Royal Docks Decentralised Energy Masterplanning Case Study
Total Page:16
File Type:pdf, Size:1020Kb
Royal Docks Decentralised Energy Masterplanning Case Study Dr Anthony Riddle Associate Director – District Heating Rambøll Energy Introduction and Background Why District Heating ? Attractive to new developers • Helping to deliver compliance targets • Avoids need to engineer on site solutions • Financial benefit Attractive to heat customers (business and individuals) • Lower cost heat than business as usual • Protection against rising gas prices • potential benefits under CRC for existing businesses Attractive to London Borough of Newham • Viable business opportunity • Delivery on CO2 emissions reduction targets • Opportunity to address fuel poverty • Avoids piecemeal approach to compliance for new developments • Possible synergies with Strategic Waste Opportunity • Aligned with Green Enterprise District Vision and attracts green business • Wider strategic benefits Strategic Heat Network Opportunity Thames Water SPG • Peak diversified demand and consumption at full build out (2031) ~ 60 MW and 106 GWh (equivalent to ~ 29,250 Code Level 4 apartment dwellings) • Between 5.7 kt of CO2 and 14.5 kt of CO2 per year at full build out. • Expected cost of heat production ~ 1.5 to 2 p/kWh • London Borough of Newham potentially has a crucial role to play in bringing forward the network and needs to consider how it can further the development of the project by acting as guarantor or an equity investor. Tate and Lyle Beckton Waste Sugar Refinery Treatment Facility Baseload Generation Strategic Heat Network Concept • Design in accordance with GLA Design Manual Guidelines • Proposal to size network for base load with embedded peaking plant • Capacity safeguarding for trading heat with OPDES • Range of smaller supply opportunities could ‘plug in’ to network • Longer term waste heat recovery potential from sewage or data centres through heat pumps should be considered further • Initial clusters opportunities to kick start development Peaking Plant Clustering Options Strategic Heat Network Concept (2) •etc 6 Commercial Model Assumptions Project Company • Owns and operates heat network • invests in connections to heat Baseload heat off take equipment production units • Purchases heat from heat generators • Sells heat at development Accumulators boundaries (FM companies / ESCo’s, LA, commercial entities) Transmission Peaking Plant New Developments Distribution pumps • Required to be DH ready system Heat • Install temporary plant if constructed prior to network exchanger opportunity stations • Pay contribution through S106 / CIL • Contribute through Allowable Developments Local Solutions framework Energy Centres (No chp) End users Post Network Pre Network Heat Production Costs Heat Selling Prices Thames SPG and Beckton Waste Treatment Facility Heat selling price Model • forfeited value of electricity production (incl ROCs) • BaU = avoided fuel costs + avoided O&M + • marginal cost of heat production ~ (O&M) avoided re-investment Tate and Lyle • BaU function of customer type • heat led process ~ (fuel cost) • Incentives, shared CRC benefit • marginal cost of heat production ~ (O&M) • Consumer heat prices ~ 3.7 – 5.7 p/kWh 8 Projected Demand and Consumption 2050 to Consumption and Demand Projected Estimated Peak Demand [kW] 10,000 20,000 30,000 40,000 50,000 60,000 70,000 [MWh] 100,000 120,000 20,000 40,000 60,000 80,000 0 0 2015 2015 2018 2017 2021 2019 2024 2021 2027 2023 2030 2025 2033 2027 2029 2036 2031 2039 2033 2042 2035 2045 2037 2048 2039 2051 2041 2043 2054 2045 2057 2047 2060 2049 2063 2051 2066 2053 West Silvertown LCY & Silvertown West &UEL RAB - Excel& Royal Victoria - South Canning Town & S08 North Canning Town BusinessRoyal Park - House Custom Peak load Peak New LargeCommercial New Medium Commercial New Retail Newham Borough London Residential customers - existing Residential customers - new Excelcentre University of East London Projected Supply at Full Build (SPG) Out Build Full at Supply Projected 10,000 20,000 30,000 40,000 50,000 60,000 100,000 120,000 20,000 40,000 60,000 80,000 0 1 0 284 2015 567 2016 850 2017 1133 1416 2018 1699 2019 1982 2020 2265 2021 2548 2831 2022 3114 2023 3397 2024 3680 2025 3963 EnergyOutput 4246 2026 4529 2027 4812 2028 5095 2029 5378 5661 2030 5944 2031 6227 2032 6510 2033 6793 Blue- Thames Water SPG 7076 2034 7359 2035 7642 2036 7925 SPG Water Thames Green - Gas boilers 2037 8208 Red - Accumulator 8491 2038 2039 Outline Business Case Modelling Thames Beckton Cost of heat [p/kWh] Water SPG Waste Required Calculation Calculation Treatment IRR Period Period Facility 25 years 40 Years Peaking Plant Embedded in Heat Network Cost of heat from heat production [p/kWh] 2.0 1.5 3.5% 2.68 3.47 Facility Scheme CAPEX / REPEX over 25 years [£M] 34.4 33.0 6% 1.93 2.64 Annual Revenues (full build out) [£M] 7.2 7.2 10% 0.51 0.98 Annual Operating Margin (full build [£M] 4.1 4.2 out) IRR (25 years) [%] 5.77 6.88 IRR (40 years) [%] 7.57 8.45 IRR (25 years) ~ 10% discount on new [%] 5.08 5.20 Maximum Acceptable Heat Buying Price and existing customers from SPG to Project Company vs IRR (40 years) ~ 10% discount on new [%] 7.01 7.08 required IRR and existing customers IRR (25 years) ~ 10% discount on [%] 5.34 6.44 existing customers only IRR (40 years) ~ 10% discount on [%] 7.22 8.08 existing customers only Carbon Emissions Reductions over BaU [ktCO2 14.5 5.7 (full build out) pa] Impact of locating peaking plant at baseload generation facilities Scheme CAPEX / REPEX over 25 years [£M] 43.0 Not modelled IRR (25 years) [%] 4.1 Not modelled IRR (40 years) [%] 6.3 Not modelled • Cost of safeguarding to OPDES, £3.4 M • Tate and Lyle Cluster Network ~ 7.2 % IRR (25 years), CAPEX £6.6M • Excel Cluster Network ~ 25 % IRR (25 years), CAPEX £2.3M Delivery Strategy 1) Develop the study work into policy for the areas in question requiring new developments to produce energy supply strategies that consider, amongst other options, connection to the strategic heat network; 2) Require new developments to install, where appropriate: a. Local-area heat networks connecting their development blocks to a single point suitable for connection to the a strategic heat network or; b. Design block heating systems around a single plant room with facility to connect to the strategic heat network. 3) Work with the GLA to establish a development programme to carry out business planning for a special purpose vehicle to deliver the strategic heat network including: a. A detailed financial model of the phased development of the network; b. Establish funding sources to minimise the need to inject capital reserves (developer connection charge, Growth Fund, low cost borrowing through PWLB, CIL/S106, UK Green Investments, allowable solutions and the London Energy Efficiency Fund); c. Establish and implement a development programme considering the customer base identified in this scheme as well as identifying further opportunities not assessed so far under this study 4) With GLA support, commence the development of the programme and its heat sources: a. Engage with Chelmsford and the Silvertown quays development to explore ways in which the energy supply requirements of the scheme may be aligned with wider DE goals and networks in the Royals. b. Engage with the major supply-side stakeholders and establish the commercial basis on which the strategic opportunity can be delivered. c. Establish the policy and necessary land agreements and take to market a concession for the development of an energy from waste plant by others at the Beckton Waste Treatment Facility site. The concession will require the successful bidder to implement the plant as CHP and commit to connecting to the heat network as part of their planning consent. Summary and Conclusions •business case around developing and operating a strategic heat network for the Royal Docks and Canning Town. •predicated on ability to integrate large scale generation facilities capable of delivering low cost, low carbon heat. •single heat network could potentially be constructed in a continuous phase •significant capital outlay ~ funding issue •clusters offers opportunity to kick start network Main Technical Drivers in Typical Scheme 120 Economics 110 100 Network (60~70% of CAPEX) 90 80 • linear heat density 70 • temperature differences (design, part load) DH water temperature °C temperature water DH 60 • scheme diversity (mix, connection strategy) 50 Network Network Supplyand Return Return Temperatures • network topology (peaking plant, centre of gravity, 40 -5 0 5 10 15 20 25 safeguarding, expansion) AmbientOutdoor temperature Temperature °C • routing (soft, hard dig, overcoming difficult 80% crossings) 75% • pipe selections 70% • operating temperatures (heat losses) 65% 60% Heat Production Units 55% energy supply % CHP CHP contribution to 50% • plant efficiency 02468 • role of thermal storage Hours of storage provided • plant utilisation over life (modular schemes) 100% • operating strategy (modulating, stop-starts) 80% 60% • steam turbines ~ heat off-take configuration, 40% required extraction temperature (Z factor) 20% 0% energy supply % CHP CHP contribution to Year of Operation Thank you [email protected] Heat Plan Denmark by Anders Dyrelund Low Carbon Urban Heating 2009 15.