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LEICESTERSHIRE COUNTY COUNCIL LEICESTERSHIRE HEAT NETWORKS STUDY LOT 2 – HEAT MAPPING AND MASTERPLANNING PE10591/Final FEBRAURY 2017 Page 88 Table 3.32: NPV Sensitivity Analysis for Loughborough B Network at 40-year project lifecycle and a 10% discount rate with 20% HNIP Grant & RHI

Table 3.32: NPV Sensitivity Analysis for Loughborough B ... 002 of PE10591 DHN... · In the case of the Loughborough B DHN only gas CHP with gas ... the age of existing plant and

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Page 1: Table 3.32: NPV Sensitivity Analysis for Loughborough B ... 002 of PE10591 DHN... · In the case of the Loughborough B DHN only gas CHP with gas ... the age of existing plant and

LEICESTERSHIRE COUNTY COUNCILLEICESTERSHIRE HEAT NETWORKS STUDYLOT 2 – HEAT MAPPING AND MASTERPLANNING

PE10591/FinalFEBRAURY 2017

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Table 3.32: NPV Sensitivity Analysis for Loughborough B Network at 40-year project lifecycle and a 10% discount rate with 20% HNIP Grant& RHI

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As shown in Table 3.24 to Table 3.26, there are three DHNs that show some potential financial

viability, gas boilers exclusively (option 3) and gas CHP with gas boilers (option 4 and 6). When

comparing the options, option 4 is the most financially viable with positive NPVs in all

scenarios at the 3.5% and 5% discount rates (although not at all at the 10% rate). In the best

of the modelled cases, option 4 has an IRR of 9.3% over 40 years and has a breakeven period

of 13 years if a 20% HNIP grant is obtained.

Options 3 and option 6 are borderline financially viable with IRRs of 5.3% and 5.4%

respectively in their modelled best cases (note, option 3 is not eligible for an HNIP grant as it

meets neither the renewable energy nor CHP criteria). When modelled without a grant over

a 25 year project life both options do not achieve positive NPVs even when modelled at a

3.5% discount rate. As both of these options are borderline they are quite sensitive to

increases in CAPEX, OPEX and in the case of option 6 decreases in the electricity sales price.

In the case of the Loughborough B DHN only gas CHP with gas boilers should be considered

moving forward.

3.8 Business as Usual

A business as usual (BAU) case has been considered for the Loughborough A and B networks.

The BAU cases involve the financial analysis of the anchor loads on the network under a set

of standard conditions should a DHN not be implemented. The exact mix of existing heat

supply plant, the age of existing plant and the prices currently paid for heat are not known for

most of the identified anchor loads. Therefore, it has been necessary to simulate the existing

BAU cases by modelling the use of modern gas boilers with the heat demands used in the

DHN analysis. For the Loughborough A network a gas purchase price of 2.2p/kWh has been

applied to the University’s heat load to reflect the price it currently pays. The gas purchase

price for all the other heat loads is assumed to be 2.55p/kWh, which is the average price paid

by a medium industrial business in Mar 2016. For the Loughborough B network the gas

purchase price has all been modelled at 2.55p/kWh which is considered representative of the

price that would be paid commercially for this heat at the scale of the heat loads present in

this network. The existing gas boilers were assumed to have 5 years of useful life left from a

15year lifetime with replacement costs applied at the appropriate times. Table 3.33 and Table

3.34 show the BAU analyses.

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The BAU analyses have shown that modern gas boilers in the individual buildings can provide

the heat required by the anchor loads modelled on the Loughborough A and B networks. The

purpose of considering the BAU case is to compare the costs of doing nothing (except like-

for-like replacement when required) with the costs of implementing the DHN. The BAU

scenario is also used to calculate the carbon savings from each technology.

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3.9 Future Opportunities

This stage of the feasibility study has focussed on the anchor loads identified as being core to

kick starting the DHN, however once a DHN is established there are a number of opportunities

for future growth, in particular the development areas to the north and south of the Newhurst

EfW plant located at Charnwood Quarry. Current proposals indicate construction of up to

3,200 dwellings, 16ha for employment purposes, a community hub, two primary schools and

an extension to the science park. The Loughborough A network would utilise around 75% of

the EfW plant’s heat capacity, so there would be some spare capacity to cater for this

potential expansion. If this proves insufficient, there may be an opportunity to utilise waste

heat from Boal UK’s aluminium casting plant. Alternatively, a new energy centre could be

implemented. Any DHN that is developed will need to be “futureproofed” to be compatible

this potential growth, i.e. the pipework specifications are compatible with this and there is

space at the energy centres to add more equipment. If the Loughborough A network does not

go forward, a separate DHN based solely on the EfW plant could be developed at a future

date to service these areas. There are also a number of smaller residential developments

closer to the centre of the town, which may be suitable for connection to either the

Loughborough A or B networks at a later date.

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4 COALVILLE

4.1 The Opportunity

Coalville is a town in the North West Leicestershire District of Leicestershire with a population

of approximately 5,000 people. It lies on the A511 trunk road between Leicester and Burton

upon Trent, close to junction 22 of the M1 motorway.

4.2 Potential Heat Loads from Existing Buildings

Figure 4.1 (below) shows the spatial distribution of heat demand density in and around the

Coalville area, based on the National Heat Map model.

Figure 4.1: Spatial Heat Density in Coalville

The map shows clusters of spatial heat demand density around the High Street in the centre

of the town, as well as in the industrial estates located directly to the north of the centre and

to the north-west of town. There also appears to be an area of high demand density at the

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Bardon Hill industrial area, out to the south-east of the town. This correlates less clearly with

the results of the overlay analysis (see Figure 4.2 below) due to the absence of large

residential buildings and buildings that can be classed as anchor loads within these industrial

areas. As discussed in previous sections, areas defined through the overlay analysis are those

that fulfil each of the three criteria outlined in Section 2.1.3 of the methodology section (i.e.

areas that are within the 10% of land area with the highest heat demand density, that are

within 200m of residential buildings with an annual heat demand of more than 100,000kWh

per year, and that are within 200m of potential anchor loads), and again, industrial buildings

are not included in the anchor load definition at this early stage, but may be considered for

further investigation once an area of focus has been defined.

Figure 4.2: Area Identified as Meeting all three Conditions of Overlay Analysis in Coalville

As with Loughborough, the initial list of anchor loads was reviewed with the client and

supplemented with data collected through the survey. The final list of proposed anchor loads

is shown in the table below and the energy demands (i.e. for heat, power and, where

appropriate, cooling) for each of these are included in Appendix A3.

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It should also be noted that at the time of writing there are plans to relocate the Hermitage

Leisure Centre to a town centre location within the next 5 years. This development would

provide a high and consistent demand for heat (data provided by North West Leicestershire

District Council states that the demand for heat from the existing leisure centre building was

460,800 kWh in 2014), hence its connection to a heat network should be viewed as a

significant opportunity.

4.3 Potential Heat Loads from New Development

Figure 4.3 shows the location of possible development sites within and around Coalville. The

large development site to the south-east of the town, known as the ‘South East Coalville

Sustainable Urban Extension’, appears to be the most significant of these in both location and

size with plans for almost 3,500 dwellings along with a primary school and local centre

(including a public house, day nursery, medical centre and 2000m2 space for A1, A2, A3 and

A5 uses). There is also an adjacent site to the south of this site that is designated for

‘employment’ purposes (this looks likely to include both B5 and B8 uses). Estimated energy

demands for these sites are included in Appendix A3. These are based on a trajectory for

construction that has been provided by North West Leicestershire District Council and has

been set from 2015 to support the potential to link the Local Plan. Note that whilst a total of

3,500 dwellings are anticipated for the South East areas of high heat demand in Coalville site,

only the 2,178 homes that are included in the current trajectory (i.e. up until 2031) are

included in the calculations. Dwellings due for construction at a later date may also be suitable

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for connection to a heat network and this should be considered once more information is

available regarding their timeline for delivery.

Figure 4.3: Proposed Development Sites in and Around Coalville

4.4 Heat Load Profile

The Coalville profile accounts for all anchor loads noted in Table 4.1. A sample of the modelled

demands for the educational, commercial and total profile are shown in Figure 4.4. As can be

seen the total combined profile shown in purple is mostly impacted by the commercial profile

(orange) while the educational profile (purple) has less of an effect. This is because the

commercial profile accounts for 61% of the annual heat demand and the commercial profile

only 39%. The total annual demand for the Coalville network without losses is 125,756MWh.

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Figure 4.4: Heat Demand Profile for Coalville Network

As can be seen the profile modelled is quite “peaky” with the peak load modelled at

approximately 3.5 times higher than the average load. The demand profile would therefore

require high boiler capacities which would be underutilised for substantial time periods over

the course of the year. The modelled profile can be smoothed using a moving average to

account for the storage capacity of the network itself (water retained in the pipework) and

additional storage tanks which have been included within the model. The Coalville network

has a storage buffering capacity of approximately 20 hours. The impact of this on the final

demand profile is shown in Figure 4.5. As can be seen the modelled storage capacity of the

Coalville network has a substantial impact on the demand profile, reducing the peak load to

approximately twice the average load.

Figure 4.5: Heat Storage Buffering Effect on Coalville Network

0

200

400

600

800

1000

1200

1400

0 12 24 36 48 60 72

Hea

tD

eman

dkW

Hour

Commercial Profile Education Profile Total Profile

0

200

400

600

800

1000

1200

1400

0 24 48 72 96

Hea

tD

eman

dkW

Hours

Actual 6h Offset 12h Offset 20h Offset

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4.5 Potentially Viable Energy Supply Options and Energy Centres

The Coalville networks have a number of technologies that are suitable for consideration. A

summary of the technologies being considered are shown in Table 4.2.

Table 4.2: Technologies Under Consideration for Coalville Heat Networks

Network Option Baseload Peak

Coalville Network Biomass Boilers

Biomass CHP

Gas Boilers

Gas CHP

Minewater Heat Pumps

Gas Boilers

The target baseload capacity was 75% of the heat demand, with the peak load plant aiming

to provide the remaining heat. Based on the capacity of the individual boilers and CHP units

the baseload modules couldn’t always meet exactly 75% but multiple modules were used to

reach a capacity that was as close as possible to this size. The number of units in each of the

scenarios varies due to capacity of the individual modules being modelled. In some cases,

based on quoted plant costs, it was preferable to use a larger number of lower capacity

modules to come closer to the 75% baseload rather than a lower number of higher capacity

modules. Details of the Coalville energy centre technology options are shown in Table 4.3

below.

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Table 4.3: Coalville Heat Generation Technology Options

Coalville Heat Generation Options

1 2 3 4 5 6

Bas

e

Heat Generation Technology Biomass Boiler Biomass CHP Gas Boiler Gas CHP Biomass Boiler Gas CHP

Number of Boilers/Engines 1 1 1 1 1 2

Total Capacity Thermal 800kW 833kW 788kW 927kW * 550kW 852kW

Total Capacity Electrical 0 333kW 0 1,820kW * 0 712kW

Pea

k

Heat Generation Technology Gas boiler Gas boiler Gas boiler Gas boiler Gas boiler Gas boiler

Number of Boilers/Engines 1 1 1 1 2 1

Total Capacity Thermal 530kW 530kW 530kW 530kW 1070kW 530kW

Total Capacity Electrical 0 0 0 0 0 0

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4.6 Energy Distribution Network

The energy distribution networks under consideration were largely influenced by the relative

locations of the anchor loads and heat supply options or energy centre locations.

Consideration was also given to geographic or human constraints whilst determining the

optimal network route, in addition to network length and associated heat losses.

. Both sites are expected to have

good connections to the utility services. Neither location is expected to raise any noise issues

as the current use is not residential (the nearest dwellings are 400m away). Similarly, air

quality is not expected to be a problem as gaseous emissions from the energy centres would

need to meet the statutory limits. This could easily be achieved by selecting the appropriate

stack height and in the case of biomass, fitting abatement equipment if required.

A comparison of the expected heat losses, capital cost and pumping energy requirements of

the networks for each of the potential energy centre locations was undertaken. The results

are shown in Table 4.4, below. As can be seen the capital costs associated with EC2 are

approximately 16% lower than EC1, the heat losses are also approximately 16% lower for EC2

and the pumping energy requirements are approximately 26% lower for EC2. For these

reasons EC2 was chosen as the preferred energy centre location in the subsequent technical

and financial assessments. Figure 3.8 shows the proposed heat distribution network. The

comparison provided does not take into account the individual expenses of the energy centre

and heat generation technologies but rather assesses the implications on the heat

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distribution network (pipe size, length etc) on the two proposed locations. Full details of the

CAPEX breakdown are provided in Appendix C.

Table 4.4: Comparison of Proposed Energy Centre Locations

EC1 – Industrial Area EC2 – College

Capital Cost £2,600,125 £2,180,283

Heat Losses 557 MWh/yr 467 MWh/yr

Pumping Requirements 103,103 kWh/yr 76,606 kWh/yr

Network Length 3530m 3034m

When designing a DHN it is preferred to opt for the shortest and most direct route to the heat

consumer’s plantroom. This methodology will secure the lowest running costs as heat loss

and pumping cost will be minimised. The route has been proposed after a site walkover

clarifying that this route is possible. Siting the energy centre at EC2 is more favourable in

terms of CAPEX, heat loss and pumping requirements. However, siting it at EC1 in the

industrial area is more appropriate from a planning perspective as it would be neighboured

by buildings of a similar type.

A number of potential pinch points exist for the proposed Coalville DHN.

Preferably

the road will be excavated in phases using prefabricated pipe elements, backfilling and

reinstatement of the road surface after testing. This is not expected to raise any significant

concerns. Where possible the pipework will be placed on the footpaths as opposed to on any

public road. Crossing the railway line would require engagement with Network Rail and may

incur additional costs for planning and permitting but there are no specific technical problems

anticipated based on the information obtained at this stage. The documentation of many

services is often not accurate which will lead to carrying out more test holes and eventually

change the route. For the actual design of the DHN system in Coalville, we have at this stage

not obtained any information about other services or sought any permits from Highways

England, utility companies or any local authorities.

4.6.1 Low Temperature Network

Specific consideration has been given to a low temperature network utilising the heat energy

contained within flooded mines as a heat source for a water source heat pump. Without a

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detailed site investigation and pumping tests it is not possible to fully determine the extent

or availability of the mine water resource, or whether a closed loop or open loop system

would be the most appropriate. However, based on information provided by the Coal

Authority, certain assumptions and inferences can be made about the resource and a broad

level analysis undertaken. Based on other monitoring stations nearby, it is assumed that a

water body with sufficient flow rate exists at a temperature of 11.7 °C at a depth of 75m.

Although drilling a borehole could be a viable option which could theoretically take place at

any suitable area on the network route that is over a section of flooded mine, for the purposes

of this assessment it has been assumed that access would be via an existing mine shaft on the

industrial estate on Comet Way to minimise costs. The shaft itself is located approximately

110m west of EC1. It is envisaged that a closed loop system could be deployed where energy

from the warm mine water could be absorbed in an antifreeze solution circulated in the

source loop of a conventional heat pump located at EC1. The heat pump working fluid, having

benefited from a temperature increase following compression, would be used to supply a

second heat exchange system attached to the heat distribution network. The low

temperature network would have a flow and return temperature of 55-35°C and therefore

would have fewer heat losses than a high temperature network.

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Figure 4.6: Temperature and COP of other Minewater Heat Recovery Projects10

A similar study undertaken by Wardell Armstrong in the City of Stoke on Trent found that

445kW of heat was recoverable from 122m depth via a standing column well with a 5 l/s bleed

circulation of minewater. Other projects at Freiberg and Rostov have achieved COPs of close

to 4 (see Figure 4.6) with a water temperature similar to those found within the Leicestershire

mine workings. It is also assumed that, with the exception of the fire station which will be

built to modern building standards, the remaining buildings will require a significant fabric

efficiency improvement for this technology to work. Detailed assessments should be

undertaken should this option progress to the next stage, however for modelling purposes it

is assumed the heating demand will be reduced by 44% (this is loosely in line with the CO2

reductions required by current Building Regulations) and the improvement costs will be

approximately similar to residential at £83/m2.

10 Ramos, R., Breede, K and Falcone, G. 2015. Geothermal heat recovery from abandoned mines: a systematicreview of projects implemented worldwide and a methodology for screening new projects. Environmental EarthScience V73, 6783-6795.

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Whilst it has not been considered in detail in the financial model, it is worth noting that there

is some potential for private wire electrical connections in the vicinity of the proposed

Coalville energy centre options. This is important for CHP generation because the electricity

could potentially be sold at a premium directly to end users rather than at the wholesale

generation prices. Allowance must still be given for increased capital installation costs so only

electrical loads near to the energy centres have been considered. For simplicity electrical

loads exceeding 100MWh/yr within 200m of the energy centre have been identified and are

reported in Table 4.5 below.

The above table suggests that, in theory, 860MWh of electricity per year could be supplied by

private wire if EC1 is adopted whilst 1,598MWh could be supplied via EC2. It is not known at

this stage whether any of these electrical loads would be interested in switching supplier to a

local generator and it is therefore recommended that further investigation into the viability

of private wire schemes be considered in the next phase of works.

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4.7 Financial Appraisal

The financial appraisal provides further details on the heat distribution network and

compares the financial viability of the energy generation technologies, collectively the DHN.

Cash flow models were applied to the DHN at 25 and 40-year project lifecycles. For each of

the lifecycle options, cash flow models were run at discount rates of 3.5%, 5% and 10%. No

debt finance has been considered in this phase of work so the networks were assessed based

on three primary funding scenarios:

i. A 20% HNIP grant towards the capital costs of the heat distribution network with

the remainder equity funded, together with energy centre qualification to the

Renewable Heat Incentive (RHI) where appropriate.

ii. No HNIP grant towards the capital costs of the heat distribution network so the

network completely equity funded, together with energy centre qualification to

the Renewable Heat Incentive (RHI) where appropriate.

iii. No HNIP grant towards the capital costs of the heat distribution network so the

network completely equity funded, and no energy centre qualification to the

Renewable Heat Incentive (RHI).

Quotations have been obtained for most of the equipment and materials required in the

Capex in addition to the fuel costs. When quotations for equipment, materials and fuels

where unavailable reasonable assumptions where made based on previous experience, other

reports and data sources. These are provided in full in the accompanying spreadsheets. For

CHP the modelled results assume 100% electricity export to grid to allow for a simple

comparison across the networks although the financial results could be improved if private

wire connections are used. Table 4.7 shows the financial assumptions made for the initial

assessment however some of the criteria will be tested in the subsequent sensitivity analysis.

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Table 4.6: Financial Assumptions

Financial Criteria Rate

Heat revenue inflation 2.70%

CPI Inflation 0.30%

RPI Inflation 1.10%

Gas price inflation 1.60%

Electricity price inflation 2.70%

Wood fuel costs inflation 2.50%

RHI Digression -1.00%

Rent (as percentage of capital costs) 1%

Insurance (as a percentage of capital costs) 1.50%

A sensitivity analysis has been undertaken on each of the modelled DHNs to show how the

financial outcomes change when adjustments are made to the models financial input criteria.

The sensitivity assessment is performed separately to the DHNs at 25 and 40-year project

lifecycles and 3.5%, 5% and 10% discount rates. The sensitivity assessment is applied to Capex,

Opex, and Fuel price and heat sales price at +/- 10% of the original modelled values.

Table 4.7, Table 4.8 and Table 4.9 show details of heat distribution network and a comparison

of the heat generation technologies. Table 4.10, Table 4.11 and Table 4.12 show the results

of the financial assessment for the DHN. Full details of what the costs include can be found in

Appendix C. Table 4.13 to Table 4.18 provides a sensitivity analysis which shows how the NPV

changes with adjustments to the financial input parameters.

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Table 4.8: Comparison of Baseload Energy Generation Technologies for the Coalville Network

1 2 3 4 5 6

Baseload TechnologyHoval STU WoodPellet Boiler 800

Small biomass airturbine CHP

Hoval Gas Boiler850

GE CHP (E)Imperitive Biomass

Boiler 550kWthPowerBloc EG-355

Fuel Source Wood Pellet Wood Chip Gas Gas Wood Chip Gas

Baseload Plant Capacity

Heat (kWth) 800 833 788 927 550 852

Electrical (kWe) 0 333 0 1,820 0 712

Baseload Plant Energy Generation

Heat (MWh/yr) 4,299 4,377 4,270 4,568 3,517 4,418

Electrical (MWh/yr) 0 1,751 0 8,972 0 3,692

Baseload Plant Module Capacities

Number of boilers/engines 1 1 1 1 1 2

Heat (kWth) 800 833 788 927 550 426

Electrical (kWe) 0 333 0 1820 0 356

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Table 4.9: Comparison of Peakload Energy Generation Technologies for the Coalville Network

1 2 3 4 5 6

Peakload PlantHoval GasBoiler 575

Hoval Gas Boiler 575 Hoval Gas Boiler 575 Hoval Gas Boiler 575 Hoval Gas Boiler 575 Hoval Gas Boiler 575

Peakload Plant Capacity

Heat (MWth) 0.53 0.53 0.53 0.53 1.07 0.53

Electrical (MWe) 0.00 0.00 0.00 0.00 0.00 0.00

Peakload Plant Energy Generation

Heat (MWh/yr) 473 395 502 204 1,255 354

Electrical (MWh/yr) 0 0 0 0 0 0

Peakload Plant Module Capacities

Number of boilers/engines 1 1 1 1 2 1

Heat (kWth) 533 533 533 533 533 533

Electrical (kWe) 0 0 0 0 0 0

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The following tables provide information on the sensitivity of the financial model to various criteria such as Capital Expenditure (CapEx),

Operational Expenditure (OpEx), fuel prices and, in the case of CHP, electricity sales price. For the purpose of this report only sensitivity figures

relating to the ‘with 20% HNIP Grant and RHI’ scenario have been presented.

Note: the greyed out line denotes that the energy option did not reach the criteria for HNIP eligibility.

Table 4.13: NPV Sensitivity Analysis for Coalville Network at 25-year project lifecycle and a 3.5% discount rate with 20% HNIP Grant & RHI

Table 4.14: NPV Sensitivity Analysis for Coalville Network at 40-year project lifecycle and a 3.5% discount rate with 20% HNIP Grant & RHI

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Table 4.15: NPV Sensitivity Analysis for Coalville Network at 25-year project lifecycle and a 5% discount rate with 20% HNIP Grant & RHI

Table 4.16: NPV Sensitivity Analysis for Coalville Network at 40-year project lifecycle and a 5% discount rate with 20% HNIP Grant & RHI

Table 4.17: NPV Sensitivity Analysis for Coalville Network at 25-year project lifecycle and a 10% discount rate with 20% HNIP Grant & RHI

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Table 4.18: NPV Sensitivity Analysis for Coalville Network at 40-year project lifecycle and a 10% discount rate with 20% HNIP Grant & RHI

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As can be seen in the financial analysis, the modelled Coalville DHN options are borderline

financially viable or financially unviable under most modelled conditions. Only gas CHP with

gas boilers (option 4) showed a positive NPV and this was only the case during a 40-year

project lifetime at a 3.5% discount rate and whilst supported by a 20% HNIP capital grant

towards the heat distribution network. The sensitivity analysis showed that the economic

outlook for option 4 could be improved if there was a reduction in OPEX and to a lesser extent

a reduction in fuel costs and an increase in the sales price of electricity. As it stands with no

sensitivity applied, option 4 has an IRR of -0.9% over a 25-year period and 3.8% over a 40-year

project lifecycle. This weak financial performance is primarily due to the Coalville DHN being

geographical large for the size of the heat load it would serve. The economics of the DHN

should be re-visited when significant additional heat loads become available, i.e. the

relocation of the Hermitage Leisure Centre to a town centre location in the next 5 years.

4.7.1 Low Temperature Alternative Network

Table 4.19 and Table 4.20 show details of Coalville low temperature heat distribution

network. Table 4.21, Table 4.22 and Table 4.23 show the results of the financial assessment

for this DHN. Full details of what the costs include can be found in Appendix C.

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As can be seen from Table 4.21, Table 4.22 and Table 4.23 none of the modelled scenarios

showed a positive NPV. This is largely due to the high operating costs associated with the

project notwithstanding the additional CAPEX involved with improving the building fabric

efficiency which wouldn’t be considered as part of other scenarios. The heat loads were

substantially reduced after the improved efficiency measures and without a substantial

temperature gradient the amount of energy that can be extracted from the mine is limited.

This project could be revisited in the future and may be more appropriate to a new

development on a smaller scale for instance for a single building.

4.8 Business as Usual

A business as usual (BAU) case has been considered for the Coalville network. The BAU cases

involve the financial analysis of the anchor loads on the network under a set of standard

conditions should a DHN not be implemented. The BAU cases have been modelled to use

modern gas boilers with the heat demands used in the DHN analysis. The gas purchase price

is modelled to be 2.55p/kWh which is the average price paid by a medium industrial business

in 2016. The gas boilers were assumed to have a 15 year life and be due for replacement in

the next 5 years with subsequent replacement costs applied at the appropriate times. Table

4.24 shows the BAU analysis.

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The BAU analysis has shown that modern gas boilers in the individual buildings can provide

the heat required by the anchor loads modelled on the Coalville network. It should be noted

this is an economic assessment only. The CO2 emissions stated represent the emissions

assuming current emission levels are maintained i.e. there are no technological

improvements to the replacement boilers that reduce emissions over the lifetime of the

project. There are therefore no CO2 savings associated with the BAU modelled case.

4.9 Future Opportunities

This stage of the feasibility study has focussed on the anchor loads identified as being core to

kick starting the DHN, however once a DHN is established there are some opportunities for

future growth, in particular, the redevelopment of the industrial estate around Vulcan Way,

the relocation of the Hermitage Leisure Centre to a town centre location in the next 5 years

and potentially an extension of the network to the community hospital, although this is some

distance away. There are also some opportunities to extend the network northwards

into the planned development areas that are there. If a network is

implemented it should be “futureproofed” to be compatible with potential growth, i.e. the

pipework specifications should allow for increased flow and there should be space at the

energy centre to add more equipment. The large development site to the south-east of the

town, the South East Coalville Sustainable Urban Extension, is too far away to be connected

the proposed Coalville network but could benefit from a separate DHN when sufficient anchor

loads become available.

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5 BROADNOOK GARDEN SUBURB

5.1 The Opportunity

The Broadnook Garden Suburb is a planned development located on land to the north of

Birstall in the Charnwood Borough (predominantly in the parish of Wanlip). The site is

identified within Charnwood Borough Council’s Local Plan Core Strategy (November 2015),

and is the subject of a planning application for around 1,650 homes, as well as a primary

school, community resource centre, health centre, and retail and commercial spaces. Figure

5.1 shows an overview of the site and a high resolution map is provided in Appendix A4.

Figure 5.1: Broadnook Garden Suburb Masterplan

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5.2 Potential Heat Loads from New Development

At the time of writing information regarding the form of the proposed development is limited,

therefore the demand for heat and power has been only broadly estimated in order to

provide an idea of scale. For non-domestic buildings, demand was estimated based on

expected floor areas provided by the developer alongside generic benchmark figures for each

building type. For domestic development demand was estimated using housing mix data from

another similar development as a proxy, alongside information from the Strategic Housing

Market Assessment (SHMA)11 , national space standards 12 and data from the National Energy

Efficiency Database (NEED) 13. The availability of the calculated demand was estimated over

time using information contained in the Strategic Housing Land Availability Assessment

(SHLAA) documentation. The demand estimates are purely indicative at this stage and will

need to be refined once more detailed information becomes available. Estimated energy

demands for this site are included in Appendix A3.

5.3 Heat Load Profile

The Broadnook profile accounts for all heat loads noted in Appendix A3 at the completion

year (2027) of the development. A sample of the modelled demands for the residential,

commercial and total profile are shown in Figure 5.2. As can be seen the total combined

profile shown in purple is mostly impacted by the residential profile (blue) while the

commercial profile has less of an impact. This is because the residential profile accounts for

62% of the annual heat demand and the commercial profile only 38%. The total annual

demand for the Broadnook network without losses is 15,964MWh. The generated profile is

based on a number of assumptions. There are 1650 dwellings which have been split evenly

across the build types (detached, semi-detached, terrace and flat). The occupancy profiles

have been split at 30% occupancy profile 1, 60% occupancy profile 2 and 10% occupancy

profile 3.

11 http://www.charnwood.gov.uk/pages/strategichousingmarketassessment12 https://www.gov.uk/government/publications/technical-housing-standards-nationally-described-space-standard13 https://www.gov.uk/government/collections/national-energy-efficiency-data-need-framework

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Figure 5.2: Heat Demand Profile for the Broadnook Network

The modelled profile is less “peaky” than the other networks modelled but can still be

smoothed using a moving average to account for the storage capacity of the network itself

(water retained in the pipework). The Broadnook network has a storage buffering capacity of

approximately 15 hours. The impact of this on the final demand profile is shown in Figure 5.3.

As a result, the peak demand is approximately half that of the non-buffered profile.

Figure 5.3: Heat Storage Buffering Effect on Broadnook Network

0

1000

2000

3000

4000

5000

6000

0 12 24 36 48 60 72

Hea

tD

eman

dkW

Hours

Commercial Profile Residential Profile Commercial and Domestic Profile

0

1000

2000

3000

4000

5000

6000

0 24 48 72 96

Hea

tD

eman

dkW

Hours

Actual 3h offset 6h Offset 9h Offset 15h Offset

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5.4 Potentially Viable Energy Supply Options and Energy Centres

The Broadnook network has a number of technologies that are suitable for consideration. A

summary of the technologies being considered are shown in Table 5.1. Consultation was

undertaken with Advance Tapes to determine the potential viability of recovering waste heat

within their manufacturing process but due to distance and geographic constraints a

connection to the Broadnook network was determined to be unfeasible. It was also

established through consultation with Biffa that the AD plant to the east of Broadnook at

Wanlip did not have any waste heat available for export.

Table 5.1: Heat Generation Technology Considered for Broadnook DHN

Network Option Baseload Peakload

Broadnook Network Biomass Boilers

Biomass CHP

Gas Boilers

Gas CHP

Gas Boilers

The target baseload capacity was 75% of the heat demand, with the peak load plant aiming

to provide the remaining heat. Based on the capacity of the individual boilers and CHP systems

the baseload modules couldn’t always meet exactly 75% but multiple modules were used to

reach a capacity that was as close as possible to this size.. The number of units in each of the

scenarios varies due to capacity of the individual modules being modelled., In some cases,

based on quoted plant costs, it was preferable to use a larger number of lower capacity

modules to come closer to the 75% baseload rather than a lower number of higher capacity

modules. This has the additional benefit for a new development of allowing a phased

deployment of the network as construction progresses. Details of the Broadnook heat

generation technology options are shown in Table 5.2 below.

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Table 5.2: Broadnook Heat Generation Technology Options

Broadnook Heat Generation Technology Options

1 2 3 4 5 6

Bas

e

Heat Generation Technology Biomass Boiler Biomass CHP Gas Boiler Gas CHP Biomass Boiler Gas CHP

Number of Boilers/Engines 3 4 2 2 1 5

Total Capacity Thermal 2,925kW 3,333kW 3,708kW 3,122kW * 2,000kW 3,275kW

Total Capacity Electrical 0 1,333kW 0 7,280kW * 0 2,660kW

Pea

k

Heat Generation Technology Gas boiler Gas boiler Gas boiler Gas boiler Gas boiler Gas boiler

Number of Boilers/Engines 4 2 2 2 1 2

Total Capacity Thermal 1,296kW 1,066kW 648kW 1,066kW 4,150kW 1,066kW

Total Capacity Electrical 0 0 0 0 0 0

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5.5 Energy Distribution Network

The Broadnook energy distribution network connects commercial loads to the west and the

northeast of the development and residential properties towards the centre and the far west.

The proposed Broadnook energy centre is located towards the southwest of the development

approximately central to the northern and western branches of the network with good access

from the A46 and A6. Estimates of the cost, heat losses and pumping requirement is shown

in Table 5.3 below and a map of the DHN is shown in Figure 5.4. The heat distribution network

modelled is indicative and should be re-assessed once the heat loads on the network can be

confirmed. Full details of the capital costs are provided in Appendix C.

Table 5.3: Details of the Broadnook Heat

Distribution Network

Capital Cost £2,260,500

Heat Losses 946 MWh/yr

Pumping Requirement 566 MWh/yr

Network Length 3125m

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08/08/2016Drawn By:

Checked By:

Date:

Date:J Wilkinson

1 : 6000@ A3

S. Allen 22/08/2016

Containsr Open OS Data. Contains public sector information licensed under the Open Government Licence v2.0

Figure 5.6PE10591

-1.1267° : -52.6953°

BNG Ref:

OS 100km Grid:

Long : Lat DMS

Long : Lat DD

448836 : 318009 SK 129

-1° 7' 36.12" : 52° 41' 43.03"

Landranger Ref:

1 : 750 000

Broadnook Heat NetworkCharnwood District

Leicestershire

Wardell Armstrong LLPWheal Jane Earth Science ParkBaldhu, Truro, TR3 6EH

Tel: +44 (0) 1872 560738email: [email protected]: www.wardell-armstrong.com

200Metres0

Heat Distribution Network

Broadnook Energy Centre

Figure 5.4

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5.6 Financial Appraisal

The financial appraisal provides further details on the heat distribution network and

compares the financial viability of the energy generation technologies, collectively the DHN.

Cash flow models were applied to the DHN at 25 and 40-year project lifecycles. For each of

the lifecycle options, cash flow models were run at discount rates of 3.5%, 5% and 10%. No

debt finance has been considered in this phase of work so the networks were assessed based

on three primary funding scenarios:

i. A 20% HNIP grant towards the capital costs of the heat distribution network with

the remainder equity funded, together with energy centre qualification to the

Renewable Heat Incentive (RHI) where appropriate.

ii. No HNIP grant towards the capital costs of the heat distribution network so the

network completely equity funded, together with energy centre qualification to

the Renewable Heat Incentive (RHI) where appropriate.

iii. No HNIP grant towards the capital costs of the heat distribution network so the

network completely equity funded, and no energy centre qualification to the

Renewable Heat Incentive (RHI).

Quotations were obtained for most of the equipment and materials required in addition to

the likely fuel costs. When quotations for equipment, materials and fuels were unavailable

reasonable assumptions were made based on previous experience, other reports and data

sources. These are provided in full in the accompanying spreadsheets. For CHP options, the

modelled results assume 100% electricity export to the grid to allow for a simple comparison

across the networks, although the financial results could be improved if private wire

connections were used. Table 5.4 shows the financial assumptions made for the initial

assessment, however some of the criteria will be tested in the subsequent sensitivity analysis.

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Table 5.4: Financial Assumptions

Financial Criteria Rate

Heat revenue inflation 2.70%

CPI Inflation 0.30%

RPI Inflation 1.10%

Gas price inflation 1.60%

Electricity price inflation 2.70%

Wood fuel costs inflation 2.50%

RHI Digression -1.00%

Rent (as percentage of capital costs) 1%

Insurance (as a percentage of capital costs) 1.50%

A sensitivity analysis has been undertaken on each of the modelled DHNs to show how the

financial outcomes change when adjustments are made to the models financial input criteria.

The sensitivity assessment was undertaken at 25 and 40-year project lifecycles and 3.5%, 5%

and 10% discount rates. The sensitivity assessment was applied to Capex, Opex, fuel price and

heat sales price at +/- 10% of the original modelled values.

Table 5.5, Table 5.6 and Table 5.7 show details of heat distribution network and a comparison

of the heat/energy generation technologies. Table 5.8, Table 5.9 and Table 5.10 show the

results of the financial assessment for the DHN. Full details of what the costs include can be

found is Appendix C. Table 5.11 to Table 5.16 give the sensitivity analysis results showing how

the NPV changes with adjustments to the financial input parameters.

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Table 5.5: Details of the Broadnook Heat Distribution Network

Heat Distribution Network

Heat supply

Heat Demand (MWh/yr) 16,910

Losses (MWh/yr) 946

Total Heat Required (MWh/yr) 17,856

DHN Losses/Total Heat Req 5.30%

Heat Distribution Network Lifetime 40

Initial Capital Costs

Heat Distribution Network £2,055,000

Contingency £205,500

Other Capital Costs £0

Total Initial Capital Costs £2,260,500

Annual costs

Rent/Wayleaves £0

Maintenance £5,000

Business Rates £0

Insurance £0

Pumping cost £44,967

Annual Costs £49,968

Decommissioning Costs £45,210

As percentage of Capital Costs 2%

Revenue Streams

Heat sales £/kWh 0.035

Heat revenue £558,752

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The following tables provide information on the sensitivity of the financial model to various criteria such as Capital Expenditure (CapEx),

Operational Expenditure (OpEx), fuel prices and, in the case of CHP, electricity sales price. For the purpose of this report only sensitivity figures

relating to the ‘with 20% HNIP Grant and RHI’ scenario have been presented.

Note: the greyed-out line denotes that the energy option did not reach the criteria for HNIP eligibility.

Table 5.11: NPV Sensitivity Analysis for Broadnook Network at 25-year project lifecycle and a 3.5% discount rate with 20% HNIP Grant & RHI

Table 5.12: NPV Sensitivity Analysis for Broadnook Network at 40-year project lifecycle and a 3.5% discount rate with 20% HNIP Grant & RHI

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Table 5.13: NPV Sensitivity Analysis for Broadnook Network at 25-year project lifecycle and a 5% discount rate with 20% HNIP Grant & RHI

Table 5.14: NPV Sensitivity Analysis for Broadnook Network at 40-year project lifecycle and a 5% discount rate with 20% HNIP Grant & RHI

Table 5.15: NPV Sensitivity Analysis for Broadnook Network at 25-year project lifecycle and a 10% discount rate with 20% HNIP Grant & RHI

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Table 5.16: NPV Sensitivity Analysis for Broadnook Network at 40-year project lifecycle and a 10% discount rate with 20% HNIP Grant & RHI

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As can be seen from the financial analysis, there are two leading options, GE Gas CHP with

peak lopping gas boilers (option 4) and gas boilers exclusively (option 3). Option 4 is the

financially strongest option overall but both options have positive NPVs in all of the modelled

scenarios with the exception of the option 3 under a 10% discount rate. It should be noted

that neither of these options qualifies for the RHI and option 3 is excluded from the 20% HNIP

capital grant. Option 4 also returns the highest IRR’s across the three scenarios and across

both the 25 year and 45 year project lifetimes. The Hoval gas CHP with gas boilers (option 6)

is a financially viable option with positive NPVs but only at 3.5% and 5% discount rates over a

40 year project lifetime. The sensitivity analysis has shown that gas boilers (option 3) are

relatively resilient to all of the sensitivities modelled while the CHP options are significantly

affected by variations in OPEX, fuel price and the electricity sales price.

5.7 Business as Usual

A business as usual (BAU) case has been considered for the Broadnook network. The BAU

cases involve the financial analysis of the anchor loads on the network under a set of standard

conditions should a DHN not be implemented. The BAU cases have been modelled to use

modern gas boilers with the heat demands used in the DHN analysis. The gas purchase price

is modelled to be 2.55p/kWh which is the average price paid by a medium industrial business

in 2015. The gas purchase price is modelled to be 2.55p/kWh which is the average price paid

by a medium industrial business in 2016. The gas boilers were assumed to have 5 years left of

a 15 year life with replacement costs applied at appropriate times. Table 5.17 shows the BAU

analysis.

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The BAU analysis has shown that modern gas boilers in the individual buildings can provide

the heat required by the anchor loads modelled on the Broadnook network. It should be

noted this is an economic assessment only. The CO2 emissions stated represent the emissions

assuming current emission levels are maintained i.e. there are no technological

improvements to the replacement boilers that reduce emissions over the lifetime of the

project. There are therefore no CO2 savings associated with the BAU modelled case.

5.8 Future Opportunities

This stage of the feasibility study has focussed on the “as planned” development at

Broadnook. It is possible that sometime in the future the development may be extended. If a

network is implemented it should be “futureproofed” to be compatible with potential growth,

ie the pipework specifications should allow for increased flow and there should be space at

the energy centre to add more equipment.

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6 RAMSCLIFF AVENUE

6.1 The Opportunity

Ramscliff Avenue is located towards the south side of Donisthorpe, to the south of Acresford

Road. Ramscliff Avenue hosts a mix of privately owned and Council owned properties which

were built in the 1950s and are not connected to the gas grid. The properties are currently

primarily heated by solid fuel back boilers. There are 53 properties in total under Council

ownership which are being considered for the DHN. Properties under private ownership have

not been considered in this assessment at this phase but could potentially be included at a

later stage. Land adjacent to Ramscliff Avenue is under Leicestershire County Council

ownership and should this land be developed for housing it could create a larger network in

the future.

6.2 Potential Heat Loads from Existing Buildings

The majority of the dwellings on Ramscliff Avenue are 1950s system built semi-detached or

terraced homes. Most of these houses have insulated walls with concrete cladding and solid

fuel boilers with radiators (the data provided by North West Leicestershire Council indicates

that one house on the street has electric heating). It is noted that the Council has a

commitment to replace all solid fuel heating systems with an alternative by 2025.

Address data provided by North West Leicestershire Council for council-owned properties on

Ramscliff Avenue was plotted using OS coordinates in order to show which of the properties

on the street were under the Council’s management and were therefore more likely to agree

to be connected to a district heating scheme. Note that some of the address points did not

fall exactly within a building outline and therefore there may be some level of error here that

would need to be considered should any scheme progress further.

6.3 Potential Heat Loads from Existing Buildings

The Council owned dwellings heat loads have been estimated using the house type and data

from the National Energy Efficiency Data Framework (NEED). Table 6.1 shows the heat

demand for Ramscliff Avenue.

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Table 6.1: Heat Demand for Ramscliff Avenue

Variable Demand

Total Heat Demand 751,500 kWh

6.4 Heat Load Profile

The Ramscliff Avenue profile accounts for all individual dwellings summarised in Appendix A3.

A sample of the modelled demand profile for the dwellings is shown in Figure 6.1. The total

annual demand for the Ramscliff Avenue network without losses is 751,500 kWh. The

generated profile is based on a number of assumptions. There are 53 dwellings which have

been split across the build types according to information provided by the Client. The

occupancy profiles have been split at 25% occupancy profile 1, 25% occupancy profile 2 and

50% occupancy profile 3.

Figure 6.1: Heat Demand Profile for Ramscliff Avenue Network

The modelled profile is “peaky” with the peak load being approximately 3 times the average.

Due to its relatively small size, the network has a heat storage capacity of only 20 minutes

which will not have a substantial smoothing effect on the modelled profile. Storage tanks

could be implemented to allow for a more smoothened demand profile and to reduce the

boiler capacity. Figure 6.1 shows the smoothened profile with a maximum of 10 hours storage

which reduces the peak load by approximately half.

0

50

100

150

200

250

300

0 12 24 36 48 60 72

Hea

tD

eman

dkW

Hours

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Figure 6.2: Ramscliff Avenue Heat Load Profile (after Smoothing)

6.5 Potentially Viable Energy Supply Options and Energy Centres

In terms of suitable heating technologies, options are limited for Ramscliff Avenue. Gas and

gas CHP have been discounted as the cluster is not connected to the gas network. Biomass

boilers have been considered and CHP could have potential although without any fixed anchor

loads the electricity would be exported to the national grid. Water in a flooded mineshaft

could also potentially be used as a heat source for a low temperature DHN in conjunction with

a water sourced heat pump (WSHP) and there are one or two shaft in the vicinity, so this

option has been considered. It is also likely that GSHPs or ASHPs, which do not need a DHN

may be a cheaper option, so these have also been assessed.

As a result of the low temperature heat produced by heat pumps, the buildings being served

by them have to have a high thermal efficiency. The buildings at Ramscliff Avenue do not

currently have a high enough fabric efficiency to permit the connection of heat pumps and

therefore the costs and constraints associated with improving the building efficiency must be

included within the assessment. Although the dwellings at Ramscliff Avenue have undergone

some thermal efficiency upgrades, they would have to be brought up to the thermal efficiency

standard required in the current Building Regulations for a heat pump to operate effectively.

The costs associated with this have been included within the financial appraisal. Upgrading

the building fabric would also reduce the modelled heat demands noted in section 6.2.

0

50

100

150

200

250

300

0 24 48 72 96

Hea

tD

eman

dkW

Hours

Actual 3h offset 6h Offset 10h Offset

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Two options have been modelled for GSHPs and ASHPs, one with no grant and a second with

a 20% grant. Heat pumps have been modelled for space heating requirements only. The

dwellings post improvement energy requirement is based on the dwelling floor area and the

Zero Carbon Hubs Fabric Energy Efficiency Standard (FEES) with an additional 10%.

6.5.1 Biomass Boilers and Biomass CHP

As Ramscliff is off the gas grid, biomass technologies are the only options available to supply

heat to a standard DHN. Without the option for gas boilers for peak lopping, biomass boilers

and CHP have been sized to meet 100% of the peak load. For some of the modelled scenarios

the boilers are oversized as there are fewer options available. Details of the potential biomass

heat/ energy generation options available at Ramscliff Avenue are shown in Table 6.2

(Options 1-4).

Table 6.2: Ramscliff Heat Generation Technology Options

1 2 3 4

Bas

e

Heat Generation

Technology

Biomass

Boiler

Biomass

Boiler

Biomass

Boiler

Biomass CHP

Number of

Boilers/Engines 4 1 1 2

Total Capacity Thermal 240kW 175kW 360kW 160kW

Total Capacity Electrical 0 0 0 90kW

Pea

k

Heat Generation

Technology

Not required Biomass

Boiler

Not required Biomass

Boiler

Number of

Boilers/Engines 0 1 0 1

Total Capacity Thermal 0 60kW 0 60kW

Total Capacity Electrical 0 0 0 0kW

6.5.2 Minewater Heat Recovery

The mine water heat recovery option (Option 5) involves pumping minewater from a nearby

borehole at Saltersford Brook where the water would be transferred to a single heat pump

housed in the energy centre. At this stage a heat exchanger would transfer the heat to a

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closed loop heat pump system and transferred across the heat distribution network. It was

decided that as a nearby borehole exists close to the site, it would be preferred to utilise this

existing access to the flooded mine rather than incurring the costs of drilling a new borehole

when it is not known if the mine water reservoir extends beneath the estate. The system

consists of a 60kWth closed loop water source heat pump that would increase the mine water

from 11.6 °C to a maximum flow of 55 °C and a return of 25 °C. It is assumed a COP of 3.9

would be achieved based on a review of case studies from other mine water heat recovery

schemes.

6.5.3 GSHPs

Standalone GSHPs (Option 6) which have been modelled to be deployed as individual heat

pumps at each property. Single heat pumps with individual ground mains where chosen

opposed to communal ground mains as they can be built out in a more incremental manor.

The heat pumps have been sized based on the Kensa Heat Pumps approximate sizing

guidelines for efficient buildings with an additional 20% capacity factor. The ground main

would be installed in shallow trenches or boreholes in the gardens of each property. After

improving the building fabric Table 6.3 shows the details of the GSHP option.

Table 6.3: Ramscliff Avenue GSHP (Option 6)

Unit Capacity

(kW)

Number

Required

Small 3.5 1

Medium 4.3 20

Large 6 32

6.5.4 ASHPs

Standalone ASHPs (Option 7) have been sized based on the Kensa Heat Pumps approximate

sizing guidelines for efficient buildings with an additional 20% capacity factor. After improving

the building fabric, Table 6.4 shows the details of the ASHP option.

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Table 6.4: Ramscliff Avenue ASHP (Option 7)

Unit Capacity

(kW)

Number

Required

Small 4.8 21

Medium 8.3 32

Large 11 0

6.6 Energy Distribution Network

The heat distribution network is small in size by comparison to the other networks as it only

services properties on one street and is shown in Figure 6.3 below. The Ramscliff Avenue

energy centre would be located on green disused space towards the east of Ramscliff Avenue

and the heat distribution network tracks almost the whole length of the street. A second

section of the network runs southeast along a field boundary to the south of Ramscliff avenue

towards the borehole at Saltersford Brook with the potential for an extension across

Measham Road to the borehole at Oakthorpe Bungalow. Table 6.5 shows a comparison of the

proposed heat networks for the standard biomass energy centres and the extended mine

water heat recovery route. Full details of the network costs are provided in Appendix C.

Table 6.5: Comparison of Proposed Heat Networks

Biomass Energy

Centre

Mine Water Heat

Recovery Route

Capital Cost £308,750 £924,320

Heat Losses 60 MWh/yr 66 MWh/yr

Pumping Requirements 17 MWh/yr 51 MWh/yr

Network Length 480m 1437m

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09/08/2016Drawn By:

Checked By:

Date:

Date:J Wilkinson

1 : 3 500@ A3

Figure 6.2PE10591

-1.5314° : 52.7215°

BNG Ref:

OS 100km Grid:

Long : Lat DMS

Long : Lat DD

431650 : 313899 SK 128

-1° 31' 52.87 : 52° 43' 17.3"

Landranger Ref:

1 : 750 000

Ramscliff Heat NetworkNorth West Leicestershire District

Leicestershire

Wardell Armstrong LLPWheal Jane Earth Science ParkBaldhu, Truro, TR3 6EH

Tel: +44 (0) 1872 560738email: [email protected]: www.wardell-armstrong.com

S Allen 22/08/2016

Containsr Open OS Data. Contains public sector information licensed under the Open Government Licence v2.0

Council Owned Dwellings

Minewater Extraction Borehole

Ramscliff Energy Centre

Heat Distribution Network

Minewater Pipeline

Potential Minewater Extension

200Metres0

Figure 6.3

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6.7 Financial Appraisal

The financial appraisal provides further details on the heat distribution network and

compares the financial viability of the energy generation technologies, collectively the DHN.

Cash flow models were applied to the DHN at 25 and 40-year project lifecycles. For each of

the lifecycle options, cash flow models were run at discount rates of 3.5%, 5% and 10%. No

debt finance has been considered in this phase of work so the networks were assessed based

on three primary funding scenarios:

i. A 20% HNIP grant towards the capital costs of the heat distribution network with

the remainder equity funded, together with energy centre qualification to the

Renewable Heat Incentive (RHI) where appropriate.

ii. No HNIP grant towards the capital costs of the heat distribution network so the

network completely equity funded, together with energy centre qualification to

the Renewable Heat Incentive (RHI) where appropriate.

iii. No HNIP grant towards the capital costs of the heat distribution network so the

network completely equity funded, and no energy centre qualification to the

Renewable Heat Incentive (RHI).

Quotations were obtained for most of the equipment and materials required in addition to

the likely fuel costs. When quotations for equipment, materials and fuels where unavailable

reasonable assumptions where made based on previous experience, other reports and data

sources. These are provided in full in the accompanying spreadsheets. For CHP options, the

modelled results assume 100% electricity export to the grid to allow for a simple comparison

across the networks, although the financial results could be improved if private wire

connections were used. Table 6.6 below shows the financial assumptions made for the initial

assessment, however some of the criteria will be tested in the subsequent sensitivity analysis.

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Table 6.6: Financial Assumptions for Ramscliff

Avenue

Financial Criteria Rate

Heat revenue inflation 2.70%

CPI Inflation 0.30%

RPI Inflation 1.10%

Gas price inflation 1.60%

Electricity price inflation 2.70%

Wood fuel costs inflation 2.50%

RHI Digression -1.00%

Rent (as percentage of capital costs) 1%

Insurance (as a percentage of capital costs) 1.50%

A sensitivity analysis has been undertaken on each of the modelled DHNs to show how the

financial outcomes change when adjustments are made to the models financial input criteria.

The sensitivity assessment was undertaken at 25 and 40-year project lifecycles and 3.5%, 5%

and 10% discount rates. The sensitivity assessment was applied to Capex, Opex, fuel price and

heat sales price at +/- 10% of the original modelled values.

6.7.1 Biomass Heat Generation

Table 6.7, Table 6.8 and Table 6.9 show details of heat distribution network and a comparison

of the heat generation technologies. Table 6.10, Table 6.11 and Table 6.12 show the results

of the financial assessment for the DHN. Full details of what the costs include can be found is

Appendix C. Table 6.13: to Table 6.18 give the sensitivity analysis results showing how the

NPV changes with adjustments to the financial input parameters.

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I

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Table 6.13: NPV Sensitivity Analysis for Ramscliff Network at 25-year project lifecycle and a 3.5% discount rate with 20% HNIP Grant & RHI

Table 6.14: NPV Sensitivity Analysis for Ramscliff Network at 40-year project lifecycle and a 3.5% discount rate with 20% HNIP Grant & RHI

Table 6.15: NPV Sensitivity Analysis for Ramscliff Network at 25-year project lifecycle and a 5% discount rate with 20% HNIP Grant & RHI

Table 6.16: NPV Sensitivity Analysis for Ramscliff Network at 40-year project lifecycle and a 5% discount rate with 20% HNIP Grant & RHI

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Table 6.17: NPV Sensitivity Analysis for Ramscliff Network at 25-year project lifecycle and a 10% discount rate with 20% HNIP Grant & RHI

Table 6.18: NPV Sensitivity Analysis for Ramscliff Network at 40-year project lifecycle and a 10% discount rate with 20% HNIP Grant & RHI

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As can be seen from the financial analysis none of the biomass heat generation technologies

result in a positive NPV for the Ramscliff network even when benefitting from a 20% capital

grant towards the distribution network and the RHI support for the generation. The sensitivity

analysis has shown that even under economically favourable conditions, the networks remain

at a negative NPV in all cases.

6.7.2 Mine water Heat Recovery

Table 6.19 shows details of heat distribution network. Table 6.20, Table 6.21 and Table 6.22

show the results of the financial assessment for the DHN across the three primary funding

scenarios. Full details of what the costs include can be found in Appendix C.

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As can be seen from the financial analysis the minewater heat recovery network does not

provide a positive NPV under any of the modelled scenarios.

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6.7.3 GSHPs and ASHPs

Table 6.23 shows details of the heat pump options comparison Table 6.24 shows the results

of the financial assessment for the heat pump options. Full details of what the costs include

can be found in Appendix C.

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As can be seen from the financial analysis none of the heat pump options provide a positive

NPV under any of the modelled scenarios, however they are still probably the most cost

effective solution.

6.8 Business as Usual

For the purpose of comparative emissions, the business as usual (BAU) case assumes the

existing heating requirements are currently fulfilled by domestic coal boilers. Further

consideration of the BAU case has not been given for the Ramscliff Avenue network because

the NWLDC has committed to replacing the existing heating systems in the near future.

6.9 Future Opportunities

This stage of the feasibility study has focussed on the Council owned housing at Ramscliff

Avenue. The properties under private ownership could potentially also be connected to a

network if one was developed. Leicestershire County Council own some land adjacent to

Ramscliff Avenue. Should this land be developed for housing, it would create an opportunity

for enlarging a network in the future. Any network that is implemented should be

“futureproofed” to be compatible this potential growth, ie the pipework specifications are

compatible with this and there is space at the energy centre for more equipment.

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7 ST MATTHEWS AVENUE

7.1 The Opportunity

St Matthews Avenue is located at Worthington, approximately 1km north of Newbold. St

Matthews Avenue hosts a mixture of privately owned and Council owned properties built in

the 1950s that are not connected to the gas grid. The properties are currently primarily

heated by solid fuel back boilers. There are 61 properties in total under Council ownership

which are being considered for the DHN. Properties under private ownership have not been

considered in this assessment at this phase but could potentially be included at a later stage.

7.2 Potential Heat Loads from Existing Buildings

The majority of the dwellings on St Matthew’s Avenue are 1950s system built semi-detached

or terraced homes. Most of these houses have insulated walls with concrete cladding and

solid fuel boilers with radiators. Address data provided by North West Leicestershire Council

for council-owned properties on St Matthew’s Avenue was plotted using OS coordinates in

order to show which of the properties on the street were under the Council’s management,

and were therefore more likely to agree to be connected to a district heating scheme. Note

that some of the address points did not fall exactly within a building outline and therefore

there may be some level of error here that would need to be considered should any scheme

progress further. It is noted that the Council has a commitment to replace all solid fuel heating

systems with an alternative by 2025.

The Council owned dwellings heat loads have been estimated using the house type and data

from the National Energy Efficiency Data Framework (NEED). Table 7.1 shows the heat

demand for St Matthews Avenue.

Table 7.1: Heat Demand for St Matthews Avenue

Variable Demand

Total Heat Demand 808,000 kWh