District energy market reaches critical mass
District energy in the UK is a growing market, according to new research by BSRIA. The market for public and private networks in the UK exceeded £400 million in 2012. It is expected to continue to grow at an accelerated rate and exceed £530 million in annual energy sales and capital investment by 2015. The market is driven by Government polices and the decentralised policies set by the National Governments of Scotland and Wales to promote low-carbon heat networks, combined with tightened regulations on sustainable homes and the general need to reduce energy bills and carbon emissions.
Over a hundred of the 250 largest hospital sites in the UK already use CHP to provide district energy and cooling. About 15% of universities and colleges currently employ similar schemes. District energy can be regarded as having reached critical mass in these segments, with both the technology and the benefits of heat networks well understood.
Consequently, there is an acceptance of the technology and a growing readiness to extend existing schemes and implement new ones.
In contrast, the residential market is still in its infancy — at less than 1% of current UK housing stock and one of the lowest penetration rates in Europe. However, the number of domestic connections is forecast to almost double over the next eight years.
The Department of Energy and Climate Change (DECC) has indicated that heat networks will play a prominent role in meeting the challenge of low carbon heating. BSRIA is predicting a positive trend for the UK district energy market in the short-term, with an average annual growth rate of about 8.5%.
However, in the short term growth is likely to be concentrated disproportionately within new privately-funded developments and will be concentrated in Greater London, which will account for more than 80% of new heat networks. The growth trend in the non-residential institutional sector also is also set to continue.
In the supply market, there is now a range of ESCOs and consultancies active in the UK with a proven and successful track record in supplying and operating heat networks. The leading ESCOs have both the financial resources and confidence to commit to projects which have a long-term return on investment.