Shared ground loop arrays and split ownership

It is widely recognised that ground source heat pumps offer ultra-low running costs, maintenance costs and carbon emissions compared to fossil fuelled heating systems and other sources of renewable energy. However, ground source has been looked upon unfavourably by housebuilders and developers in the past because of the added cost of the ground array. Simon Lomax, MD of UK manufacturer Kensa Heat Pumps explains how this will all now change as Government legislation has enabled innovative new financial models.

Lucrative RHI funding for shared ground loop array systems

Most housebuilders are not aware that subsidy support is available for new build residential developments. In fact, the Non Domestic Renewable Heat Incentive (RHI) provides financial support for individual ground source heat pumps installed inside each dwelling served by a shared ground loop array. This system architecture is regarded as ‘district heating’, and so both new build and retrofit installations of this nature are eligible for 20 years of Non Domestic RHI income.

The 2018 Renewable Heat Incentive (RHI) Regulations included an important refinement for ground source heat pumps (GSHPs). Along with clarification regarding split ownership arrangements (which I will touch upon later), quarterly Non Domestic RHI payments for residential properties linked to shared ground loop arrays are now based upon the deemed heat consumption taken from the EPC.

Previously, RHI payments were based upon the metered heat consumption at each dwelling served by the shared ground loop, forcing system owners to install heat meters and engage in an onerous quarterly claims process, and with no certainty on the level of RHI income they would receive over the 20 year period as usage was significantly impacted by occupant behaviour, a factor beyond their control.

Now owners of as few as two ‘clustered’ properties can invest with confidence in GSHPs connected by shared ground loops, knowing with certainty the level of income they will receive via the RHI over 20 years, and avoiding the hassle of metering. This change enables those looking to develop multiple dwellings for private sale to fund, own and maintain the ground array, recouping their investment with confidence via the RHI income.

Split ownership mitigates installation costs for developers

The lucrative Non Domestic RHI income available for multiple dwellings linked to a shared ground loop array can be used to attract external investors to take separate ownership of the ground array asset, in the same way that the gas infrastructure is owned by entities quite distinct from the householder.

With RHI income for shared ground loop arrays now based upon the deemed heat consumption at each dwelling, funders are now encouraged to provide no-cost ground arrays: they are now certain of their income and realise the asset – the underground array – will have modest and very predictable maintenance costs.

This funded ground array mechanism leaves the developer with just the cost of the ground source heat pump units themselves. These can be sold along with the property and the new tenants will benefit from the lowest carbon and lowest cost heating solution – a win-win for all. And each dwelling is free to source electricity from its own preferred energy company, switching as required.

Advantages over traditional district heating systems

The shared ground loop array model also reduces installation cost and energy bills compared to district heating systems featuring large central plant. These conventional systems require costly insulated pipes to protect the heat as it is circulated away from the source, imposing high bills on householders who have no opportunity to select an alternative heat supplier. However, with a ground source heat pump inside each property connected to a shared ground loop array, heat is only generated close to the point of use, so the fluid circulating around the distribution pipework is at ambient temperature, thus improving efficiencies.

A recent report by Etude, commissioned by the Greater London Authority (GLA), ‘Low Carbon Heat: Heat Pumps In London’ affirms, “The lowest carbon heat is achieved by the residential block using (individual) ground source heat pumps coupled to a communal ground loop. This system benefits from very small distribution losses due to the ambient flow temperature and relatively high efficiencies of 380 per cent for space heating at 35˚C and 290 per cent for DHW at 60˚C offered by ground source heat pumps.”

Supporting carbon compliance and the electrification of heat

House builders and their SAP consultants are also realising the specification of a shared ground loop array ground source heat pump system can allow savings to be made elsewhere in the build without compromising compliance with building regulations. The combination of carbon and running cost savings of ground source heat pumps with shared ground loop arrays has been thoroughly documented in the aforementioned Etude report. The results show shared ground loop array installations, defined in the report as a ‘communal ground loop connected to individual heat pumps’, as the most efficient and lowest cost solution compared to various air source, direct electric and gas configurations, offering real opportunity and relief to many developers who are facing increasingly stringent carbon compliance targets.

Government’s ambition for the widespread electrification of heat is driving policy to deliver lower carbon developments, and with further decarbonisation of the grid, electrically delivered heat is widely regarded as the future of heating. With proposed reductions in the carbon intensity figures used within SAP, the specification of GSHP’s will simplify compliance with building regulations, and reduce carbon compliance costs.

Kensa is confident that these new financing models emerging as a result of certainty of RHI income and split ownership will encourage the widespread adoption of ground source heat pumps and shared ground loop arrays in private housing. What used to be viewed as the most expensive heating option is now the cheapest.