Fuel poverty is high on the agenda for most Housing Associations, particularly those with homes in rural areas; yet finding affordable, efficient, and long-lasting solutions can be a challenge.
The recently launched “domestic” stream of the RHI has proven unappealing to many social housing providers, however Kensa has developed an innovative solution adopting ground source heat pumps that enables social landlords to benefit from both the more lucrative “non-domestic” stream of the RHI and receive an upfront capital subsidy through the Energy Company Obligation.
It is well documented that a well-designed, well-installed ground source heat pump system can deliver significant energy cost savings to tenants (particularly where night storage systems are displaced) with running costs typically lower than gas systems; and with an expected 20 year lifetime will provide low lifetime ownership costs to the landlord.
As both a UK based manufacturer and MCS accredited installer, Kensa has delivered approximately 1000 systems in to existing social homes over the past 5 years.
We have recently completed a project with Westward Housing to retrofit ground source heat pumps in to a residential scheme in Devon. A recently issued news release describes in their own words their experiences, which you can read here.
The installation employs Kensa’s novel “micro heat network” system architecture, which simply put, involves an individual ground source heat pump, domestic hot water cylinder and new radiator system installed in each dwelling, while multiple heat pumps are connected to a common borehole ground array.
It is this common borehole array that creates the “heat network” element, one of the advantages of which is that it meets Ofgem and DECC’s definitions for “district heating” and is therefore able to attract an additional capital subsidy under the Energy Company Obligation (ECO).
Where ground source heat pumps displace electric night storage heaters in rural areas, this can often be between £2,000 and £3,000 per property. The particular scheme with Westward happened to feature one-bedroom flats, however the solution is extremely flexible and is ideally suited to other property types particularly bungalows and terraced or semi-detached houses.
While in this instance Westward were fortunate enough to obtain a grant under the EST Ready for Retrofit scheme, more typically Kensa promotes this solution alongside the Non Domestic Renewable Heat Incentive, which will provide a 20 year income stream for the social housing provider. This allows the additional capital investment costs to be recovered over time, for example based on a typical scheme of bungalows and terraced houses:
Typical costs & savings
|Per Unit||Scheme of 24 units|
|Gross capital cost (incl. borehole, GSHP, new wet heating system, DHW cylinder, installation, VAT):||£13,500||£324,000|
|Assumed "counterfactual cost" (i.e. cost of like or like replacement night storage heaters):||£2,500||£60,000|
|Net investment cost:||£8,000||£192,000|
|Typical RHI income over 20 years (based on assumed metered heat consumption, index linked):||£15,000||£360,000|
|Net overall benefit:||£7,000||£168,000|
|Typical expected annual tenant energy cost savings:||£300 - £400 per year|
Once the upfront ECO grant and “counter factual” costs are considered (i.e. the cost of replacing a like for like electric heating system) there is a compelling return on investment picture, together of course with demonstrable tenant energy cost savings, which Westward themselves point to in their case study and can be heard first hand in our “Tenant Tales” videos with Croft House residents.
In short, by adopting ground source heat pumps in this unique way and benefiting from two attractive funding streams, the tenant gains very low cost and reliable heating, the Housing Association gains very low maintenance costs and an RoI on the investment of around 5-10%.
If this has whetted your appetite a little and you would like to discuss this with Kensa further, please feel free to contact us on 0845 680 4328 or by email at [email protected].
Kensa district ground source heat pumps for social landlords: Benefits in brief
- Help reduce tenant energy bills and tackle fuel poverty;
- Benefit from an upfront capex contribution via ECO;
- Generate a 20 year income stream through the non-domestic RHI;
- Individual ground source heat pump and heating system per property;
- Communal ground arrays allow systems to qualify as “district heating” for RHI and ECO purposes;
- Every occupier has their own heating system control, domestic hot water and energy bill;
- Typical 5 – 10% RoI (IRR);
- Long life expectancy and low lifetime ownership costs;
- More robust and more efficient than air source heat pumps; no noise emissions or planning issues to be concerned with;
- Read Kensa’s case study on the Croft House project; Click here
- Hear what Westward Housing’s tenants have to say; Click here
- Watch ‘Micro Heat Network’s’ in action. Click here