suited for heat pumps. Heat pumps can also supply all, or a fraction of

DHW and an element of summer cooling, if the installation is designed correctly.

8.16 For ground loop based installations there are three main options: borehole (Figure 6

– below right), straight horizontal (Figure – below left) and spiral horizontal, often called

'slinkys'. Horizontal trenches cost significantly less than boreholes, but require greater

land area and are less efficient as the ground temperature varies closer to the surface. For

a slinky coil, a trench of about 30m length will provide for about 1kW of heating load.

Trenches are normally a minimum of 5m apart. Borehole based collectors will be at

depths of between 60 – 200m.

Figure 6: Horizontal Loop and Vertical Borehole GSHP

8.17 As already stated, energy is needed to activate the heat pump cycle and to compress

the vapour for the production of useful heat. The efficiency of this process is expressed

by the ratio between the useful heat delivered and the driving energy used by the

compressor. This ratio is called the Coefficient of Performance (CoP). The CoP of the

current generation of ground source based heat pumps varies from 2.5 to 5.

76 of 89


Background

8.18 ASHPs work on the same principal as a GSHP, however, the medium from which

heat is extracted is the external air rather than the ground. ASHPs will generally have a

lower seasonal CoP compared to GSHPs due to the generally lower air temperatures

compared to the ground. They may require additional backup in extremely cold

conditions and this facility is normally provided by electric heating built into the system.

Its requirement will be limited, but it can provide peace of mind to the end user.

8.19 ASHPs can either be internal modules, ideally installed in a garage, basement or

utility room (normally linked to whole hose ventilation systems), or external modules,

normally next to a wall of the building they serve. The location of an external unit is

important for performance as exposure to high winds can cause defrosting problems. It is

therefore advisable to create a fence or hedge around the unit to protect it from high

winds. In addition, the fans and compressors do make a small noise (typically

imperceptible and akin to an oil/gas boiler firing up), so it is worth considering locating

the plant away from windows and adjacent buildings. It is also possible to reduce this

noise by mounting the unit on a noise-absorbing base. Manufacturers should display the

noise levels of the units to enable an informed selection.

8.20 The image below shows a typical system, which in this instance comes with three

key components; the absorber, the boiler and the cylinder, although fully external, all-in-

one units and other variations are also available.

Figure7: Typical ASHP layout for a domestic situation

77 of 89

Solar Photovoltaics

Background

8.21 Solar generated electricity is created by the technology of photovoltaics (PV) –

solid state semi-conductors that convert light into electricity. When light (a photon) is

incident on a PV cell it gives energy to an electron. The electron moves away from the

cell into an electrical circuit. The electricity created is direct current (DC). This can

either be used to charge batteries or power DC devices; however in the UK it would

normally be converted to alternating current (AC) via an inverter to meet the electrical

demands of the site and tied into the grid.

8.22 Systems are easily retrofitted or incorporated into new and existing roofs, facades

and glazing, the technology being extremely versatile. The panels themselves when

arranged and connected together form an array with electrical generating capacity

measured in kilowatts peak (kWp - a rating calculated using a defined theoretical set of

conditions rather than maximum or typical output).

Figure 8: Standard PV panels installed on a house in Hurley, Berks

8.23 Mono-crystalline and hybrid PV panels are the most efficient at turning daylight

into energy, but it may be easier to install thin film panels in the form of solar roof tiles

rather than fitting a standard roof and then retrofitting panels. This is, however, more

costly and whilst solar roof tiles come in a variety of different physical sizes and

capacities, they do not currently vary much from a grey/blue/black colour.

Figure 9: PV roof tiles

78 of 89

8.24 The key locational requirements for a PV array are to avoid shading and to face

within 45° of south, although they will work at a reduced efficiency facing east/west. A

tilt of between 30-45° is also preferable, but not essential. Solar PV material can also be

integrated into flexible flat roof membrane materials.

Generation and Tariffs

8.25 In terms of generation capability, 1kWp installed of PV should produce around 900

units/kWhs of electricity per annum situated in a southerly-facing, un-shaded location. A

1kWp array made up of conventional panels will need around 6-7m² of space on a roof;

with around 1m² of internal wall space required for the inverter and associated

equipment.

8.26 The host building will have first call on any electricity generated and this will offset

electrical requirements, leading to saving for the occupiers. In addition to this, payment

can be received from utilities for the simple fact of generating renewable electricity. This

is due to be formalized into law from April 2010 and will be known as the feed-in tariff.

This will guarantee a payment of £0.361 for every unit generated by a PV system on a

new build property, up to a rated capacity of 4.0kWp for a period of 25 years. There will

be an annual 7% reduction in this guaranteed tariff for systems installed in the following

financial years. This will bring payback to those who invest in this technology down to

around 10 years at current electricity prices (or sooner if electricity prices rise).

Solar Thermal

Background

8.27 Solar thermal heating systems (STHS) utilise energy from the sun, in the form of

light and heat, to supply heat to hot water systems. This is achieved by using a solar

collector filled with a liquid medium, which absorbs heat from the radiation of the sun (it

does not have to be sunny to work) and transfers this heat, via a heat exchange system to

a dual coil hot water tank.

8.28 Collector technology is split between flat plate collectors and evacuated tube

systems. The former are cheaper per m² than the latter, but are not as efficient. STHS

will provide a portion of the annual domestic hot water requirements depending on the

details of the end use and size of solar collector system installed, and is generally around

50% of hot water requirements over the course of a year, although in reality this is often

higher. This will be around 95% of hot water requirements from the end of May through

to mid-September, whilst in winter a 20% contribution can be expected on average.

79 of 89

Figure 10: Flat Plate Solar Collector

Figure 11: Evacuated Tube Solar Collectors

8.29 There are now a number of solar thermal tile products entering the market and these

allow for total roof integration options, although, like PV, the product is still only

available in a traditional grey/blue slate type colouring and is more expensive than both

flat-plate and evacuated tube systems.

8.30 The hot water from a solar thermal system is normally supplied as a pre-heat to a

twin coil hot water storage tank linked to the main heating system for the home. There

will also be a drain-back unit (on some systems), pumps, controllers and pipe-work to

interface with the existing boiler system.

Figure 12: Solar thermal slates

80 of 89

8.31 Both flat-plate and evacuated tube collectors tend to be guaranteed for around 20

years but are known to last well over 30 years. Other parts such as pumps have standard

time guarantees associated with standard plumbing products. Annual maintenance

requirements are minimal and it would be reasonable to check the system on a 5 year

cycle, although it could be included with standard annual boiler servicing.

8.32 STHS collectors are best located on un-shaded, pitched roofs, facing due south for

optimum performance, although other orientations within 45 degrees either direction

from due south or horizontal mounting do not significantly affect output. Even at

east/west facing alignments, the system will still perform to around 75% of efficiency.

Building mounted Wind Turbines

Background

8.33 A building mounted turbine is one that, rather than sitting on a free standing mast,

will instead be attached to the side of a building. They typically range in rated output

from 100W to 1.5kW. They should always be several meters above the roof line and

preferably have a clear, unimpeded draw on the wind coming from the south west, which

is the prevailing direction of the wind in the UK. The amount of energy generated is

determined by the nature and velocity of the wind and the area swept by the blades.

Blade shape and rotation speed determine efficiency. Grid connection operates in the

same manner as described in the earlier section for solar photovoltaics.

8.34 This size of turbine and associated mounting structures are comparatively new to

market and it is important to be sure that the building structure can handle the additional

stresses that will be placed upon it from the mounting of a turbine. Additionally, wind

eddies and gusts around buildings, making it very difficult to accurately state quite what

power any of this type of turbine will generate over a given year.

Figure 13: Stealthgen on house in Bedfordshire

81 of 89

Free-Standing Wind Turbines

Background

8.35 A free-standing wind turbine is one that, rather than being attached to a building,

sits on a free standing mast. They range in rated output from the very small 1kW up to

the extremely large offshore type that can be rated at 5.0MW. As with building mounted

turbines, they require a clear, unimpeded draw on the wind coming from the south west,

which is the prevailing direction of the wind in the UK. The amount of energy generated

is determined by the nature and velocity of the wind and the area swept by the blades.

The larger they are, the more power they generate. Blade shape and rotation speed

determine efficiency. Grid connection is normally a direct feed, as would occur for a

power station, although it is possible to plug a system into a private wire for a site, with

the option to spill over production into the grid.

Turbine Types

8.36 As stated above, turbines range in size and power output. Below, in Figures 14, 15

& 16 are examples of small, medium and large turbines. The first is located at Brill

Primary School, Buckinghamshire and is rated at 6kW, with a blade height of 14m. The

second turbine has been in operation within the North Wessex Downs AONB since 1991

and is rated at 330kWp and is 47m high. Interestingly it only has two, rather than the

traditional three blades. The third image is of the 1.8MW rated turbine at Swaffham,

Norfolk. This is 128m high and has proven popular enough with local residents for the

town to request a second turbine be constructed. The common perception when wind

turbines are discussed is of the largest variety, so it is important to stress that this

technology comes in smaller sizes.

Figures 14 & 15: Brill School and Faccombe small & medium scale wind turbines

82 of 89

Planning Permission

8.37 This issue will dominate any plan to install medium or large scale wind turbines. It

will incur upfront costs for environmental impact studies – to include acoustic assessment

and bird/bat impact studies - and photo montages of the proposed development.

8.38 There are also limits as to the proximity with which a large turbines (and possibly

medium turbines – although we have never been able to find defined guidance on this)

can be located in relation to houses. This exclusion

zone is set at between 6-700m.

8.39 There can be no doubt that any proposed

development of a turbine of either large or medium

scale will prove controversial, whether for right or

wrong reasons, and such a development should not

be entered into lightly. Projects involving

large/medium scale turbines are probably best done

in conjunction with a specialist operator and

installer.

Figure 16: Swaffham large scale wind turbine

83 of 89

9 Appendix B – Market survey

Questions for consultees

Questions form the basis of a conversation to gauge the impact the provision of LZCs

have on the valuation of properties.

HIPS

1/ Has the introduction of the EPC as part of the HIP had any impact on selling price?

2/ Has a poor energy rating ever been a major factor in the sale of a property?

3/ Has a good energy rating ever been a major factor in the sale of a property?

LZCs

1/ To what extent are the following presented to prospective purchasers as benefits:

1 – major negative, 2 – minor negative, 3 – neutral, 4 – minor benefit, 5 – major benefit

Solar PV

Solar Thermal


Air Source Heat pump

Wood fired central heating

Roof mounted turbine

Heating provided by communal heat plant

Oil fired heating

Gas fired heating

2/ Assuming identical properties what would be the additional amount placed on the

valuation for each of the following:

Solar PV

Solar Thermal


Air source Heat pump

Wood fired central heating

Roof mounted turbine

Heating provided by communal heat plant

84 of 89

Oil fired heating

Gas fired heating

3/ Is there any difference in additional value between new build and existing housing.

4/ What are the factors that affect the valuation of energy generating devices in pricing

property?

5/ In what ways does the provision of energy efficiency/generating technologies affect

the sale of properties?

6/ Are you aware of the FIT – will it have any effect on the appeal of these technologies?

Organisations Consulted

Developers

1. Millgate Homes

2. Taylor Wimpey

3. Avebury Projects

Estate Agents

1. Hursts

2. Buckell and Ballard

3. Thompson Wilson

4. Chancellors

85 of 89

10 Appendix C – Cash flow analysis for case studies

Scenario results - Cressex Road

2010 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 19 30

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

NO RHI

Price Case Discount rate NPV IRRFlat prices ASHP 10% 3.5 -30274 0.00% cf -27000 -223 -215 -208 -201 -194 -187 -181 -175 -169 -163 -158 -152 -147 -142 -137 -133 -128 -124 -120 -116

ccf -27000 -27223 -27438 -27645 -27846 -28040 -28227 -28408 -28583 -28752 -28916 -29073 -29226 -29373 -29515 -29653 -29786 -29914 -30038 -30158 -30274

Carbon driven ASHP 10% 3.5 -31570 0.00% cf -27000 -223 -221 -220 -219 -218 -217 -217 -217 -218 -219 -220 -223 -225 -228 -232 -237 -243 -250 -257 -265

ccf -27000 -27223 -27444 -27664 -27884 -28102 -28319 -28537 -28754 -28972 -29191 -29412 -29634 -29859 -30087 -30319 -30556 -30799 -31048 -31305 -31570

Flat prices ASHp 15% 3.5 -45250 0.00% cf -40500 -323 -312 -301 -291 -281 -272 -263 -254 -245 -237 -229 -221 -214 -206 -199 -193 -186 -180 -174 -168

ccf -40500 -40823 -41135 -41436 -41728 -42009 -42281 -42544 -42797 -43043 -43280 -43509 -43730 -43943 -44150 -44349 -44542 -44728 -44908 -45082 -45250


0.00% ccf -40500 -40823 -41144 -41464 -41782 -42099 -42414 -42730 -43045 -43361 -43680 -43999 -44322 -44648 -44979 -45316 -45660 -46012 -46374 -46747 -47132

Flat prices ASHP 20% 3.5 -60227 0.00% cf -54000 -423 -409 -395 -382 -369 -356 -344 -333 -321 -311 -300 -290 -280 -271 -262 -253 -244 -236 -228 -220

ccf -54000 -54423 -54832 -55227 -55609 -55978 -56335 -56679 -57012 -57333 -57644 -57944 -58234 -58514 -58784 -59046 -59299 -59543 -59779 -60007 -60227

Carbon Driven ASHP 20% 3.5 -62693 0.00% cf -54000 -423 -421 -419 -417 -415 -413 -413 -413 -415 -417 -419 -423 -427 -434 -442 -450 -461 -475 -488 -505

ccf -54000 -54423 -54845 -55264 -55681 -56096 -56509 -56923 -57336 -57751 -58168 -58587 -59010 -59438 -59871 -60313 -60764 -61225 -61700 -62188 -62693


ccf -63000 -63520 -64022 -64508 -64977 -65430 -65868 -66291 -66700 -67094 -67476 -67845 -68201 -68545 -68877 -69199 -69509 -69809 -70099 -70379 -70649

Carbon Driven ASHP 25% 3.5 -73679 0.00% cf -63000 -520 -517 -515 -513 -510 -508 -508 -508 -510 -512 -515 -520 -525 -533 -543 -553 -567 -583 -600 -620

ccf -63000 -63520 -64037 -64552 -65065 -65575 -66083 -66590 -67098 -67608 -68120 -68635 -69155 -69680 -70213 -70755 -71309 -71875 -72459 -73059 -73679

Flat prices ST 10% 3.5 -21092 0.00% cf -30000 606 585 565 546 528 510 493 476 460 444 429 415 401 387 374 361 349 337 326 315

ccf -30000 -29394 -28809 -28244 -27698 -27170 -26660 -26168 -25692 -25232 -24787 -24358 -23943 -23543 -23155 -22781 -22420 -22071 -21733 -21407 -21092

Carbon driven ST 10% 3.5 -17564 0.00% cf -30000 606 603 600 597 594 591 591 591 594 597 600 605 611 620 632 644 660 679 699 722

ccf -30000 -29394 -28792 -28192 -27595 -27001 -26410 -25819 -25228 -24634 -24037 -23438 -22832 -22221 -21601 -20968 -20324 -19664 -18985 -18286 -17564

RHI included

Flat prices ASHP 10% 3.5 -5717 1.00% cf -27000 1447 1398 1351 1305 1261 1218 1177 1137 1099 1062 1026 991 958 925 894 864 834 806 779 753

ccf -27000 -25553 -24155 -22805 -21500 -20239 -19020 -17843 -16706 -15607 -14546 -13520 -12529 -11572 -10646 -9753 -8889 -8055 -7248 -6469 -5717

Carbon driven ASHP 10% 3.5 -7013 0.30% cf -27000 1447 1391 1338 1286 1237 1188 1141 1095 1050 1006 963 921 880 840 799 760 720 681 642 603

ccf -27000 -25553 -24162 -22824 -21537 -20301 -19112 -17971 -16877 -15827 -14821 -13858 -12937 -12057 -11218 -10419 -9659 -8939 -8258 -7616 -7013

flat prices ASHp 15% 3.5 -9619 0.70% cf -40500 2099 2028 1960 1893 1829 1768 1708 1650 1594 1540 1488 1438 1389 1342 1297 1253 1211 1170 1130 1092

ccf -40500 -38401 -36372 -34413 -32519 -30690 -28922 -27214 -25564 -23970 -22430 -20941 -19504 -18114 -16772 -15475 -14222 -13011 -11842 -10711 -9619

Carbon Driven ASHP 15% 3.5 -11501 0.00% cf -40500 2099 2019 1941 1866 1794 1724 1655 1589 1523 1459 1397 1336 1277 1218 1159 1102 1045 988 931 875

ccf -40500 -38401 -36382 -34440 -32574 -30780 -29055 -27400 -25812 -24289 -22830 -21432 -20096 -18819 -17601 -16442 -15340 -14295 -13307 -12376 -11501


ccf -54000 -51248 -48590 -46021 -43539 -41141 -38824 -36585 -34422 -32333 -30314 -28363 -26478 -24657 -22897 -21197 -19555 -17968 -16435 -14953 -13522


ccf -54000 -51248 -48602 -46057 -43611 -41259 -38999 -36829 -34747 -32750 -30838 -29006 -27255 -25581 -23984 -22465 -21020 -19650 -18356 -17135 -15988


ccf -63000 -59620 -56354 -53199 -50150 -47205 -44359 -41609 -38953 -36386 -33906 -31510 -29195 -26958 -24797 -22709 -20691 -18742 -16859 -15039 -13281


ccf -63000 -59620 -56369 -53244 -50239 -47350 -44574 -41909 -39351 -36899 -34550 -32300 -30149 -28093 -26132 -24265 -22491 -20808 -19218 -17719 -16311

Flat prices ST 10% 3.5 32354 13.50% cf -30000 4238.9565 4095.61 3957.111 3823.296 3694.006 3569.088 3448.394 3331.782 3219.113 3110.254 3005.076 2903.455 2805.271 2710.406 2618.75 2530.193 2444.631 2361.963 2282.089 2204.917

ccf -30000 -25761 -21665 -17708 -13885 -10191 -6622 -3174 158 3377 6488 9493 12396 15201 17912 20531 23061 25505 27867 30149 32354

Carbon driven ST 10% 3.5 35883 14.00% cf -30000 4239 4113 3992 3874 3760 3650 3547 3447 3353 3263 3175 3094 3016 2943 2877 2813 2755 2704 2655 2612

ccf -30000 -25761 -21648 -17656 -13782 -10022 -6372 -2825 622 3975 7238 10413 13507 16523 19467 22343 25157 27912 30616 33270 35883

87 of 89

Scenario results - Castle Street flats

2010

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20NO RHI


ccf -27000 -27296 -27583 -27859 -28126 -28384 -28634 -28875 -29108 -29333 -29550 -29760 -29963 -30159 -30349 -30532 -30708 -30879 -31044 -31204 -31358


ccf -27000 -27296 -27591 -27884 -28176 -28467 -28756 -29045 -29335 -29625 -29917 -30211 -30507 -30806 -31109 -31419 -31734 -32057 -32389 -32731 -33084

Flat prices ASHp 15% 3.5 -51626 0.00% cf -45000 -450 -435 -421 -406 -393 -379 -366 -354 -342 -331 -319 -309 -298 -288 -278 -269 -260 -251 -243 -234

ccf -45000 -45450 -45886 -46306 -46712 -47105 -47484 -47851 -48205 -48547 -48877 -49197 -49505 -49803 -50091 -50370 -50639 -50898 -51149 -51392 -51626


ccf -45000 -45450 -45899 -46345 -46789 -47231 -47670 -48110 -48550 -48992 -49435 -49882 -50332 -50787 -51248 -51718 -52198 -52689 -53194 -53714 -54251


ccf -58000 -58593 -59184 -59772 -60357 -60939 -61518 -62097 -62676 -63259 -63843 -64431 -65024 -65624 -66231 -66851 -67482 -68129 -68795 -69479 -70187

Rising prices ASHP 20% 3.5 -70187 0.00% cf -58000 -593 -573 -554 -535 -517 -500 -483 -466 -451 -435 -421 -406 -393 -379 -367 -354 -342 -331 -319 -309

ccf -58000 -58593 -59167 -59721 -60256 -60773 -61273 -61756 -62222 -62673 -63108 -63529 -63935 -64328 -64708 -65074 -65428 -65771 -66101 -66421 -66730

Flat prices ASHP 25% 3.5 -91941 0.00% cf -81000 -743.7681 -718.617 -694.315 -670.836 -648.151 -626.233 -605.056 -584.595 -564.826 -545.726 -527.271 -509.441 -492.213 -475.568 -459.486 -443.948 -428.935 -414.43 -400.416 -386.875

ccf -81000 -81743.77 -82462.4 -83156.7 -83827.5 -84475.7 -85101.9 -85707 -86291.6 -86856.4 -87402.1 -87929.4 -88438.8 -88931 -89406.6 -89866.1 -90310.1 -90739 -91153.4 -91553.8 -91940.7

Rising prices ASHP 25% 3.5 -96274 0.00% cf -81000 -744 -740 -737 -733 -729 -726 -726 -726 -729 -733 -737 -744 -751 -762 -776 -791 -811 -834 -858 -887

ccf -81000 -81744 -82484 -83221 -83954 -84683 -85409 -86135 -86861 -87590 -88323 -89060 -89804 -90555 -91316 -92093 -92884 -93695 -94529 -95387 -96274

RHI included

Flat prices ASHP 10% 3.5 1331 4.00% cf -27000 1926 1861 1798 1737 1678 1622 1567 1514 1463 1413 1365 1319 1275 1231 1190 1150 1111 1073 1037 1002

ccf -27000 -25074 -23213 -21415 -19678 -18000 -16378 -14811 -13297 -11835 -10422 -9056 -7737 -6463 -5231 -4041 -2892 -1781 -708 329 1331

Carbon driven ASHP 10% 3.5 -395 3.30% cf -27000 1926 1852 1781 1712 1646 1582 1519 1457 1397 1339 1282 1226 1172 1117 1064 1011 959 906 855 802

ccf -27000 -25074 -23222 -21441 -19728 -18082 -16500 -14982 -13524 -12127 -10789 -9507 -8281 -7109 -5992 -4928 -3917 -2958 -2052 -1198 -395

flat prices ASHp 15% 3.5 -1925 3.00% cf -45000 2928 2829 2734 2641 2552 2466 2382 2302 2224 2149 2076 2006 1938 1872 1809 1748 1689 1632 1576 1523

ccf -45000 -42072 -39242 -36509 -33868 -31316 -28850 -26468 -24166 -21943 -19794 -17718 -15712 -13775 -11902 -10093 -8345 -6656 -5025 -3448 -1925


ccf -45000 -42072 -39255 -36547 -33944 -31441 -29036 -26727 -24511 -22387 -20352 -18403 -16539 -14758 -13059 -11442 -9904 -8447 -7069 -5770 -4550


ccf -58000 -54142 -50414 -46813 -43333 -39971 -36723 -33584 -30552 -27622 -24792 -22057 -19414 -16861 -14394 -12011 -9708 -7483 -5333 -3256 -1249


ccf -58000 -54142 -50432 -46864 -43434 -40137 -36968 -33926 -31006 -28208 -25527 -22959 -20503 -18156 -15918 -13787 -11762 -9841 -8026 -6315 -4707


ccf -81000 -76165 -71494 -66981 -62620 -58407 -54336 -50403 -46603 -42931 -39384 -35956 -32645 -29445 -26354 -23367 -20481 -17693 -14999 -12396 -9881


ccf -81000 -76165 -71515 -67044 -62746 -58614 -54643 -50831 -47172 -43665 -40305 -37087 -34010 -31069 -28263 -25594 -23055 -20649 -18374 -16229 -14215

88 of 89

Scenario results - Terriers School

2010

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20NO RHI


ccf -54000 -54632 -55243 -55833 -56403 -56954 -57486 -58000 -58497 -58977 -59441 -59889 -60322 -60740 -61144 -61535 -61912 -62277 -62629 -62969 -63298

Carbon driven ASHP 10% 3.5 -66981 cf -54000 -632 -629 -626 -623 -620 -617 -617 -617 -620 -623 -626 -632 -638 -647 -660 -673 -689 -709 -729 -754

ccf -54000 -54632 -55261 -55887 -56510 -57130 -57747 -58364 -58981 -59601 -60224 -60850 -61482 -62120 -62767 -63427 -64100 -64789 -65497 -66227 -66981

Flat prices ASHp 15% 3.5 -94846 cf -81000 -941 -909 -879 -849 -820 -793 -766 -740 -715 -691 -667 -645 -623 -602 -582 -562 -543 -524 -507 -490

ccf -81000 -81941 -82851 -83729 -84578 -85399 -86191 -86957 -87697 -88412 -89102 -89770 -90415 -91037 -91639 -92221 -92783 -93326 -93850 -94357 -94846


ccf -81000 -81941 -82878 -83810 -84738 -85661 -86580 -87499 -88418 -89341 -90269 -91201 -92142 -93092 -94056 -95039 -96041 -97066 -98122 -99208 -100331

Flat prices ASHP 20% 3.5 -140092 cf -121500 -1264 -1221 -1180 -1140 -1101 -1064 -1028 -993 -960 -927 -896 -866 -836 -808 -781 -754 -729 -704 -680 -657

ccf -121500 -122764 -123985 -125165 -126305 -127406 -128470 -129499 -130492 -131452 -132379 -133275 -134141 -134977 -135785 -136566 -137321 -138049 -138754 -139434 -140092

Carbon Driven ASHP 20% 3.5 -147456 cf -121500 -1264 -1258 -1252 -1246 -1240 -1234 -1234 -1234 -1240 -1246 -1252 -1264 -1276 -1294 -1319 -1345 -1377 -1417 -1458 -1508

ccf -121500 -122764 -124022 -125273 -126519 -127759 -128992 -130226 -131460 -132699 -133945 -135196 -136460 -137736 -139030 -140350 -141695 -143072 -144490 -145948 -147456

Flat prices ASHP 25% 3.5 -184607 cf -162000 -1536.841 -1484.87 -1434.66 -1386.14 -1339.27 -1293.98 -1250.22 -1207.94 -1167.09 -1127.63 -1089.5 -1052.65 -1017.06 -982.662 -949.432 -917.326 -886.305 -856.333 -827.375 -799.396

ccf -162000 -163536.8 -165022 -166456 -167843 -169182 -170476 -171726 -172934 -174101 -175229 -176318 -177371 -178388 -179371 -180320 -181237 -182124 -182980 -183807 -184607


ccf -162000 -163537 -165066 -166588 -168103 -169610 -171110 -172610 -174111 -175618 -177132 -178654 -180191 -181742 -183316 -184921 -186556 -188231 -189954 -191728 -193561

RHI included

Flat prices ASHP 10% 3.5 6441 4.00% cf -54000 4108.8551 3969.908 3835.66 3705.952 3580.63 3459.546 3342.556 3229.523 3120.312 3014.794 2912.845 2814.343 2719.172 2627.219 2538.376 2452.537 2369.601 2289.47 2212.048 2137.244

ccf -54000 -49891.14 -45921.2 -42085.6 -38379.6 -34799 -31339.4 -27996.9 -24767.4 -21647.1 -18632.3 -15719.4 -12905.1 -10185.9 -7558.69 -5020.31 -2567.77 -198.172 2091.298 4303.346 6440.59

Carbon driven ASHP 10% 3.5 2758 4.10% cf -54000 4109 3952 3800 3653 3511 3375 3240 3109 2980 2856 2735 2615 2499 2384 2269 2157 2045 1933 1823 1712

ccf -54000 -49891 -45940 -42140 -38487 -34975 -31600 -28361 -25251 -22271 -19415 -16680 -14065 -11566 -9182 -6913 -4755 -2710 -777 1046 2758

flat prices ASHp 15% 3.5 9010 4.70% cf -81000 6119 5912 5712 5519 5332 5152 4978 4810 4647 4490 4338 4191 4049 3913 3780 3652 3529 3410 3294 3183

ccf -81000 -74881 -68969 -63257 -57738 -52405 -47253 -42275 -37466 -32819 -28329 -23991 -19800 -15750 -11838 -8058 -4405 -876 2533 5827 9010

Carbon Driven ASHP 15% 3.5 3526 4.00% cf -81000 6119 5885 5659 5440 5229 5026 4825 4631 4438 4253 4073 3895 3722 3550 3379 3213 3046 2878 2715 2550

ccf -81000 -74881 -68996 -63337 -57897 -52668 -47642 -42817 -38186 -33748 -29495 -25422 -21527 -17805 -14255 -10876 -7663 -4617 -1739 976 3526


ccf -121500 -113285 -105347 -97678 -90269 -83110 -76192 -69509 -63052 -56814 -50786 -44962 -39335 -33898 -28645 -23570 -18666 -13929 -9351 -4928 -655


ccf -121500 -113285 -105384 -97787 -90483 -83462 -76714 -70237 -64020 -58061 -52351 -46883 -41654 -36657 -31890 -27354 -23041 -18951 -15087 -11442 -8019


ccf -162000 -152010 -142358 -133032 -124021 -115316 -106904 -98777 -90925 -83339 -76009 -68927 -62084 -55473 -49085 -42913 -36951 -31189 -25623 -20244 -15048


ccf -162000 -152010 -142402 -133164 -124282 -115744 -107539 -99662 -92102 -84856 -77913 -71263 -64904 -58827 -53031 -47514 -42269 -37297 -32597 -28165 -24003

89 of 89

Scenario results - Ercol Site

2010

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20NO RHI

Price Case Discount rate NPV IRRFlat prices ASHP 10% 3.5 -116173 cf -55000 -4159 -4018 -3882 -3751 -3624 -3501 -3383 -3269 -3158 -3051 -2948 -2848 -2752 -2659 -2569 -2482 -2398 -2317 -2239 -2163

ccf -55000 -59159 -63177 -67059 -70810 -74434 -77935 -81318 -84587 -87745 -90796 -93744 -96593 -99345 -102004 -104573 -107055 -109454 -111771 -114010 -116173


ccf -55000 -59159 -63297 -67416 -71514 -75593 -79652 -83712 -87771 -91849 -95948 -100066 -104224 -108422 -112682 -117023 -121448 -125980 -130644 -135443 -140404

Flat prices ASHp 15% 3.5 -168771 cf -81000 -5967 -5765 -5570 -5382 -5200 -5024 -4854 -4690 -4531 -4378 -4230 -4087 -3949 -3815 -3686 -3562 -3441 -3325 -3212 -3104

ccf -81000 -86967 -92732 -98302 -103684 -108883 -113907 -118761 -123451 -127982 -132360 -136590 -140677 -144626 -148441 -152127 -155689 -159130 -162455 -165667 -168771


ccf -81000 -86967 -92905 -98814 -104695 -110547 -116371 -122195 -128019 -133872 -139752 -145661 -151627 -157651 -163761 -169991 -176340 -182843 -189534 -196419 -203537


ccf -91000 -98208 -105172 -111901 -118402 -124684 -130753 -136617 -142282 -147756 -153045 -158155 -163092 -167862 -172471 -176924 -181226 -185383 -189400 -193280 -197029


ccf -91000 -98208 -105381 -112520 -119624 -126694 -133729 -140765 -147801 -154870 -161974 -169112 -176319 -183596 -190978 -198503 -206173 -214028 -222112 -230429 -239028


ccf -113000 -122102 -130895 -139392 -147601 -155532 -163195 -170599 -177753 -184665 -191343 -197795 -204029 -210052 -215872 -221495 -226927 -232176 -237248 -242147 -246882


ccf -113000 -122102 -131159 -140173 -149143 -158070 -166954 -175838 -184721 -193648 -202618 -211631 -220731 -229919 -239241 -248742 -258427 -268346 -278553 -289055 -299912

RHI included


ccf -55000 -48762 -42735 -36912 -31286 -25850 -20598 -15524 -10621 -5884 -1307 3115 7388 11516 15504 19358 23081 26679 30154 33513 36757

Carbon driven ASHP 10% 3.5 12527 6.48% cf -55000 6238 5906 5587 5278 4981 4694 4398 4112 3816 3530 3252 2963 2682 2388 2081 1780 1464 1129 798 447

ccf -55000 -48762 -42856 -37269 -31991 -27010 -22315 -17917 -13805 -9988 -6459 -3207 -244 2438 4827 6908 8688 10152 11281 12080 12527

flat prices ASHp 15% 3.5 50654 9.61% cf -81000 8950 8647 8355 8072 7799 7536 7281 7035 6797 6567 6345 6130 5923 5723 5529 5342 5162 4987 4818 4655

ccf -81000 -72050 -63403 -55048 -46975 -39176 -31640 -24359 -17324 -10528 -3961 2384 8515 14438 20160 25690 31032 36193 41180 45999 50654


ccf -81000 -72050 -63575 -55560 -47986 -40839 -34104 -27793 -21893 -16417 -11352 -6686 -2435 1413 4840 7827 10381 12481 14101 15247 15888


ccf -91000 -80188 -69741 -59648 -49896 -40474 -31371 -22575 -14077 -5866 2067 9732 17138 24293 31206 37886 44339 50575 56599 62420 68044


ccf -91000 -80188 -69950 -60267 -51118 -42484 -34347 -26724 -19596 -12980 -6862 -1226 3910 8559 12699 16307 19393 21929 23887 25271 26046


ccf -113000 -99348 -86157 -73413 -61099 -49202 -37707 -26601 -15870 -5503 4514 14193 23544 32579 41308 49742 57891 65764 73371 80721 87823


ccf -113000 -99348 -86421 -74194 -62641 -51740 -41466 -31839 -22839 -14486 -6761 357 6842 12712 17939 22495 26391 29594 32066 33814 34792

Documents

Delivery and Site Allocations DPD – Evidence to Support ... and Site Allocations DPD – Evidence to Support Sustainable Construction ... FEED–IN-TARIFF AND RENEWABLE HEAT INCENTIVE