Introduction

Aberdeen City Council have initiated a not-for-profit company to develop and manage a combined heat and power district scheme for properties under-going refurbishment and upgrades.

Objectives and target audience

The main aims of this project were to:-

• To meet the council’s key objectives of affordability, sustainability, safety and carbon dioxide (CO2) emissions reduction;

• To aid with the costs of tenants and to help reduce fuel poverty.

Financial Resources and Partners involved

Now that the objectives of how to best improve the four multi-storey blocks was determined, the council had to decide how to finance the introduction of this scheme.  The funding for the scheme had been estimated to be very high and some had to be funded externally.

The council and AH&P came to an agreement of the installation of the Stockethill scheme.  The agreement consisted of that the council provide funding of £215,000 per year to AH&P to guarantee that any bank loan taken out for capital costs can be paid back.  This guarantee to AH&P allowed the sum of £1.08 million to be available for the project.  Joint to this agreement, AH&P had to ensure that external funding was also granted to reduce the amount of capital that council needs to contribute to the scheme.

A grant of £736,000, which was 40% of the capital cost of the project was financed from the Energy Saving Trust community energy programme.  Due to the annual contribution financed by Aberdeen City Council, the AH&P were able to secure an encouraging rate of interest for a bank loan to cover the remaining 60 % of the capital costs.  Funding from the Energy Efficiency Commitment (EEC) was also applied for to compensate their capital costs.  The funding took two years before becoming available as the scheme was being used as a pilot to determine the split of carbon savings between the community energy programme and EEC.  The application for funding from the EEC was granted due to the success of the pilot

Process

In 2003 an energy centre was built next to one of the four multi-storey blocks.  This consisted of 210 kilowatt electric gas fired engine CHP and two kilowatt thermal gas fired boilers.  Each of the four multi-storey flats was connected to the energy centre via pre-insulated underground pipes which each flat consisting of its own internal distribution system.  The tenants were asked to cast a vote on how to they would like to pat for the service.  The majority favoured for their weekly charge to included within their rent i.e. a heat-with-rent charge.  The weekly set charge currently stands at £7.25, giving an annual cost of £348 payable for 48 weeks per year.

With regards to private properties, AH&P charge home owners for their heat without an intermediary i.e. the council.  They will be charged the flat rate.  Due to the fact that the flat’s heat is not individually metered, the council decided to provide controllable heating systems and face-to-face advice on how to be energy efficient.  The result of this is to persuade tenants to save energy.  The council is trying to determine whether this initiative of heat-with-rent charge does actually save more energy than a metered heat supply.

Results

Before the works were implemented the tenants were asked if they would like to have the heating system installed since the work was an improvement and not a repair.  Out of the 288 flats, 21 tenants did have the new system installed although they were given several chances to change their option.  Those flats that did not have heating systems original installed when occupied by previous tenants, were main priority for new heating systems once the flats became voided.  The most important concerns of the tenants were regarding capital and maintenance costs.  AP&H decided they would charge 50p towards long-term maintenance costs.  The council also arranged a loan scheme to owners to cover installation costs and with the repayments being lower than their actual saving in heat costs.  Due to the council owning the heating system under the council owned properties.  This therefore allows any property to be sold with a ‘clean title’ should any of the other properties be sold under ‘right to buy’.  Due to the implementation of the new heating systems being a success, the flats have been fuel poverty proofed.

Critical Success Factors / Challenges

The main critical success factors regarding the Stockethill scheme are:-

• A very high number of tenants who occupy the flats are very dependant on this scheme being a success as it will reduce the annual cost for tenants due to the new heat-with-rent charge that has been implemented with the scheme;
• Much financial backing has been put in place by Aberdeen council and the Energy Saving Trust community energy programme to fund the project.  In total a sum of £1,816,000 is available to ensure that this project is a success which suggests that much backing from the council and other organizations is currently in place;
• The whole implementation of the CHP system is a sustainable energy scheme which will contribute to the reduction of carbon emissions of 20% by 2012 by agreements set in the Kyoto protocol.