HOT|COOL NO.2/2016 - "District cooling in the Middle East"


The general trend these days in Denmark is that consumer co-operatives merge in case it is efficient, and they take over municipally or privately owned district heating systems as well. In Denmark, the municipalities often guarantee for loans for their consumer co-operatives in order to improve the financial efficiency and to enable them to invest in projects of public interest. Even companies with little staff can undertake relatively large investment projects as they can engage consultants, who help themwith the planning, design, procurement and operation to ensure competition among all suppliers.

What will the manager then do? In most cases, we find that universities, military camps, hospitals and airports have found DH&C as themost cost-effective solution. Moreover, they do their utmost to optimize from building installation to production. Most campus areas in the US have district energy, but unfortunately, rather old steam systems, as US was fist-mover in district energy. However, many are now being modernized, shifting to lower temperature DH&C in order to meet the new challenge of climate change and integration of efficient and renewable energy sources. In Denmark, the Technical University and Copenhagen Airport have recently supplemented their DH with DC to almost all buildings, including even heating and cooling individual aircrafts at the gate. In Carlsbergbyen, a new large urban development in Copenhagen, the owner of the land has planned for connecting all buildings to the city-wide DH system and to connect all buildings with a cooling demand (around 50%) to a local DC system. This is the most cost-effective for all in the long run; for all who will buy and rent buildings in the district and thus also for the developer who is going to sell the land. This confirms that DH&C is the most cost effective long-term solution in cities with maximal connection and with an optimal zoning. The energy manager of a campus can see that his building infrastructure and his DH&C infrastructure have the same long life-time, and he therefore has an interest in working for long-term strategies for both. What do we do in cities? But what about cities, which have many thousand decision- makers. Can owners, citizens and private companies agree on harvesting the benefits of DH&C? Can they elect a city council to serve their common interests in this respect, or do they prefer not to co-operate? For a city there are many options, each having specific advantages and disadvantages. Consumer co-operatives The closest we come to the campus-ownership is a consumer co-operative. In this case, land-owners form and own a co- operative with the aim to develop a DH&C system. All consumers will share the ownership, and the aim of the company will in general be to deliver reliable DH&C in the most cost-effective way to the owners. This form of ownership is in the regulatory language called “non-profit” ownership as it leaves no profit to external investors. Should there be a profit, it will be returned to the consumers by reducing the price. In such a structure, there is a strong inventive for the board and the management to perform efficiently, as the consumers are also owners and they will elect a new board at next year-s general assembly in case they are not satisfied. Denmark is known for farmers’ co-operatives and for co-operatives for water supply and DH in almost all small towns, even up to 50,000 inhabitants. The consumer co-operatives are also known to be very active owners, who try hard to find solutions to lower costs and provide better comfort. They have e.g. been drivers for adopting innovative solutions in co-operation with small industries, e.g. preinsulated pipes (company Logstor), large-scale solar water heating and heat storage pits (town Marstal).

The consumer owned Høje Taastrup District Heating delivers district cooling to 73 consumers in Copenhagen Markets.

Municipally owned public utilities The city council is elected to take care of the interest of the residents and the private companies in the city. In most cities around the world, they take care of the basic infrastructure for traffic and environment, often in separate entities entirely owned by the city. Denmark, Sweden, Finland and Germany have a long tradition for municipally owned utilities for DH&C, wastewater, water, electricity, gas, public transport etc. The basic idea is to run these services to the benefit of the consumers, separated from the municipal budget and benefitting from the synergies having all services in one company (one bill for all services to the building owner). In general, it is the same ownership structure as the consumer-cooperative, only the election of members to the board is indirectly via the city council. In Denmark, most of the large DH companies are owned by the local municipality in which they distribute their heat, and the company has its own “non- profit” budget. In Germany, e.g., it is allowed to transfer profit or deficit from one service to another – but it is still essentially the same structure as in Denmark. Municipal partnership companies In case the optimal district heating system covers several municipalities, one solution is to form a municipal partnership company formed by the municipalities that are to be supplied from the system. In Denmark, most of the natural gas grid, all the waste incinerators and all large heat transmission systems are owned in this way. Each owner municipality appoints members to the board, and the companies are managed like the municipally owned companies. The municipalities share loan guarantees for the company. The municipal partnership companies can, like the co-operatives and the municipal owned


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