Neil Kitching Scottish Enterprise Green Heat

Paul

Well, welcome to today's Rethink What Matters podcast, where we're all about aligning the economy with the ecology with everyone in order that we can improve business performance, create stronger families and a greener, cooler planet.

And today, I am joined by Neil Kitching.

Neil is the energy specialist for Green Heat and Water Technologies, supporting a low carbon economy in Scotland.  Also supporting Scottish companies to take advantage of opportunities of the green heat revolution.

Separate to that, separate to the work with the Scottish Enterprise, Neil is the author of Carbon Choices, on the common sense solutions to our climate and nature crisis.

Welcome, Neil.

Neil

Thank you, Paul. That's a comprehensive introduction.

Paul

Okay. Great. Great.

Neil‍

Green Heat is just a small part of our support. But yes, we're also encouraging companies to have net zero plans. We think climate is obviously very crucial to the future of the economy. So we're now encouraging all companies that we give a grant to either have a net zero plan or be working towards a net zero plan. And so that's now a condition of awarding a grant to a company. And if they don't have a next year plan, we will work with them and support them in that journey to create one. So it's a really strong move forward.

We're also encouraging companies to have net zero plans. We think climate is obviously very crucial to the future of the economy. So we're now encouraging all companies that we give a grant to either have a net zero plan or be working towards a net zero plan. And so that's now a condition of awarding a grant to a company.

‍Paul

Okay. And does that involve them going through the scopes one, two, and three then?

Neil

Definitely scopes one and two and encourage them to look at scope three as well, that's right.

Paul

Right. And how is that assessed then? Is it just that they have to have a plan or are there certain criteria that you you're looking for in their net zero plans?

Neil

We're trying not to make it too mandatory because there's so many different schemes out there. We have our own mechanism that we can support them with. Or they can adopt one of the current methodologies that are already out there.

The methodology they use isn't so important. It's the fact that they're considering net zero and working towards it, that's really important to us.

Paul

Okay. Are there any examples you could give us? Something that that you'd be looking for? I mean, you could have a plan. You can say I'm doing something. But is there something you might be looking for specifically that shows they're actually serious about their net zero plans.

Neil

So the first year, I guess, a lot of it's based on trust. We will ask the company; do you have a net zero plan? Are you working towards a net zero plan? Of course, it's very easy for them to say, “Oh yes. Of course, we're working towards a net zero plan.”

And we might accept that in the first year. But obviously, if they come back to us and ask for a grant again, and they've said they're working towards a net zero plan. We would be asking to see a copy of it before giving any future grants. So this is a journey that something will ramp up and tighten over time.

Paul

Right.

What was your journey to working for the Scottish Enterprise and, you know, getting involved in green heat? Have you always been interested in green heat?

Neil

I don't think I knew what green heat was until about eight years ago. So, yes, where I studied geography at university. Then I believe I was trained to be an accountant in London and I worked as an accountant for twenty years. In a career which was alright, but I didn't feel terribly fulfilled.

So I then made a big step – change to Scottish Enterprise, working in the sustainable development policy team. And that's where I really learnt all about sustainability, and all these different technologies. So a really good place to be.

And then I moved into the energy team and I've been working on green heat for the last few years. So, yes, bit of a change.

Paul

I think you've been there for about fifteen years or so.

Neil

That's right. Yes.

Paul

And how have you, over those fifteen years, what's been your impression of the importance or the interest in green heat over those fifteen years? Have you seen a significant change in the last few years?

Neil

It's been a massive change. So when I started working in sustainability, the big thing was how do we change our energy use because at the time it was from coal and it was quite dirty. And gas, as I mentioned earlier, was deemed to be quite clean relatively.

So nobody talked about heating because they all thought heating is done by gas and that's okay. So there's been massive change.

Scotland now has one hundred percent equivalent renewable electricity. And that's been a massive change in ten years. One of the fastest changes in any grid anywhere in the world.

Scotland now has one hundred percent equivalent renewable electricity. And that's been a massive change in ten years. One of the fastest changes in any grid anywhere in the world.

But now we're realising that that's not enough got to tackle transport, and that's probably been being done primarily through electrification, electric cars.

But the big elephant in the room is heat where eighty-five percent of our homes are still heated by fossil gas and, you know, that's got to change.

Paul

Could you tell us a little bit more about what green heat means to you?

Neil

Green heat. So that's any heat for heating our homes, heating our businesses that doesn't involve emitting carbon emissions to the atmosphere.

So there's quite a few different types of green heat. The most obvious are things like heat pumps also heat networks and biomass heating. So there's a number of different technologies. But basically it's moving away from burning natural gas or what I call fossil gas and also from burning fuel oil and other things that are damaging to the atmosphere.

Paul

So it's also solar panels and it's, you know, such renewables, it's wind as well.

Neil

In terms of green heat, it would be solar thermal panels for heating hot water. We don't include solar PV and wind, which is using electricity, we don't include that in our definition of green heat, but obviously it's all part of our green, low carbon future.

Paul

Okay. Let me just understand that a little bit more then. So why would solar PV and wind not be a part of green heat?

Neil

So we were looking at the way we heat our buildings, not the way we generate our electricity. So that's the distinction.

Paul

That's an important distinction. Right?

Neil

And it's important because we use more energy to heat our buildings than we use generating and using electricity.

So heat is a kind of hidden emissions that people don't seem to be too aware of, but it's bigger than electricity.

We use more energy to heat our buildings than we use generating and using electricity. So heat is a kind of hidden emissions that people don't seem to be too aware of, but it's bigger than electricity.

‍So just by decarbonising electricity grid and creating a hundred percent renewable or low carbon electricity, that's not going to solve our climate problem. We also need to solve our transport emissions, our agriculture and the way we heat our buildings.
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‍Paul‍

Should we talk a little bit about heat pumps and the Scottish Enterprise’s view of heat pumps?

Neil

Yes. I think the first thing to say about heat pumps is they're not a new technology. They were invented over a hundred years ago.

Most of us have a heat pump of sorts in their homes already because fridges are basically a heat pump.

Some people say it's a heat pump in reverse, but it's the same technology.

And then in countries like Norway and Sweden and now France, heat pumps are being rolled out at scale. And yet in Britain, we seem to be laggards and we still seem to think that heat pumps are some strange new novel technology that's maybe a bit strange.

Paul

You're right. You're right about that. It just come across like that.

Neil

Yeah. So the problem in Britain is I guess it is down to policy.

And just an accent to geography. So UK benefited from access to fairly cheap natural gas from the North Sea. And as a result, we relied on that for decades. And it kind of enabled us to build houses to a fairly poor energy efficiency standard because it was still fairly cheap to heat them. And we got lulled into that.

That's very different from countries like Denmark. So they went through the oil crisis the same as we did in the 1970s. We then developed the North Sea Oil and North Sea Gas and the Danes didn't have access to that.

And so they went down the heat network route. They've been busy installing heat networks through their cities, towns and even villages from the 1970s onwards. And we just didn't do anything like that here.

UK benefited from access to fairly cheap natural gas from the North Sea. And as a result, we relied on that for decades. And it kind of enabled us to build houses to a fairly poor energy efficiency standard because it was still fairly cheap to heat them. And we got lulled into that.

That's very different from countries like Denmark. They went down the heat network route. They've been busy installing heat networks through their cities, towns and even villages from the 1970s onwards. And we just didn't do anything like that here.

Paul

Right. And so is Scotland able to operate differently to England, if you like, in the way that it sets these. I think the one of the challenges is this spark gap, isn't it, the spark spread? The difference between the cost of electricity and the cost of gas, and that's the challenge that the heat pumps face. Other is the pricing set differently in Scotland than it is to England?

Neil

So great question. It's a complicated landscape. So most heating issues are devolved. So the Scottish government has a lot of authority and powers around say creating heat networks and giving subsidies and grants and creating a good business environment for heat pumps and heat networks.

But there's a couple of big things that are across the UK. So one is running the gas pipeline, the gas grid that's all UK. And also the price of electricity and gas is – and taxes on it are all from central government so it's a bit of a complicated picture.

But you mentioned the spark spread that is fundamental. And just to explain what that means, that's difference in price between gas and electricity.

And in Britain for a number of years, gas, as I mentioned earlier, has been very cheap. And electricity has been reasonably expensive and made even more expensive by treasury taxes. A lot of environmental taxes were put on electricity, but not on gas.

And I think that stems from the time when if you go back ten years, when we're burning coal for electricity. Electricity was actually higher carbon than gas was and gas was considered, at that time, to be relatively good and relatively low carbon. But that situation's completely reversed now.

‍So the gas has stayed at the same carbon intensity but the intensity of the electricity grid has plummeted through all the new renewables and nuclear. And so it's an anomaly that we tax electricity and we barely tax gas.

So the gas has stayed at the same carbon intensity but the intensity of the electricity grid has plummeted through all the new renewables and nuclear. And so it's an anomaly that we tax electricity and we barely tax gas.

Paul

I know that I think in the UK, there is that's that that they're looking at that. I think it's called REMA, the Review of Electricity and Market Arrangements.

And I believe that this is to be decided this year and come into force October or November 24 in England anyway. Where hopefully this spark spread will be addressed.

Neil

Hopefully, I think that would apply across the whole of United Kingdom Okay. But if you compare that with countries like Norway that I mentioned earlier and France in those countries, electricity is relatively cheap.

And so Norway from hydro power and France from nuclear power. And in countries like Norway, they don't have such an extensive gas network.

So the spark spread there is much lower. And there's a direct correlation between the spark spread and the deployment of heat pumps across Europe. So it's fundamental.

Heat pumps are brilliant, but you're fighting an uphill battle at the moment to try and deploy them because gas is still relatively cheap.

Paul

The competition is gas, isn't it? And if, you know, these heat pumps can be two, three, four hundred percent efficient. But if gas is two, three, four times the price, then, you know, you're not getting anywhere. Are you? So they've got to be playing on a level of electricity and gas. They've got to be priced same so that we can make this move over to clean heat, you know, heat pumps. So that's good news. And I know that you yourself have installed a heat pump as well.

Neil

Yes. So I was looking at my carbon footprint. And the biggest thing that I can affect is the energy use at home. And so I ordered a heat pump. I was helped by Home Energy Scotland with advice and then with a grant north of our loan.

Paul

So let me just-- I mean, sorry, just to interrupt. Is that something which anybody in Scotland can apply for then?

Neil

Any household, that's right. So there's a £7,500 grant. In England and Wales, there's boiler upgrade scheme and that would offer a £5,000 grant for heat pumps as well. So I went through the process, got three quotes from installers and mine was a bit complicated because I wanted solar panels and the battery as well.

Paul

Right. And then air source or ground source?

Neil

An air source heat pump. So it's a box in the wall outside the house.

Paul

Yeah. Okay. And tell us more. I mean, how did it go? How's it going? Is it all completed now?

Neil

It's all completed. It was installed in November. We were allegedly plunged into a cold snap last December, if you remember. But our house was kept warm. Even by a seven kilowatt eight-foot heat pump, which, you know, doesn't sound very much, but that's enough because you run it for more hours a day than you would a gas boiler.

And as I said earlier, the price of running a heat pump versus gas would be fairly comparable. But there's two or three tricks that you can employ with heat pumps, which brings the price crashing down. And I estimate that my energy bill now is a half of what it was before. So maybe £2,500 before, which was in line with the national average under the price cap. And this year, my estimate is my total energy bill that's electricity for heating, lighting, hot water and appliances will be £1,200. So I could perhaps explain a little bit why that is because that might surprise your listeners.

Paul

Yeah. Please do. Did you say, but it was half the price, is that half the price against gas as it was before?

Neil

What I'm saying is my total energy bill electricity and gas is halved. I no longer have a gas bill because the gas has been disconnected from our house.

My total energy bill electricity and gas is halved. I no longer have a gas bill because the gas has been disconnected from our house.

Paul

All right. Okay. So please, yes, tell us the tricks.

Neil

Three tricks that reduced the bill: cheaper overnight tariffs and fire up the heat pump during the cheap rates, having solar panels, having the battery.

It’s really three tricks. One, with electricity you can move to cheaper overnight tariffs. So companies like Octopus.

So the first thing I did was try to fire up the heat pump as much as possible during the cheap rates and then try and not use it during the expensive rates. So that reduced the price a bit.

But also having the solar panels that obviously provides some free electricity to the house, so that helps a bit. But I think, yes, even more importantly is having the battery. So in the summer, the batteries charged up for free from the solar panels. And then that's used to run our electricity in the evening. So that works really well.

But in the winter and this is a bit that people might not be familiar with. We managed to charge the battery overnight cheap rates. So come the morning, the battery is fully charged and then that'll help to run the heat pump during the day, producing most of the electricity required for the heat pump. So instead of paying thirty-five pence unit for my electricity for the heat pump, I'm paying twenty pence unit. And so that's a big saving.

And so you put all these things in combination in a rather complicated way, and my energy bill has halved. That’s a really important message.

Paul

That's a very important message. It's a great case study to have on this podcast.

And I think we're going to be building on this, you know, in other podcasts as well. So that's great. Thanks very much for sharing that, Neil.

So let me just get back a moment though. So you are taking some electricity off the grid still, obviously, to power the pump. You've got the solar panel charge in the battery, but the battery does that drive the pump as well?

Neil

So the battery can be used to provide electricity to the house, which includes running the heat pump, running your shower, running your oven, your lines.

Paul

Okay. All things. Sometimes you've got a car battery in your head. But how big is this battery?

Neil

It's fifteen kilowatt hours capacity. It's three batter(ies) stacked in each other. They're in the garage. They're quite discreet.

Paul

Okay. And aesthetically, how pleasing or otherwise, if I may be so bold to ask, is your heat pump?

Neil

So I think it looks quite good. It's a box. It's a metre and a half wide and a metre and a half tall and with a fan on it. And it's at the back of our house, you can’t see it from the front of the house. But to me, it's not an issue. It's almost completely quiet, and we expect the same noise as a fridge.

Paul

So you can easily see how they could be on the side of every house. I mean, it's not a big deal.

Neil

Most houses could have a heat pump. I think one issue is you really need to have a hot water tank. And so some modern houses have been built without hot water tank, so you need to find space for that. That could be in your house, it could be in your garage.

Paul

Right. Could it be next to the heat pump?

Neil

It could be next to the heat pump. Normally, it'd be indoors. You really want it to freeze.

Paul

Yeah. Extra insulation required. Okay. So That's a really great case study. It's really good to hear that's working for you. And you have the grants. So you have a grant? You mentioned three things. A grant, there was something else, an incentive and a third thing?

Neil

I got a grant and also interest free loans. I think that was the two things.

Paul

Those are two things. Grant and interest free loans. Brilliant.

And overall then, the capital expenditure – was it reasonable or, you know, are you going to get your money back? I know it's cheaper for you now. I mean, does the business case stack up? I mean, environmental is obviously a no brainer.

Neil

I think the first thing to say is, yes, it's all about cutting your carbon emissions. There's no point at us all burning gas and frying the planet. So to some extent, to push back on the question, does it stack up financially? Because we have to do this, yes. But obviously, that's a bit of a dream world. Everybody lives in real world where they are interested in money.

Without the grants, no, it wouldn't stack up at present for retrofitting a house because you're having to do quite a bit of work around the house.

With the grants, I think it will pay back, but it's going to take eight to ten years would be my estimate.

But yes, it's got a bit complicated because of the heat pump, the solar and the battery and they all intermingle with each other, so it's quite hard to single out what's cost effective, what isn't

Paul

Okay. But it's a great system, great setup, really is.

Neil

It's a great setup. And, you know, businesses can install heat pumps in their premises as well and that's something through work that we're trying to encourage.

Paul

Yeah. Businesses absolutely. I mean, you know, a solar panel with a battery and a heat pump. Just seems like a brilliant solution.

Neil

When you drive around, you see so many businesses with large roofs, warehouses, and you just think ideal for solar panels.

Paul

We've got the solution. We've just got to put all the bits of the puzzle together, and part of that is going to be policy and incentives and grants, just to get people over the hump of getting it installed. Then obviously, the more people to take it up, the cheaper it will become.
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Yeah. We've got the technology, haven't we? You know, we've got the solution. We've just got to put all the bits of the puzzle together, and part of that is going to be policy and incentives and grants, just to get people over the hump of getting it installed. Then obviously, the more people to take it up, the cheaper it will become.

Neil

So the Scottish government's got strong policy in this area. So from 2024, the plan is to ban the installation of new gas boilers in new buildings – domestic and commercial buildings.

And so developers will then have the choice of low carbon technologies, which is likely to be heat pumps or heat networks in the more built up areas. So there's changes coming quite quickly.

So from 2024, the plan is to ban the installation of new gas boilers in new buildings – domestic and commercial buildings. And so developers will then have the choice of low carbon technologies, which is likely to be heat pumps or heat networks in the more built up areas.

I believe England and Wales are likely to do the same a year later. And then there's tentative proposals to ban the replacement of gas boilers in existing homes perhaps in 2030 onwards, but that legislation has not yet been agreed. But you can see the direction of travel.

 Paul

Absolutely. Fantastic.

Let's talk about heat networks. I don't think they get talked a lot. People don't tend to talk about heat networks that often, I don't think. It’s more of a community oriented solution, isn't it? But I think it is something which is again, invaluable, because that just works better when more people are doing this together. So could you explain, please, what a heat network is?

Neil

So heat network is a system of insulated pipes run under the streets into individual houses to provide your hot water and then heat is supplied from a central source.

So heat network is a system of insulated pipes run under the streets into individual houses to provide your hot water and then heat is supplied from a central source.

So if we go to Copenhagen, because I've visited there and been shown how it all works there. We have one integrated network covering the entire city, ninety-eight percent to the population, the city of – I'm not sure what it is, one and a half million to two million people. It was very impressive. It's been built out over the last thirty, forty years.

And initially, it was capturing the waste heat from the coal power stations. And also from energy from waste incinerators. And then gradually, these coal power stations have been closed down. And they're now providing the heat still from energy from waste but also from standalone biomass incinerators.

And there's some solar thermal input to it and some heat pumps. So they're diversifying the heat sources into that system. So that's a very impressive setup. They've decarbonised their heat across the entire city.

Paul

So it's like just delivering hot water like cold water gets delivered then.

Neil

It is, but it's in large insulated pipes, quite specialist technology.

Paul

But you turn your tap on and hot water comes out?

Neil

No. You don't turn your tap on because this is feeding into your radiator. So it's all in a sealed system.

Paul

We're not turning a tap on and hot water's coming out because this hot water is obviously feeding radiators. But in theory, we could turn the tap on and hot water would come out in a similar way to the cold water?

Neil

I think there'd be health and safety issues over that, I would say.

Paul

Yeah. I'm not suggesting anybody does this. But it is that kind of idea, this hot water's coming out from the ground, supplied sort of centrally, if you like, from obviously our community network. What a great idea. Didn't the Romans do something like this? I bet they did if we look hard enough.

Neil

The Romans did, but on a very small scale and only for a few privileged people.

Paul

Yeah. They used to heat their floors like that, didn't they? I think?

You know, what a brilliant idea, really? It's not even rocket science, is it that? And this is the sort of thing we do when we need to.

You know? Once we realise that we haven't got an endless amount of energy, then, you know, we start being sensible about the way we waste it. Don't we? So it's a great idea.

Neil

That's right.

Paul

Do you have any more examples, Neil? Of this of green heat in Scotland?

Neil

Yes. So in Scotland, the Scottish government's been very supportive of heat networks. There's grants to help pay some of the capital costs. And I'll just give a few examples because everyone's been a little bit different.

So there's one in Sterling near where I live, and that's taking the waste heat from the sewage works. The water – wastewater flowing into sewage works is relatively warm. Not warm enough to heat your homes. But it's warmish water that then goes through heat pump to be boosted up to seventy degrees centigrade to be then put into the heat network. That makes heat pump heat network more efficient. So my heat pump at home is taking tap water at ten to fifteen degrees whereas the one at Sterling is taking warmer water. And that makes the whole process more efficient and effective. So that's one example.

And then at Queen's Quay in Glasgow. It's a really good example of a large water source heat pump that's taking water from the Clyde. It's title there, the River Clyde.

And again, that water is warmer, particularly in winter than the air. So again, that's more efficient than an air source heat pump. And there's a big energy centre there built by Renfrewshire Council and that's then heating houses, a nearby college and the plan is to then take it to the nearby hospital. So big plans for expansion there.

Another example is at Seafield on the outskirts of Edinburgh. In that case, it's taking the waste heat from an energy from waste plant. So that's very like the example I gave in Copenhagen.

And a final one is the AMIDS scheme again near Glasgow. That's a bit different. It's taking again the sewage water from the Scottish water sewage plant. And rather than hitting it up, essentially, it's taking the water that's maybe fifteen to twenty degrees pumping it through pipes.

This time, they don't need to be insulated because it's not seventy degrees. It's fifteen to twenty degrees. The water goes into the nearby buildings. And then there's a heat pump in the individual building to heat it up to the required temperature. So that's a different model and, you know, one that's quite exciting.

You know, Scottish Enterprise is out there helping companies think about all these different technologies and solutions.

Paul

So we're joining the dots up, isn't it? Where's that waste heat and how can we get it, you know, keep it and put it somewhere useful?

Neil

Yes. Well, you also got waste heat from data centres, from the London underground, from supermarkets, you know, the fridges give out an awful lot of waste heat. So there's a lot of sources out there.

Paul

And how unique is that solution you gave just then to Scotland?

Neil

That one I was just talking about is certainly unique in United Kingdom and there's only a handful across Europe. So yes. That's new.

Paul

What was the name of that one again?

Neil

AMIDS.

Paul

AMIDS. Okay. Great.

Brilliant. Neil, it's been such a pleasure talking to you, such an insight into the Scottish Enterprise and your approach to green heat there. And thanks very much for sharing your time with us.

Neil

Thank you, Paul. That was a good conversation. Thank you very much.

Paul

Brilliant. Thank you again.

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