By Anders Dyrelund, Senior Market Manager, Ramboll Energy
In this small town of Vojens the district heating consumer co-operative have through decades established district heating to almost all buildings. In 2015 they established the world largest solar water heating system and heat storage pit in order to be more efficient and reduce their heating bills. The solar heating covers 50% of the annual heat production, and the system is ready to integrate more fluctuating renewable energy. The system is financed 100% by loans at a very competitive interest rate, thanks to a good business plan and municipal guarantee. There is no subsidy except the indirect subsidy of tax on the natural gas, which it replaced by the solar heat.
networks. The zoning depends on the local conditions and, as with the other natural monopolies, it is an important task in the urban planning to find this optimal zoning. World-wide we find cities with no DH&C, although it is both viable and feasible, and we can see cities in which 99% of all buildings are connected, e.g. Copenhagen. What is the secret behind this difference? Different yet uniform ownership structures may be the answer and the key to a further development of the sector. In order to assess which ownership form is most efficient for the city and the energy consumers, it may help to look at three main factors of the efficiency: • The technical efficiency: Is the network and plants designed and installed to ensure long life-time and optimal performance etc. • The institutional efficiency: Do we utilize the natural monopoly 100%, is the zoning optimal for the city as a whole and have we identified and been able to implement the least cost solution for heat supply taking into account contributions from all local stakeholders. • The financial efficiency: Do we finance the investments in the most efficient way at the lowest interest rate on the market. A campus is a small city In a campus, one legal entity owns all buildings and infrastructure. One manager is responsible for providing a good and reliable indoor climate in all buildings at the lowest cost in the lifetime of the campus and at the same time meeting the overall policy of the owner.
There are many good reasons to develop district heating and cooling (DH&C) in urban area: • DH&C is a precondition for integrating fluctuating and low quality energy sources for heating and cooling • DH&C is a good instrument for reducing the environmental impact of energy • DH&C can benefit from the economy-of-scale in cities • DH&C can help the power system to avoid black-outs due to uncontrolled use of chillers • And finally, integrate fluctuating wind and solar power by forming a cost effective virtual battery
But how can landowners, industries and residents harvest these benefits?
In order to come closer to the answer, we have to realize that DH&C is a strong natural monopoly, and that the hot and cold water are closely related. They are two sides of the same coin. All cities realized more than 100 years ago that water and sewage systems are important natural monopolies in cities. All buildings are now connected, and the sewage systems have even double pipes for wastewater and rainwater. Like DH&C, they are twin- grids serving the need of the city. Also the public traffic system is a strong natural monopoly. In some cities, there is a potential for either DH or DC, but in most cities for both. In many Northern Europe countries we have DH in the whole city, but only cooling in the business areas. It is a challenge to identify the optimal zoning of these infrastructure
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