A practical guide to the reduction of energy costs and carbon emissions for existing heating and hot water systems in commercial and domestic buildings, calculation of payback costs and consideration of the generation of on-site electricity
by Mike Hardy



I have been a building service engineer (heating and hot water services, ventilation and air conditioning) all my working life and have been looking at reducing the energy costs and carbon footprint of my own 1950s home with the help of modern technology which I use regularly for my own Clients.

We own a poorly insulated building in the South East of England (that tailors’ wear the worst suit, springs to mind) with a conventional oil-fired boiler.

The more I looked at solutions the more confused I became – and I thought if I am finding this such a challenge to consider replacement options and greener solutions how must it be for other building owner/s without any background in my industry.

The choices are made all the more difficult, because the decision to renew/improve equipment for both house owners and building owners have to second guess governments future actions, in particular, in relation to grants and also second guess what is going to happen to fuel prices in the near future and the long term future.

There is no lack of rhetoric about the phasing out of fossil fuels and investment in renewable technologies and plenty of advice out there regarding replacement equipment.

Some objective advice exists - but I could find little practical guidance on the direct comparison and detailed/personalised payback costs (both carbon and financial) of various technologies and the application to heating and for onsite electrical generation for that matter – the latter of which is likely to be encouraged by governments all over the world in the future as this could play a decisive part in the reduction of centralised and extremely inefficient generation and distribution costs of electricity. (In the UK electrical distribution costs were estimated to have an efficiency of 38.5% average in 2004).

So the following is what I know to be an independent report made in the summer of 2009 on the possibilities of reducing energy and running costs and carbon emissions both for domestic and commercial buildings but with one eye also on possible/likely future trends.

You may or may not agree with my conclusions, but sincerely hope the information is of interest and helps you to make decisions and ideas for choices for your own property or buildings.

As with previous articles apologies in advance for those with knowledge of building services for any over simplifications or stating the obvious – but the article is intended for those with little or no knowledge at all of the systems that are out there now – and it is likely that most will agree the more people that have knowledge of the choices the better.

Apologies also for this article mostly referring to costs or circumstances in the UK but hope that those with a broader vision than my own may be able to adapt them to their own circumstances wherever they are in the world geographically – many countries throughout the world are faced with the same decisions and at the risk of repetition the shift away from fossil fuel economies, of course, is a constantly recurring theme.

Mike Hardy,
South East England

Ian McEwan, the prize winning internationally acclaimed writer, recently wrote in an article:

An alien landing on our planet and noticing how it was bathed in light would be amazed to learn that we believe ourselves to have an energy problem, that we ever should have thought of overheating or poisoning ourselves by burning fossil fuels or generating plutonium. Sunlight falls on average by Nasa’s calculation, 200 watts for every square metre of the Earth’s surface.”

Ian McEwan may also have added that free cooling for buildings by the use of cold outside air being transferred to an overheating building is also available throughout the world, and this same alien would be equally amazed that very few air conditioning systems in the world take advantage of this and instead almost always also use energy in the form of fossil fuels to cool the air in a building and pay the financial cost associated with this. (See article by the writer A Practical Guide to Free Cooling, Alternative Cooling and Low Energy Systems’).


The rising costs and finite resources of fossil fuels, of course, concentrate each and all of our minds on the subject now as never before both in commercial and domestic buildings - this coupled with the urgent need to reduce carbon emissions.

With astonishing prescience Sweden had already announced in 2005 their intention to phase out dependence on fossil fuels by 2020 - this is the same year predicted in December 2008 by Fatih Biro the Chief Economist of the International Energy Authority for the global ‘plateau’ for conventional oil.

The huge significance of failing to initiate timely mitigation’ before the plateau is spelled out clearly by the Hirsch committee commissioned by the US department of energy and may be read at www.acus.org/docs/051007-Hirsch_World_Oil_Production.pdf which will affect all aspects of our lives.

The Building Regulations in the UK, for whatever reason have permitted poorly insulated buildings to be built in the past (the Regulations have significantly improved now) and most of the existing building stock uses far more energy to heat than is necessary – this is in stark contrast to some other countries particularly in Europe.

It is perfectly possible to build houses and commercial buildings with a zero or almost zero requirement for heating and such houses exist in the UK and Europe.

But new construction is not the consideration here and is for another time, but the issue is how to improve the performance of existing buildings so that energy consumption may be reduced and also consider on site electrical generation which is likely to be encouraged by most governments in the future.

Insulation to Existing Buildings

This is by far and away the least expensive way to achieve a reduction in energy costs and reduce carbon emissions, the Passivhaus’s in Germany, the Zedbed buildings in London, UK and the Building Research Establishment buildings at Innovation Park, Watford, UK amongst a number of buildings to show how effective well insulated building can be.

The key areas to insulate in existing houses are lofts, walls, and hot water storage cylinders and in the UK the Energy Savings Trust document Practical refurbishment of solid-walled houses’ is a useful and detailed guide for insulating existing houses available from www.energysavingstrust.co.uk.

Some of the information is equally applicable to commercial buildings.

In the UK as well as other European countries some limited grants are available; in the UK the Carbon Trust will provide interest free loans for commercial buildings many of us very stronglybelieve these should be grants not loans available for buildings, particularly in this harsh economic climate and would at the same time rejuvenate some sectors of the construction industry. Thus the proposed packages to reduce unemployment would also at the same time help to reduce the use of fossil fuels and the emissions of carbon – something very positive from what at the moment is a desperate financial situation for many.

Insulation – Hot Water Storage

Using 88 mm Thick Insulation on an Existing Cylinder

The simplest addition of insulation is to the hot water cylinder (calorifier or hot water storage tank) if this is not well insulated.

In the domestic market there is no disagreement about quick payback costs here with a domestic jacket costing around £12 (DIY) the Energy Saving Trust say this will be a saving of about £40 per year and therefore a payback period of between of 5 months – except I make that nearer 3 months.

They also state the carbon dioxide saving is around 195 kg. So based on this figure they are estimating 1,054 kWh per annum will be saved and natural gas at 4p per kWh this approximates to a £40 saving per annum.

So at 10p per kWh for electricity day rate that would be an approximate £100 per annum saving.

Although this will vary considerably with usage there is no doubt that this is the best return for insulation and is a must do’ in all houses with inadequate cylinder insulation and commercial buildings where storage equipment is used with poor insulation.

Insulation of Existing Buildings

The simplest and most effective way to insulate an existing building is to provide insulation in the roof space and fill the wall cavities with insulation.

The first port of call for carrying out this would have to be your energy supplier (gas or electric) as the work would be subsidised by them.

The Energy Savings Trust predicts a payback period from 2 to 6 years for roof insulation and around 2 years for cavity wall insulation for a gas fired installation.

Ambthair has published a guide for carrying out your own calculations for your own buildings for both financial and carbon payback. Alternatively, there is an extremely useful site at www.encraft.co.uk/ws/P/Calculators/HomePage.php, and use the property heating evaluation tool.

Heat Recovery Ventilation

Once the above work is carried out the building will be well sealed and more comfortable for all that. But the building does need ventilation and this is resolved in well sealed buildings by the use of a heat recovery unit. These ventilation units may recover as much at 70% to 80% of the heated air exhausted to atmosphere.

There are many of the above products available and Vent–Axia and Xpelair amongst others explain their products on their web sites and will also provide a design and application service based on their own products.

The wind powered passive heat recovery units used at the Zedbed project are available through the ZedFactory at www.zedfactory.com.

Heat Generating Equipment Common to Domestic and Commercial/Industrial Buildings

The least costly capital cost per kW of heat generating equipment is still using fossil fuels; the conversion of the fuel to useful heat is now much more efficient than has been the case in the past.

Condensing Boilers

Fuels: Gas, Liquefied Petroleum Gas (LPG) or Oil.

Condensing boilers are available as both conventional or combination (tankless) boilers. The condensing boilers are the most efficient boilers as they are designed to recover heat normally discharged to atmosphere through flues and are now mainly replacing most types of boilers.

The boilers use a heat exchanger to reduce the temperature of the exhaust gases which contribute to the heat recovery but the majority of the energy is recovered from the condensation of the water vapour in the exhaust gases this releases the latent heat of vaporization of the water.

The actual efficiency of the boilers depends on the prevailing humidity and temperature of the ambient air and will operate at its most efficient if the incoming air is 100% relative humidity.

The Seasonal Efficiency of Domestic Boilers in the UK (SEDBUK) provides the following efficiency bands:

BandSedbuk Range
A90% and above
B86 – 90%
C82 – 86%
D78 – 82%
E74 – 78%
F70 – 74%
GBelow 70%

The boiler should be selected to be in B and A as indeed most condensing boilers are.

Matching of Condensing Boilers to Existing Heating Systems

The correct matching of condensing boilers to existing ‘traditionally designed’ systems is not always straightforward and needs to be considered carefully in order that boilers operate at the optimum efficiency in condensing mode and therefore maximum financial and carbon payback benefits.

Most existing systems, including all radiators or heat emitters will have been sized on the traditional boiler temperatures of an 82°C flow water temperature from the boiler and 71°C return water temperature to the boiler, but a condensing boiler operating with the same return of 71°C will fail to condense and therefore these temperatures are not suitable for a condensing boiler as they will be inefficient.

For condensing mode the lower the return water temperature the better, a typical flow and return water temperature for a condensing boiler is 70°C and 50°C respectively and if the return temperature is further reduced to say 40°C the boiler will be even more efficient.

The return water temperature is the important factor in enabling the boiler to condense and generally speaking should always be around 50°C or lower.

There is an advantage to keeping the flow temperature high to say 80°C and a system selected to operate at 80°C flow and 50°C.

The advantage of this is that the mean temperature is raised from 60°C (70 flow and 50 return) to 65°C (80 flow and 50 return).

If, as is likely, a traditional 82 flow and 71 return (mean 75.5°C) temperatures were used to size the heat emitters or radiators then the mean temperature provided by the new condensing boiler needs to be as high as possible.

Even then if the original radiators were sized very accurately for the lowest winter temperatures the system may struggle to hold the desired room temperatures, although systems tended to be oversized in the past.

The other reason for keeping the flow temperature high is if there is an indirect cylinder or calorifier, water will need to be stored at 60°C or more (to prevent colonising by micro organisms) and again as high a mean temperature as possible would be needed.

For the above reasons it would be worth considering an independent engineer to look at a particular application, it may be necessary to reduce the heating water flow rate and possible change the heating pump to obtain the optimum temperatures described above.

The above comments would apply to the application of any condensing boiler to an existing system.

Over the last 5 years there have been question marks over the reliability of some condensing boilers. The application of the boiler and the selection of a reliable model of boiler are therefore absolutely critical.

For the domestic market, Which have provided an independent guide.

You will see that the worst case is that for a selected group of 34 people who purchased from a particular manufacturer 79% of them had problems since 2005 – so this is why it is so important to choose carefully.


Combi – Condensing Boilers (Tankless or Instant Heaters)

Fuels – Gas, LPG or Oil.

Very efficient combi boilers are now used all over Europe for domestic applications and as the name implies all equipment is combined in the one boiler. Combi boilers are able to provide both heating and instantaneous hot water at the same time and so there are generally no energy losses using hot water storage equipment in the form of an indirect hot water cylinder.

In the past combi boilers were usually limited to an output of 24kW and 28kW but now a much larger range is available up to 54kW which will be suitable for most houses except the very largest. (The output figures refer to the hot water output – the heating output available for radiators etc. is generally 5 to 10kW less than this figure).

When replacing a conventional boiler it is important to check the condensing boiler manufacturers requirements for both the pressure of the mains water and also the size of the incoming gas main. These may need to be increased and is an important cost consideration for the application for a condensing boiler as both increasing water pressure and gas main size can be expensive.

The latest generation of combi boilers have an intelligent pre heat mode and this monitors the hot water usage over the previous 24 hours and preheats for a short while before the first anticipated use.

The Energy Savings Trust gives a figure of saving up to £235 per year by replacing an old boiler with an efficient condensing boiler and a reduction of carbon dioxide emissions of up to 1,300 kilograms per year.

Based on this if the new installation is around £2,300 then the financial payback is about 10 years.

The Greener Homes Price Guide’ published by the Royal Institute of Chartered Surveyors gives a financial payback figure of 18 years.

See Ambthair's guide on a method of calculating the financial and carbon payback for an individual building.

Condensing Boilers for Commercial Installations

Fuels – Gas, LPG or Oil.

As stated above Combi condensing boilers are able to provide both heating and instantaneous water but they are limited to a capacity of about 54kW.

For a commercial application if an existing boiler is to be replaced then this could be replaced with a new condensing boiler and at the same time it may be worth considering replacement of the calorifier or heat storage for hot water with a new plate heat exchanger.

This would then have the advantage of providing hot water instantaneously when it is required rather than storing hot water. The sizing of the new boiler has to be considered carefully and may need to be sized for a higher heat output than the boiler being replaced. This would be because if there is a high heating demand in winter in cold weather and at the same time a high hot water service demand the new boiler with an identical heat output may not cope. Rather than increase the boiler output it is not uncommon, using controls, to arrange a priority system and in this way keep the boiler the same size as the old boiler.

This priority system is easier to arrange for a domestic system than a commercial system.

The plate heat exchanger manufacturer will normally size the plate heat exchanger size based on hot water outlets.

See Ambthair's guide on a method of calculating the financial and carbon payback for an individual building.

Heat Pumps – for Heating Only – Domestic and Commercial

Fuel: Electricity, but used much more efficiently than conventional electrical resistance heating.

Heat pumps are said by many to be coming of age for heating only applications.

I have specified and selected heat pumps for many years but not for heating only but for cooling and heating of commercial buildings – those who have been in a similar position will well remember the unreliability of heat pumps approximately 20 years or more ago (not untypical for an emerging technology) but that has all changed in the last 10 years.

Heat pumps are used widely in Sweden and Canada and both countries have far colder winters than the UK – so the question is why are they so rarely used for heating only in the UK? - and why are air source heat pumps not even considered by the framework suppliers because of what the Building Research Establishment call lack of interest’ thus at a stroke ignoring an entire industry - see under Grants for Public Buildings’ for this discussion.

The refrigeration cycle is probably at its clearest to understand when used in a refrigerator where the evaporator inside the refrigerator cools the air and is connected by refrigeration pipework and a compressor to the condenser which is at the back and rejects heat and why it is warm.

A heat pump in addition to the above reverses this cycle, the external coil extracting heat from the air (no matter how cold) to provide heat to the coil inside the refrigerator.

The miracle of the heat pump is the efficiency or more correctly the Coefficient of Performance (referred as CoP throughout) in using electrical energy.

For each 1kW of input of electrical energy - 1.5kW to 6kW may be provided as useful heat depending on a number of factors.

As the CoP of heat pumps increases due to development progress, so does their viability for consideration of being a source of replacement heating.

Heat pumps are made in the form of air source, ground source and water source and as the names imply the energy for heating is being extracted from in the case of air source’ the external air, in the case of ground source it is underneath the soil and in the case of ‘water source’ from water for example in a lake or stream.

As the discussion is about replacing equipment for more efficient equipment of the different heat pumps, the air source heat pump would be the most simple and economic to install.

An external heat pump such as may be seen canti–levered at the back of a typical retail unit, would be all that was required for small installations.

It is true the CoP of air source heat pumps becomes poorer as the weather gets colder whereas ground source heat pumps stays roughly constant all the time.

However, a ground source heat pump requires excavation of land, and quite apart from the land required there is a higher cost of installation.

Innovation and competition between manufacturers has meant that both the CoP and the water flow temperature for air source heat pumps are improving all the time.

Traditionally the water flow temperature for an air source heat pump used to be (and still is with many) around 40 to 45°C so auxiliary (top up) electrical heating was required to raise the temperature further so that they could be used to replace conventional boilers.

However, recently one manufacturer has stated their heat pump using carbon dioxide as a refrigerant could achieve a flow temperature of 65°C (top up electrical heating is used to raise the temperature still further if required) and another manufacturer using 2 stages of heating provides a maximum flow temperature of 80°C this time without any top up electrical heating.

So now heat pumps are competing for the first time with boilers without the necessity of auxiliary or top up electric heating in the form of an electric immersion.

Paul Braithwaite of the Heat Pump Association has suggested in Sweden (domestic heat pumps are more widely used in mainland Europe than the UK) that the heat pump provide about 70% of the heating with the electrical immersion doing the remaining 30%.

For both domestic and commercial applications the capital cost of heat pumps per kW of heating is considerably more than conventional boiler output per kW - but this needs to be looked at further in terms of financial and carbon payback costs.

In the case of commercial heat pumps if both the heating and cooling cycle is used in practice, then this would of course reduce the comparative capital costs because a boiler and a chiller would be required as against a single heat pump.

The Energy Savings Trust estimate the cost of an air to water heat pump is between £5,000 and £10,000 for a detached house (excluding VAT) – this would be instead of a boiler.

They estimate that annual running cost savings vary, depending on the fuel being displaced, from £300 (gas), £870 (electricity) and £580 (oil).

The variation in cost for equipment varies hugely both domestically and commercially, if it is acceptable for the replacement to have a low flow temperature (such as for underfloor heating) then the cost of the heat pump will reduce considerably.

However, I want to consider the heat pumps with a high flow temperature because these are the natural replacements for most existing boilers and these heat pumps are certainly not the least expensive.

I estimate a high temperature heat pump with a heating capacity of 15kW could be installed for around £10,000. (Cost of equipment £5,000 or £6,000).

If we assume the following rates:


We have also to assume an average CoP value for the heating season – so we assume 3.5.

At a CoP of 3.5 the electricity price becomes effectively 2.85p/kWh, which would be even less if off-peak heating is used for early morning heat up – but we will keep with the 2.85 figure.

For say a £2,000 oil fuel bill per annum then this would be reduced to £949 using the heat pump and the above assumptions.

A financial payback of round about 10 years.

For say a £2,000 gas bill per annum this would reduce to £1,425 and a financial payback time of about 18 years.

The carbon savings would be based on the above.

There is no doubt that the Coefficient of Performance and (just as importantly for replacement of equipment in buildings) the flow temperature is improving all the time.

A recent book written by Professor David JC Mackay titled ‘Sustainable Energy – Without the Hot Air’ and available for downloading at www.withouthotair.com, publishes the informative comparison for boilers, heat pumps and combined heat and power shown below.

Line graph with electrical efficiency on the x axis plotted against heat efficiency on the y axis, of a selection of energy sources
Graph comparing efficiency of electrical energy vs heat energy for several energy sources

The diagram plots CoPs of 3 and 4 for heat pumps and as he says in his book Let me spell this out. Heat pumps are superior in efficiency to condensing boilers, even if heat pumps are powered by electricity from a power station burning natural gas’.

He goes on to say The heat-pump solution has further advantages that should be emphasized: heat pumps can be located in any buildings where there is an electricity supply; they can be driven by any electricity source, so they keep on working when the gas runs out or the gas price goes through the roof; and heat pumps are flexible: they can be turned on and off to suit the demand of the building occupants.

The diagram for CoPs of only of 3 and 4 and there is little doubt that these CoPs will improve and the cost of heat pumps will come down. (Some heat pumps in Japan are said to be achieving CoPs of 6 but I do not have the information at what external temperature and what flow temperature.)

The diagram is an interesting and informative way of considering the economics of heat pumps, condensing boilers and combined heat and power.

Remember these are for air source heat pumps – by far the easier of the heat pumps to retrofit into a building – and are the same heat pumps that the framework suppliers who are involved in huge public contracts have expressed no interest in. Perhaps Professor David JC MacKay would kindly spell this out’ to the framework suppliers please.

One final kick for air source heat pumps - the Energy Savings Trust tell me there is up to a £900 grant available from the Low Carbon Buildings Grant allocation as long as the heat pump heats only and does not cool.

Of course this is nonsense, because most heat pumps cool as well heat, so probably the majority of manufacturers cannot encourage customers to claim the grant – leaders in the field such as Daikin confirm this to me and so also, no doubt, would Mitsubishi, Sanyo and other leading manufacturers if I asked them.

Combined Heat and Power (Cogeneration) – Domestic and Commercial Heat and Electricity Generation

Talking of Combined Heat and Power of which we were under heat pumps lets have a closer look at this replacement technology which will generate both heat and electricity.

Micro CHP for Domestic

The EU cogeneration directive defines, perhaps a little confusingly, micro generation as units that provide up to 50kW of onsite electricity.

Generally only the smallest micro generation unit is suitable for a domestic application and that unit is described below.

Engine Driven

Fuel: gas - provides heating and on site electricity generation.

The very smallest micro combined heat and power as applied to domestic properties is in its infancy – and many people find the prospect of generating electricity and heat within their own home a useful and exciting proposition.

There are a number of companies now competing and developing equipment in this field.

It is estimated by some in the UK that ultimately domestic micro CHP may provide 20% or so of the electricity generating capacity – which is more than currently obtained from nuclear power.

In terms of leaders in the field is a gas burning generator called the Whispergen which has been developed in New Zealand. This produces both heat and electricity and makes no more noise than a refrigerator it is claimed. It is also similar in size to a floor standing refrigerator.

The unit is in effect a tiny power station and uses a stirling engine and produces and requires approximately 6.6 kWth (kW of heat) to provide 1 kWe (kW of electricity).

The unit will also provide additional heat, as required, by the use of a heat exchanger of approximately 6kW.

In the UK, before E.ON Energy took over Powergen it was announced that the Whispergen would go on sale it is thought for £3,000.00 including installation – the unit will use natural gas – there seems to be some doubt the £3,000 figure is still valid.

As boilers are replaced then these can be replaced by the Whispergen which would provide electricity (the owner is able to sell surplus electrical energy to the grid) and heat for both heating and hot water.

The unit is being manufactured in Spain by a recently formed consortium called Efficient Home Energy and it is thought that they will be available in the Netherlands and Germany in 2009 and in the UK late 2009 or early 2010.

On the face of it the Whispergen micro generation unit will be an answer to many things because as heating is required then at the same time electricity is also generated for use in your home or selling back to the grid.

If this is the case then gas fired homes facing replacement boilers should consider switching to Whispergen units when they are available or to one of their competitors such as Baxi who are mentioned below and claim they will have similar equipment available which they say they are putting through extensive trials in the UK.

The Whispergen combined heat and power unit produces electricity at near to the maximum stirling engine heat output of 6.6kW.

Baxi have been established in the CHP field for some time and have recently also developed a micro CHP unit also using a stirling engine and state that it provides 1kW of electricity and 6kW of heat, they say also that as heat demand falls off then 1kW of electricity will still be provided down to 4kW of heat.

An additional 18kW of heat is provided by a heat exchanger, providing a total output of 24kW available for heating.

My understanding from the information I have received is that the Whispergen will always have to provide a minimum of 6kW of heat to provide 1kW of electricity and the Baxi Ecogen unit a minimum of 4kW to provide 1kW of electricity.

Baxi state they are running extensive trials in the UK and the unit should be available in 2009 and will go on sale to private households through British Gas.

A number of other companies are developing units by themselves or involved in consortiums.

For electricity some organizations have proposed the use of solar panels and industrial lead acid batteries for storage to cover the gaps in summer and winter (See solar energy.)

The reason for this is because it would not be economic to run the microgeneration units in summer because heat is always generated – unless of course there is a reason for providing heat in summer.

Financial and Carbon Payback

The Carbon Trust have been running what is believed to be the UK’s first major field trials since Spring 2005 and through to 2008 of 87 micro-combined heat and power systems for both domestic and small commercial units and included in the trial are 27 condensing boilers - the Whispergen Mark 5 was one of the units under trial.

The conclusions so far (a further report is expected) have demonstrated carbon and cost savings from micro–combined heat and power where they can operate for long and consistent heating periods.

Their conclusion is that for older larger houses with a high and consistent heat demand the carbon saving is from 5 to 10%.

The domestic system has been found to save £40 to £90 relative to a condensing boiler depending on export reward to the electricity grid.

The Carbon Trust suggests a 20 year payback that will come down to 7 – 15 years.

The trial demonstrated that the unit generated peak power corresponding with peaks in domestic demand and therefore appears to be beneficial for the electricity network.

Combined Heat and Power (CHP) and District Heating - Commercial

Fuels: They may be manufactured to burn almost anything including the conventional fuels.

Combined heat and power (CHP) is the use of a heat engine as described above to simultaneously generate both electricity and useful heat in commercial and industrial buildings and quite unlike micro CHP for houses has a long history within the building service industry. (I will use the nomenclature CHP throughout.)

CHP generates useful energy, at the point of use, in the form of both electricity and heat, with an overall efficiency typically up to 80%.

District heating again uses CHP but a centralised plant is used to serve domestic or commercial properties. CHP is widely used in parts of Eastern Europe; for example, Helsinki is mostly served by a district heating system.

So when should a Building Owner of an existing building consider CHP? Are there any initial considerations that may be made to indicate that CHP would be of financial benefit, and who should the Building Owner consult for a detailed analysis of the on site situation?

Financial investment in CHP may be considerable and the worst case scenario is that a major investment may be made with a poor or negative financial return.

It has been suggested in the past that for economic viability a site must normally have an electricity load of at least 45kW and a heat load of 120kW. Simultaneous demand for heat and power must also be present for at least 4500 hours a year (about 50% annual load factor).

A beneficial time to consider CHP is likely to be when much of the old boiler plant needs replacing and capital investment in new heating plant is required anyway.

If both the above criteria are met it would certainly be worth consulting a CHP specialist who would assess the economics of a range of CHP sizes and ideally these should be sized using daily demand profiles in order to accurately determine the actual amount of heat and power that may be supplied to the building.

Where necessary, thermal storage may be used to smooth the demand profiles and maximize the economics of the CHP.

Accurate sizing is vital to the good application of CHP and it is important, just like micro CHP, that equipment should not be oversized.

Small systems from 15kWe up to 1MWe are most commonly used for commercial buildings, and these usually use internal combustion engines burning gas or oil. They are normally developed as a complete package and are relatively easy to install, usually small enough to be located in existing boiler rooms. They effectively replace the main boiler which would be linked to the existing heating distribution system.

There are a number of ways of financing CHP installations which are:

  1. Purchase of the system outright in which case the Building Owner undertakes all capital costs and realises all subsequent savings. Alternatively,
  2. The CHP supplier offers an arrangement whereby the supply and maintenance of the equipment is at their cost, typically the Building Owner pays for the gas or oil consumed by the CHP equipment and purchases the generated electricity from the supplier at a reduced price as well as well as receiving the heat at zero cost.

    This arrangement is suitable for a Building Owner not wishing to make a major financial investment and also transfers some risk to the equipment supplier.

Clearly a CHP specialist is required to evaluate and size the proposed CHP system and assess financial payback.

CHP suppliers offer this services as well as electricity suppliers and likely to offer advice and selection free of charge.

The following website will provide guidance and information on where to obtain completely independent advice and surveys:

Other sites of interest:

  • Department of Energy and Climate Change, outlining the UK Government incentives for CHP and strategy for 2010 targets.
  • The Combined Heat and Power QA Standard was published in November 2000 and is an Energy Efficient Best Practice Programme initiative by the Government to encourage the wider practice of Good Quality CHP’ and aims to monitor, assess and improve the quality of the UK Combined Heat and Power’


Trigeneration is also available which is a combination of CHP and absorption chilling to provide cooling in summer or processes requiring chiller water or air.

The process of CHP produces heat and power, however during the summer months the heat generated in many cases is likely not to be fully utilised on site. It is during this time that the demand for cooling often reaches its maximum. If cooling is required then the solution is to use the excess heat to operate an absorption chiller which is linked to the cogeneration unit providing air conditioning. It is an irony that heat is required in order to cool, which is not the case for conventional air conditioning equipment, but is with the absorption process and has been used for many years. The origins of absorption chillers go back to work carried out by Albert Einstein in the USA on domestic refrigerators.

(He had yet another role to play in the HVAC industry and one for which he received his Nobel Prize – see later under photovoltaics).

Diagram of absorption process
Typical absorption process

Typical Absorption Process

Both Heliodynamics and Absolicon produce solar panels that produce both electricity and heat and are therefore suitable for absorption units shown above.

Solar Thermal Collectors – Domestic and Commercial

Solar heating makes use of flat plate or evacuated collectors which absorb sunlight to provide heating.

So this method of heating is free after installation costs except for the running of an electrical pump.

But what of the economics of solar heating in a country which is not blessed with an awful lot of sun, such as the UK?

I have heard all sorts of anecdotal stories in the UK – i.e. “it would be OK if we had more sun” to the I have lashings of hot water all summer”.

So which is correct?

A report was published in 2001 describing work carried out as part of the Department of Trade and Industry Sustainable Energy Programme.

The report describes results of comparing eight solar water heating systems mounted side by side so direct comparison could be made.

Six flat plate and two evacuated tube panels were installed and the efficiency of converting the solar energy to provide heat for 150 litres of water was compared over an approximately 6 month period between December and June.

The evacuated tube panels were shown to have an efficiency of 56% to 54% per square metre of absorber area and from this was deducted what the report described as parasitical energy’ to drive an electrical pump.

In approximate terms this would then reduce the efficiency to about 50% and an estimated carbon dioxide reduction of between 109 and 104 kg per square metre.

The Renewable Energy Association (REA) give a figure of solar radiation from a south facing collector inclined at 30 degrees in South West England as 1250 kWh per square metre per annum and records from Kew over 20 years in the same circumstances show an average of 1067 kWh per square metre per annum. (The REA give a comparative figure of 900 kWh per square metre per annum for North Scotland).

So to be conservative we could reasonably expect 0.5 × 1067 kWh per metre squared = 533 kWh per metre squared of useful heat for water from an absorber using an evacuated tube collector.

This is a significant amount of energy and surprised me, maybe I had been listening to the detractors of solar energy in the UK for too long – but we still have to look at financial payback and carbon payback.

Whilst researching the subject of solar panels I came across on the internet articles entitled Active solar technology’ and Urban solar water heating’ both written by the Department of Mechanical Engineering at the University of Strathclyde (they say nominated centre of excellence in energy utilisation by the Building Research Establishment).

What comes over to me from these articles is that they are evidently as enthusiastic about this technology as I am.

One report states that many potential customers were put off solar water heaters due to a bad perception of the technology from the installation of unreliable systems in the 1970s’.

I remember that well, there were problems with systems and generally this technology had an awful press – not unlike the early days of the heat pump industry at around the same time.

The article also quotes the accessible resource for solar domestic hot water systems by 2025 is estimated to be 12 terawatt hours [1 terawatt hour = 1,000,000,000 kWh] based on 50% of the housing stock being suitable for water panels system and that each system provides 1200 kWh per year’.

They quote their source as New and renewable energy; Prospects in the UK for the 21st Century’.

Professor David JC Mackay says in his book, Sustainable Energy - Without the Hot Air, Solar thermal water heaters are a no brainer. They will work almost everywhere in the world.’

But let’s curb this enthusiasm for the moment, the independent trials in Cranfield in 2001 and the carbon payback calculation are encouraging, there just remains the small matter of financial payback.

An instant slap in the face is provided by the RICS publication The Greener House Price Guide’ where the errata slip pessimistically states under the heading Installation of solar panels including all plumbing alterations and making good”, that financial payback is greater than 100 years (previously given as 208 years in the same book and revised by way of the errata slip).

The Energy Saving Trust are not much more optimistic, they state the installation cost is between £3,000 and £5,000 with heating bill reduction a measly £50 to £95 per year with 645 kg of carbon dioxide emissions saved. (Saving based on a three bed semi.)

So that is a financial payback of between 31 years (best case) and 91 years (worst case) and reflects the approximate nature of these calculations and serves to show how important it is for each building owner to factor in their own specific situation.

Let’s look closely at the figures:

Grants for public buildings are 50%.

Domestic grants for England and Wales are £400. For Scotland the grant is for 30% of the cost of the installation up to £4,000, and for Northern Ireland the grant is £1,125.

The University of Strathclyde again quotes New and Renewable Energy for the following performance figures – and the annual kilowatt hour figures are not far away at all from the 2001 Cranfield trials:

Typical system area 3 – 4 square metres.

Typical system price:

  • Retrofit including VAT: £2,000 to £6,000
  • DIY including VAT or new build: £1,000 to £2,500

Such a system would require an installation of typically 1 to 2 days and would have an estimated lifetime of 25 years. Annual pump running costs are estimated at £10 per year.

A typical system of 3 to 4 square metres would collect up to 1000 – 1500 kWh annually.

I question how realistic the figure of £1,000 is for DIY – I have been quoted £1,899 including VAT for 3.6 square metres of panels including the cylinder and everything except the pipework so the upper DIY figure of £2,500 seems more realistic – but if the economy of scale of solar took off may well squeeze the figures down to those quoted.

The University of Strathclyde goes on to say that in typical UK conditions such a system will collect up to about 350 kWh per metre square per annum.

So let us work on that figure – if we have an installation of 4 square metres that is an annual gain of 1,400 kWh – so how much is that worth financially, assuming it is all used usefully?

For gas 4.0p × 1,400 = £56. With £400 grant in England and Wales then revised costs will be between £600 and £5,400 so payback between 10.7 years and 96 years.

In Scotland £4,000 is paid up to a maximum of 30%. So the revised costs after the grant would be between £700 and £4,200 so payback between 14 years and 88 years.

With a £1,125 grant for Northern Ireland then the revised costs will be between £0 and £4,875 so payback between nought pounds and 99 years.

What is not factored into the above figures is the efficiency of the means of production of the heat at the moment say by a boiler – which if it is say 70% efficient would be more of a saving than shown.

For electricity 10p × 1,400 = £140. Electricity is costing 2.5 times as much as the gas so the payback time will be 2.5 times less than those for gas.

Commercially each building will have to be looked at individually much the same as Combined Heat and Power.

The evacuated panels themselves are not that expensive – for example 36 square metres of panels providing 12,600 kilowatt hours per annum would be around £6 to £7,000 which if the boilers was 78% efficient would provide the equivalent of 18,000 kilowatt hours per annum.

At a typical cost of 4p per kilowatt hour this would save £720 annually.

For say a financial payback of 20 years the installation needs to not exceed a cost of £12,250.00 – and given the figures above it is unlikely to – especially if installed when the building is being constructed.

If the price of gas doubles by 2012 as some predict then the pay back periods would half again – if the building is a public building then the 50% grant is likely to reduce the paybacks anywhere between 6 years and 55 years and the doubling of the costs of gas would reduce the figure further between 3 year and 27 years.

There is no doubt in my mind of the importance of solar thermal heaters for now or in the future.

This is an almost free resource after a not very expensive installation and quite why the technology has been routinely ignored both domestically and commercially is a mystery.

The figures shown would come down further for new installations.

A solar hot water design tool at www.encraft.co.uk/ws/P/Calculators/HomePage.php will assess the potential and payback period using solar thermal energy.


The photoelectric effect was first noted by a French physicist, Edmund Becquerel, in 1839, who found that certain materials would produce small amounts of electric current when exposed to light. In 1905, Albert Einstein described the nature of light and the photoelectric effect on which photovoltaic technology is based, for which he later won a Nobel Prize in physics.

To my mind the discovery is still breathtaking – producing electricity from light is something that could only have been dreamed of in the past – and light is everywhere – and the technology is improving in leaps and bounds. So objectively what is not to like about PV?

The biggest hurdle as we shall see is financial payback with carbon payback much less so.

I went to an informative and honest presentation recently by a leading manufacturer of PV cells and inevitably the questions turned to financial payback periods. The talker looked crestfallen or was it a mild frustration at this wonderful technology and facility being reduced to mere financial sums as he tried to put the case that with PV long term financial planning is required with very real long term gains.

'Do you look at the financial payback of a new car? Or when the Victorians built the sewers and bridges were they analysing the payback?' He could have replied, 'Or are there certain decisions that are so important, such as an uninterruptible and carbon free electricity grid for our children and their children that this question is no longer valid?' – but he didn’t.

PV solar panels generate electricity from sunlight and even work, though less effectively, in overcast conditions. The PV cell includes one or two layers of semi-conducting material, usually silicon.

To be effective, a PV system needs to be installed on a roof that faces within 90 degrees of south and is not overshadowed by trees or buildings. The electricity generated is in the form of Direct Current (DC) - normally 12 volt and converted to Alternating Current (AC) using an inverter and is connected into the AC building supply.

There are three basic types PV panels: monocrystalline, polycrystalline (or multicrystalline) and amorphous; all are made from silicon.


  • Only daylight is needed to create energy.
  • Can be connected to the national grid and any excess electricity sold back to an electricity company.
  • Solar energy is free, plentiful and clean.
  • Generally planning permission is not required when installed correctly.
  • The electrical infra-structure already exists.
  • There are no carbon emissions once installed.


  • A large roof area is needed to generate lots of energy. 1.5kWp would normally be installed on an average size house which would cover an area of 12 square metres.
  • The efficiency of solar panels depends on the number of solar light hours and climate.
  • Initial costs are higher than conventional electric and gas-heater systems.
  • An unshaded, south-facing location is needed for installation

Most solar energy manufacturers use the Photovoltaic Geographical Information System for determining the solar irradiation in any part of the world.

This figure of course varies significantly throughout the world.

The industry is expanding hugely and most notably in Germany and Japan.

Financial Payback and Carbon Payback

There is little doubt in some people's mind that photovoltaics together with offshore wind power will contribute to the possibility of a carbon free electricity grid – particularly in the UK.

The strength of a PV cell is measured in kilowatt peak (kWp) – that is the amount of energy the cell generates in full sunlight.

The RICS Green Home Guide gives an installation figure of £8 to £9,000 for a 1.5 kWp PV system for a terraced house, £10,000 to £12,000 for a 2 kWp system for a semi-detached house and £25,000 for a 5 kWp for a detached house.

The Energy Saving Trust state that is likely that a 2.5 kWp photovoltaic cell will provide 50% of annual electricity consumption for houses, and surplus electricity may be sold back to the grid and the saving can be considerable - up to 1.2 tonnes of CO2 a year, and around £250 reduction of the electricity bill.

There has been a debate going on about the payback period for PV within the industry – here is a heated observation from a solar panel supplier about the figures given in the RICS The Greener Homes Price Guide’:

Jeremy Leggett, Executive Chairman, Solarcentury (a PV and solar panel supplier and installer) says:

How RICS (The Royal Institute of Chartered Surveyors) got it wrong

To use an example, a typical domestic retrofit system saves over a tonne of CO2 per year and £350 per year off electricity bills at today's prices. The system is warranted for another 20 years and will last another 20 years beyond that. Right now, solar installers are offering retrofit PV systems with a payback” of 13 years, not the 100 years quoted by RICS. That figure will drop further with future electricity inflation and falling solar PV costs. In addition, the Government's grant programme offers guaranteed domestic PV grants of up to £2,500 till mid-2010 towards the cost of installation [see www.lowcarbonbuildings.co.uk.] For solar hot water, the RICS research assumption peddled as fact” of annual energy savings of just £24 and a 208 year payback” is simply incorrect.

Only this week, the many micro-generating customers of Scottish and Southern Energy received the news that from 1st September they will be paid 20p per unit for their exported electricity. This means that the typical UK domestic PV owner will be saving well over £350 per year on their electricity bills at today's prices. On this basis, a typical domestic PV system will pay back in about 13 years. On top of that the value of their property will have increased as a result of their decision to install PV.

Additionally, the supposed 30 year working lifetime of photovoltaics is very much an underestimate. Some of the first solar panels manufactured by Sharp and installed in Japan over 40 years ago are still generating electricity today. And that's using half century old technology. Just because a solar panel has a warranty of 25 years doesn't mean that should be taken as an indication of its lifetime. Nobody would expect their fridge to pack up after two or three years, just because that's the warranty period. For that matter, you wouldn't talk about payback when investing in a fridge either.”

So conflicting views – but I do very much take the point that just because guarantees are being offered say for twenty years this does not mean the system will not last for forty years (the inverter excepted) – that is forty years of carbon savings and forty years of financial payback (see below re. calculations for financial payback).

So how do we form an independent view on this? Everything of course is about the cost of electricity now and in the future - there is little doubt that the cost of PV installations will reduce with the economy of size and has already done so in Germany.

There has been a real commitment to this technology in Germany.

Relationship between Oil, Gas and Electricity in the UK and Europe

It is helpful to try to understand if there is a relationship between oil, gas and electricity prices now and in the future.

Are electricity costs going to go up and by how much in the next 20 years? How long is a piece of string’ may be the answer but at least an attempt to answer this question should be made.

David Shaw of Efficiency Direct wrote an interesting article in February 2007 discussing this very issue. In his article How oil prices affect utility costs’, he looks at the historic link and the situation today.

It is explained historically both in Europe and the UK that the price of oil has been linked with the price of gas and because a large proportion of the UKs electricity is generated from gas, any large movement of oil prices will affect both retail gas and electricity prices.

The question then is what affects oil prices which Dave Shaw says in his article is very complex and multi–dimensional’.

However from what I can see once the world economy is back on its feet again it can only go one way and that is up - and as described by the Chief Executive of Gazprom to $250 per barrel at some time in the future and this price rise would be in line with any resource that is running out fast - or has reached its plateau’.

Returning to Payback of Photovoltaics (PV)

So why are the predictions made for PV for financial payback so all over the place?

Jeremy Leggett of Solarcentury is predicting 13 years in a specific case and The Greener Homes Price Guide do not give a specific figure but by inference of annual energy savings is 100 years or more and the Energy Savings Trust somewhere in between depending on which of their examples you pick.

I want to try to pin this down as accurately as I can, of course there are many variables - one thing we do know is the solar irradiation of the sun varies throughout the UK but not that much.

There does seem to be a consensus that the carbon payback is pretty quick but we will look at that as well.

A very readable and comprehensive 132 page final technical report on domestic photovoltaic field trials in the UK between 2000 and 2005 was first published in 2006 and may be read at www.berr.gov.uk/files/file36660.pdf.

The trials were carried out under contract as part of the Department of Trade and Industry (now BERR) New and Renewable Energy Programme and the report is a must read’ for potential PV installers if only to avoid the installation pitfalls.

The report details the trials on 28 different projects installing photovoltaics in different locations in the UK.

The Executive Summary concluded that based on a lifetime of 25 years (much disputed as too short a lifetime by Jeremy Leggett of Solarcentury – see above) the cost of PV generated was found to be between 20.9p/kWh and 184.7p/kWh with an average of 47.5p/kWh.

(No surprises here for readers of this article at the extraordinary variations in results – but in fairness I should mention that the trials are inclusive of both installations to new buildings as well as retrofit to existing buildings – the latter of which are more expensive to install.)

The report also goes on to state that if the known underperforming panels are removed the average and maximum costs are 39.1p/kWh and 77.8p/kWh respectively.

The report states that this is significantly better than the average generally quoted of 50p/kWh.

Although the above is helpful what we want is a guide on how to calculate independently both financial and carbon payback for a PV system added to an individual property.

Help is at hand if the form the calculator at: www.encraft.co.uk/ws/P/Calculators/HomePage.php.

At this site it is possible to feed in your post code and rates for electricity and an approximation of both financial payback and carbon payback is made by the calculator.

The default post code is NG1 6BJ and based on a target annual generation of 1,000 kWh per year.

The example given is for a 1.2 kWp grid connected photovoltaic modules system requiring 9.8 square metres of roof space. The design tool assumes the modules are made from crystalline silicon with a conversion efficiency of 12%.

A budget cost for the installation is assumed to be £7,400 and with a grant of £2,400 an actual cost of £5,000.

Given the default assumptions of the price of electricity the financial payback is calculated at 25.1 years and the carbon payback at 3.2 years.

If I put in my own post code the equivalent figures are 23.9 years and 3.0 years because of the slight increase in solar irradiation in Sussex.

What the calculator does not seem to have provision for at the moment (and I have spoken to Encraft and their proposal is to put in various electricity supplier rates in the future) is for a rate which included payments for all electricity generated.

At the moment (summer 2009) Good Energy are paying 15p/kWh for energygenerated rather than exported to the grid. (The value of Renewable Obligation Certifiates are included in this figure).

A simple calculation tells me for post code NG1 6BJ if I put the Renewable Obligation Certifiate values at nil, the payback through saving of electricity will be £109 (this assumes only 70% use of the electricity). However 1,000kWh at 15p per hour will add £150 to this figure making a saving of £259 and a financial payback period of 19.3 years.

As previously stated according to the Department for Business Enterprise and Regulatory Reform website, the Government is committed to having FITs in place in April 2010’.

FITs or Feed in Tariffs could just light the blue touch paper for the solar PV industry in the UK and this has already happened in Germany so that solar PV is now a major contributor to German electricity generation – solar irradiation levels are not that dissimilar in the UK from Germany – see the Joint Research Centre site for solar irradiation levels in Europe.

Using a Feed in Tariff system electricity companies are obliged by Governments to buy renewable electricity at above market rates.

In this way the solar PV owner will receive a fixed payment for generated electricity for a fixed period of time say 20 years.

So in our example if FITs were set at 40p then the figures would be a payback of £109 + 1,000kWh generated × 40p = £509.

A payback of just 9.8 years.

But it is quite likely the grant of £2,400 would be withdrawn in which case the figure would have to be revised to 14.5 years.

It is quite possible, but there are no guarantees, that installations now and in the past will also benefit from the new FITs and this is therefore a good argument for having the work done now whilst the grants are still in place.

When the FIT figures are set in April 2010 then the above example, of course, will need to be replaced with the actual figures and this we will do in this article.

Germany, France, Poland, the Czech Republic, Spain, Italy, Netherlands, Greece, Portugal, Switzerland, Bulgaria, Hungary, Latvia, Lithuania, Belgium, Slovenia and Slovakia all use long term feed in tariffs.

I have to confess to a feeling of surprise – everywhere I read that solar PV is just too long term to be financially viable and also uninformed observations that UK does not have enough sun’ - it has reasonably similar irradiance levels to Germany – and for the story so far in Germany please see this Guardian article, Germany sets shining example in providing a harvest for the world’.

What is not factored in to any of the figures is the electricity prices if and when (probably when) oil prices reach $250 per barrel.

Fuel cells for the Future

Fuel cells are electrochemical devices and are being developed for heating and electricity for homes. They use hydrogen and oxygen through a membrane to produce electricity and heat; when it combusts it produces nothing but water.

If a hydrogen pipework infrastructure existed the system would be ideal for piping hydrogen to homes to use this technology – unfortunately, of course, it does not.

The alternative then is to use the natural gas infrastructure that already exists.

The German company Baxi Innotech have developed a fuel cell using natural gas which is converted to a hydrogen rich gas, and state that they have 800 units in operation in Europe.

The fuel cell which is about the size of a fridge is capable of producing 1.5kW of electricity and 3 kW of heat.

Baxi tell me they are expected to be available to home owners from 2010 and Vaillant expect their own fuel cell unit to be available in the market in 2010. It is anticipated that they will operate in conjunction with condensing boilers to provide the additional heat.

This development could well be a long term solution for domestic markets – better still if a hydrogen infrastructure is installed although this does not seem likely.

UK Grants

At April 2009:

Domestic UK Grants

The grants for microgeneration technologies for England and Wales are managed for the Department of Business Enterprise and Regulatory Reform (BERR) by the Energy Saving Trust.

The grants are towards the cost of installing a certified product by a certified installer and both the approved products and installer are shown at www.energysavingtrust.org.uk/Generate-your-own-electricity.

The scheme for certified installers is operated by the Building Research Establishment (BRE).

Solar Panels

England and Wales: a maximum of £400 of the relevant eligible costs, whichever is lower.

Scotland: the grant is 30% of the installation costs up to £4,000.

Northern Ireland: the grant for installation is £1,125 regardless of size but subject to an overall limit of installed costs, inclusive of VAT.

Photovoltaic Panels

  • England and Wales: Up to £2,5000.00
  • Scotland: Nil
  • Northern Ireland: the grant for installation is £3,000 per kWp up to £15,000.00 maximum and subject to an overall 50% limit of installed costs and inclusive of VAT.

Ground or Water Source Heat Pumps

  • England and Wales: a maximum of £1,200 or 30% of the relevant costs, whichever is the lower.
  • Scotland: 30% of installation costs up to £4,000 including all ground works.
  • Northern Ireland: £3,000 regardless of size subject to an overall of 40% of installed cost, inclusive of VAT. £2,400 for air source heat pumps subject to a maximum of 40% inclusive of VAT.

Wind Turbines

  • England and Wales: A maximum of £1,000 per kWp installed, and with an overall maximum grant of £2,500 or 30% of the eligible costs whichever is the lower. Also payment of kWh exported or generated.


On the 11th September 2008 the UK Prime Minister announced measures to help people cope with their fuel bills and this is called the Home Energy Saving Programme’ and stated the measures will be paid for by the energy companies at a cost of £910 million.

Each energy company seems to have a different approach to the distribution of grants and these may be seen on the Energysavings Trust web site.

(I am not at all sure why a uniformity of approach should not be followed by all of these companies – it would certainly be less confusing for everyone).

The common theme is that if you are over 70 or on benefits it is likely the loft insulation and cavity wall insulation will be provided free of charge.

Grants for Public Buildings

These are by far the most generous grants.

Grants for the installation of microgeneration technologies are available to public sector organisations (schools, hospitals, housing associations, and local authorities) and charitable bodies under the Low Carbon Building Programme – Phase 2 (LCBP2).

Grants will be available for installation up to a maximum of 50kW electricity and 45kW of heat per property.

Installation must be chosen from the pre-specified products list available from the LCB2 website and the grants are as follows:

  • Solar photovoltaics (PV) – 50% grant.
  • Micro wind turbines – 50% grant.
  • Solar thermal – 50% grant.
  • Ground source heat pumps – 50% grant.
  • Biomass - 50% grant.

A maximum of three eligible technologies for each proposed building can be applied for.

The low carbon building site states: Why does the list of technologies not include air to air heat pumps” (I think they mean air source heat pumps) and the site answers its own question as follows:

Unfortunately there were insufficient expressions of interest from the framework suppliers during the tender process to include all microgeneration technologies in the final framework.

Interested parties may apply to the Low Carbon Programme Phase 1 (www.lowcarbonbuildings.org.uk) which does offer grants for these new technologies”

But the same site states elsewhere Community groups, public and non-profit sector applicants can now only apply to Low Carbon Programme Phase 2”.

So we conclude from the above air source heat pumps are out because of lack of interest!

My profuse apologies for side tracking from grants but I want to understand how this extraordinary situation has arisen. There are thousands of air source heat pump installers in this country, some going bust as I write I expect, so why the lack of interest? To say nothing of the best value for money for the public sector and the tax payer.

To understand the answer to this crazy question it has to be understood how the scheme is intended to work.

The answer to the question is contained in the low carbon building site FAQs.

The question: Who installs the systems?”

The answer: The applicant will be required to source the microgeneration installer through the BERR appointed Framework Supplier” - see www.lowcarbonbuildingphase2.org.

The site goes on to explain the Framework Suppliers are required to use a person, firm or company specified as certificated installers in relation to the relevant technology.

The Framework Suppliers appear to be an extremely limited list and are: British Gas, Dimplex, E.ON UK, The Low Carbon Partnership, RES Heat and Power, Solarcentury, and Solar Microgeneration.

Some are stated to be suppliers for say only solar photovoltaics and some for several methods of microgeneration – so this limits the list even more.

When I queried the limited tendering procedure and, in particular, the omission of air source heat pumps this is the reply I received from the Building Research Establishment (BRE):

Dear Mike,

Thank you for leaving the above feedback on our website.

Seven Framework Suppliers were chosen by BERR following a competitive tender to ensure quality, range and value for money. The contract notices for the Framework Suppliers were published at the Official Journal of the European Union (OJEU) in June 2006 (for a web link please see the FAQ document on our website). The deadline for expressions of interest has now passed. BERR are not considering any more tenders. Framework Suppliers are required to use certificated installers in relation to the relevant technology. Installers need to contact the framework suppliers directly for more detail on becoming listed as one of their installers.

Unfortunately there were insufficient expressions of interest from the framework suppliers during the tender process to enable inclusion of all Microgeneration technologies in the final framework, air source heat pumps were one of these. There is a set product list available to download from the website that must be used in order to be eligible for a grant.

The above information can be found in the FAQs on our website, please also see guidance notes and terms and conditions.

I hope this has answered your queries however please let me know if you require any further information.

Kind Regards,
Administrator, Low Carbon Buildings Programme Phase 2

I wrote again to ask if it was likely that grants for heat pumps for Public Buildings was likely to change in the future and this is the response:

Dear Mike,

We do not know of any grants for air source heat pumps available to the public sector at the moment. Phase 1 of the LCBP does cover air source heat pumps - however this is now only open to domestic homeowners.

We do not know what future schemes may be opened up in the future, or what technologies these may cover. Any updates will be posted on the LCBP Phase 2 website homepage.

Sorry I cannot be of anymore assistance.

Kind Regards,
Administrator, Low Carbon Buildings Programme Phase 2

So EU best practices for tendering may have been followed but an entire industry has been left out for grants in the public sector due to lack of interest it seems – this clearly does not make sense and must be a reflection on the method of procuring tenders no matter how correctly the EU tendering procedure has been observed.

See Heat Pumps for discussion of the application and importance of air source heat pumps and in particular this diagram.

Grants for Private and Commercial Sector

The Energy Technology List (ETL) is a register of products that may be eligible for 100% tax relief under the Enhanced Capital Allowances (ECA) scheme for energy saving technologies – the Carbon Trust manages the list on behalf of the government.

The Energy Technology Criteria List (ETCL) and the Energy Technology Product List (ETPL) are for performance criteria and qualifying products respectively – enhanced insulation is not specifically mentioned as an ETPL but may qualify for an ECA if the ETCL criteria are met.

Appendix: Units

See the author's guide for information on the units used in this article.

Useful sites

Acknowledgements and thanks

To all the web sites mentioned and to the following publications:

Sustainable Energy – Without the Hot Air by David JC Mackay

Available for free download at www.withouthotair.com.

Michael Meacher MP says it all about this book: So much uninformed rhetoric is thrown about on climate change and energy systems that there is an urgent need for an authoritative study setting out just what can and cannot be realistically be done to achieve sustainable energy. This hugely important book fills that gap both technically and highly readably. It should be a must read’ not only at home, and in industry, but on each Government Ministers desk, and not just in the UK.

From me, congratulations for writing this book Professor Mackay this much needed book brilliantly fills a technical gap – uninformed rhetoric should no longer be an option for anyone.

Heat – by George Monbiot

As the New Scientist says we need people like Monbiot more than ever before.

Solar Heating – design and installation guide – published by the CIBSE
TM25 - Understanding building integrated photovoltaics - published by the CIBSE

I urge anyone who is considering the design and application of solar heating to read these.

The Greener Homes Price Guide – by BCIS

BCIS is the building cost information service for the Royal Chartered Institute of Surveyors.