what

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This guide aims to provide specific and practical
information to support your implementation of
decentralised energy systems. The guide will help
you understand the right solution for different
situations and help you understand which groups
of people you will need for delivery. Use the
buttons below to navigate around the guide.
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This section covers context for DE and the
technologies involved
This section covers key scenarios for the
application of DE
This section covers reasons to consider DE
This section covers key enablers and current
business models
This section covers which parties you may need to
deliver a DE scheme
This section covers links to sources of further
information
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What
This section provides some introductory
information defining the context for
decentralised energy and some of the main
technologies involved.
Definition of DE
What you need to do first
Technologies
ESCo
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Definition of Decentralised Energy

• There are many different definitions of
  decentralised energy.
• The Government takes a broad view using the term
  distributed energy to refer to the wide
• range of technologies that do not rely on the
  high-voltage electricity transmission network or
  the gas grid.
• This includes
• All plants connected to a distribution network
  rather than the transmission network.
• Small-scale plants that supply electricity to a
  building, industrial site or community,
  potentially selling surplus electricity back into
  a distribution network.
• Microgeneration, i.e. small installations of
  solar panels, wind turbines or biomass/waste
  burners that supply one building or small
  community, again potentially selling any surplus.
• Combined Heat and Power (CHP) plants, including
• Large CHP plants (where the electricity output
  feeds into the transmission network but the heat
  is used locally).
• Building or community level CHP plants.
• Micro-CHP plants that effectively replace
  domestic boilers, generating both electricity and
  heat for the home.
• Non-gas heat sources such as biomass, wood, solar
  thermal panels, geothermal energy or heat pumps,
  where the heat is used in just one household or
  is piped to a number of users in a building or
  community.

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Local Generation

• Distributed energy schemes use a range of fuels
  to generate heat and electricity more efficiently
  by being close to the point of use. The heat is
  distributed and used in district heating
  networks, can generate chilled water for cooling
  and be used in industrial processes. The
  electricity is sold locally or exported onto the
  grid.

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Energy Efficiency Measures

• Should be the starting point of any energy
  strategy.
• Most important in achieving targets.
• Insulation Technology.
• Innovative solutions applied to all the micro
  renewable technologies.
• Ongoing source of business opportunity.

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Hierarchy of Energy Efficiency in Buildings

• Across our cities and communities these are the
  routes to lowering carbon emissions, reducing
  energy use and improving energy security, beyond
  central generation.

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Energy Companies (ESCos)

• What is an ESCo?  
• The precise role and responsibilities of an ESCo
  are tailored to meet the needs of the specific
  project or initiative. In general, ESCos are
  used to deliver the  following objectives
• CO2 reduction
• Renewable energy projects
• Energy savings
• Energy efficiency services
• Energy advice or
• Tackling fuel poverty.
• However, this list is not exhaustive and one of
  the main benefits of an ESCo isits flexibility.
• ESCos may be used to oversee the financing,
  construction, operation and maintenance of the
  system.  However the precise responsibilities of
  the ESCo will be tailored to meet the needs of
  the individual scheme.
• An Energy Service Company (ESCo) is not a magic
  wand that makes an unviable project viable,
  however, an ESCo may take a different view on
  acceptable rates of return and risk than other
  companies.

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ESCos 2

• ESCo and risk management
• An ESCo can spread the risk by transferring respon
  sibility to those stakeholders best placed to
  manage them.  In the case of financial risk, an
  ESCo may choose to enter into a fixed cost
  arrangement and incur the risk of project
  overspend.
• Not only can an ESCo reduce the risk involved in
  a project, it can also ensure a much more rapid
  outcome.  By forming a group whose sole purpose
  is the specified project, it can provide a
  focussed delivery.  In contrast, for example, a
  local authority has many responsibilities and so
  time management issues may result in delays to
  the scheme.
• Furthermore an ESCo can ensure that the parties
  managing the project have sufficient knowledge
  about the topic.  By involving either public or
  private entities with previous experience
  implementing similar schemes, the outcome of the
  project can be much more secure.
• In some cases it can be useful to produce a risk
  matrix containing the risks at all stages of the
  project.  This ensures that all eventualities
  have been considered, all involved parties are
  aware of their responsibilities, and that each
  stage of the project is successful.  This matrix
  will be tailored to the specific project and
  include only the relevant risks. 

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ESCo Case Study 1
ESCo

• Thameswey Energy Ltd (est. 2007)
• Aim Install a range of sustainable and renewable
  energy projects to meet the Councils Climate
  Change Strategy objectives.  Improve the
  environment within the Borough of Woking for the
  benefit of local residents.
• Mechanism Thameswey Energy Ltd was established,
  a joint venture company between Thameswey Limited
  (a company wholly owned by Woking Borough
  Council) and Xergi Ltd.  The ESCo was setup to
  finance, build and operate small scale CHP
  stations, to provide energy services by private
  wire and distributed heating networks to
  institutional, commercial and residential
  customers.
• Outcome A CHP system provides heat, electricity
  and chilled water to district buildings.  Further
  expansions will provide energy to other residents
  and revenue generated is being invested into
  similar schemes.

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ESCo Case Study 2
ESCo 2
Aberdeen Heat Power (est. 2000)

• Aim Improve the local authoritys housing stock
  and reduce fuel costs for tenants.  Find a more
  energy efficient heating method than mains
  electricity in the citys multi-storey blocks.
• Mechanism An ESCo was created to manage the
  scheme, and it in turn employed contractors and
  consultants to construct and install the CHP
  plant. 
• Outcome 288 flats are now connected to the
  community CHP scheme, which has created an annual
  cost saving of 83,396 for residents. The carbon
  savings from the scheme, compared to the existing
  heating systems, equate to 411 tonnes per year.

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ESCo Case Study 3
ESCo 3
Southampton Geothermal Heating Company (est. 1986)

• Aim That Southampton City Council must not only
  advocate sustainable development, but demonstrate
  its commitment by investing in energy efficient
  services.
• Mechanism Southampton Geothermal Heating Company
  Ltd was created in a joint agreement between
  Southampton City Council and Utilicom (a
  specialist energy management company).  The ESCo
  is solely owned by Utilicom so as to minimise
  risk for the local authority.
• Outcome A geothermal well is used alongside a
  CHP generator to provide energy to local
  residents and businesses.  10,000 tonnes of
  carbon emissions are avoided annually and the
  council receive revenue of
• 10-15,000 a year from the sale of surplus energy.

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ESCo Case Study 4
ESCo 4

• Mill Energy Services Ltd (est. 2003)
• Aim  Meet the commitment of the developer to
  ensure that the refurbished apartments are carbon
  neutral and that carbon emissions from ground
  floor properties are minimised. 
• Mechanism An ESCo (wholly owned by the residents
  and tenants of the building) was created to
  operate and maintain the renewable energy
  generating assets, and to create revenue to cover
  ongoing costs.
• Outcome A 50kW photovoltaic system and biomass
  CHP provide heating, electricity and drinking
  water to 130 apartments and several ground floor
  businesses.  This results in approximately a 600
  tonne reduction in carbon emissions annually. 
  Various energy saving measures, including high
  specification windows etc, were also installed.

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Technologies
Heat Pumps (Ground Air)
Combined Heat Power
Small Scale Wind
Small Scale Hydro
Biomass Heating
Solar Water Heating
Solar Photovoltaic
Combustion
Fuel Cells
Gasification
Energy from Landfill Gas
Anaerobic Digestion
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Combined Heat Power

• How it works
• Burns gas to produce heating and hot water. Uses
  internal combustion technology. Prime mover is
  an engine, with heat output a bi-product of
  electrical generation.
• Generation heating equally prioritised
  (compared to micro CHP which is heat demand
  lead).
• Space, noise and output constraints are less of
  an issue (compared to domestic customers due to
  plant room availability).

We will ensure that your CHP is correctly sized
to meet the majority of your demand for heating.
It is usually more cost effective to undersize
the CHP to provide the majority of your base load
and use another appliance (such as a gas boiler)
to provide supplementary heating. Control panel
optimises electrical heat generation. Power
unit is a combustion engine. Burns fuel (nat.
gas) to drive generator. Heat exchangers extract
energy from exhaust and oil to provide useful
heating in the premises.
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Combined Heat Power 2

• Specification
• Product Microgeneration
• Product Type Combined Heat Power
• Classification Low Carbon
• Output 13 kW(e)
• 29 kW(t)
• Efficiency 70 (gas)
• 26 (electricity)
• Generation 87,600 kWh(t)/yr
• 39,426 kWh(e)/yr
• Carbon Saving 75 reduction compared to Gas
  alone.
• Technology Benefits
• Low Carbon Uses fossil fuels to generate heat
  and power in a highly efficient manner, ideal for
  carbon reduction and operational efficiency
  improvements. If fuelled by a bio fuel, then CHP
  can be considered a renewable or carbon neutral
  technology.
• Combined Heat Power The plant installed is
  ideal for high heating and electricity
  requirements. Leisure centres, schools, hospitals
  all fit this category. Heat requirement needs to
  be low temperature (lt100 deg) not suitable for
  chemical or manufacturing processes.

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Combined Heat Power 3

• Typical Installations
• Schools - Good requirement for heat all year
  (especially with swimming pools) and high
  electrical demand.
• Hospitals - High heat and electrical demand
  throughout the year.
• Small scale heat networks high electrical
  demand throughout the year. Small heat demand in
  summer but CHPs can be undersized with addition
  of efficient boilers to ensure electrical demand
  is sized adequately.
•  
• NB addition of chiller units will improve heat
  demand and therefore the options are increased.

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Ground Source Heat Pumps

• How it works
• Solar energy stored in ground is extracted by
  ground loop and pumped into compressor.
• Compressor pressurises low temperature
  refrigerant to convert into high temperature
  thermal output for CH and DHW.
• Carbon renewable credits can be earned.
• Government backed with grants and central funding
  available to offset high capital cost.
• Recognised in building regs and Code for
  Sustainable Homes.
• Pressure
• Temperature Connected
• Volume
• Solar energy is captured by ground loop water and
  pumped to HeatPlant.
• Heat transfer vaporises refrigerant in Heat
  Plant.
• Compressor compresses vapour into liquid.
• Low grade energy in vapour is captured as high
  grade heat.
• High grade heat is pumped around CH system.

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Ground Source Heat Pumps 2

• Specification
• Product Microgeneration
• Product Type Heat
• Classification Renewable
• Output up to 40 kW(t)
• Efficiency CoP 4.0 CH
• 3.5 DWH
• Generation 25,000 kWh(t)/yr
• Carbon Saving up to 40 compared to Gas
• Technology Benefits
• Renewable Although GSHP uses grid supplied
  energy to operate it is collecting solar energy
  via the ground which acts like a huge battery,
  storing the energy as heat. If coupled with a
  renewable energy tariff, or electrical generating
  renewables a GSHP could be totally renewable in
  operation.
• All electric A GSHP only requires an electrical
  connection to operate ideal for off gas
  installations. Comparative running costs vs LPG
  or oil are very favourable.
• Grant funding applicable Several grants,
  including the LCBP Phase 2 are viable for this
  technology.

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Ground Source Heat Pumps 3

• Typical Installations
• Schools Mainly new build with efficient heat
  circuits (underfloor or low temp rads).
• Village Halls Any requirement to heat large
  areas with low temperatures.
• Offices Any underfloor heating system or low
  temp circuit is ideal for improved CoPs.

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Air Source Heat Pumps

• How it works
• Alternative to Ground Source Heat Pump
  installation
• Ambient heat from air is extracted by evaporator
  in compressor unit.
• Compressor pressurises low temperature
  refrigerant to convert into high temperature
  thermal output for CH and DHW
• Can work to temperatures of -20 deg.
• Installation is simpler than GSHP, but efficiency
  is less.
• Same technology as GSHP, only different heat
  source
•  
• Pressure
• Temperature Connected
• Volume
•  
• Energy is captured by fan unit from temperature
  in air.
• Heat transfer vaporises refrigerant in ASHP
• Compressor compresses vapour into liquid
• Low grade energy in vapour is captured as high
  grade heat
• High grade heat is pumped around CH system

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Air Source Heat Pumps 2

• Specification
• Product Microgeneration
• Product Type Heat
• Classification Renewable
• Output up to 14.6 kW(t)
• Efficiency CoP 3.3 CH
• 2.3 DHW
• Generation 25,000 kWh(t)/yr
• Carbon Saving up to 30 compared to Gas
• Technology Benefits
• Renewable Although ASHP uses grid supplied
  energy to operate it is collecting ambient
  energy via the air which acts like a huge
  battery, storing the energy as heat. If coupled
  with a renewable energy tariff, or electrical
  generating renewables an ASHP could be totally
  renewable in operation.
• Invisible heating solution Although efficiency
  isnt as high as GSHP, the installation costs and
  ease of integration (no ground loops or
  boreholes) make ASHP an attractive proposition
  for retrofit applications.
• Typical Installations
• Offices Mainly for warm air heating systems and
  air handling systems. (Some heat pumps can
  provide air conditioning but for this reason ASHP
  wont attract grant funding).

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Biomass Heating

• Burning biomass does not consume fossil fuels,
  but it does release CO2 into the environment.
  Biomass boilers require management and
  maintenance, take time to heat up and cool down.
• There is increasing concern that biofuel
  production may divert land from food production
  and forestry and this could raise as many
  sustainability issues as it is trying to solve.
• For small-scale domestic applications of biomass
  the fuel usually takes the form of wood pellets,
  wood chips or wood logs.
• The cost for boilers varies a typical 15kW
  (average size required for a three-bedroom semi
  detached house) pellet boiler would cost around
  5,000 - 14,000 installed, including the cost of
  the flue and commissioning. A manual log feed
  system of the same size would be slightly
  cheaper. A wood pellet boiler could save you
  around 750 a year in energy bills and around 6
  tonnes of C02 per year when installed in an
  electrically heated home.

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Biomass Heating 2

• Specification
• Product Microgeneration
• Product Type Heat
• Classification Renewable
• Output up to 70 kW(t)
• Efficiency 90 fuel efficiency.
• Generation 25,000 kWh(t)/yr
• Carbon Saving Up to 56 compared to Gas.
• Technology Benefits
• Renewable Wood is deemed a renewable source of
  fuel, especially with short rotation coppice
  (SRC) sources such as willow.
• Different Market Conditions Wood fuel will not
  follow the gas demand curve and price
  fluctuations will be driven by different market
  conditions in short term.
• Grant funding applicable LCBP Phase 2 funding
  of up to 50 project value is available for this
  technology.
• Typical Installations
• Schools, visitor centres, office buildings, civic
  buildings. Local factors to consider are
  availability of
• fuel supply and space for fuel storage.

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Biomass Heating 3

• How it works
• Wood pellets are created from waste in
  manufacturing processes. These are deemed carbon
  neutral as they have the carbon content from the
  photosynthesis process i.e. the only carbon
  emitted is the carbon captured while the tree is
  living (excludes embodied carbon from
  manufacture, transport, etc.)
• Carbon renewable credits can be earned 
• Government backed with grants and central funding
  available to offset capital cost
• Recognised in building regs and Code for
  sustainable homes.
• Best utilised as base load heating with separate
  appliance to provide peak load heating (such as a
  gas boiler).
• Large hopper holds wood pellets which are driven
  into local hopper.
• Pellets are slightly heated to remove moisture
  while in transit to
• combustion chamber.
• High temperature (initially from a heat gun, but
  then self sustaining
• from combustion) breaks down wood into composite
  parts.
• Combustible material ignites from the heat
  providing energy to
• heat building.
• Heat is passed into distribution system via plate
  heat exchanger.
• None toxic Ash is created (lt2 fuel volume) and
  can be used as
• a fertiliser.

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Small Scale Wind

• Generally lt 50kw. May be only 4-500w.
• Ideal way to generate clean, renewable energy.
• Established technology.
• Normally 3 blades driving a generator.
• Stand alone independent often in remote
  locations.
• Grid connected for higher use applications.
• Mast and Building mounted Planning issues.
• Wind power is a clean, renewable source of energy
  which produces no carbon dioxide emissions or
  waste products.
• Larger systems in the region of 2.5kW to 6kW
  would cost between 11,000 - 19,000 installed.

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Small Scale Wind 2

• Technology Benefits
• Renewable Powered by wind an abundant and
  renewable source of energy.
• Multiple Revenue Streams As well as offsetting
  grid supplied (and purchased) energy, reducing
  utility bills ROC credits can also be sold to
  utility suppliers, increasing earnings potential.
• Visible Visible green endorsement has many CR
  benefits. Schools can benefit from added
  curriculum material.
• Grant funding applicable LCBP Phase 2 funding
  of up to 50 of the cost of purchase and
  installation is available for this technology.
• Typical Installations
• Schools Tend to have plenty of room to maximise
  energy yield (turbulence from close buildings,
  trees, etc. has negative impact on energy
  capture). And can offset capital cost using LCBP
  Phase 2 funding. Good use as an educational tool
  and as a visible commitment to renewable energy.

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Small Scale Hydro

• Hydro power systems use running water turning a
  turbine to produce electricity. A micro hydro
  plant is one that generates less than 100kW.
• Typically used in hilly areas or river valleys
  where water falls from a higher level to a lower
  level.
• Turbine mounted in the flow generates
  electricity.
• Electricity produced depends on volume and speed
  of flow.
• For medium heads, there is a fixed cost of about
  10,000 and then about 2,500 per kW up to around
  10kW - so a typical 5kW domestic scheme might
  cost 20-25,000. Unit costs drop for larger
  schemes. Maintenance costs vary but small scale
  hydro systems are very reliable.

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Solar Water Heating

• How it works
• Solar energy heats collector, transferring heat
  into heat transfer medium (glycol).
• Glycol is pumped through distribution circuit
  through a pump station into a specially designed
  twin coil solar cylinder.
• Specification
• Product Microgeneration
• Product Type Heat
• Classification Renewable
• Output up to 10 kW(t)
• Efficiency 50
• Generation 6000 kWh(t)
• Carbon Saving up to 1.2 tonnes compared to
  electricity alone 

Cylinder is heated by solar coil and any
additional heat required is provided by existing
heating appliance (gas boiler, etc.) via the
upper coil in the cylinder. Temp sensors on plate
and in cylinder operate pump sets by detecting
when supply and demand are available. Pumps
circulate heat from solar panels to lower coil to
heat domestic hot water supply. DHW tank stores
this energy until a demand is required.
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Solar Water Heating 2

• Technology Benefits
• Renewable Operated by the most abundant
  renewable resource the sun. Ideal for sites
  with high hot water demand (leisure centres,
  restaurants).
• Visible Visible green endorsement has many CR
  benefits. Schools can benefit from added
  curriculum material.
• Typical Installations
• Schools New build or retrofit with access to
  southern elevations. Can be installed on roof, in
  roof or even on a building façade.
• Leisure centres Has a constantly high demand
  for hot water and can utilise high yield periods
  (summer months).
• Offices Any offices with central hot water
  systems and/or catering facilities for hot water
  demand.

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Solar Photovoltaic

• How it works
• Solar Radiation (Photons) strike mono or poly
  crystalline structure in PV panel.
• This photon energy excites unpaired electrons
  in atomic structure and some are released from
  structure, creating electron flow or direct
  current electricity.
• DC electricity flows into inverters where it is
  inverted into grid compliant 230v supply.
• Inverters are closely sized to the panel to
  ensure that the system is designed to run
  efficiently. The Inverter efficiency is key to
  the overall installation.
• Specification
• Product Microgeneration
• Product Type Power
• Classification Renewable
• Output up to 26 kW(t)
• Efficiency 12 at panel
• 96 at inverter
• Generation 14,000 kWh(e)
• Carbon Saving up to 6 tonnes pa compared to grid
  supplied electricity

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Solar Photovoltaic 2

• Technology Benefits
• Renewable Operated by the most abundant
  renewable resource the sun. Ideal for all sites
  with little shading and good electrical demand.
• Visible Visible green endorsement has many CR
  benefits. Schools can benefit from added
  curriculum material.
• Typical Installations
• Offices Any with good solar yield (i.e. little
  shading from trees or other buildings). Most
  offices have high electrical demand in summer due
  to IT equipment and air conditioning.

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Fuel Cells

• Based on a chemical reaction.
• Combines hydrogen oxygen.
• Forms electricity, water heat.
• Silent operation.
• Low maintenance.
• High efficiencies.
• Very low (even zero) emissions.
• Commonly reforms natural gas or other fossil
  fuel.
• With operating temperatures as low as 80C, fuel
  cells can be installed in private households and
  light commercial operations as well as meeting
  all the energy requirements of large industrial
  operations.

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Combustion Energy Recovery Incineration

• Combustion of a fuel, most often waste, under
  controlled conditions in which the heat released
  is recovered for a beneficial purpose. This may
  be to provide steam or hot water for industrial
  or domestic users, or for electricity generation.
  Combined heat and power (CHP) incinerators
  provide both heat and electricity. The fuel value
  (calorific value) of household waste is about one
  third that of coal.
• The most widely deployed ERI process is called
  mass burn. Waste is burned on a moving grate in
  a boiler with little or no pre-processing. The
  boiler and grate system therefore have to be
  large and robust enough to withstand all
  conceivable articles in the waste stream.
• The basic components of a plant are the
• waste bunker and reception building where waste
  is delivered
• by road, potentially rail, or occasionally by
  river and stored prior to use
• combustion unit(s) which burn the waste
• heat recovery and power generation plant
• flue gas cleaning equipment which cleans the
  combustion gases prior
• to discharge to air
• ash collection facility
• exhaust stack which discharges the combustion
  gases to the air.

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Gasification

• Gasification is a manufacturing process that
  converts any material containing carbonsuch as
  coal, petroleum coke (petcoke), or biomassinto
  synthesis gas (syngas). The syngas can be burned
  to produce electricity or further processed to
  manufacture chemicals, fertilizers, liquid fuels,
  substitute natural gas (SNG), or hydrogen.
• Gasification has been reliably used on a
  commercial scale worldwide for more than 50 years
  in the refining, fertilizer, and chemical
  industries, and for more than 35 years in the
  electric power industry.
• Power Generation with Gasification
• Coal can be used as a feedstock to produce
  electricity via gasification, commonly referred
  to as Integrated Gasification Combined Cycle
  (IGCC). This particular coal-to-power technology
  allows the continued use of coal without the high
  level of air emissions associated with
  conventional coal-burning technologies. In
  gasification power plants, the pollutants in the
  syngas are removed before the syngas is combusted
  in the turbines. In contrast, conventional coal
  combustion technologies capture the pollutants
  after combustion, which requires cleaning a much
  larger volume of the exhaust gas.
• Pyrolysis is the thermal degradation of waste in
  the absence of air to produce char, pyrolysis oil
  and syngas. e.g. the conversion of wood to
  charcoal.

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Anaerobic Digestion

• Anaerobic digestion is a biological process
  defined as the breakdown of organic matter by
  naturally occurring bacteria in the absence of
  air into biogas and biofertiliser and at a
  temperature, either in the mesophilic range
  (35-42C) or in the thermophilic range (52-55C).
  
• There are broadly three uses for biogas
• In a conventional boiler to produce hot water or
  steam.
• In a stationary engine to produce power.
• As biomethane for vehicle fuel.

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Anaerobic Digestion 2

• Food Waste Digesters
• The weekly collection of source-separated food
  waste is now being recognised by the Waste
  Resource Action Programme (WRAP), a Government
  funded organisation, as being the most successful
  way of diverting this waste from landfill.
• Farm Digestion
• Anaerobic digestion has a natural place on the
  farm, not just as a process within a cows
  stomach, but as part of a waste management system
  enhancing the recycling of nutrients, and as a
  source of renewable energy.
• The emphasis will come from one or a mixture of
  the following
• Feedstock, for example you may have a specific
  product to treat that is currently costing you a
  lot of money to deal with or you may want to
  import food waste and charge a gate fee.
• Biofertiliser, for example you may want to
  enhance the management of your manure producing a
  more homogenous material to apply accurately to
  land or alternatively you may want to bring in
  feedstocks, which contain nutrients that will
  eventually be utilised on your land making
  mineral fertiliser savings.
• Energy, for example, you may have high energy
  requirements on site which could be met using
  anaerobic digestion, making electricity savings
  while claiming renewable obligation certificates.

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Energy from Landfill Gas

• Power generation from the gas captured in
  landfill sites.
• Landfill gas is a mixture comprising mainly
  methane and carbon dioxide, formed when
  biodegradable wastes break down within a landfill
  as a result of anaerobic microbiological action.
• The biogas can be collected by drilling wells
  into the waste and extracting it as it is formed.
  It can then be used in an engine or turbine for
  power generation, or used to provide heat for
  industrial processes situated near the landfill
  site.
• Landfill sites can generate commercial quantities
  of landfill gas for up to 30 years after wastes
  have been deposited.
• Recovering this gas and using it as a fuel not
  only ensures the continued safety of the site
  after landfilling has finished, but also provides
  a significant long term income from power and/or
  heat sales.

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When

• This section provides some milestones at which a
  decentralised energy solution could be
  considered. It also provides some case studies to
  bring the topic to life.

Waste
Spatial Planning / Regeneration
New Build
Refurbishment or Extension
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Waste

• Business and Domestic Waste is an important
  potential feedstock for Decentralised Energy
  generation.
• When you have a waste stream with a significant
  calorific value.
• When the cost of landfill makes DE economically
  viable.
• When you have a significant source of waste near
  to a requirement for energy or heat.

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Spatial Planning / Regeneration

• Local Authorities should give full consideration
  to the suitability and application of
  Decentralised Energy provision in all of their
  Spatial Planning and Regeneration Strategies.

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New Build

• DE solutions to provide Heat and Power should be
  fully evaluated in any New Build proposition for
  Houses, Schools, Hospitals, Office complexes or
  Factories.

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Refurbishment or Extension

• DE solutions to provide Heat and Power should be
  fully evaluated in any proposition for Houses,
  Schools, Hospitals, Office complexes or Factories
  to be extended or refurbished.

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Why

• This section identifies some of the key reasons
  for considering a decentralised energy solution.

• Company Image
• Security of Supply
• Increased Demand for Energy
• Climate Change adaptation

• Economics, i.e. Energy savings, penalties,
  charges, taxes, CRC
• Business Opportunity
• Comply with legislation

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How

• This section suggests some key enablers for
  decentralised energy schemes and suggests
  specific business models that others are using in
  the market place.

Business Models
Contracts
Steps
Planning
Regulations
Grants / Subsidies / Tax
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Planning
Small / Micro Wind
Solar
Anaerobic Digestion
Not Required
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Planning Small / Micro Wind

• Due to legal technicalities the current statutory
  instrument (SI) does not cover micro wind. Once
  these issues have been resolved, it is expected
  that roof mounted and free standing micro wind
  turbines will be permitted at detached properties
  that are not in conservation areas.
• Further legislation is expected later this year.
• Until then, you must consult with your local
  authority regarding planning permission.

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Planning Solar

• Solar PV and solar thermal (roof mounted)
• Permitted unless.
• Panels when installed protrude more then 200mm.
• They would be placed on the principal elevation
  facing onto or visible from the highway in
  buildings in Conservation Areas and World
  Heritage Sites.
• Solar PV and solar thermal (stand alone)
• Permitted unless
• More than 4 metres in height.
• Installed less than 5 metres away from any
  boundary.
• Above a maximum area of array of 9m2.
• Situated within any part of the curtilage of the
  dwelling house or would be visible from the
  highway in Conservations Areas and World Heritage
  Sites.

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Planning Anaerobic Digestion

• As with any industrial facility, anaerobic
  digestion plants are subject to a number of
  regulations and administrative procedures
  designed to protect the environment and human
  health. Depending on the circumstances of the
  individual plant, these might include
• Planning Permission,
• Waste Regulations,
• Animal By-Products Regulations (ABP) Regulations,
• Integrated Pollution Prevention and Control
  (IPPC) and
• OFGEM accreditation.

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Planning Not Required

• Permitted development rights.
• In England, changes to permitted development
  rights for renewable technologies introduced on
  6th April 2008 have lifted the requirements for
  planning permission for most domestic
  microgeneration technologies.
• The General Permitted Development Order (GPDO)
  grants rights to carry out certain limited forms
  of development on the home, without the need to
  apply for planning permission.
• Biomass boilers and stoves, and CHP
• Permitted unless
• Flue exceeds 1m above the roof height.
• Installed on the principal elevation and visible
  from a road in buildings in Conservation Areas
  and World Heritage Sites.
• Ground source heat pumps - Permitted.
• Water source heat pumps - Permitted.

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Regulations

• Renewables Obligation (RO)
• Various Renewables Obligation Orders have been
  enacted since the original Renewables Obligation
  Order was introduced in April 2002. In brief the
  RO was set up by Government to encourage the
  development of new renewables generation projects
  in the UK through a market support mechanism. The
  RO requires licensed suppliers to provide an
  increasing percentage of their electricity
  supplies to customers from qualifying renewable
  sources and this obligation runs until 2027
  although proposed legislation if passed will
  extend this period to 2037. The RO as a support
  mechanism differs from the feed-in tariff which
  is used in Germany and Spain to encourage
  development of new renewables projects.
• Energy Act 2008
• This Act includes provisions strengthening the RO
  as well as enabling the Government to introduce a
  tailor-made scheme to support (via feed-in
  tariffs) low carbon generation of electricity in
  projects up to 5MW it also enables a new
  Renewable Heat Tariff to be introduced to provide
  a financial support mechanism for renewable heat
  which has so far been lacking in the UK and its
  absence has proved a disincentive for the
  development of renewable heat projects in the UK.
• see the website- www.decc.gov.uk for more on
  this Act.

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Regulations 2

• Planning and Energy Act 2008
• This Act enables local planning authorities to
  include in their development plans requirements
  for a proportion of the energy used in
  developments in their area to be from renewable
  sources to be low carbon energy from local
  sources and for developments in their area to
  comply with energy efficiency standards exceeding
  the building regulation requirements.
• Planning Act 2008
• This Act also affects energy developments and
  how they will be treated within the planning
  regime. see the website- www.berr.gov.uk for
  more on this Act.
• Electricity Act 1989
• This Act sets out the licensing regime for the
  electricity industry and is important in relation
  to any DE project development as regards the
  electricity aspects, most notably the
  distribution and supply aspects of any such
  project.

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Regulations 3

• The Electricity (Class Exemptions from the
  Requirement for a Licence) Order
• 2001 (as amended)
• These Orders provide exemptions, in specified
  circumstances, from the requirement to hold
  licences
• for generation, distribution and/or supply of
  electricity which would otherwise be required
  under the
• Electricity Act 1989 (as amended). This area has
  been subject to a large amount of work over
  recent
• years mainly through the Distributed Energy
  Working Group but a legal case which was decided
  last
• summer by the European Court of Justice (the
  Citiworks AG case) has put into doubt the
  validity of
• such exemptions which affect third party
  suppliers ability to use networks to supply end
  customers.
• The ramifications of this case are still being
  considered by the UK Government to see if the
  Orders will
• remain valid following this decision.
• Other Relevant Government Policy Documents
• Regional Spatial Strategy
• Local Government Act of 1999
• Code For Sustainable Homes
• Supplement to Planning Policy Statement (PPS) 1
  on Planning and Climate Change
• Energy White Paper
• Local Government White Paper

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Grants / Subsidies / Tax

• It is recommended that, in the very early stages
  of considering a decentralised energy scheme,
  suitable grants, subsidies, tax advantages etc
  are explored.
• Some of the technologies described in this guide
  are new and are supported in order to make them
  comparable to their well-established competitor
  technologies.
• Fiscal incentives of this nature could be related
  to
• Location certain regions may attract
  regeneration funding e.g. Objective 1 funding
  from EU.
• Technology some new technologies are subsidised
  or supported e.g. Low Carbon Buildings Programme
  (LCBP).
• Who you are some benefits relate to specific
  industries, sizes or organisation or, for
  example, the public sector.
• Local in addition to regional approaches above
  (location), there may be specific individual
  scheme grants that may be available e.g. from
  Regional Development Agency (RDA).
• A comprehensive list is not provided in this
  guide, due to its complexity and relatively
  fast-moving nature but you may find some of the
  following resources useful.......

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Business Models
Energy Performance Contract
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Implementation of Decentralised Energy Generation
The Energy Performance Contract

• Model Energy Performance Contract between ESCO
  and Energy User
• Concept ESCO designs, pays for, operates and
  maintains the optimum mix of energy efficiency
  and decentralised energy generation systems. The
  ESCO guarantees a level of performance increase
  based on the difference between the pre and post
  implementation performance levels.

• Key Advantages
• End user can retain its capital for its core
  business purpose rather than energy generation
  assets
• Operational and performance risk not taken by end
  user
• Operational and Maintenance resources not
  required from end user
• Non finance benefits such as internal and
  external marketing

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Contracts

• Introduction
• In relation to any DE project there will be a
  requirement for a number of contracts and
  agreements to be put in place.
• Given that there are an almost infinite number of
  variations in the type of DE projects which can
  be set up, this section deals with contracts and
  agreements which are commonly used in such
  projects.
• Alongside the contracts there will be a number of
  regulatory requirements which will need to be met
  by any DE project developer or sponsor and these
  will be dealt with in the section of this Guide
  entitled Regulations.
• SPECIFIC CONTRACTS FOR GENERIC DE PROJECTS
• 1 Land Contracts and allied rights etc
• 1.1 It will almost always be the case that the
  land on which the DE plant and infrastructure is
  to be placed will need to be leased or licensed
  to the DE project sponsor or developer and/or
  operator. Much will depend on who owns the land
  and whether this is in public or private hands.
  At the very least a DE project developer should
  be looking for rights over the relevant land
  which are exclusive rights and which will last
  for at least the duration of the DE project plus
  a further period to cover any works etc which
  will need to be carried out after the end of
  operation of the DE project.

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Contracts 2

• 1.2 The typical documents which would be put in
  place in relation to privately-owned land would
  include either a lease or some form of licence
  agreement between the freeholder(s) of the land
  (and there may of course be instances where the
  land affected by the project is owned by more
  than one entity) and the project company/sponsor.
  It is also usual for relevant easements to be
  sought from landowners where infrastructure is to
  pass over, under or through their land. Finally,
  it is essential to ensure that rights of access
  are also obtained to enable access to land during
  both construction and the operational period of
  the DE project.
• 1.3 In relation to public land there may in
  addition be arrangements and rights relating to
  land set out in the Concession Agreement entered
  into between the DE project company and the
  public entity as well as the entry into of
  specific leases/licence agreements with such
  entity.
• 1.4 It is particularly important for DE project
  developers to ensure that they have acquired the
  relevant land rights to all land required for the
  purposes of the project where the project is
  being to any great extent project financed as the
  financing entities will require these aspects of
  the project to be watertight and to cover the
  full duration of the projects life.

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Contracts 3

• 2 Construction Contracts
• 2.1 Much here will depend on the model chosen for
  the DE project. Many such projects will involve
  the setting up of a special purpose vehicle
  (SPV) which will enter into various contracts
  with contractors for different aspects of the
  project. A classic case is the letting by the SPV
  of a Design and Build Contract where tenders will
  be sought from suitable companies to put together
  either the main plant for the project or the main
  plant and allied infrastructure.
• 2.2 In some cases, particularly where the project
  sponsor is a public sector entity, the Concession
  Contract will include an obligation on the
  sponsor to carry out the entire project and to
  deliver to the public sector entity specific
  services (which will generally be the delivery of
  heat and power to designated buildings at agreed
  cost levels). In these cases there will be a
  further series of contracts and sub-contracts
  between the project sponsor and third parties for
  the design and construction of the relevant plant
  and infrastructure.
• 3 Supply Contracts
• 3.1 One of the main drivers behind DE projects
  is the provision of cheaper, often sustainable
  and more reliable energy supplies to customers
  who are connected to the local DE networks for
  both heat and power. For this to work there need
  to be in place contracts for the supply of these
  services to such customers which enables the SPV
  or DE project company to charge for such supplies
  and hence derive income for the DE project.
  Therefore standard form supply contracts for both
  electricity and heat supply will need to be
  prepared.

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Contracts 4

• 4. Other Contracts
• Various other contracts will need to be prepared
  depending again on the structure of the project
  chosen at the outset. Operation and Maintenance
  contracts may need to be let in relation both to
  the plant and the allied infrastructure if the
  SPV or project company does not have the skills
  in-house to carry out this work. Meter reading
  and billing arrangements may need to be
  outsourced as well by the SPV requiring contracts
  to be entered into with these entities. Finally,
  contracts will need to be entered into with
  external suppliers for electricity and heat
  supplies for periods when the on-site plant is
  either out of commission for routine maintenance
  or where there is an unexpected outage of the
  plant which affects the supply of electricity
  and/or heat.

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Steps

• Success in the implementation of decentralised
  energy schemes is no more difficult that doing
  the basic steps in the right order and making the
  right decisions at the right time. The town-level
  example of Gussing exemplifies the step by step
  process.
• 1. Consider what you want to achieve by
  implementing a scheme. This could also be
  described as defining the objectives for the
  project. Objectives could include securing or
  sustaining local employment, security of supply,
  mitigating future energy price rises, consume
  local waste locally, achieving competitive
  advantage, regulatory compliance etc.
• 2. Identify both the local context and local
  resources. The ultimate solution should fit
  into the locality in terms of scale, desire to
  have it there, local fuels and organisations.
  Consider which companies or buildings, commercial
  or residential, could use or benefit from energy
  that the scheme produces or could produce
  resources for the scheme. Consider wider than
  your individual site to identify other supply or
  demand factors and to benefit from economies of
  scale.
• 3. What are the appropriate technology types and
  manufacturers? Having established 1.  and 2.
  above, what type of solution(s) are most
  suitable? Which ones can you eliminate? Focusing
  on a smaller technology type and, within it,
  which specific equipment will save time and be
  easier to communicate.

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Who

• This section identifies the groups of people that
  you will need to deliver a decentralised energy
  scheme. It describes their role in the process.
  It also provides names of specific organisations,
  from the BCSD-UK membership, who are engaged in
  this activity.

Funders
Technology Providers
Legal Advisors
Customers
Design Engineers
Energy Companies
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Funders

• As the name suggests, funders pay for part or all
  of the scheme and will recover costs by
• Retailing downstream energy
• Lowering their energy consumption or cost
• Regulatory compliance and avoiding penalties and
  fines
• Other charges e.g. local taxes etc
• Different funders invest for different motives.
  Some may be on the project day to day, be a
  remote investor or be a customer.

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Technology Providers

• There will always be technology at the heart of a
  DE scheme. Therefore, there is always a need for
  a technology provider.
• Some technologies (and their manufacturers) are
  established and some may be newer, providing
  often superior performance but without the
  established customer base.
• Technology providers may or may not take
  performance risk on the technology that is take
  the risk on whether the equipment works, as
  stated. It is important to ensure that the goals
  of the technology providers are aligned to that
  of the overall scheme to improve chances of
  success.
• It is suggested, as per HOW, within the STEPS
  section, that the specific technology for the
  scheme is considered as the third step after
  objectives and resources have been covered. This
  will ensure that companies are engaged, offering
  the right technology rather than the promotion of
  a technology that may not be suitable.
• Technology providers, following the point above,
  should be engaged early in the scheme so that the
  equipment is suitable to the required function.

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Legal Advisors

• In relation to all projects which focus on the
  whole area of decentralised energy (DE) there
  will be a requirement for a thorough
  understanding of both the regulatory and legal
  frameworks under which such projects will be
  developed. This section will look at some of
  the key areas which will be encountered on a
  journey to a positive outcome in developing a
  project in the DE arena from a regulatory and
  legal perspective and will detail some of the
  success stories with projects which have
  succeeded. These examples will include certain
  Energy Service Company schemes (ESCOs) which
  have been set up and which are currently active
  in the UK.
• It will therefore be necessary to enlist the
  assistance of consultants and/or lawyers who are
  familiar with the regulatory and legal framework
  which covers decentralised energy and who have
  experience in advising on the relatively complex
  structures which will need to be put in place for
  a successful project including the raft of
  agreements and other documentation which will be
  necessary for the project to reach a satisfactory
  conclusion.
• From experience it is often beneficial to engage
  consultants in the early stages of any DE project
  and particularly in relation to ESCO structures
  and the contractual framework which will need to
  be considered and then put in place to enable
  these schemes to function properly.
• See also under Contracts within how

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Customers

• Stand alone users of substantial energy and/or
  heat e.g.
• Hospitals
• Schools
• Office complexes
• Industrial applications
• Concentrations of Energy Users e.g.
• Housing associations
• Industrial estates
• Communities
• Remote sites without grid access e.g.
• Farms
• Water pumping and extraction

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Design Engineers

• There will always be technology at the heart of a
  DE scheme. Therefore, there is always a need for
  a technology provider.
• Some technologies (and their manufacturers) are
  established and some may be newer, providing
  often superior performance but without the
  established customer base.
• Technology providers may or may not take
  performance risk on the technology that is take
  the risk on whether the equipment works, as
  stated. It is important to ensure that the goals
  of the technology providers are aligned to that
  of the overall scheme to improve chances of
  success.
• It is suggested, as per HOW, within the STEPS
  section, that the specific technology for the
  scheme is considered as the third step after
  objectives and resources have been covered. This
  will ensure that companies are engaged, offering
  the right technology rather than the promotion of
  a technology that may not be suitable.
• Technology providers, following the point above,
  should be engaged early in the scheme so that the
  equipment is suitable to the required function.

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Energy Companies

• Energy companies are intrinsic to schemes of this
  nature. They may have a renewable obligation
  which drives them to generate electricity from
  renewable sources and certainly have an interest
  and knowhow in selling the resultant energy to
  large and residential customers. If an energy
  company is a generator, they will be used to
  funding, building and owning operating assets.
• An energy company may seek to be the sole or part
  owner of an ESCo and may seek to engage in the
  scheme from start to finish.
• Energy companies have the systems and people to
  retail to customers for the energy (including
  heat). This would include billing, customer
  service, credit management etc.
• However, energy companies are unlikely to have
  all the skills required to deliver a DE project
  end to end. They will need support from others at
  different stages, especially the early ones.
• A limited role for an energy company may just be
  to buy the energy that comes from the scheme in a
  Power Purchase Agreement (PPA) or similar.

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Where

• This section contains links to sources of further
  information.

BCSD-UK
Contributory Organisations
Guidelin