Establishing local networks for energy supply / combined heat and power

Remote power plants are inefficient, with over 60 per cent of the energy from fossil fuels being lost through transmission and waste heat before the electricity reaches our buildings.

The Seaton CHP plant in Aberdeen is part of a CHP system delivered by a council-backed not-for-profit company

Capturing ‘waste’ heat is an important priority in cities and towns and it can be utilised by existing industries to replace increasingly expensively produced process heat. A local decentralised community energy system can help tackle these issues through decreased transmission losses and by capturing and utilising the waste heat in buildings of all uses. This is combined heat and power (CHP) serving district heating.

Cities, towns and villages should consider the potential benefits of increasing the proportion of energy provided through decentralised energy systems with a high proportion of new renewable energy to improve efficiency and reduce CO2 emissions in the shorter term while working alongside the currently less efficient national distribution grid. The proportion of electricity coming from renewables will increase over time and so grid-supplied power could become more viable as a sustainable option in the future.

Systems can be:

  • block-based, with each block in a development having its own communal energy system
  • site-wide, where a single energy generation source or small number of sources (to suit phased development or demand that varies over time) serves a number of buildings connected by a community energy network
  • city-scale.

The most common form of decentralised energy supply is community or district heating. This is where space heating and hot water is delivered to multiple occupants from a local plant via a network of insulated pipes buried in the ground. The pipe network can be installed at the same time as other services (water, drainage, etc) to minimise costs in new development. It is also possible to retrofit existing buildings and there are convincing cost/benefit arguments for supplying heat to them or industry rather than new buildings where there is low heat demand. Industrial use of waste heat, not only retains such industries, protecting them from escalating fossil fuel costs, but also enables larger, more commercially efficient CHP plants to be situated in the city fringe, with short (and therefore) efficient pipework connections to serve a manageably small number of high heat-requiring customers.

Seaton CHP plant

The Seaton CHP plant in Aberdeen is part of a £1.6 million Combined Heat and Power system delivered by council-backed not-for-profit company Aberdeen Heat & Power.

Seaton CHP plant

Photo by Aberdeen City Council

Local decentralised heating can also be combined with electricity production if a CHP plant is used, leading to the production and delivery of more than one service and associated prime energy efficiency gains. This uses the inevitable waste heat from the electricity generation process to heat buildings, rather than requiring additional gas, oil or electricity to generate it. The CHP unit is linked to homes and other buildings by a local district heat distribution network. The electricity produced could be exported to the national grid or transported to other users over the local electricity distribution network or over a new, community owned or part owned network.

The Seaton CHP plant in Aberdeen is part of a £1.6 million Combined Heat and Power system delivered by council-backed not-for-profit company Aberdeen Heat & Power.

Local decentralised generation plants can be housed in ‘energy centres’ or block plant rooms and are therefore best planned at the neighbourhood masterplanning stage. Given that heat can be transmitted up to 30km with little heat loss from modern pre-insulated pipe work there is also potential to capture the heat from existing power stations and connect this to new and existing developments.

Waste heat from remote power stations can even be used to convert biomass in waste or wood to 'wood alcohol' a potential transport renewable fuel.

Guidance on the implementation of schemes can be found in NHBC Foundation guide NF13 Community Heating and Combined Heat and Power

An important principle in approaching local energy supplies is to look to efficiently integrate disparate processes and patterns of energy use within the 'mixed use' of buildings in a city. Energy systems make a profit and this should influence ownership decisions across sites and neighbourhoods. This integration - and the efficiencies that it ensures - is a key aspect that has been missing from energy planning and management over the past decades and needs to be addressed by cities and towns in a proactive manner as required by PPS1.

Most of the heat generation technologies discussed here can be used for decentralised generation and some (such as CHP) only become commercially viable if used in this way. A wide range of energy generation technologies are suitable for site-wide energy distribution systems, with a slightly reduced range also applicable to block-based community systems.

A thermal store will allow electricity generation from CHP to be de-coupled from heat production and its delivery to end users. This is because demand for electricity does not closely match demand for heat. A thermal store allows heat to be stored during periods of peak electricity production and used later – thus avoiding the need to burn gas or oil for heat provision during those periods. The CHP plant can then be sized more cost-effectively. The options are a large central store, block-based stores, or individual stores (such as a hot water cylinder in every dwelling) or a combination of the three along with the thermal capacity of the system network, depending on the specific requirements of the development.

Community heating systems usually allow individual householders to be in control of their own heating and hot water system by the provision of a heat exchanger unit and heat meter in every home and other building on a development. Heat exchangers are also recommended to hydraulically separate parts of the system so that supply to certain parts can be isolated if necessary for maintenance or emergency repairs.

Other factors to consider are:

  • Maintenance. The maintenance responsibility for the centralised plant would not generally lie with individual residents but can be assigned by the developer to a site management company or ESCo.
  • Gas. A community heating system within a residential development removes the requirement for individual gas connections, boilers and flues.
  • Billing. Energy billing to each occupier served by the system would need to be centrally managed, either by unit rate, heat-metered consumption charges or flat rate service charging. Billing can be managed by an ESCO. The creation of a district heating system restricts customer choice but will often be the most attractive option to consumers due to cost savings of locally produced heat.
  • Future proofing. The means of energy generation can be efficiently and quickly modified centrally and added to in the future. As new more efficient and environmentally friendly heating/cooling/electricity generation technologies are proven and become cost effective, they can be ‘plugged in’ to the community distribution system with minimal disruption. This avoids the nightmare of changing individual plant in every building and reduces the risks associated with changing fuel economics or changing CO2 emission compliance targets. The meter reading and billing arrangements will be digital for efficiency. If a data cable has to interconnect all meters then it can be relatively easily extended to sell competitive data services to its customers - so that the ESCo becomes a more efficient MUSCo. The MUSCo so formed can now provide customer tailored education on the benefits of low carbon lifestyles, -reward known reductions in energy used, can trade future ’carbon credits‘ on behalf of the community, - facilitate web-based services such as ’to the door‘ delivery of locally grown food (become the community green steward), overseeing the increasingly tough future targets to meet the demands of the Climate Change Act.

Fuel sources

A combined heat and power plant can generate electricity, heat and/or cooling via an absorption chiller.

It can be fuelled by a variety of sources from biomass to waste.

Local, sustainable wood, the biomass fraction of municipal solid waste or the agricultural waste supply is the preferred fuel to ensure there are not unintended consequences of increased carbon intensity of the fuel due to transportation or by switching agricultural land from food to fuel production. Imported fuel can be associated with rising food prices if local food production has been displaced by energy cash crops. Large quantities of liquid biofuel are required to meet the required target of the Renewable Transport Fuel Obligation of 10 per cent by 2020 Biomass and liquid biofuels can have negative effects on food production and biodiversity. The embodied carbon from their planting, fertilising, processing and transporting has to be considered along with issues of guaranteeing the sustainability credentials of the fuel delivered.

CEN standards on the overall minimum sustainable sourcing and accreditation of all biofuels for use in the EU are being developed and already exist for transport.

Other fuels include the biomass and fossil fuel element of municipal solid waste and commercial waste, sewage/food waste wet biomass which is best suited for anaerobic digestion and specialist waste streams such as old tyres.

Each scale of urban use also has to consider the traffic implications of fuel delivery, the effects on external air quality and whether the rejected heat in summer will worsen the urban heat island effect.


A district heating system is most appropriate at the scale of a large district, neighbourhood or city. Smaller areas of 200-250 homes can be viable (see for example Mauenheim bio-energy village in Germany) although this does not preclude smaller schemes that can grow.

The phasing of development, density and heat requirement of each connected customer is key to establishing economic viability. This can be addressed by the use of temporary boiler plant until the full development justifies the full energy centre with CHP and associated plant. Similarly block-based plant can eventually interconnect to form a district network then a neighbourhood until the full city level efficiency can be achieved.

For waste to energy CHP plants the scale of application, the phasing of development and integration with suitable long-term waste management policies are key to economic viability. As a general rule, waste-fed schemes will need to be of a neighbourhood or larger scale to be viable.

Gas-fired CHP systems can be an attractive current option for smaller individual systems for buildings and neighbourhoods. Units are available for applications of one unit and upwards but can only be used for a period as gas is a fossil fuel.

The commercial viability of the required district heating systems is affected by the heat requirements and density of available customers for heat and cooling and becomes viable at approximately 200 homes at medium density (60-80 homes/hectare). However, an ESCo partner may not be interested except at a larger scale. Meanwhile, irrespective of commercial viability, CHP (of any fuel source) may be required to meet particular regional or local planning policies, as is the case in London.

An additional consideration on the scale of biomass energy plants is that they can be better audited with fewer emission control issues if fewer, larger scale plants are provided.

The delivery of community energy systems should be led from a wider spatial planning and masterplan level. The numerous waste to energy CHP plants in northern Europe, such as Hammarby Sjöstad, Malmö, Copenhagen and Hanover were all initiated and led by the local planning authorities. Individual plot developments are normally too small to make these systems financially viable.

As a general rule minimum average housing densities of 50 homes/hectare are recommended to limit the cost of pipe work installation.

Conditions for district heating and CHP

District heating is a strategic enabling technology in that it provides a network that a range of technologies and fuel sources can feed into. It has been recognised by the government as one of the most significant carbon saving actions. However, is not appropriate for all areas. Key determinants are:

  • Density. The installation of pre-insulated heat pipes is expensive. Therefore it is costly to connect widely dispersed buildings. Low temperature district heating using heat pumps as used significantly in Holland can partially address this issue as there is so much low grade heat available in the interseasonal thermal ground stores that uninsulated plastic pipe is all that has been found to be needed. Conversely, where buildings are densely concentrated, for example with blocks of flats or terraced housing, district heating is an attractive option.
  • Age of buildings. This will identify the level of thermal insulation in buildings as determined to the building regulations in force at the time when they were built. Spatial density and the thermal characteristics will combine to show the ‘heat density’ of buildings in an area.
  • Mix of uses. Different types of building occupiers have varying demands for heat. For example, domestic householders’ consumption of heat peaks in the early morning and during the evening. During the daytime it tends to be lower. Commercial offices heat use peaks between 9am and 5pm. These are represented in demand or load profiles. Different load profiles complement one another and a diversity of load profiles improves the technical feasibility and financial viability of district heating.
  • Presence of anchor loads. Some building users have large demands for heat that are steady over the course of a day and over a year. Typically, these users are public sector such as hospitals, universities, prisons and leisure centres with swimming pools. As public sector organisations can commit to long-term contracts they can act as ‘anchor loads’ for the development of a district heating network.

Such features determine the energy ‘character’ of an area. Further information on character areas is given in the TCPA and CHPA guide on Community energy. This includes detailed guidance and example case studies including Copenhagen’s strategy.

Design considerations include ensuring adequate space for the plant and flue within the wider scheme development as well as access, storage and transport implications of fuel deliveries. New district heating systems should also connect into any existing networks so that the surplus heat is available to the existing stock with its higher heat demands.

Community energy centre locations should be planned to have good access to transport routes, particularly canals and rail if available.


The average capital costs for a CHP system are as follows:

  • biomass CHP on a large site: around £3,500 per kW of electricity (kWe)
  • biomass CHP on a small city infill site: around £16,000 per kWe
  • gas-fired CHP with a capacity of between 8kWe and 40kWe: between £1,200 and £3,400 per kWe
  • gas-fired CHP with a capacity of over 400kWe: between £650 and £1,200 per kWe

These figures are from 2008 Communities and Local Government research. They reflect the capital cost of each carbon saving option when applied to a Part L1a 2006 compliant home. Present compliance with Part L 2006 assumes a concept known as displaced carbon factor where renewable electricity displaces a high carbon-emitting source like coal from the grid mix. The displaced carbon factor is therefore higher than the grid carbon factor, which may overestimate the compliance ability of renewable electricity produced, and underestimate the cost by, in some instances up to 30 per cent. Along with the lack of available smaller scale biomass CHP technology this was one of the two main issues, raised by the UK Green Building Council that led to the recent zero carbon definition consultation exercise.

The costs represent an estimate of the total costs to a contractor, including materials, plant and labour, builder’s work in connection, preliminaries, overheads, contingencies, profit, and design fees. The same research also undertook an economic cost and benefit analysis of each technology. This found that the value of saving in energy costs for biomass CHP systems was £1,223 per tonne of CO2 saved, compared to £2,728 for gas-fired CHP systems. As indicated above these figures now represent a low estimate as they will require updating following the removal of the displaced carbon factor in cost calculations.

Priority: develop a low carbon and renewable energy portfolio
Tags: energy, cities and towns, neighbourhoods

CABE and Urban Practitioners
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