Project Summary

The Full Circle project is changing the way we heat our homes and businesses. Recovering waste heat from distribution network transformers, we can create a more efficient and sustainable heating system that is accessible to everyone.

This innovative project is developing a new industry-leading framework that will make it easier for heat network developers, property developers, and Energy Service Companies (ESCos) to make use of this untapped resource of waste heat from transformers. This new framework will provide the certainty and support that businesses need to invest in waste heat recovery to improve efficiency of heat networks.

Innovation Justification

Although Full Circle spans across all four challenges, the primary challenge addressed is 4: Accelerating decarbonisation of major energy demands.  

.If successful, the learning can be used to de-risk similar projects across the UK. The innovation of Full Circle is about bringing a concept to reality on the network side in collaboration with new stakeholders. Full Circle will also test what potential regulatory and commercial arrangements are required to enable the scheme to be rolled out across DNOs.

Although heat recovery is a well-established concept, many past projects have not progressed further than feasibility study or experiments. This can be attributed to distance between power transformers and heat demand, as well as limited commercial viability.

This project has clear benefits as extracting the heat from the transformers will reduce peak operating temperatures, increasing asset life cycle. If most of the heat required for the end users heating comes from the transformers’ waste heat, then less energy needs to be generated from higher cost and carbon sources. This is based on an average annual transformer heat volume and temperature recovery profile meeting 75.9% of the heat demand of 2,752 MWh with recovered heat of the site annual heat demand of 3,626 MWh.

During the Discovery phase, our techno-economic analysis has explored the potential capital and operating costs of the solution at high-level to give an initial estimate for both the DNO and heat network operator. Potential cost savings from selling heat for the DNO and reduction in fuel cost for the heat network operator were also estimated. Carbon reduction has been estimated for the heat network operator against the counterfactual of Wandsworth’s heat network operating without heat recovery from transformers. These results are usually accessed separately by the two different stakeholders. No previous project has fully assessed these outputs to this level of detail. 

The Full Circle project aims to evaluate a novel cross-vector strategy for implementing waste heat solutions scalable to various communities throughout the UK. To achieve this goal, the project will utilise a phased approach, starting with a technical feasibility study of the proposed design and culminating in a demonstrator as part of the Beta Phase. The project cannot be funded elsewhere within the price control or considered as part of BAUgiven the complexity and risk in approach, integration of technologies and business model. Therefore, the SIF provides the right approach, funding, and ecosystem for the project to develop in an agile way.

From a DNO perspective, transformer losses are typically rejected as heat and paid for by consumers through DUoS charges (counterfactual). Full Circle's heat recovery system provides an opportunity to reduce these losses and improve efficiency, whereas replacing old transformers would only reduce, not eliminate, losses and require significant capital costs. The Wandsworth development's selected hybrid gas boiler and air source heat pump solution was chosen over a full gas boiler or fully electrified heat network (counterfactual options) due to non-compliance with local planning requirements and prohibitive costs, respectively.

With regards to heat recovery options, the oil-water heat exchangers paired with a water-to-water heat pump were selected due to this option’s most efficient heat transfer process, lowest costs and least impact on the site. This approach is easiest to upscale to meet potential increases in demand. Other alternative options were disregarded following an Integrated Risks Matrix assessment.

Impacts and Benefits

Financial - future reductions in the cost of operating the network

The counterfactual baseline for UK Power Networks is the estimated four transformers’ losses of circa 4,141MWh per annum and a peak loss of circa 1MW. The cost associated with these losses contributes to the cost of operating the network (DUoS charges). Full Circle will enable reduction of losses in real terms as waste heat is recovered for the heat network. The metric used for reporting this benefit will be the amount of heat supplied to the heat network, which is estimated to be 2,752MWh per annum; assuming a bulk heat offtake rate on a p/kWh basis and UK Power Networks may expect a revenue to cover the capital cost the infrastructure and a modest profit to cover the cost of service.

Active heat removal from transformers enabled by heat recovery might increase transformers rating and assets life cycle, and therefore delay or deferrer assets replacement due to ageing or requiring more network capacity, lowering the cost of operating the network. Both these cost reductions could translate in a reduction of DUoS charges for electricity consumers, subject to policy and regulatory investigations.

Financial - cost savings per annum on energy bills for consumers

The heat network operator will be able to pass on the reduction in the cost of operating the network to its consumers. The pre-innovation baseline is therefore the consumers heating bills based on the hybrid heat generation using electricity and gas, which is circa £300 per annum for each residential unit. Through transformer heat recovery, cost savings per annum on heating bills could be around £90 per annum for each residential unit (about 30%) or a total savings in heating bills of £60,000 per annum for 637 residents. 35% of the end consumers are the future residents of SGN’s planned senior housing development (Vulnerable Customers).

Financial - cost savings per annum for users of network services. 

The pre-innovation baseline for the heat network operator is a hybrid fuel supply of electricity and gas. The metric used for reporting this benefit will be the overall fuel cost for supplying heat. The initial forecast of reduction in fuel cost is estimated to be circa £60,000 per annum.

Environmental - direct CO2 savings per annum. 

The counterfactual is the carbon emissions (i.e. the metric) associated with generating heat by air source heat pumps and gas boilers. The transformer heat recovery could significantly reduce the consumption of electricity and gas, which may lead to an initial forecast of carbon reduction in the order of 50% against the heat network’s counterfactual.

Environmental - indirect CO2 savings per annum.

A previous UK Power Networks innovation project (Power TX RTTR) has identified that active heat removal from transformers may lead to transformer rating increases of up to 20%, leading to delayed or avoided new equipment/assets installed in the DNO’s network, presenting indirect carbon savings. However, this benefit requires a detailed investigation in the Alpha Phase.

Creation of new revenue streams. 

The pre-innovation baseline is no revenue received for waste heat generated from operating the network. Through Full Circle, UK Power Networks would sell waste heat and hence create a new revenue stream for the current business as usual (BAU). As stated before, the initial forecast of this revenue is approximately £70,000 per annum for Wandsworth substation. Potential revenue at UK Power Networks level will need to be investigated during Alpha through the work package for scaling-up and rolling-out opportunities.

New to market – services. 

The pilot project through Full Circle at Wandsworth could potentially become the first service of supplying heat provided by a DNO to a heat network in the UK. If successful, this can de-risk similar projects across the DNOs.