9 Identification of Barriers
There are a number of barriers that must be overcome to implement heat recovery from power generation in Scotland. Understanding these barriers is important in its' own right and is an important input into the development of policy ideas.
This study collected views on the barriers from:
- A questionnaire circulated to members of; the Forum for Renewable Energy Development Scotland, the Renewable Heat Implementation Group and a selection of local planners. This is discussed in detail in section 8 and the detailed returns are consolidated into tables and included in Appendix 3: Responses from Planners.
- A policy workshop held with Scottish Government officials in January 2011.
- AEA knowledge based on contact with district heating operators and developers.
It is important to note that respondents may be commenting on real barriers, or issues that they perceive to be barriers. Perceived barriers may occur through previous experience e.g. difficulties in gaining planning consent, experience that may no longer be as relevant if planning policy has changed.
While perceived barriers can prevent or delay new initiatives in the same way as real barriers, the solution is different, better clarity of information, case studies etc, are the route to deal with perceived barriers.
9.1 Classification of Barriers
Participants and respondents were forthcoming about what they saw as the significant barriers to the recovery of heat from large scale energy generation in Scotland. The range of responses was broad and for ease of presentation these are grouped into 5 types of barrier;
- Communication or informational barriers.
- Local or national planning barriers.
- Funding and Project Capital barriers.
- Technical barriers.
- Risk and uncertainty barriers.
Some of the barriers identified overlap or span the boundaries of more than one of these types, however, presentation in broad types is beneficial for clarity and understanding. Each of the barrier types are explored in a little more detail below, the responses are in some cases rephrased and amalgamated as an aid to clarity, but these are all as identified by respondents.
9.1.1 Communication or Informational Barriers
This type of barrier refers to problems that arise due to a general lack of awareness of what is involved in the establishment of a heat recovery network or system.
- Low awareness of / lack of familiarity with potential and opportunity:
- House builders unfamiliar with systems.
- Few examples or case study sites from which to draw experience.
- Public concerns about combustion processes:
- Potentially perceived as being dirty processes.
- Lack of confidence that district heating systems can be effective:
- Lack of established market or supply models.
- Uncertainty about choice of suppliers and tie in to other services; and
- Lack of basic information such as heat maps.
These informational barriers are thought to result in a number of identifiable impacts including:
- Reduced investor interest.
- Objections lodged during planning processes.
- Low take up of consumers; and
- New developments situated away from potential sources.
9.1.2 Local or National Planning and Regulatory Barriers
These barriers were identified and defined by both planners and non-planners alike, to some extent they might reflect uncertainties or lack of information among respondents in respect to planning arrangements and might therefore be addressed by actions to improve communication and information.
- Planners lack experience of these systems:
- novelty of systems creates uncertainty for planning officers.
- lack of presumption in favour of heat recovery systems.
- Lack of clear standards for heat recovery for existing power plant:
- such as de-minimis efficiency standards.
- guidance on thermal efficiency requirements unclear.
- Lack of integration of heat systems within existing arrangement for services; and
- Location of existing power stations perceived as being remote from heat users.
These barriers have a number of potential impacts:
- Development time is extended delaying the point at which returns can be achieved; and
- Costs to developers are increased both by delays and a need to undertake work to reassure regulatory agencies.
Planning and regulatory barriers may also increase overall uncertainty about project acceptability and result in potential developers not putting forward proposals or abandoning proposals as such barriers are encountered.
9.1.3 Funding and Project Capital Barriers
These barriers concern the availability of initial capital to establish the infrastructure and the uncertainty around financial models for supply.
- Lack of government incentives for utilising heat from fossil fuel electricity plants;
- Uncertainty over appropriate business models for the construction and ongoing maintenance of facilities:
- Price relative to gas costs uncertain over time.
- Lack of established billing system.
- Access to capital to funding network extensions.
- Limited reward for fossil fuel plants to increase efficiency.
- High capital costs and long payback periods for infrastructure:
- High costs of infrastructure for retrofit.
- High cost of infrastructure in Scotland relative to Scandinavia.
- Current economic climate and resistance of banks to provide finance; and
- Impact on electricity generation (loss of output).
The impacts of funding and project capital barriers include:
- Weaker business cases for potential development; and
- District heating may be seen as carrying greater risk and therefore higher finance costs, both as a result of potential delays through the planning and regulatory system discussed above, but also uncertainty over income streams.
These barriers also suggest a need for exploration of models of splitting infrastructure (for networks) from supply. These types of barriers also suggest a central role for the public sector.
9.1.4 Technical Barriers
The barriers identified here concern the technical implementation of heat recovery schemes covering the whole technical delivery process from heat recovery, heat transport and use.
- Managing the heat load and heat demand to ensure needs are met and obligations fulfilled.
- Possible need for backup heat supply systems.
- Physical distance from existing sources of heat (heat losses etc).
- Large scale sources require large scale heat users.
- Seasonal nature of heat demand - much less heat wanted in the summer.
- Efficiency of heat exchangers at plant and customer sites; and
- Trading off energy generation losses with heat supply and losses of revenue for generators.
Many district heating schemes exist across Europe, including examples supplied with heat from power stations. Hence the technical barriers can be overcome. However the impact of technical barriers:
- Compound issues of uncertainty.
- Increase the high up front capital costs.
- Make smaller scale proposals more difficult to deliver; and
- Create difficulties for generators in sweating existing assets.
9.1.5 Risk and Uncertainty Barriers
The barriers identified in this section concern risk and uncertainty associated with the development of schemes as a whole, which have not previously been addressed under other sections
- Scheme complexity.
- Long term contracts needed:
- Long term business uncertainty.
- Risk that alternative technologies supersede district heating (example might be Organic Rankine Cycle or heat pumps).
- Potentially fragmented ownership of system components creating dispute about liability or maintenance.
- Need for landowner agreements potentially covering significant different land managers.
- Attitudes to risk from business users.
- Resistance to change; and
- Users financial stability and longevity uncertain.
The impact of risk and uncertainty barriers might be to:
- Deter potential customers form making connections to a local network.
- Add complexity to business cash-flow management; and
- Impact on costs of finance associated with additional risk.
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