BUSINESS MODELS FOR THE DISPLACEMENT OF OIL BY HEAT PUMPS AND ENERGY STORAGE IN SOCIAL HOUSING

Osaru Agbonaye, Inna Vorushylo, Patrick Keatley, Ye Huang, Motasem Bani Mustafa

Research output: Contribution to conferenceAbstract

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Abstract

This paper presents a potential solution to fuel poverty arising from dependence on oil heating in the UK by proposing business models for the deployment of heat pumps and energy storage systems in social housing and multi tenanted buildings.
Many low-income tenants manage to pay their rents but can’t adequately heat their homes, due to inefficient appliances, the choice of heating technology installed and the operational cost of such heating, among other factors. There are legal requirements for social housing landlords to provide adequate heating facilities in homes, however it is not the responsibility of the landlords to make sure that homes are warm. Hence the burden of heating rests on the tenants who are exposed to fluctuations in oil and electricity prices and cannot choose alternative heat sources since they don’t own the property.
There is both a business and social case for heating to be included in tenant rents. Renewable installations such as rooftop PV, combined with battery and thermal energy storage, combined with potentially low-carbon heating sources such as heat pumps present the possibility for landlords to switch from oil-fired heating systems, the primary driver of high fuel poverty rates. Combined with technologies such as smart thermostats and occupancy prediction algorithms, these can allow for smarter heating and the growing demand response market presents better reward opportunities for landlords. This would allow for smart management of heating facilities while allowing for better investments from the landlord, income for the landlord, and a better standard of living for tenants. However, without a proper framework for investment analysis and policy instruments, (which is the focus of this paper), most property owners will shy away from such programs.
A case study is evaluated for a housing estate at Coleraine, Northern Ireland. NEPLAN 360 Software is used to model the distribution network in the community and investigate network constraints and capacity for consumer-owned resources to relieve the constraint. A replacement analysis is done to switch from oil heaters to heat pumps and associated clean technologies; the impacts on the network with and without smart management are investigated. The project also investigates the technical and financial case for battery and thermal storage and PV installations in the estate. Cost-benefit analysis is carried out using accounting tools such as Net Present Value and Rate of Return to validate the business model. The impact of system-wide deployment on the wholesale electricity market is investigated.
By determining the yearly heating requirement of a home, options for revenue collection from tenants, available demand response value and government schemes, the paper presents a framework for investment analysis and business model evaluation for landlord investors and provides policy recommendations.
Original languageEnglish
Publication statusAccepted/In press - Apr 2019
EventUKERC Annual Conference 2019: Local Energy Systems in National and International Contexts - St Anne's College, Oxford, United Kingdom
Duration: 24 Apr 201925 Apr 2019
http://www.ukerc.ac.uk/events/ukerc-conference-2019.html

Conference

ConferenceUKERC Annual Conference 2019
Abbreviated titleUKERC 2019
Country/TerritoryUnited Kingdom
CityOxford
Period24/04/1925/04/19
Internet address

Keywords

  • Fuel poverty Private rental sector Housing Northern Ireland
  • business models
  • Tenant
  • Community Energy
  • Heat pumps
  • Demand Side Flexibility

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