Paul Albone outlines the results of the feasability study for a district heating system/thermal energy grid in the Avonmouth/Severnside Enterprise Area.

3. Heat Input
•
5 Projects/sources
•
Max Est.
1,100,000Mkwh pa
Z1
Heat Users
•
205 Locations
•
Process & Space heating
Theoretical TE Uptake
•
Z2
Max Est.
718,000Mkwh pa
Network
•
Mapped against road
access & overland pipe
runs
Z3
Z4

4. Type of Operation
Processing/
manufacturing
27
30
Distribution/
warehousing
67
81
Commerical /Offices
unknown
TE Zones Heat Demand Potential
150,651
362,229
Zone 1
159,736
Zone 2
45,654
Zone 3
Zone 4
400,000
350,000
300,000
250,000
200,000
150,000
100,000
50,000
0
Heat Demand DECC
calcs
LCSW Study data
Zone 1 Zone 2 Zone 3 Zone 4

5. •
Pipe run lengths
•
•
•
•
•
•
•
Z1 ~ 14.9km
Z2 ~ 6.3km
Z3 ~ 15.8km
Z4 ~ 4.3km
Project cost est (£3k/m – £2k/m)
• Z1 ~ £44.9M - £32.7M
• Z2 ~ £18.9M - £12.6M
• Z3 ~ £47.4M - £31.6M
• Z4 ~ £12.9M - £8.6M
Total + connection
• £129.3M - £87.9M
Revenue Potential
(£0.018 – £0.028/kwh – based on DECC heat pricing gas lined)
•
•
£12.9M - £20.1M pa
ROI Potential
• 10 to 4.4 years

6. •
•
Revenue Potential : £12.9M - £20.1M pa
ROI Potential : 10 to 4.4 years
The REALITY IS:What this assumes
Heat uptake
Other UK TEG/DHNs
The AS TEG
100% heat uptake
100% heat uptake
100% v unlikely!
Structures to drive long term
contracts and user sign up (LA
operations, planning etc)
No LA operations
Established planning consents
25+ yrs
3yr max
Incentive
structures
Contract term
None
Heat pricing
Gas linked heat
pricing
Pricing formula
Heat supply only
Real cost of heat delivery
(O&M, space saving, cost
avoidance – personnel etc)
Cost avoidance formula very
different.
Heat supply only LESS cost of existing
assets + is variable (central
procurement etc)
Additional DHN
revenue support
No energy centre
Energy centre (RHI, electricity
revenue etc)
No energy centre
Engagement
LESS than gas link pricing for large
users
Site decisions not just a matter for
the specific location.
“we are already doing a lot – Why
should we do this?”

7. •
Effect on ROI when varying
•
Capital cost (via discounting)
•
Heat uptake
Maximum capex and minimum heat price
ROI (years) 0% Discounted Capital Cost
140.0
120.0
100.0
80.0
years
100%
60.0
50%
40.0
20%
20.0
0.0
z1
z2
z3
z4
total + con
100%
6.9
23.0
16.5
4.8
10.0
50%
13.8
46.0
33.0
9.6
20.0
20%
34.4
115.0
82.5
24.0
50.0
% of total heat
uptake

8. ROI (years) 0% Discounted Capital
Cost
140.0
120.0
100.0
80.0
60.0
40.0
20.0
0.0
100%
z1
z2
z3
z4
total +
con
100%
6.9
23.0
16.5
4.8
10.0
50%
13.8
46.0
33.0
9.6
20.0
20%
34.4
115.0
82.5
24.0
50%
50.0
20%
ROI (years) 50% Discounted Capital
Cost
70.0
60.0
50.0
40.0
30.0
20.0
10.0
0.0
100%
z1
z1
z2
z3
z4
total +
con
100%
1.4
4.6
3.3
1.0
2.0
50%
2.8
9.2
6.6
1.9
4.0
20%
6.9
23.0
16.5
4.8
10.0
50%
20%
total +
con
3.4
11.5
8.2
2.4
5.0
6.9
23.0
16.5
4.8
10.0
20%
100%
z4
50%
25.0
20.0
15.0
10.0
5.0
0.0
z3
100%
ROI (years) 80% Discounted Capital
Cost
z2
17.2
57.5
41.2
12.0
25.0
50%
20%

9. ROI (years) Variation with Max/MinCapital Estimates ,
0%, 50%, 80% Capital Discounting
and 100%, 50%, 20% Heat uptake
60.0
50.0
40.0
30.0
100%
50%
20.0
20%
100% uptake at min cap
10.0
50% uptake at min cap
20% uptake at min cap
0.0
0%
50%
80%
100%
10.0
5.0
2.0
50%
20.0
10.0
4.0
20%
50.0
25.0
10.0
100% uptake at min cap
4.4
2.2
0.9
50% uptake at min cap
8.7
4.4
1.7
20% uptake at min cap
21.9
10.9
4.4
Only realistic scenario.
Use this to inform the model

10. 1. Standard DHN/TEG business model does not apply.
2. Establish a workable business model rather than trying to make the
model work.
3. Fundamentals and risks of this model will be dictated by:-
a) The private/corporate heat users.
b) The cost of the infrastructure.
4. To achieve an acceptable ROI will take financial input from Public
and Private sectors.
•
Use a mixture of existing instruments eg:•
Part PFI type for main infrastructure
•
Standard debt for small supply grids within a
neighbourhood/industrial complex
5. Must drive down the capital repayment burden, to
6. Enable short term contracting of TE to work.