Publication - Research and analysis

Decarbonising heating - economic impact: report

This report considers the potential economic impacts arising from a shift towards low carbon heating technologies in Scotland, over the period to 2030.

Decarbonising heating - economic impact: report
Appendix C FTT:Heat - Data input and treatment

Appendix C FTT:Heat - Data input and treatment

C.1 Scope of FTT:Heat

The version of FTT:Heat used to analyse decarbonisation of the supply side of heating in Scottish buildings is largely based on FTT:Heat as developed by Dr. Knobloch and operated by Cambridge Econometrics (Knobloch, Mercure and Pollitt, et al. 2017). Whereas the standard model looks solely at domestic buildings, here a distinction was made between non-domestic buildings (combination of public and commercial buildings) and domestic buildings which were separated into flats and houses explicitly.

The spatiotemporal coverage is 32 local authorities that cover all of Scotland and it runs from 2018 (end of historical data, start of simulation) until 2030. FTT:Heat includes 11 heating technologies.

C.2 Data inputs and treatment

Techno-economic data

The supply-side of heat decarbonisation means substituting heating technologies for technologies that do not generate (direct) emissions. Substitution only occurs when consumers consider the alternative renewable technologies as a viable option. Among others, this depends on techno-economic data as represented in Table C.1. Decision-making to substitute technologies depends on upfront investment costs and operational costs, such as repair & maintenance (termed O&M in the table), fuel costs, and any policy cost or benefit if applicable. To capture gaps in the input data and get a measure for intangible costs, gamma values are estimated. These also cover unlisted limitations of technologies. The table below lists the technologies included in this analysis.

Historical energy use for heating

The "Scottish Energy Statistics Hub" (SESH) reports non-electrical heat demand for domestic and non-domestic buildings by fuel and local authority for the period 2005 to 2018 (Scottish Energy Statistics Hub 2020a). SESH draws the data from the "Sub-national Total final energy consumption data" (Department for Business, Energy & Industrial Strategy 2018) and "Energy Consumption in the UK: end use" (Department for Business, Energy & Industrial Strategy 2020). The former reports electricity consumption by sector and by local authority for the period of 2005 to 2018. The latter reports end-use energy use by fuel and by sector for the years 2016 to 2019, but as a UK aggregate. These numbers are used to estimate the electrical demand for heating purposes. See Table C.2 for final energy demand in domestic buildings and Table C.3 for final energy demand in non-domestic buildings.

Through the ongoing Renewable Heat Incentive (RHI), installation of renewable heating technologies is supported. This data is tracked and reported on by SESH (Scottish Energy Statistics Hub 2020c). It also reports the number of accreditations per local authority which guides the regional allocation of renewable technologies (Scottish Energy Statistics Hub 2020b, Scottish Energy Statistics Hub 2020f).

Mapping energy to local technology composition

Finally, the non-electrical final energy demand, the electrical final energy demand, and the renewable heat generation need to be harmonised and mapped to specific heating technologies and local authorities. Some of the technologies included in the RHI use the same fuel as listed in the final energy demand figures (both electrical and non-electrical).

First, the regional final energy use was mapped to technologies. Second, the share of flats and houses connected to the grid, the number of accreditations, and the flats/houses composition of a region were used to allocate renewable technologies to local authorities (National Records of Scotland 2017). If the renewable technologies used the same energy carrier as technologies already filled based on the final energy use figures, then this amount was subtracted from those technologies.

Communal heating for non-domestic buildings was allocated based on the share of regional non-domestic GVA to the country Total. A similar approach was followed for communal heating for the domestic buildings.

Table C.1: Cost components for each of the technologies included in this analysis
Heating technologies Investment O&M Fuel cost Lifetime Efficiency Gamma value Capacity factor Emission factor Payback threshold Capacity factor
  €2015/kW €/kW €/kWh years % - MWh/ kW gCO2/ kWh years MWh / kW
Oil boiler 595.61 23.82 0.08 20 0.8 0.01 2.17 266.76 4 2.17
Gas boiler 504.87 10.10 0.08 20 0.87 0.03 2.17 201.96 4 2.17
Biomass boiler 608.41 2.43 0.05 20 0.85 -0.02 2.17 0 4 2.17
Coal stove 287.34 5.75 0.06 20 0.7 0.08 2.17 353.88 4 2.17
Communal heating - gas 308.28 18.50 0.05 20 0.87 0 2.17 201.96 4 2.17
Communal heating - Biomass 308.28 18.50 0.05 20 0.85 0 2.17 0 4 2.17
Electric heating 605.27 0.63 0.21 20 1 -0.08 2.17 0 4 2.17
Heatpump Ground 1536.19 16.29 0.21 20 3.5 -0.02 2.17 0 4 2.17
Heatpump AirWater 837.50 17.45 0.21 20 2.5 -0.03 1.71 0 4 1.71
Heatpump AirAir 579.06 59.33 0.21 20 2.5 0.01 1.97 0 4 1.97
Solar Thermal 832.81 8.99 0.00 20 1 -0.01 0.65 0 4 0.65
Table C.2: Final energy use for heat in domestic buildings.
Domestic heat demand (GWh) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Scottish Energy Statistics Hub Non-electric heat demand Coal 607 547 626 663 664 693 684 654 626 535 539 536 522 505
Manufactured fuels 370 354 322 385 293 331 299 297 337 300 287 285 305 308
Petroleum products 4218 4499 3872 4116 4003 4534 3493 3478 3581 3171 3176 3170 3112 3122
Gas 35329 34343 34469 33342 30730 30330 28959 28802 28073 27700 27315 27459 28352 28361
Bioenergy & wastes 549 574 582 690 752 969 842 1071 1261 1198 1353 1454 1445 1579
SESH Total heat 41073 40316 39872 39196 36442 36857 34277 34301 33878 32903 32671 32903 33736 33876
Estimates for combination of space and water heating Bioenergy 549 574 582 690 752 969 842 1071 1261 1198 1353 1454 1445 1579
Coal 976 901 949 1048 957 1023 983 950 963 835 826 820 827 813
Electricity 2817 2754 2728 2632 2599 2585 2535 2491 2422 2447 2414 2307 2101 2094
Gas 34460 33498 33622 32521 29974 29584 28246 28093 27383 27018 26644 26784 27694 27686
Oil 4218 4499 3872 4116 4003 4534 3493 3478 3581 3171 3176 3170 3112 3122
Total non-electrical 40204 39471 39024 38376 35687 36111 33565 33593 33188 32222 31999 32228 33077 33200
Total 43021 42226 41752 41008 38286 38696 36100 36084 35609 34669 34413 34535 35178 35295
Table C.3: Final energy use for heat in non-domestic buildings.
Non-domestic heat demand (GWh) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Scottish Energy Statistics Hub Non-electric heat demand Coal 109 100 103 104 137 107 113 99 110 113 24 23 26 27
Manufactured fuels 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Petroleum products 3418 3168 2993 2889 2836 2873 2948 2957 2909 2958 3111 3239 3265 3311
Gas 12197 11651 11962 11468 9703 10885 9843 10565 10041 9316 8335 8100 8560 8555
Bioenergy & wastes 226 194 207 225 507 665 579 630 975 1006 1683 1356 1444 1299
SESH Total heat 15949 15113 15264 14685 13183 14531 13484 14252 14035 13392 13153 12718 13295 13192
Estimates for combination of space and water heating Bioenergy 226 194 207 225 507 665 579 630 975 1006 1683 1356 1444 1299
Coal 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Electricity 6314 6343 6257 6217 5908 6052 5883 5871 5924 5597 5402 5374 5457 5650
Gas 11234 10732 11018 10563 8938 10026 9066 9731 9249 8580 7677 7461 7884 7880
Oil 2387 2213 2090 2018 1981 2007 2059 2066 2032 2066 2173 2262 2281 2313
Total non-electrical 13848 13138 13315 12805 11425 12698 11705 12427 12256 11652 11533 11079 11609 11491
Total 20162 19481 19572 19022 17333 18750 17588 18298 18180 17249 16936 16454 17066 17141

C.3 Projections for useful energy demand

The demand-side perspective is important in the context of heat decarbonisation. Heat demand can be split in terms of heat required and the energy demand needed to generate that heat. The former is called useful energy demand (UD) while the latter is called final energy demand (FD) (Madureira 2014). The UD can then be further divided in heat required for hot water (UDw) and heat required to elevate indoor space temperatures (UDs).

Historical UD figures were obtained by scaling the FD (by technology) figures with estimates for efficiency as obtained via the process described in C.3 for each of the building types. Projections of UD for each building sector are discussed below.

Non-domestic demand

The historical UD values for non-domestic buildings were divided by the historical GVA timeseries for each local authority. This gives UD intensity (in units of GWh/£2019m). The UD intensity is then connected to GVA projections that include estimated effects due to the COVID-19 pandemic (Cambridge Econometrics produces these projections per local authority on an annual basis). Non-domestic buildings are assumed to decrease their UD intensity by a rate equal to the annual compound rate between 2010 and 2018 and this rate was continued into the projected time period to mimic efficiency gains (i.e. insulation improvements) of non-domestic buildings. Improved insulation is a heating demand-side solution which will contract the need to supply heat. Therefore, this is reflected in the UD projections.

Domestic demand

The regional historical FD (by technology) is scaled to UD through technological conversion efficiencies. The National Records of Scotland reports shares of flats and houses of the Total number of dwellings for each local authority. This was combined with building archetypes developed by Element Energy for the Scottish Government from which the average UD for flats could be extracted. Combining the shares of dwelling types (flats and houses) with the dwelling specific UD, the Total UD could be split into a UD specific for flats and a UD specific for houses.

Element Energy also reported on average UD by dwelling type in 2035 by assuming that all dwellings are upgraded to EPC band C. In combination with household projections per local authority and by assuming that the split between houses and flats remains constant, projections of UD for houses and flats per local authority up to 2030 were obtained.

This settles the heat demand side, which serves as a fixed input for each of the scenarios, to which FTT:Heat matches the supply side.


Contact

Email: heatinbuildings@gov.scot