By Roman Geyer, Research Engineer, AIT Austrian Institute of Technology GmbH, and Ralf-Roman Schmidt, Research Engineer, AIT Austrian Institute of Technology GmbH
Making the current district heating (DH) systems future proof required substantial changes. The existing district heating networks in Austria already have to struggle with unstable market situations and new requirements. In order to increase the economic and energetic efficiency as well as the share of renewable energies, DH operators have to adapt their business models and also have to consider completely new aspects. Background to the Austrian DH situation Currently, more than 2,400 district heating (DH) networks are operating in Austria, besides some larger networks in urban areas the majority are small biomass bases rural DH networks. About half of the total supply is based on fossil fuels, the remaining share is distributed between waste incineration, biofuels and others – the total share of CHP is about 2/3. Due to unstable fuel and electricity prices, the long-term perspective of these systems is becoming increasingly insecure. The integration of alternative heat sources (such as solar- and geothermal energy as well as residual or ambient heat via heat pumps) can minimize investment risks, maximize the security of supply and reduce the CO2 emissions. However, many existing systems in Austria are not designed for a significant share of alternative heat sources which are fluctuating and/or decentral and/or have a low temperature level. Weaknesses of current business models Typical business models for urban and rural DH-operators in Austria are shown in Figure 1 and Figure 2 (black print). They are based on “classical” heat distribution to the customer: heat is produced and delivered to the customers without a deep customer relationship. Moreover, the contracts are usually rigid and don’t have many degrees of freedom for the customers. Having fixed and variable prices (consumed energy) is the most used tariff system of DH operators in Austria. Due to (mostly) high fixed prices, customers do not see too much financial incentives for energy savings or optimization of their heating system. Although DH operators see their customers as key partners, they actually do not play a big (active) role in existing business models. Further on, DH network operators rely mainly on high temperature supply units. This is a barrier for lower system temperature and in turn prevents the transition towards the 4th generation. As a consequence, far-reaching changes (technical-ecological structural transformations) are necessary for suitable future business models in order to make greater efforts to meet customers' needs and increase the system efficiency.
Figure 1: Typical business model for an urban DH-network in Austria (presentation form: Business Model Canvas; picture source: Stratego), the new elements of the business models are red underlined
Introducing innovative elements Within the STRATEGO project a coaching scheme was implemented for the two largest cities in Austria (Vienna and Graz) and two small biomass-based rural DH networks being representative for many others. In multiple coaching sessions together with Swedish partners, side visits and national workshops with local stakeholders as well as meetings with national authorities, different solution options for tackling selected key challenges in Austrian DH networks have been developed. In this framework, following innovative elements for business models in a) urban and b) rural networks have been discussed (new elements are printed in red colour and are underlined in Figure 1 and Figure 2): a) Urban district heating networks: Although many urban district heating operators have their focus already on providing their customers different services and packages, the existing business models lack of financial benefits and incentives for reducing the network temperatures, integrating alternative heat sources and increasing the flexibility. Possible new elements include: Figure 2: Typical business model for a rural DH-network in Austria (presentation form: Business Model Canvas; picture source: Stratego), the new elements of the business models are red underlined
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