Project Summary

Net Zero Terrace will produce a replicable technical and financial model for decarbonisation of mixed-tenure terraced housing that can be scaled and is appropriate for those that might otherwise be left behind.

Innovation Justification

This project sits under Innovation Challenge 1, Project Scope 2, and will develop an affordable and scalable solution to decarbonising terraced streets in the UK. There are nearly 10 million terraced homes, many of which cannot easily transition to low carbon heat due to space constraints, affordability, and capacity in the DNO networks.

Discovery built on previous Community Renewal Fund work and identified that there could be a viable solution to the challenges faced, delivering affordable low carbon heat via an integrated SLES combining ambient loop heat technologies with community renewables, home energy management, and integration into the DNO network.

Soft market testing has been carried out under Discovery with over 20 organisations. This process has shown that the subsystems exist and there is significant existing learning that can be assessed, but it needs to be supplemented with actual testing of some subsystem components to prove they can integrate. 

Discussion with UKPN’s SHIELD Discovery project team has demonstrated there are opportunities for shared learning between the two different approaches to decarbonising heat in domestic properties. 

Learning has also been brought in from the Pathfinder-funded sister project, which informs the evidence base for the benefits of the Net Zero Terrace solution. Centre for Energy Equality (CEE), as a project collaborator, has also brought in learning around customer engagement from its involvement in other SIF Discovery projects.

Buro Happold has leveraged learning from the BEIS-funded Heat Pump Ready Programme and NIC-funded CommuniHeat project, resulting in refinements to the planning process and validating our plan to use energy monitoring during Alpha.

This solution will be the first demonstration of how a novel SLES can be fully integrated into a DNO network, providing benefits for customers. Comparable systems exist in private networks and some elements have been tested on social housing, but no such schemes have been identified that have been deployed on regulated networks with mixed tenure properties. 

Discovery has shown that it is possible to use current connection processes to integrate the SLES into the DNO network, but this limits the opportunities to maximise the benefits of operating the SLES as one system. It has also highlighted differences between DNO assumptions on the network impact of these technologies, resulting in different upgrade requirements in different license areas. Further innovation is required through Alpha regarding the connections process, including around the assumptions made and identification and realisation of network and customer benefits. 

The readiness levels for the solution moved during Discovery up to 3-4, and we predict that post-Alpha these will move to 5. 

In terms of scale, the study area has been chosen by RV Energy because it represents the key characteristics of the challenge being addressed. The project aims to achieve a scalable solution, so Alpha will also look at deployment through the entire borough; initial mapping shows in Rossendale alone that 14,000 homes could be decarbonized with this solution. Alpha will also scale up the impacts for delivery across the UK.

The counterfactual is the installation of an electrical boiler. District heating and hydrogen have been discounted as counterfactual options because the location is not near an industrial cluster or significant waste heat source or has a dense enough heat demand. 

Discovery has concluded that the model is viable and subsystems exist, but the system as a whole does not currently exist in the market and without innovation support would not be viable due to the complexity of interactions needed between parties. The benefits are now clear as compared to the counterfactual of installing electric boilers.  

Impacts and Benefits

Techno-economic modelling shows that this solution is the lowest cost option for delivering low carbon heat and will be on par with the current gas / do nothing option once the cost modelling has been refined with in-situ data. It delivers approximately 6tCO2e/ year carbon savings compared to the current gas option and approximately 2tCO2e/ year compared to the counterfactual electric boiler installation.

• The pre-innovation baseline is the current heat supply to the households, which is predominantly gas boilers. This has been modelled based on benchmark data to cost an average of £4,423 per household and produce 7tCO2e/ year (the project is questioning the benchmark data and will test with real data from homes in Alpha).
• The counterfactual is the installation of electric boilers with individual PV installations. This has been modelled to cost an average of £9,095 per household per year, with carbon emissions of 3.5tCO2e/ year.
• There were three scenarios modelled for the solution, and the costs and benefits for the mid-point scenario are: average annual cost £5,436 with annual carbon emissions of 1.25tCO2e/ year per household.

This modelling has been done using standard industry data for modelling energy consumption and annual energy bills for the types of homes in Bacup. Alpha will collect actual data through monitoring homes and subsystem testing to refine the model.

The CBA shows the electric boiler option has a whole life NPV of £0.6939m compared to the solution NPV of £0.8601m, meaning that the solution is the least cost option for decarbonisation. 

The CBA uses the actual cost of reinforcement calculated for the study area for both the project solution and counterfactual electric boiler solutions. The total demand for the GSHPs was found to be significantly lower, with a total demand of 166.69kW, compared to the electric boiler counterfactual which was found to be 424.20kW. This leads to reduced need for reinforcement and reduced connections costs.

The impact of these differences will be modelled for the whole network during Alpha alongside the avoided (indirect) carbon savings from the reduced need for network investment.  

There will also be local economic benefits and the creation of new revenue streams and job creation as a result of the solution. For example, the soft market testing undertaken during Discovery demonstrated that fabric retrofit, solar PV and sensors can be provided by local supply chain companies.

In addition, the solution includes community-owned solar, which will be owned and operated by RV Energy, resulting in the following local economic benefits:

1. Local people will be invited to purchase shares (£50 minimum share) in RV Energy and in return will receive interest payments for the lifetime of their investment as well as their investment re-paid. The share offer will be open to as many as possible by offering a low entry price.
2. The profit from operating the community-owned solar will be used to create a community benefit fund which will be invested in the local area.
3. The aim of the solar co-op is to subsidise the cost of electricity for the local community. 

The counterfactual does not provide the community-owned benefits because it only includes individually-owned PV. It is also unlikely to create the same level of new revenue streams for local installers because the counterfactual is not a co-ordinated approach, therefore will not create a significantly increased, new level of demand. 

The solution is a new-to-market product, process and service. It integrates existing sub-components from different suppliers and provides them a new route to market by offering a new service to homes for the supply of low carbon heat, including an offer of energy efficiency installation.