Where two or more properties require heat, for example in a building development, instead of heating each one individually, a more cost-effective option may be to provide a District Heating Scheme. Eligible District Heating schemes qualify for the Non-Domestic Renewable Heat Incentive, which is paid quarterly for 20 years.
District heating can utilise a number of different technologies, depending on the situation, including ground source heat pumps, Combined Heat and Power (CHP) or a commercial wood chip or pellet biomass boiler. To illustrate the possible options, we have provided two examples below.
District Heating Example 1.
A property developer is building 8 bungalows on a plot of land in a village where there is no natural gas. The developer would rather not install oil boilers and oil tanks and is considering individual air source heat pumps or ground source heat pumps. Air source heat pumps are tempting as they involve a lower capital expenditure and a simpler installation. However, because the properties are part of a development and are not self-builds, individual heat pumps would not be eligible for the Domestic Renewable Heat Incentive.
If installing a ground source heat pump district heating system, however, the owner of the system would be eligible for the Non-Domestic Renewable Heat Incentive.
In this situation, each property would be provided with its own ground source heat pump. The heat pumps and external header pipes, up to the manifold, would be owned by the home owner and they would be responsible for their upkeep and for the running costs of the heat pump, which would be included as part of their electricity bill, plus an annual service.
Ownership of the manifold and ground collector would be retained by the developer. They would then become an Energy Supply Company (ESCo). From an installation such as this, payments would be based on the amount of heat each property needed, as determined in their SAP reports, so payments would be fixed for the 20-year term of the RHI. (Alternatively, the installation could be funded by a third party, who would then retain ownership and would receive the RHI payments).
District Heating Example 2.
A landowner has a 5 tied cottages in close proximity to each other, and to a farm yard used for corn drying. The corn dryers are currently fuelled by LPG and the cottages are heated by ageing oil boilers, some of which are due for replacement. The landowner also has large areas of managed woodland, from which they are able to produce wood chip. The ideal solution is to install a Froling wood chip boiler, correctly sized to provide heating for all 5 cottages and to meet the needs of the corn dryer.
This form of installation would be eligible for the Non-Domestic Renewable Heat Incentive.
The landowner has the option to install the biomass boiler in an unused farm building, or to use a containerised system, including a backup commercial oil boiler, buffer tanks, pumps and all other equipment, for ease and speed of installation.
A new heat exchanger is supplied and installed for the corn dryer and underground, pre-insulated heat mains are used to carry hot water to each cottage.
In each cottage, we install a Heat Interface Unit (HIU), which effectively replaces the oil boiler. These are connected to the original heating systems and to the flow and return pipework of the pre-insulated heat mains to the biomass boiler.
Each HIU also includes a heat meter, so the landowner becomes an ESCo (Energy Supply Company) and is able to charge each tenant for the heat they use, offsetting the cost of supplying fuel as well as servicing and maintenance costs. Heat production from the biomass boiler is metered, and the RHI is paid based on the heat the biomass boiler actually generates. If the boiler is correctly sized it will meet, but not exceed the Tier 1 RHI tariff; in these circumstances, a 320-kilowatt boiler (categorised as a “Medium Commercial Biomass” boiler) would attract annual payments of £52,195.00. Over 20 years this would total £1,043,900.00.