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This document is the final project report for the project titled 'MARKAL Macro analysis of long run costs of mitigation targets.'

This report is the final report under the Defra contract EP0202 MARKAL Macro analysis of long run costs of mitigation targets. The objective of this study was to consider the additional impacts (economic and technological) of moving to an increasingly carbon constrained energy system, with reductions in CO2 of 70% and 80% by 2050. In addition, another objective was to assess the impact of including emissions from international aviation, and the implications for abatement in other sectors under a 60% constraint in 2050. This analysis builds on work led by Policy Studies Institute (further referred to as the EWP 07 MARKAL analysis), to inform the Government’s Energy White paper, published in May 2007. In that analysis, up to 60% reductions in emissions of CO2 by 2050 were considered, with many associated sensitivity runs undertaken to examine different assumptions.

A key part of the strategy outlined in the Energy White Paper Meeting the Energy Challenge included the provision of legally binding carbon targets for the whole UK economy, to progressively reduce emissions. A Climate Change Bill is being proposed that would implement such targets, and has recently been consulted on. As part of further discussions around longer-term targets, Defra commissioned this additional MARKAL analysis, to explore the impacts of more stringent targets than those considered in the Energy White Paper.

This report consists of 4 sections of model results and analysis, being:

1. System evolution
2. Technology pathways
3. Economic impacts
4. International aviation

This response acknowledges the recently announced 10 point climate plan, and includes some initial comments as follows:

• We welcome that a target of 600,000 heat pumps is included in the plan as this provides some clear direction for industry. However this is purely a target and it requires a thorough policy and governance framework to both support deployment and protect consumers.
• Despite the clear case for district heating, it is overlooked in the plan, and there is a lack of focus on energy efficiency despite the expected centrality of both of these technologies.

The inquiry questions, where UKERC evidence and analysis can provide relevant insights, are then addressed drawing upon UKERC reports and the wider literature in order to provide evidence based answers to a number of the Committees core questions.

The shift towards hybrid working-from-home practices is seen by the authors as a great opportunity to introduce a novel financial mechanism, the Retrofit Salary Sacrifice (RSS) scheme that will help increase homeowners' awareness and uptake of retrofit works to improve their home-office environments. This novel approach is to encourage household-level retrofitting in order to reduce carbon emissions and lower energy costs (Figure 1). It is a tax-efficient incentive for home-owning employees to improve their properties, using the model of successful existing salary sacrifice schemes for the purchase of bicycles and EVs. This approach has a catalytic role for able-to pay salaried homeowners to directly benefit from more attractive and affordable finance for retrofit projects, the prospect of lower energy bills in the long term, and a more comfortable working environment. Additionally, employers gain an extra benefit to offer their workforce, as well as a route to addressing Scope 1–3 of their direct and indirect carbon emissions.

This project seeks to identify the innovative solutions needed to deliver major reductions in the capital cost of heat network infrastructure and accelerate its deployment. Examining the technical, process and system developments needed to deliver a step change reduction in the capital costs, along with cost estimates and time frames for undertaking these developments. District heat networks supply heat to homes and businesses through pipes carrying hot water. They have great potential to deliver CO₂ emissions reductions and cost benefits through the use of low carbon heat, waste heat from power stations, industry and other sources, combined heat and power, and large-scale heat pump deployment.

This summary report summarises the entire project, in a readily-accessible manner. Readers may find it useful to study this report prior to studying the detailed engineeringreports.

Key findings from the project

Heat network capital cost reductions of 30-40% are possible. Eight route maps summarise the actions required to implement the most impactful solutions with a total funding requirement of c£10m

Cost modelling of a notional baseline network (constructed to current good practice in the UK) comprising a mix of types of dwelling from flats to detached houses and a group of non-domestic buildings showed that 77% of the total cost of a typical heat distribution network is associated with three key elements:

1. The civil engineering work to excavate and reinstate trenches (37%).
2. The transmission and distribution pipes and their installation (17%).
3. The supply and installation into the buildings of the heat interface units (HIUs) and associated pipework, which enable the connection of the DH network to the building’s heating system (23%).

A technical review of DH experience outside the UK revealed that the technical designs used in countries with established district heatingmarkets are broadly similar to the designs deployed in the UK. However, in other countries there is a widespread understanding of DH systems and better integration in practice across all delivery stakeholders, including a more standardised methodology for carrying out assessments, design and construction for new schemes.

The technical review also confirmed that the design and installation of pre-insulated pipe systems has reached a level of technical maturity after 40 years of development, and so the areas with the greatest potential for cost reduction are likely to be those concerned with completely new materials and products, new approaches to site work, or more radical system design. Additionally, Heat Interface Units (HIUs) have the potential for cost reduction through optimisation and mass production.

Subsequent technical and stakeholder engagement activity identified a range of innovation opportunities and technical solutions that could deliver substantial reductions in the capital cost (and lifecycle cost) of DHN infrastructure deployment.

These solutions have been prioritised and combined where appropriate to form eight broad groups for which ‘route maps’ have been developed which describe the mechanisms by which these solutions can be driven through to commercialisation.

Each route map details:

• The particular challenge to be addressed
• The proposed solution−
• Development and commercialisation requirements
• A plan of work.

Each activity within the plan of work has been separately defined with a scope, cost and implementation schedule. The funding needed to deliver the activities within the route maps is proposed to come from a combination of central government and the DH industry.

The primary objective of this project is to identify and then assess innovative solutions thatwould deliver a substantial step change reduction in the capital cost and contribute to overalllifecycle cost reduction of the District Heating distribution system. Whilst focussing on this primary objective, the project will also consider the value of the District Heating Network system to relevant stakeholdersand the possibilities for optimising value and business cases for stakeholders, even where this may result in a slightly smaller cost reduction.

This report sets out the work carried out in Stage 1 of the project, and comprises the following main parts:

• Part A presents the system and stakeholder requirements which is the output from Work Package 1.
• Part B presents the technology review which is an output from Work Package 2.
• Part C presents the methodology used in creating a network cost model and the analysis of network costs which is an output from Work Package 2.
• Part D presents the system review and target setting which is the output from Work Package 3.

Taken together, these parts assess and synthesise the current baseline practice and costs in the UK and overseas, and relevant technologies and practices from other industries which could potentially be used in future, before identifying key challenge areas for targeting of cost reduction solutions during Stage 2 of the project. Readers may find it useful to study the Summary Report, which summarises the entire project, prior to studying the detailed engineering reports.

This project seeks to identify the innovative solutions needed to deliver major reductions in the capital cost of heat network infrastructure and accelerate its deployment. Examining the technical, process and system developments needed to deliver a step change reduction in the capital costs, along with cost estimates and time frames for undertaking these developments. District heat networks supply heat to homes and businesses through pipes carrying hot water. They have great potential to deliver CO₂ emissions reductions and cost benefits through the use of low carbon heat, waste heat from power stations, industry and other sources, combined heat and power, and large-scale heat pump deployment.

In Stage 1 of the project, work comprised assessment and synthesis of the current baseline practice and costs in the UK and overseas, and relevant technologies and practicesfrom other industries which could potentially be used in future, from which key challenge areas were identified for targeting of cost reduction solutions during Stage 2 of the project.

This report describes the identification and development of solutions in each of these challenge areas, the assessment of the key solutions against a range of criteria, and the selection of certain solutions to have route maps developed during Stage 3.

The five prioritised Challenges which have focussed activity in Stage 2 are as follows:

• Challenge 1 -System Design Architecture
• Challenge 2 -Civil Engineering CAPEX
• Challenge 3 -Pipes and Connections CAPEX
• Challenge 4 -Internal Connections CAPEX
• Challenge 5 -New Network Income

This report presents the methodology and outputs of Stage 2 of the project summarising:

• The approach to solution development
• Solutions identified which address the challenges above
• The evaluation of solutions against the key criterion of DHN cost saving and the supporting qualitative and quantitative criteria
• The interaction of alternative solutions and how they can be applied to maximise the system level CAPEX saving
• The solutions selected for route mapping in Stage 3 and the selection rationale

Readers may find it useful to study the Summary Report, which summarises the entire project, prior to studying the detailed engineering reports

This project seeks to identify the innovative solutions needed to deliver major reductions in the capital cost of heat network infrastructure and accelerate its deployment. Examining the technical, process and system developments needed to deliver a step change reduction in the capital costs, along with cost estimates and time frames for undertaking these developments. District heat networks supply heat to homes and businesses through pipes carrying hot water. They have great potential to deliver CO₂ emissions reductions and cost benefits through the use of low carbon heat, waste heat from power stations, industry and other sources, combined heat and power, and large-scale heat pump deployment.

This report sets out the route maps developed during Stage 3 of the project to achieve full commercial deployment of each of the highest priority solutions. Each route map sets out the challenge addressed, the proposed solution, the barriers to development, development requirements, commercialisation requirements and a plan of work comprising a number of activities. It covers eight road maps:

• A - Knowledge Management, Research and Training
• B - Low Flow Rate Design
• C - Radical Routes
• D - Trenchless Solutions
• E - Improved Front End Design and Planning
• F - Shared Civils
• G - Direct Hydraulic Interface Unit (HIU) System and Existing Domestic Hot Water Storage
• H - HIU Optimisation

UKERC has particular expertise in the energy system changes needed to deliver decarbonisation. In our submission we address questions 1, 2, 4, 8, 9, 10, 11, 12. In each instance we provide a summary of some of the main issues where we have expertise and insights relevant to the question. Topics addressed include Infrastructure needs, funding policy, Biodiversity, Decarbonised power supply, hydrogen, heat pumps, low carbon networks, energy efficiency, and CCS and CCUS.

Energy System Demonstrators are physical demonstrations testing new technologies for low-carbon energy infrastructure.

A review of energy systems demonstrator projects in the UK was undertaken for UKERC by the Energy Systems Research Unit (ESRU) at the University of Strathclyde. The review encompassed 119 demonstrators and consisted of two phases: 1) the identification of demonstrator projects and 2) an analysis of projects and their outcomes.

Energy demonstrators

The review defined an energy system demonstrator as "the deployment and testing of more than one technology type that could underpin the operation of a low-carbon energy infrastructure in the future". Only demonstrators that post-date the 2008 Climate Change Act were included and that included a physical demonstration at one or more UK sites. 119 projects were identified that met the search criteria.

There were two phases of review activity. Phase 1 involved identification and documentation of demonstration projects, involving a systematic search to identify and record the details of projects. Phase 2 was a review of project outcomes and outputs, particularly end-of-project evaluations, covering technical, economic and social outcomes where available.

The review outputs (available here) are a final report summarising the findings, 119 demonstrator project summaries (the Phase 1 reports), 119 demonstrator output analyses (the Phase 2 reports) and a GIS (Geographic Information System) map and database showing the locations and project details of the demonstrators.

The final report, attendant project summaries and GIS data are intended to provide policy makers and funding bodies with an overview of the existing demonstrator "landscape", enabling decisions on future demonstrator calls and the focus of those calls to be made with a clearer knowledge of what has already been done.

Project files

• Access the demonstrators GIS map here.
• Access the Phase 1 summaries here.
• Access the Phase 2 summaries here.

This document is a summary for the project titled 'THz nanodevices for energy harvesting'.

The urgent need to reduce carbon emissions in order to limit the impacts of global warming necessitates action for us to reduce our dependence on fossil fuels by switching to various carbon-free renewable energy resources. In the UK, the government has set up ambitious targets for the production of electricity from renewable sources, 10% of electricity by 2010 and 15% by 2020. Therefore the development of a new low-cost, efficient and environmentally friendly way to generate electricity would be of enormous benefit to society as a whole. This project outlines a plan for the technical and commercial development of 'rectennas' which can be used to convert heat, and later solar, energy from a variety of sources directly into usable electricity. It will also provide significant business opportunities internationally as countries strive to move towards more sustainable ways of generating electricity. This technology has the potential to overcome the fundamental limits of high cost and low efficiency that have limited the success of conventional thermoelectric and photovoltaic devices as low carbon solutions to the world's energy needs.

Heat energy, in the form of infrared radiation, is emitted from any object above absolute zero temperature; the hotter the object the more energy is released. This project aims to develop technology that can harness this energy by converting it into usable electricity using 'rectennas'. Rectennas consist of an antenna, to capture electromagnetic radiation, and a rectifier (requiring diodes with particular characteristics) to convert the energy into DC current. A square meter of material at 700°C, for example, releases about 50kW of energy as heat which would be enough to power 2,500 energy saving light bulbs. The work extends proven technology, shown to be highly efficient (>80%) in the microwave region (GHz), into higher frequencies (Thz) to harvest heat (infrared) from a variety of sources including waste heat from computer chips, car exhausts and beyond. Further development of this technology offers hope of highly efficient light (solar) energy capture. Despite the great potential benefits the device could deliver, the technology is relatively simple and requires only two main components making them cheap to produce and reliable to operate. Antennas that operate at frequencies (infra-red) which allow them to capture heat energy frequencies have very recently been developed, tested and manufactured at low cost however work is required to get rectifiers to operate at this range. Developing recitifiers which are capable this is the main objective of the project and Prof. Song is a world leading expert in the high speed diodes which make up rectifiers, diodes are semiconductor devices which only allows current to flow through it in one direction.

The Spatial Energy Plan for Greater Manchester Combined Authority project was commissioned as part of the Energy Technologies Institute (ETI) Smart Systems and Heat Programme and undertaken through collaboration between the Greater Manchester Combined Authority and the Energy Systems Catapult. The study has consolidated the significant data and existing evidence relating to the local energy system to provide a platform for future energy planning in the region and the development of suitable policies within the emerging spatial planning framework for Greater Manchester.

This report investigates heat network operating temperatures and the effect current decisions regarding the design and operation of networks will have on the long term operational efficiencies. The report demonstrates how heat networks can be future proofed for changes to operating temperatures. This is appliedto a heat network in Bury to highlight and quantify impacts.

The Case Study Development project was commissioned by the ETI in Nov 2015 as part of Work Package 3 (WP3) of the Smart Systems and Heat Phase 1 programme. The project was intended to develop Market, Business and ICT Integrated Solutions through system architectures to provide evidence and guidance for business strategy and policy to enable the UK low carbon heat transition. This was achieved through understanding the inter-relationships between market frameworks, business process, asset management and ICT solutions. Primary focus was on the implementation at the local level, but in the context of a national energy system transition.

This report describes the specific considerations and approaches taken for developing ICT slices (bounded areas of functionality that can be specified, designed and implemented in manageable stages) through the architecture. This report is basedon the exemplar Energy System Architecture is as described in the “Energy Systems Architecture Methodology: Enabling Multi-Vector Market Design,” paper.