*3.3. Life Cycle Assessment (LCA) Modelling*

A previously modelled LCA study [44] was adapted to evaluate the environmental impact associated with heat pumps in house archetypes in Orkney. The functional unit of the study is decided as generating the required thermal energy for house archetypes in Orkney during the lifetime of an ASHP which is assumed as 20 years. The amount of energy required for different house archetypes is calculated in the energy model. The LCA software SimaPro 8.0.3 [45] was used to model the products and the ReCiPe Midpoint (H) method [46] was used to calculate environmental loads. The model assumes that ASHPs are manufactured in Europe and transported to Orkney. Currently, Orkney produces a surplus of renewable electricity from wind and tidal sources, and the electricity mix in

Orkney comprises 100% renewable energy sources. Therefore, this electricity mix is used in LCA [12]. Electricity demand varies based on archetypes and their specifications. Therefore, environmental results for these individual archetypes are calculated.

## *3.4. Life Cycle Cost (LCC) Modelling*

Existing heating fuel types (oil, coal, LPG, wood, electricity), fuel prices, investments costs, discount rate, and lending rate information are included in the model to calculate savings coming from the transition to heat pumps. Different financing alternatives, including support from the government (BUS/HES), are also investigated at both the archetype level and the island level. In this section LCC analysis of a heat pump is calculated based on baseline model results. Then, results for CE and resource efficiency (RE) scenarios are analysed for future results.

The cost of installing heating measures is analysed by Delta-EE [47] for different heating types including heat pumps. An existing report from the Carbon Trust [48] investigates the overview of heat pump retrofit in London through 15 case studies and CO2 savings and cost analysis. Nesta and BIT have several economic and social studies on heat pumps about reducing the cost of heat pumps, increasing end-user awareness and policy review [49–51]. In line with these studies and market research, the upfront cost of an ASHP is assumed as £9250, £10,250, and £12,000 for 8.5 kW, 11 kW, and 14 kW sizes of heat pumps (Table 1) (these costs include buffer tank costs as it was investigated in energy model). The upfront cost is assumed as £9250 for houses in the new building category, and £10,250 for the remaining house specifications except for unrefurbished, detached houses. As detached houses have higher demands than remaining archetypes £12,000 upfront cost is assumed for a larger size of a heat pump. Future cost reductions for heat pumps are expected by DECC [52] for a mass market scenario. Therefore, 10% and 20% cost reductions are assumed for RE and CE scenarios. Average lending rates and discount rates for a 15-year period are decided from market research and quotes from providers.

The Boiler Upgrade Scheme (BUS) replaces the Renewable Heat Incentive (RHI) and provides a grant of £5000 for the upfront cost of an ASHP [53]. Similar to this support, the Scottish Government provides a loan for EEI measures and renewable heating systems, including cashback payments [8]. The government can provide a £2500 interest-free loan and £7500 cashback (£10,000 in total) for an ASHP installation. The unrefurbished, detached house is the only category which has more than £10,000 upfront cost so the interest-free loan is not limited to £2500 in this study for simplicity. These support measures are also included in LCC calculations. The results are expressed in discounted costs at an annual rate of 3.5% [54].

Data for fuel prices of energy sources used in Orkney were collected from previous studies and quotes from suppliers. BEIS [55] provides historical data for fuel prices and future trends. National Infrastructure Commission [56] researched the current fuel prices for the year 2050. With the help of these reports and market research from suppliers, the fuel prices for the baseline scenario, RE scenario, and CE scenario are identified [55–58]. LPG, oil, coal and wood prices are identified as 6.3 p, 5.2 p, 4.7 p, and 5.3 p, respectively. Standard electricity tariff price is identified as 16.5 p, and Comfy Heat tariff is identified as 8.6 p, 15.7 p, and 20.3 p for off-peak, peak, and standing charge prices (Appendix B, Figure A1). Fossil fuel prices are expected to increase in the future with carbon taxes, and electricity prices to decrease [57].

Specification and EEI conditions of construction elements in house archetypes are analysed in Orkney (Appendix C, Figure A2). Many of the houses require external wall insulation when needed which is around 45% of the total housing stock. Cavity wall insulation accounts for 30% and internal insulation for 3%, respectively. Moreover, 22% of the housing stock does not have any specified construction type, whereas they are classified under the new building category, so they do not require any wall insulation. The dominant potential insulation type in refurbished detached houses is cavity insulation. Further, 54% of the total housing stock has double-glazed windows. High-performance windows only

exist in the new building category, so they do not require any efficiency improvements. In terms of roof insulation, loft insulation is the dominant potential insulation type. However, 11% of houses require flat roof insulation. Underfloor insulation is the only option for the floor category and the majority of refurbished houses and all unrefurbished ones require floor insulation.


**Table 1.** Summary of assumptions for life cycle cost analysis and future scenarios.

The cost of efficiency improvement steps for each construction element is identified by house archetypes. While deciding on the insulation type, the dominant construction element is selected. The highest installation cost occurs in unrefurbished detached houses with £22,100 followed by semi-detached and end-terraced houses with £16,325 and £15,525 respectively. Mid-terraced houses require less wall insulation area. Therefore, the total cost is relatively low (£9425) when compared with other archetypes. External wall insulation is the major contributor to the costs in all archetypes except mid-terraced houses. Replacing windows dominates the wall insulation in mid-terraced houses as they have less wall area exposed to outside conditions. Refurbished houses also require some improvements to reach the new building category which includes secondary glazing to have higher insulation on windows, drought proofing, and further insulation on roofs and floors. The installations costs for detached, semi-detached, mid-terraced, and end-terraced houses are £9000, £7075, £6675, and £4975, respectively (Appendix C, Figure A3). The efficiency improvement costs are included in the LCC analysis for a broader perspective on the housing stock condition.
