picture: Vielmo/Greenpeace

The Role of Onsite Energy

Generation in Delivering
Zero Carbon Homes
A report from the Renewables Advisory Board
By Element Energy with EST

URN NUMBER: 07/1555

 The role of onsite energy generation in delivering zero carbon homes

Foreword

The former head of the Prime Ministers Strategy Unit,

Geoff Mulgan, said that Governments frequently overestimate
their power to change things in the short term, but underestimate
it in the long term. The current government cannot be accused
of committing this error with its proposal for all new homes to be
zero carbon by 2016. The policy is both far-sighted and bold.

This report for the Renewables Advisory Board
(RAB) by Element Energy is the first detailed
analysis of the role that onsite generation could
play in delivering the policy. Element have
produced a strong report built on rigorous
modelling and extensive peer review by the
construction sector and the renewables
industry. It provides some genuinely new
insights into the technological and regulatory
choices created by the zero carbon policy.
The Department of Communities and Local
Government (CLG) has been clear that it wants
the zero carbon homes policy to stimulate new
technology and reduce the cost of low carbon
technology for existing homes. The report
suggests that this can be achieved if Ministers are
prepared to accept the trade off between cheaper
remote generation, and the technology forcing
benefits of more expensive onsite generation.
Purists will argue that decarbonising the grid using
remote wind farms would be a more economically
efficient way of meeting the policys goals, but this
is not straight forward because of planning risk,
and it doesnt meet the technology stimulation
objectives of the policy. We consider that there is a
strong justification for using this policy to support
the development of local, decentralised zero
carbon generation, at the same time that other
policies, such as the Renewables Obligation, are
used to decarbonise the grid.
This report shows that the zero carbon homes
policy could create a new market for onsite
renewables worth 2 billion a year. This is
a market additional to and bigger than that
created by the Renewables Obligation, and
one that benefits renewable power and heat
generating technology.
Nevertheless the report demonstrates that
there are some big challenges to its delivery.
The biggest weakness of the policy is the lack
of demand for onsite renewable technology
before 2016, and the capacity gap that
this will create. By proposing to jump from
approximately 25% carbon saving from total
energy demand in 2015 to 100% savings in

A report from the Renewables Advisory Board 

 The role of onsite energy generation in delivering zero carbon homes

Foreword

Our central recommendation is therefore that Government finds new

ways of bringing forward demand for renewables before 2016

2016, CLG will create a big step change in
demand in the final year that will require new
construction industry skills, and very large
expansion in manufacturing and installation
capacity. We believe that this capacity gap will
cause the policy to fail if it is not addressed now.
Our central recommendation is therefore
that Government finds new ways of bringing
forward demand for renewables before 2016,
as part of an explicit strategy to build capacity
in both the construction sector and in the UK
onsite renewables industry. It could do this by
mandating a minimum renewables requirement
in new development, or use the planning
system to require zero carbon standards in the
largest developments before 2016. The zero
carbon homes policy is a powerful driver
for change, which could bring significant
industrial and environmental benefits to the
UK. Nevertheless it can only stimulate the
necessary learning and investment if we can
translate the Governments aim for 2016 into
bigger steps towards the zero carbon goal
before then.
Matthew Spencer
Chair, Microgeneration Working Group,
Renewables Advisory Board

A report from the Renewables Advisory Board 

 The role of onsite energy generation in delivering zero carbon homes

Recommendations
from RAB

This study outlines a number of important issues for

consideration by government and business. RAB
has chosen to highlight the three that we think are the
most critical for government to address:

1. Create strong, early stimulation to the
onsite renewables sector to avoid the high
risk of a supply gap in 2016
We consider this to be the biggest risk to the
success of the zero carbon policy. The policy
creates a very large new market for onsite
renewables, but the proposed approach to
its implementation creates a steep ramp up
in demand in 2016, which the renewables
sector is unlikely to be able to meet without
strong and consistent stimulation over the
next eight years. Specifically, the transition
from Code for Sustainable Homes (CSH) level
5 to level 6 introduces a substantial additional
demand for renewable electricity, and as
such could create an unsustainable spike in
the demand for onsite electricity generation.
These electricity generating technologies would
not be significantly stimulated by the gradual
introduction of the code in the preceding years.
Without sufficient onsite renewables supply
some homes would not be able to comply
with building regulations and the rate of house
building would slow. Current proposals will
require the industry to grow to supply a UK
market of over 2 billion pounds per annum
from a very low base in the years before 2016.
Early demonstrators from the social housing
sector will help but are unlikely to stimulate the
scale of investment needed in the supply chain.
We recommend that Department for
Business, Enterprise and Regulatory Reform
(BERR) and RAB carry out further work with
the finance community and the renewable
sector to develop investment and capacity
building strategies for onsite renewables
We recommend that CLG urgently explore
ways of changing policy to stimulate demand
for onsite renewables in advance of 2016,
eg mandating a minimum percentage of
renewables for developments over a certain
size, or encouraging local authorities to require
CSH level 6 through planning regulations
for the largest urban extensions and new
towns in advance of 2016. Whilst the largest
developments constitute a small proportion of
the homes built they are generally the easiest
and most cost effective sites in which to
achieve zero carbon standards.

A report from the Renewables Advisory Board 

 The role of onsite energy generation in delivering zero carbon homes
2. Accelerate the technological and
commercial development of biomass CHP
For the zero carbon policy to be achievable
it is essential that sub 1MW biomass CHP is
technically proven and commercially deployable
by 2016. This requires a huge technology
acceleration effort at UK and European levels.
It is also important that larger scale CHP and
district heating is culturally and commercially
attractive in the UK, since it offers a relatively
cheap route to compliance.
We recommend that the Department for
Innovation, Universities and Skills make R&D
into sub 1MW biomass CHP a national priority
We recommend that the deployment
of biomass CHP is a priority of the new
Environmental Transformation Fund.
3. Minimise the use of remote offsite
energy generation in meeting zero
carbon standards
The use of remote offsite renewable generation
is likely to be required if the Government wants
to meet CSH level 6 in all new homes, but the
way this is allowed will have a huge impact on
technology innovation and deployment, since it
will benefit mature technology already supported
through the Renewables Obligation. If remote
A report from the Renewables Advisory Board 
Recommendations from RAB
offsite generation is allowed on a large scale
and with a low buy out price it could therefore
undermine the Governments objectives of using
the policy to encourage the development of new
technologies and increasing the availability of
technology to cut emissions in existing homes.
Local offsite generation is encouraged in the
current Code for Sustainable Homes and whilst
this study does not consider its impact we
believe that it could provide some technology
diversification benefits. CLG has said that it will
decide on its approach to offsite generation at a
later date.
We recommend that CLG clarifies the role
and differentiates remote offsite and local
offsite generation within the next year, to
provide early certainty to the construction
and the onsite renewables sector
We recommend that local offsite generation
is encouraged in ZCH policy implementation,
but that rules are set carefully to ensure that
it contributes to the development of new
decentralised energy networks, and that long
term operational and maintenance costs are
met by developers as part of the compliance
process
We recommend that the use of remote offsite
generation is kept to a minimum by setting a
tight cap on its use, and a high buy out price
for any offsite generation fund.
 The role of onsite energy generation in delivering zero carbon homes

Contents

Foreword...................................................................................................................1
Recommendations from RAB...............................................................................3
Executive summary................................................................................................7
Introduction........................................................................................................... 17
Model description................................................................................................ 18
Outline................................................................................................................. 18
Inputs.................................................................................................................. 19
Developer choice................................................................................................. 19
New build housing future projections......................................................... 20
Rate of new build................................................................................................ 20
Breakdown of housing by type............................................................................ 21
Development size................................................................................................ 22
Low and zero carbon homes............................................................................. 25
Energy demand in modern homes....................................................................... 25
Code for sustainable homes................................................................................ 27
Zero carbon homes............................................................................................. 27
Low and zero carbon technologies................................................................. 29
Technologies included in the model..................................................................... 29
Restricting technology uptake............................................................................. 30
Resource limitations............................................................................................ 31
Cost assumptions............................................................................................... 32
Results and analysis........................................................................................... 34
Baseline technology uptakes............................................................................ 35
Baseline scenario description.............................................................................. 35
Technology costs and zero carbon home feasibility........................................... 36
Technology uptake.............................................................................................. 38
Selecting technologies......................................................................................... 41
Uptake change over time.................................................................................... 44
Market size.......................................................................................................... 45
Baseline summary............................................................................................... 46
Sensitivities........................................................................................................... 48
Code for sustainable homes level 5 legislation/appliance offsetting...................... 49
High efficiency homes......................................................................................... 52
Consumer behaviour sensitivity to operating costs........................................... 56
Consumer behaviour valuing biomass storage.................................................. 59
Grid CO2 intensity................................................................................................ 61
Sensitivity to allowing a mains gas connection..................................................... 65
No technology development................................................................................ 68
Biomass CHP availability..................................................................................... 71
Heat pump COP factors...................................................................................... 74
Partial offsetting allowance.................................................................................. 77
Partial offsetting with no gas connection.............................................................. 80

A report from the Renewables Advisory Board 

 The role of onsite energy generation in delivering zero carbon homes

Contents

Allowing 100% offsite electricity import................................................................ 83

Allowing buy-out of appliances at ROCs value, and no gas connection.................. 87
Sensitivity summary............................................................................................. 90
Market size sensitivity.......................................................................................... 92
Technology supply............................................................................................... 94
Current microgeneration markets........................................................................ 94
Impact of the Code for Sustainable Homes before 2013 / 2016.......................... 95
UK technology manufacturing opportunity........................................................... 97
Employment impact..........................................................................................105
Installer personnel............................................................................................. 105
Maintenance personnel..................................................................................... 107
Skills availability and training.............................................................................. 108
Specific specialist skills...................................................................................... 110
The industry perspective.................................................................................111
Barriers posed by the housebuilding industry.................................................... 111
Barriers posed by low carbon technologies....................................................... 114
The onsite energy industrys perspective........................................................... 115
Conclusions.........................................................................................................119
General findings................................................................................................ 119
Markets and technology.................................................................................... 120
Regulation......................................................................................................... 122
Commercial issues............................................................................................ 123
APPENDICES . ................................................................................................125
A. Appendix - CO2 intensity factors................................................................... 125
B. Appendix - Baseline builds and costs........................................................... 127
C. Appendix - House inputs.............................................................................. 128
D. Appendix - Energy costs............................................................................... 129
E. Appendix - Biomass storage costs............................................................... 130
F. Appendix - Technology assumptions............................................................ 131
G. Appendix - Installation times......................................................................... 161
H. Appendix - List of consultees........................................................................ 162
I. Appendix - Model description....................................................................... 165
J. Appendix - Results from workshops barrier exercise..................................... 169

A report from the Renewables Advisory Board 

 The role of onsite energy generation in delivering zero carbon homes
Executive summary
The Department for Communities and Local
Government (CLG) has proposed a far reaching
target that by 2016 all new build housing should
be zero carbon meeting level 6 of CLGs Code
for Sustainable Homes (CSH). This is to be
achieved through the building control system,
whereby the Part L Building regulations will be
gradually tightened according to the energy
performance levels defined in the Code for
Sustainable Homes, towards the eventual
Code level 6 energy standards in 2016. CSH
6 requires that there are net zero carbon
emissions arising from all energy uses in a
home.
This is an ambitious goal, as there are very few
(if any) genuinely zero carbon developments
existing in the UK today. The implications of
meeting CSH 6 are not yet clear and there are
ambiguities around the definition. However,
what is clear is that the new policy offers a
substantial opportunity for the UKs nascent
onsite energy generation sector.
The Renewables Advisory Board (RAB) has
therefore commissioned a study to assess the
role of onsite energy generation in the delivery
of the Governments proposed zero carbon
homes policy (ZCH) . It has been produced
by Element Energy, working with the Energy
Saving Trust and RAB, with financial support
from BERR.
 Code for Sustainable Homes a step change in sustainable
home building practice - CLG 2006
To understand the impact of the proposed
regulation, we have pursued a twin track
approach involving a detailed dialogue with the
microgeneration and house building industry
and a techno-economic model of the likely
effect of the legislation.
i. Industry dialogue
In order to obtain industry input into the
modelling assumptions and the likely barriers to
onsite energy technologies, we held:
Three stakeholder workshops, with
participants from: house builders, architects,
developers, microgeneration industries, and
trade associations
Detailed telephone conversations with
house-builders and housebuilding
associations
Detailed conversations with selected
microgeneration industry representatives
Peer review input from the RAB
Microgeneration group
These discussions lie behind many of the
conclusions in this report.
ii. Modelling approach
To understand the impact of the legislation, a
techno-economic model of the choices likely to
face developers when attempting to meet the
zero carbon homes regulation has been built.
A report from the Renewables Advisory Board 
 The role of onsite energy generation in delivering zero carbon homes

Executive summary

The uptake model assesses an exhaustive set
of onsite technology combinations which are
available for a range of different developments
with the aim of meeting zero carbon. These
options are assessed in terms of their capital
cost, running cost and other metrics. These
metrics are then used to predict which
solutions developers will most likely choose
to satisfy the zero carbon legislation. Using
a stock model, these predictions enable
the examination of total annual uptakes for
renewable and onsite technologies to 2025. An
outline schematic of the model is illustrated in
the figure below.

Figure i Schematic
INPUTS TECHNOLOGY CONSUMER CHOICE of uptake model.
ASSESSMENT A number of
technical inputs and
assumptions are
Characterise new build used to assess the
housing to 2025 Define energy demands feasibility of achieving
for each dwelling regulation for each
Dwelling types
house type using a
Development size All energy demands
Urbanity number of technology
2 efficiency scenarios
Tenure combinations. For
each suitable option,
a consumer choice
32 dwelling types calculation predicts
energy demands which technologies
are most likely to be
Regulation requirements
used.
CO 2 targets
Limitations
Applicable technology
solutions
Developer choice
Can a set of
technologies be used? Consumer decisions
Sizing of technologies based on cost and other
to meet legislation factors.
Low and zero carbon Assessment of costs
technologies and performance

Performance and cost

projections RESULTS
Suitability for different
dwelling types Technology uptake
Cost
Number of homes not
meeting legislation

A report from the Renewables Advisory Board 

 The role of onsite energy generation in delivering zero carbon homes

Executive summary

Change in uptake over period 2013 - 2025

250,000 2013
Number of dwellings affected

200,000
2016

150,000

2020
100,000

2025
50,000

0 Figure ii Uptake of the

top 10 technologies
PV chosen by developers
H
P
P 20 over the timescale of
C H d
s in 25 the model base case
as roC l w P 20
om M
ic al C
H in
d
g
20 assumptions. The
i m 20
B :P S
a s s
o
W
a tin W 16 units are number of
m H r 20
iu m ic e SH d homes per year which
ed Low B io M
i c
H in
le
r 13
r W oi
M
g e c t e B have the technologies
r e rg
La El La as installed.
G

The baseline results for uptake for the top securing faster uptake of existing technology
ten technologies available to developers are and bringing new technology to the market
illustrated graphically for 2013, 2016, 2020 and through the proposed zero carbon homes
2025 according to the baseline assumptions in policy. However, there are a number of
the model. technical, regulatory and commercial
challenges to achieving high levels of onsite
The main findings from the modelling and generation.
consultation exercise are discussed below.
2. The rate of installation of onsite generation is
iii. General findings highly sensitive to the rules set around the use
1. Onsite energy generation is important for of offsite generation, which is generally cheaper,
the delivery of the governments objectives of but offers lower additionality.

A report from the Renewables Advisory Board 

 The role of onsite energy generation in delivering zero carbon homes
3. Onsite energy generation is likely to be installed
in the vast majority of homes built to Code level 6
if the use of offsite generation is capped at below
50%. In the whole of the UK this could result in
onsite generation being installed for between
250,000 and 300,000 new homes a year.
4. Patterns of uptake of renewables will be
affected by the detailed rules set in new Building
Regulations, and modifications to the Standard
Assessment Procedure (SAP) and the Code
for Sustainable Homes (CSH), eg setting high
minimum heat loss parameters will reduce
the viability of CHP and could require greater
uptake of more expensive renewable electricity
technologies.
5. The very steep ramp up of demand after
2016 when CSH level 6 becomes mandatory
creates a particular challenge for the
manufacturers and installers of onsite generation
equipment because of the very low levels of
demand before then. This is a particularly acute
capacity hurdle faced by the suppliers of onsite
renewable electricity technologies which are
not currently expected to receive any significant
market stimulation before 2016 but which need
to be installed at a huge rate after that date.
6. Nearly a third of all new homes are currently
built in developments of less than ten dwellings,
and a half of all new homes are in developments
of less than 50 dwellings. Large urban extensions
and new towns of greater than 1000 homes
constitute less than 10% of all dwellings built.
A report from the Renewables Advisory Board 10
Executive summary
Space for equipment is a key limitation for
onsite renewables in the majority of housing
developments.
7. The ability to generate sufficient renewable
electricity will become the key factor for
compliance with CSH level 6. It is not likely
to be possible to meet CSH level 6 in 12% of
modelled homes (36,000). These are principally
urban flats in developments of less than ten
dwellings which lack the space for renewable
electricity generating technologies. The degree
to which most of these developments miss CSH
level 6 is small, and equates to 20kg CO2 per
dwelling, equivalent to 50W of PV per flat. CSH
level 5 can be met in all developments.
8. Since building regulations are applied uniformly
to all housing developments the government will
either (a) have to set building regulations at level 5
of the Code and use planning regulations to get to
level 6 for larger developments, or (b) it will have to
allow for offsite generation of renewable electricity.
Modelling suggests that offsite generation to meet
5% of total energy use will be required if all homes
are to meet CSH level 6 if gas connections are
permitted, or 20 30% of total energy use if a gas
connection is not allowed.
9. The proposed timescale for the ratchet up
of code levels results in very little installation of
onsite renewables until 2016, after which there
is there is a huge step change in demand. The
proposed tightening of building regulations in
2010 and 2013 do not contribute significantly to
 The role of onsite energy generation in delivering zero carbon homes

Executive summary

Annual cost of all Technologies in 2016

900
Figure iii Market size
for each technology
800
- under the modelled
700 base case - for
achieving CSH 6 in
600 2016. The graph
Annual cost (millions )

shows the new build

500 market only.
400

300

200

100

0
SHW
PV

Micro Wind

Medium CHP
Medium Wind

Gas Boiler

Community Micro

Large CHP
Electric Heating

Large Wind

Micro Biomass Boiler

Air Source HP
Low H:P MicroCHP

High H:P MicroCHP

Medium Community

Community Air Source

Large Community
Medium Biomass CHP

Large Biomass CHP

Community Ground
Ground Source HP
Biomass Boiler

Biomass Boiler
Biomass Boiler

-100
Source HP
HP

-200

the building of capacity in the onsite renewable policy level. For example large wind farms have
electricity industry. a substantially lower cost in terms of pounds
spent per tonne of CO2 saved than PV systems.
10. Likely future demand for onsite generation The zero carbon homes policy is designed to
outstrips current UK supply for every technology stimulate uptake of new technologies and will
and for biomass CHP, small wind and microwind therefore not always produce the lowest cost
it could exceed global supply. This indicates that carbon savings in the short term.
the need to build a multi billion pound onsite
energy generation industry in a very short period iv. Markets and technology
will be the greatest challenge created by the 12. The market for onsite energy technology
proposed zero carbon homes policy. in 2016 in the base case scenario is 2.3
billion a year at 2007 prices. This suggests
11. The model suggests that enforcing that the policy could generate a market for
CSH 6 by 2016 stimulates uptake of PV and renewable heat and non-ROCable renewable
other relatively expensive renewable energy electricity larger than the market created by
technologies, if offsite generation is not allowed. the Renewables Obligation. The graphic above
These are clearly not the lowest cost low carbon summarises the potential size of the market for
electricity technologies on a national energy each technology.

A report from the Renewables Advisory Board 11

 The role of onsite energy generation in delivering zero carbon homes
13. The modelling suggests that the zero
carbon homes policy will not only meet the
Governments objective of accelerating the
uptake of existing technology, but that it could
also meet its objective of developing new
technology. The new build market will drive
significant economies of scale in manufacturing
which should be reflected in lower costs for onsite
renewable technology and stimulate an increase in
uptake in existing homes. This impact on existing
homes has not been quantified.
14. Technologies that are likely to experience
the highest level of uptake are biomass combined
heat and power (CHP) and photovoltaics (PV) but
this is highly sensitive to the level at which offsite
energy generation is allowed.
15. Biomass CHP is likely to be the first
technology considered by a developer, where
wind energy is not viable, because of its
relatively low capital cost and its ability to meet
power and heat loads under the zero carbon
regulations. The cost of using biomass CHP
A report from the Renewables Advisory Board 12
Executive summary
will reduce if heat demand can be aggregated
across different parcels of land in a large
development, and if housing developments can
be linked to nearby commercial heat demand.
16. The high uptake of biomass CHP is critically
dependent on the technological development
of sub 1MW plant. The market for sub 1MW
biomass CHP technology could be worth over
half a billion pounds per annum from 2016 if
technological and supply capacity constraints
are overcome. Biomass CHP on this scale is
not currently commercially mature, though pre-
commercial trials are underway.
17. Biomass CHP uptake is also dependent
on a number of other factors including the
attractiveness of communal heating to
housing developers, the commercial offerings
available for the management of CHP and
heat networks, and the assumption that the air
quality impact of emissions from biomass plant
will not be a significant constraint to its use in
urban areas.
 The role of onsite energy generation in delivering zero carbon homes
Biomass CHP
Current global production capacity (MW)
Current UK production capacity (MW)
2016 baseline demand
2016 baseline net market value (millions)
2016 baseline demand
Current UK production
capacity (MW)
Current global production
capacity (MW)
0 50 100
18. The projected annual uptake of biomass
CHP is substantially larger than the current
worldwide industry capacity for the technology.
This is both an opportunity and a threat and
suggests that substantial effort will be required
to foster a UK industry. The graph above
illustrates the current and forecast market for
the technology.
19. Zero carbon standards will drive high uptake
of PV because it requires no additional space and
can be integrated into the fabric of the building.
Despite its high cost PV could be installed on 70%
of new homes (200,000) from 2016.
20. The market for PV could be worth over
0.8 billion a year by 2016, if offsite generation is
not allowed. If offsetting all appliance electricity
A report from the Renewables Advisory Board 13
Executive summary
MWe Figure iv Baseline
demand for biomass
10.0 CHP against current
2.5 national and global
capacity.
216
716
150 200 250
use is permitted then PV could be significantly
reduced although this is highly sensitive to the
offsetting costs. The use of PV would also be
lower if Biomass CHP systems were power-led,
resulting in large amounts of heat being dumped.
It is assumed that this is neither desirable nor
permissible in most urban situations.
21. Micro gas fired combined heat and power
with a low heat-to-power ratio is also projected
to have high uptake if gas connections are
allowed on zero carbon developments,
because SAP currently credits onsite electricity
generation with a carbon benefit above that of
imported grid electricity. If the SAP methodology
is changed then gas CHP uptake is negligible.
Notwithstanding this methodological issue,
the use of gas boilers and gas CHP is likely
 The role of onsite energy generation in delivering zero carbon homes
to lead to homes being unable to maintain
zero carbon standards later in their life. This
is due to the carbon content of grid electricity
falling significantly over the coming decades
if the electricity industry responds to climate
regulation and carbon pricing. As with biomass
CHP, the technology for low heat to power
systems (essentially fuel cell based CHP) is
not currently commercially mature. This means
significant technical and market development
would be required for the technology to fulfil its
potential by 2016.
22. Electric heating may be favoured by
developers where large-scale wind power is an
option because of its simplicity and low cost,
and features strong growth up to 2025.
23. Solar water heating (SWH) is not widely
used to meet CSH level 6 because of its relatively
high capital carbon abatement cost. However,
it may be the dominant renewable technology
used to meet Code level 4 from 2013, if it is not
disincetivised by SAP methodology. This may
result in a very short but big demand for SWH
until CSH level 6 becomes statutory in 2016.
A report from the Renewables Advisory Board 14
Executive summary
24. The model suggests that heat pump
installations are not stimulated by zero carbon
legislation because they increase the need for
onsite renewable electricity production, which
is the main constraint to compliance with CSH
level 6. However, its uptake will be higher if it
is chosen as an alternative to electric heating
where large-scale wind or biomass power
production is feasible.
25. The size of the overall market for onsite
energy technologies and the markets for each
specific technology are very sensitive to the
way in which the legislation is enacted and
the rate of technology development. Specific
legislative sensitivities are the level of offsite
electricity permitted and its cost, and the
degree to which gas connections are permitted
under the legislation. The main technological
sensitivity is the rate of development of two
technologies which are not commercially
mature, low heat to power CHP (fuel cells) and
sub 1MW (medium) biomass CHP. The error
bars in the graph below illustrate the sensitivity
of the market sizes to the uncertainties in
legislation and technology development.
 The role of onsite energy generation in delivering zero carbon homes

Executive summary

Net value of markets in 2016

1,400 Figure v Graph

showing baseline,
1,200 upper and lower
Net value ( millions)

bound ranges for

1,000 the market size for
each technology, as
800 stimulated by the zero
carbon legislation in
600 2016.

400

200

0
PV
Air Source HP

Large Wind

High H:P MicroCHP

SHW

Ground Source HP

Micro Wind

Large CHP
Small Wind
Community Air Source HP

Low H:P MicroCHP

Medium CHP
Micro Biomass Boiler

Community Ground Source HP

Large Biomass CHP

Medium Community Biomass

Medium Biomass CHP

Community Micro Biomass Boiler

Large Community Biomass Boiler

Boiler

v. Regulation will want to retain liability for energy generation,

26. The model predicts the installation of its infrastructure and fuel supply.
2,700 community heating networks a year in
the UK from 2016. To be most cost effective 27. It is not yet clear how any additional running
the networks will require to be brokered at the costs for biomass heat and power systems will
master planning stage, before large sites have be dealt with in the regulation of zero carbon
been divided up amongst different developers. standards and in the commercial deals offered
They will also require the development of to developers, since there will be a strong
commercial Energy Services Company (ESCo) incentive for developers to avoid these costs.
models since discussions with the construction In this case they will either be passed on to
sector suggest that very few housing developers the home owner, or biomass will be replaced

A report from the Renewables Advisory Board 15

 The role of onsite energy generation in delivering zero carbon homes
with lower cost fuels such as gas after a home
has been approved as compliant with building
regulations. There is anecdotal evidence that
some new developments in London are not
using installed biomass systems and are relying
on parallel gas systems once buildings have been
passed as compliant with low carbon regulations.
vi. Commercial issues
28. The net additional cost of onsite technology
needed to meet CSH 6 is predicted to be
less than 1,000 per dwelling for a large
development of rural flats that can use wind
power, to around 13,000 per dwelling for an
urban development of less than ten houses that
use micro CHP and PV. The average cost is
circa 6,000 per dwelling in small, medium and
large urban developments. These costs only
relate to the energy / CO2 aspects of the Code
and do not include building fabric costs, or main
contractor overheads.
29. The numbers of people expected to be
employed in the installation of onsite renewables
is 4,600 Full Time Equivalent (FTE) under
the base scenario, which is a relatively small
proportion of the estimated 200,000 people
employed in the UK as electrical engineers and
plumbers. However, low recruitment into the
electrical and plumbing trades could have a
A report from the Renewables Advisory Board 16
Executive summary
knock on consequence on the delivery of zero
carbon regulations. An additional 8,000 FTE
are expected to be required to maintain onsite
energy generation, including over 4,000 needed
for biomass CHP maintenance.
30. The construction sector is accustomed
to simple and robust warranties for building
products. It is likely that those businesses in the
renewables industry that can first develop such
products that can be specified through existing
procurement routes will dominate the market.
31. There is a need to satisfy developers that
reliable mechanisms exist for the ongoing
operation and maintenance of site wide
systems, possibly through the use of ESCos.
Currently there is very little understanding of the
implication of an ESCo for a new development,
and few commercial offerings.
32. The creation of a very large new market for
onsite renewable energy is a big opportunity for
the UK to secure new business and manufacturing
capacity. With at least two elections between now
and 2016, investors may well perceive that the
market for onsite renewables carries high political
risk. Creating a good investment environment will
require strong and consistent market signals in the
intervening period.
The work described in this report was carried out under contract to the Renewables Advisory Board:
 he views and judgements expressed in this report are those of the contractor and do not necessarily reflect
T
those of BERR or the Renewables Advisory Board.
www.renewables-advisory-board.org.uk

RAB (2007) 0177

First published 2007