Combine a Heat Pump with the new Renewable Heat Incentive for a substantial payback
With the new Renewable Heat Incentive (RHI), installing a heat pump could not only offer improved energy-efficiency but the opportunity to acquire a significant payback. The RHI is the world’s first long-term financial support programme for renewable heat.
Those who generate and use renewable energy to heat their buildings could benefit from the RHI. By increasing the generation of heat from renewable energy sources (instead of fossil fuels), the RHI helps the UK reduce greenhouse gas emissions and meet targets for reducing the effects of climate change.
The Renewable Heat Incentive and Heat Pumps
The RHI consists of two parts: the domestic and the non-domestic scheme. Since November 2011, the non-domestic scheme has been open to commercial, industrial, public sector, not-for-profit and heat networks. The scheme is designed to bridge the gap between the cost of fossil fuel heat installations and renewable heat alternatives through financial support for owners. A gap which often deterred individuals from renewable heat options, prior to this scheme. On 4th December 2013, the government published a response setting out a series of improvements and increased support under the non-domestic scheme.
Key features of the new policy include:
- An increase in support for renewable CHP, large biomass boilers (over1MW), deep geothermal, ground source heat pumps, solar-thermal and biogas combustion.
- New support introduced for air-water heat pumps and commercial and industrial energy from waste.
- An evolved approach to budget management, using improved market intelligence to allow credible growth rates across the range of renewable heating technologies supported, whilst ensuring that the scheme remains affordable and achieves value for money.
The government estimates the policy changes could incentivise around 5,000 new, non-domestic installations and an additional 6.4 TWh of renewable heat by the end of 2015/16.
After consulting in summer 2012, in April 2013 the government implemented a transparent budget management mechanism in the non-domestic scheme, called degression. This ensures that budgets are sustainable over the period April 2013 to March 2015. Monthly data on scheme uptake will be published and tariffs reduced, where necessary, on a quarterly basis.
Through degression, the government will reduce the tariffs paid to new RHI recipients if uptake of the non-domestic scheme is higher than expected, and more than what is affordable. Action, therefore, needs to be taken imminently so that you do not miss the opportunity to take advantage of the scheme.
To date, 855 new non-domestic renewable energy installations for the RHI have been accredited between January and March 2014. This is an increase of 77% on accreditations in the same quarter of 2013. In March alone, there were 451 new applications, which is more than a staggering 25% increase than the applications received in the two previous months.
There are now 3830 accredited renewable energy installations in the non-domestic sector. They have a total capacity of 760MW, of which 114MW was installed this quarter.
Heat Pumps and the RHI
After the new regulations are introduced, applications submitted for ground-source and air-source heat pumps will be required to include the following:
- A design seasonal performance factor (SPF) of at least 2.5.
- Measurement of electrical input to calculate SPF and provide quarterly meter readings.
- Ground-source heat pumps capable of simultaneous heating and cooling will have to measure heat drawn from the ground and provide quarterly meter readings.
- Ground-source heat pumps capable of cooling must provide a capacity value based on the heating function only
- In addition to using naturally occurring energy in the form of heat, ground-source heat pumps will be able to use heat:
- Gathered and stored in the ground using solar collectors providing no other subsidy
- From space cooling or process cooling
- Waste from industrial processes
As a result of the new amendments, the Ground-Source Heat Pump (GSHP) technology will receive a tariff increase. GSHPs will receive an increased tariff of 8.7p/kWh of generated heat for the first 1314 hours and then will receive 2.6p/kWh thereafter.
GEA and Heat Pumps
GEA has recognised that there is a large amount of heat which can be recovered from the refrigeration plant in the food industry. In order to harness this heat and create hot water at 65ºC, for example, they recommend that a heat pump be added to your refrigeration system.
The following example has been created to show the difference between the running costs of a boiler providing heat whilst an air cooled chiller provides the cooling in a facility, and that of a chiller in combination with a heat pump.
The example is based on a facility which consumes 250m³ of hot water per day at a temperature of +65 ºC, and simultaneously uses an air cooled chiller to provide cooling throughout the factory via a secondary fluid (water or glycol for example), producing glycol at a temperature of -6 ºC. This example could in fact be anything from a freezer to a water chiller providing air conditioning to offices.
The principal is based on the fact that a refrigeration system absorbs heat at a low temperature and then discharges it to the ambient at a warmer temperature; just not warm enough for practical use; which is where the heat pump comes in.
Boiler and Chiller Scenario
The steam produced by the boiler is distributed to various users and creates, for example, the 250m³ per day of cleaning water. Assuming the boiler runs 18 hours a day, the heating requirement is 920kW. Since the boiler is likely to be only 80% efficient, the system consumes 1,150kW of fuel. Also, natural gas produces a great deal of CO², approximately 1,400 tonnes per year. A cost of 3p/kWhr equates to a bill of just over £226,000 per year (excluding pumps, fans etc.).
Simultaneous to the boiler, the refrigeration system is cooling the factory. An efficient air-cooled chiller producing 750kW of -6 ºC glycol to cool the facility will consume 255kW of electricity condensing at +45 ºC and will basically be dumping 750kW+255kW = 1,005kw of low grade heat into the ambient air up on the roof. If we assume 9p/kWhr, this amounts to an additional cost of £150,000 per year (based on the same 18hrs/day, 7 day/week, and 52 weeks/year) and an even greater impact on the environment (approximately an additional 802 tonnes of CO² per year).
Chiller and heat pump scenario
The chiller still produces the required cooling at -6 ºC, but now instead of the condenser outside discharging the heat, the heat pump boosts the temperature up from +45oC to +65oC where the heat is used to warm water. +65 ºC water is created by condensing the refrigerant with the mains water rather than ambient air.
The refrigeration chiller combined with the heat pump (which is only a small booster compressor) uses only 244kW to refrigerate and heat in total, but also boosts the temperature to a level, which can be used. Based on 9p/kWhr, the refrigeration and heating is now costing just over £143,000 per year and the production of CO² is considerably reduced (approximately 767 tonnes of CO² in total for heating and cooling per year).
Not only has the cost to the environment been considerably reduced but the cost to the business amounts to £143,000 rather than £376,000 and the capital cost is similar for any new project. An existing facility, with a current boiler house and steam distribution system, would be expected to achieve a return on the investment within 1-2 years.
A typical example of a heat pump, including hot water buffer tanks, pumps and distribution system could cost between £500-£600k depending on the complexity and size of the facility. Even at £600k, a heat pump system would offer 2.6 year return on investment and if capital is not available, leasing could provide an option.
With the introduction of the new RHI scheme, this example would provide an additional saving of just over £230,000 which will reduce the return on investment to 1.3 years! A new development provides an even better payback opportunity.
Isn’t it time we stop throwing away perfectly good heat, after all we employ the same thing already in our refrigerator in the kitchen which is warming the kitchen (or garage) by cooling the food in it?
The proposal above is based on a food processing plant but a heat pump can certainly benefit a number of markets and industries, including:
- leisure centres
- pharmaceutical plants
- processing plants
- building services
- public buildings
GEA has developed a range of standard industrial heat pumps for heat recovery of waste heat. The range of GEA’s heat pump series is from 200 kW to 15,000 kW producing hot water up to 82ºC. Besides the standard range of heat pumps GEA also offer specials with a supply temperature up to 95ºC. The 3 key benefits of a GEA heat pump is safe, reliable and high efficiency.
Besides GEA’s large range of waste heat recovery heat pumps they also offer a smaller range of ground source heat pump for supplying hot water up to 80ºC and with a heating COP above 3.0. The range of high temperature ground source heat pumps cover the range from 400 – 700 kW.
Be quick! Ofgem estimate the current scheme will be retracted by 1st April 2016, unless a new budget is approved for the RHI funding. Any heat pump, however, bought before this date will be secured for 20 years with the RHI non-domestic scheme.