Technology Strategy Board Retrofit for Future a study to minimise CO2 emissions for typical UK housing comparing Combined Heat and Power District Heating with Insulation. March 2011


Executive Summary.


This work illustrates that the objective of minimising CO2 emissions from a typical late 1960s/early 1970s London houses in a terrace of five houses, is to connect them to district heating.

Connection to the district heating gives a lower capital cost per tonne of CO2 displaced than alternative insulation measures.

The analysis also shows the importance of considering the sequence of investment decisions.

Evaluation of the higher CO2 content of heat from a new or old boiler shows insulation measures are a better investment than a boiler.

Evaluation of the lower CO2 content of heat from district heating shows that investment in the district heating connection is a better investment than the insulation.

An analysis of the relative merits of adding solar thermal or biomass to the house or to the district heating favours, integration of the technologies with district heat supply. The reason for this is economies of scale and a better load factor due to diversity of demand for domestic hot water.

The methodology is independent of cost and tariff assumptions for current or future energy supplies. It signals cost abatement information for conditions where CO2 taxes became dominant in marginal energy supply tariffs.



When reviewing capital costs and CO2 savings for the different types of heat load, we realised that at very high levels of insulation, domestic hot water and ventilation loads can dominate CO2 emissions.

We evaluate a low CO2 heat supply option for domestic hot water and ventilation. We then consider increasing supply capacity to meet existing fabric and ventilation heat loads.  The incremental costs for piped heat supply systems per kW of capacity of energy carried are low.

We compare the DH option to the most common current solution for reducing CO2 emissions for existing houses in the UK, changing the old boiler for a new condensing boiler and improving the fabric insulation.  

Orchard Partners London Ltd led the work.  Energy Advisory Associates carried out most of the modelling for the current fabric of the house and the proposed fabric improvements using the PassivHaus planning package, a well-validated design tool for low energy buildings. 

Three charts illustrate our findings.  The first chart illustrates the effect of each measure on the annual CO2 emissions for the two heat supply options, low CO2 heat from CHP or higher CO2 heat from the new boiler.  The benchmark for the savings for the connection to the heat network and the new boiler are the same an old boiler.

The second chart illustrates how the capital cost per tonne of CO2 saved changes for the demand side measures ranked in increasing capital cost for the measure.

The third chart compares delivered energy and CO2 emissions on a before and after basis.

The first two charts show the district heat option on the left and the new boiler option on the right.  The demand side measures are the same for both options.  The columns for the measures read from left to right in cost effectiveness per tonne of CO2 displaced.

The first chart below illustrates how district heat delivers greater annual CO2 savings on connection of the house to the district heating than investment in three sequential measures.  First, replace the boiler to reduce emissions from domestic hot water, ventilation and fabric loads.  Two, insulate the cavity for the brick and block construction to improve the wall.  Three insulate the roof.



Capital costs per tonne of CO2 displaced.

A valuable aspect of the work is that initially it solely analyses the measures in CO2 terms to give clear signals of the effects of CO2 taxes or CO2 reduction incentives.  Where a CO2 tax dominates the costs of energy supply, the columns reflect cost abatement signals.

The cost of the energy supply assumed in cost abatement curves, depends on assumptions about costs of the fuel, subsidies and tariff structures for different energy supply sources. 

We first rank options in terms of cost per tonne of CO2 saved for the capital investment. The CO2 overhead depending on the fuel, in this case gas.  Subsequently we review the actual benefit to the consumer by evaluating what actually pay in practice per unit of energy.

The second chart below illustrates the capital cost per tonne of CO2 displaced.   The costs in £/tonne CO2 saved, do not include costs of actual energy saved by the efficiency measure.  If we include the cost benefit of energy saved, many of the specific measures illustrated in the charts give positive returns on investment

Each column reflects the capital cost for a specific measure.  The replacement of the double-glazing is high due to low CO2 savings.  Under conditions of scarce capital resource, first carry out the cavity fill replacing the sealed units later.

From the right side of the chart, the boiler investment reduces the CO2 footprint of the fabric and domestic hot water load, but at a high cost.  The demand side measures, all give a better return than investment in the boiler, signalling optimal capital allocation is to invest in insulation measures first.

For the district heat option, low CO2 heat reduces the cost effectiveness of fabric measures, now the optimal capital allocation is to connect to the district heating first.

The calculations use a 3.5% real rate of return on capital, which is the basis for the UK’s Building Regulations and comparable lifetimes for the different elements.  The work has increased understanding of the complexity of achieving low CO2 emissions for the current UK housing stock. 

Recommendations for the house.

After taking into account consumers actual costs for the supply of heat, our recommendations are-

  • Extend the piped heat supply from CHP to the building group, and supplement it by large-scale solar in summer as per Danish practice.
  • Fit PU foam cavity fill to the walls to achieve good air tightness levels.
  • Similar measures in the roof, under the tiles.
  • Replace the existing double glazed sealed units that had failed, due to moisture between the panes, and fit higher-performance replacement units, having half the heat loss, but keep the frames, as they are in sound condition.
  • Fit continuous mechanical-exhaust only ventilation, with some preheating of the incoming fresh air using the radiator return water.
  • Domestic hot water tank and pipes are to be very well insulated, above current UK standards.
  • Along with straightforward but cheap measures to install energy-efficient lighting, A++ appliances, pumps and fans, this package reduces CO2 emissions by 82% versus their 2009 levels as shown in the following chart comparing delivered energy and CO2.

Chart three below helps to show the difference between a delivered energy analysis and a CO2 emissions analysis for the house.



A major problem in the UK and much of Europe is a poorly insulated existing housing stock with an architectural heritage of internal and external features which means costs and disruption are high to reduce the energy losses from the building fabric, after doing lower cost measures such as cavity fill and roof insulation.

The work illustrates how a CO2 analysis assists decision taking to optimise capital expenditure to meet future CO2 targets for retrofitting the urban housing sector.  The compatibility of district heating with other sources of low CO2 heat, large-scale solar thermal, biomass, geothermal and heat pumps differentiates it from other options to decarbonise the heat sector such as individual home electric heat pumps.

Professor Robert Lowe deputy director University College London Energy Centre, in one of his papers, explains how CHP is thermodynamically similar to an electric heat pump, allowing evaluation of the technologies on an equal basis by comparing their Coefficient of Performance (COP).

Large scale CHP achieves COP’s of over ten with the potential to deliver greater CO2 savings through district heating for than small air source electric heat pumps with COP’s of less than four. 

The work demonstrates how an existing house can reduce its CO2 footprint significantly and more cost effectively on connection to a local district heating supply of energy than investment in demand side measures such as insulation to reduce buildings energy demand from its fabric and illustrates how results from an energy analysis and a CO2 analysis differ.

WRH Orchard February 2011


Note. Orchard Partners London Ltd (OP), building services engineers, specialise in optimising DH and retrofitting houses to such systems.  The detailed reports include IP and information of commercial value to OP and our major collaborator on the project Energy Advisory Associates.

We are willing to disclose information to research institutes and others subject to confidentiality agreements.


For further information about the project please contact:-


William R H Orchard MA(Oxon) MBA CEng  FIMechE MCIBSE MIET FEI 

Managing Director

Orchard Partners London Ltd

9 Lansdowne Close

London SW20 8AS.


Tel +44(0)20-8296-8745 Fax +44(0)20-7060-3345


For “PassivHaus” modelling of the fabric our lead author and analyst is-


David Olivier BSc MASHRAE


Energy Advisory Associates,

1 Moores Cottages, Bircher

Leominster, Herefordshire

England HR6 0AX


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