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Rewards and reductions with ASHP

With an increasing focus on lower carbon energy and growing support from Government incentive schemes, contractors and engineers are waking up to the potential of renewable energy. Chris Davis considers what makes air source heat pumps such an attractive option for commercial buildings.
It has never been more evident that we need to look at lower carbon energy solutions if we are to meet ambitious Government targets of an 80% cut in greenhouse gas emissions by 2050.

The increasing price of fossil fuels particularly in off-gas areas, more stringent legislation on emissions and the coming of age of new technologies are all contributing to a shift towards renewables solutions which can create huge opportunities for contractors and engineers.

These opportunities are particularly evident in the commercial sector, which generates 40% of all CO2 emissions in Europe.

As a result, any technology which can offer lower running costs, acceptable payback periods and help meet carbon reduction targets is likely to make people stand up and take notice - and air source heat pumps do just that.

Cost-effective, carbon cutting
With building regulations becoming increasingly challenging, air source heat pumps - when applied correctly and to the right specification - can be a cost-effective way to provide heating and hit carbon reduction targets.

Dimplex has already had a lot of success with air source heat pumps in the commercial new-build sector where building regulations demand higher levels of efficiency and 'zero carbon' buildings by 2019.

Air source heat pumps are a proven solution for new-build projects, increasingly specified to help meet the latest regulations and contributing significantly to high BREEAM scores for those buildings with additional sustainability targets. We have seen some fantastic results on construction projects for schools, offices, retail and leisure buildings amongst others.

However, there is also a huge opportunity in off-gas retrofit as replacement for oil or LPG systems - an area which until now has been largely untapped - and part of the reason for this is the glaring omission of air source heat pumps from the non-domestic Renewable Heat Incentive (RHI).

Despite the lengthy delays to the domestic RHI, the non-domestic scheme has been in place since November 2011 offering financial support for 'green' heating technologies including ground source heat pumps, biomass and solar thermal water heating.

Unfortunately, take-up has been disappointing and at just 50% deployment rate according to the latest Ofgem report - predominantly biomass - the Department of Energy and Climate Change (DECC) has said itself that overall take up of the RHI is 'lower than expected'.

The general feeling is that many of the tariffs were based on inaccurate assumptions and subsequently set too low, which is why the Government has just completed a consultation with a view to increasing tariffs for some technologies, but there has also been pressure from the industry to include air source heat pumps.

Now, with the Government striving to meet its target that 12% of the UK's heating will be provided by renewable sources by 2020, it has recognised that air source is a relatively easy-to-apply technology which can contribute significantly to carbon reduction targets. The latest consultation states DECC's intention to finally include air source heat pumps with a tariff of 2.5p per kWh - which is great news for engineers and consultants.

The smart choice
One of the biggest opportunities for commercial heat pump application lies in off-gas retrofit installations replacing oil or LPG boilers, which have been crippled by rising fuel price increases in recent years.

The latest heat pumps from manufacturers such as Dimplex offer high efficiencies, short paybacks and a great return on investment compared to oil or LPG, irrespective of any RHI funding. However, with air source heat pumps now set to be included in the non-domestic RHI, there are even more rewards to be reaped.

Let us take a typical example of a 40kW commercial property with space heating demand of 80,000kWh per year.

At the current oil price around 55p per litre and taking into account the fact that oil boilers are 80% efficient, the annual running costs for an oil system would be around £5,500 per year - not to mention the inconvenience of bulk oil buying, storage and system maintenance.

Compare this to a high efficiency heat pump with Seasonal Performance Factor (SPF) 3.5, which could reduce the heating bill by as much as £3,215 per year.

Add the non-domestic RHI tariff for air source heat pumps which is expected to be set at 2.5p per kWh for 20 years and there is potential for another £2,000 RHI income each year - making a total benefit of £5,515 per year compared to the oil boiler system.

With an initial capital expenditure investment of around £40,000 for a heat pump system of this size, it means the technology has a payback of around seven years - and a potential net benefit of £72,000 over the expected 20-year lifetime of the system.

As oil prices continue to rise and pressure increases on businesses to reduce carbon emissions, they are figures which simply cannot be ignored.

The addition of air source heat pumps to the non-domestic RHI is set to kick-start the retrofit market for this proven technology which can provide cost-effective heating and help meet carbon reduction targets with shorter payback times than you might think.

Now is the time to act and make sure you don't get left behind.

// The author is business development director for Dimplex Renewables //
15 August 2013

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