How private financing could unlock ground source heating

Heat pump manufacturer Kensa is using private financing to remove one of the biggest barriers to ground source heating, but schemes will only be viable if the government takes a street-by-street approach to retrofit. Lucinda Dann finds out more.

The upfront cost of installing underground pipes to feed warmth from the earth to a ground source heat pump remains one of the biggest barriers to the technology’s uptake for domestic heating.

With the cost of installing a system starting at around £15,000, the government has provided help in the form of a £5,000 grant through its Boiler Upgrade Scheme – with the level set to rise to £7,500 from next month. However, just 2.7% of the vouchers redeemed so far through the scheme have been used for ground source heat pumps (GSHP), suggesting there is still a funding gap to be bridged.

Heat pump manufacturer Kensa says it has a solution which will provide mass decarbonisation of heat at an affordable price for homeowners.

By installing large ambient heat networks under streets for homeowners to connect to, Kensa can remove the entire upfront cost of the underground installation for a GSHP without needing subsidisation from the state. Customers would then need only fund the cost of the pump and any additional work needed within the property.

The underground asset can be operational for 100 years and offers a low risk return similar to the mains gas network, and is therefore an attractive investment proposition for pension funds. Connected homeowners pay a flat rate for accessing the heat captured by the network, much like the standing charge for mains gas. Kensa says this model offers the lowest running costs of any form of heat for homeowners.

However, installing a large ambient heat network for a whole street is something that can be done only when heating is considered on a street-by-street basis.

Kensa has just finished installing a pilot version of its vision in a project called Heat the Streets, which saw ambient heat networks installed at five sites across Cornwall to demonstrate the company’s blueprint for the mass deployment of heat pumps. It is the first time such a network has been installed in a street anywhere in the world, says Kensa.

Sites included both new-build and retrofit, across both private and social housing. Kensa has already managed to bring a commercial offering to market as a result of the project for the new build sector and is now offering GSHP to developers for the same price as air source heating.

Lisa Treseder, director of business development at Kensa Utilities, says networked heat pumps – as the in-road ground source heat networks are known – are the “obvious option” for developers, with investors keen to invest in this burgeoning market.

Across the streets of the Collins Parc estate in the Cornish village of Stithians, Kensa installed 42 dinner-plate-sized boreholes and a network of pipes, having gained planning permission from the council.

Two plastic pipes connected to form a U-bend at the bottom were inserted into each hole and filled with a mixture of water and anti-freeze. Rather than absorbing geothermal heat from the ground, the pipes collect solar energy as the earth is constantly being warmed by the sun, known as solar irradiation, remaining around 10 degrees Celsius throughout the year.

Ground temperatures vary depending on the local geology, hydrology and the amount of solar irradiation, but the technology is suitable for use across the UK.

The properties of the granite bedrock beneath Stithians means that the ground temperature is slightly higher at 12.9 degrees Celsius, allowing heat pumps to be more efficient and therefore costing less to run. Because the energy stored in the ground is constantly being renewed there is no reason to meter the amount of heat customers pull through from the network, says Treseder.

“We have done the cost versus benefit analysis on should you meter heat and in this model with this technology no, it doesn’t help, we don’t want to do it,” says Treseder. “If you do meter heat you have to have a lot of extra technology in the house, so its another failure point on your system, and as the utility provider we would have to make sure that is all functioning properly so we can bill people accurately.”

Instead, customers are charged a flat rate to access the network, which is currently based on the cost of installation. Treseder says that in the future when the technology is mainstream this cost could be standardised for all connections. For the Stithians project the rate is £25 per month for a contract period of 20 years.

“We’ve tried to keep this as simple and as familiar as possible so it is not too difficult for people to take up. A lot of the issue around the uptake of heat pumps is their unfamiliarity to the public and the idea that they are really complex and therefore risky,” she says.

“We have stopped explaining what heat pumps are and instead we talk about how this is like your existing gas heat network – you’ve got a white box in your house, a pipe in the street and a standing charge – it’s all quite familiar.”

This model of heating promises a high level of price stability for customers and predictability in their bills, as the only variability is the amount of electricity required to boost the temperature of the ambient heat drawn from the ground array, and this is dependent on the heating and hot water requirements of each dwelling.

As the ground remains a fairly consistent temperature throughout the year, GSHP are as efficient in winter as they are in the summer, making them cheaper to run than air source heat pumps.

Getting the contracts with customers right is critical to the success of networked heat pumps, because customers must be happy to pass on the contract’s obligations to the next owner when they sell the house.

This took quite a bit of work Treseder says. The company has become a member of the Heat Trust – the only assurance scheme for customers in the heat network sector – ahead of the introduction of regulation for heat networks to help give confidence to its potential customers.

“We set out to make sure that we are selling something that is good and decent and which didn’t overly favour Kensa because that’s just another barrier to uptake, and the Heat Trust is a good way of us being able to demonstrate that going forwards.”

Treseder welcomes the standardisation that regulation promises to bring to the heat network sector, with the model likely to fair well against the maintenance and reliability obligations regulation will introduce.

The underground array does not require mains electrics or complex maintenance due to it not having a central pump to maintain flow. When maintenance is required, isolation chambers will allow engineers to segment the network to keep as many homes connected to the array as possible while work is undertaken.

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