By Anders Dyrelund, Senior Market Manager, Ramboll and Isidore McCormack, Senior Consultant, Ramboll
The municipal partnership company Vestforbrænding, owner of both waste to energy plant and district heating, has increased their district heating system signifi- cantly.
For many projects, the last challenge – the financing – is the most difficult. Many good projects have not been implemented due to lack of financing. This has not been the case in Denmark. Since 1980, all the most cost effective projects within district heating, natural gas, waste incinerators and CHP plants have been financed 100% at the lowest interest rate possible on the world market. Hence, the financial efficiency has been excellent. As a result, most international delegations studying the Danish energy sector look for the secret behind this efficient financing. It is not about designing complicated financial mechanisms. It is a matter of efficient planning and co-operation at all levels in the society to ensure that the modelled return on investment is achieved as planned. Described below are some of the most important factors to consider. Stable national energy policy Denmark has since 1976 had a stable energy policy based on majority agreements in the Parliament. The latest agreement, from 2012, states that Denmark shall be independent of fossil fuels in 2050, and is based on votes from 95% of the members of Parliament. So, although there are some minor disagreements on how fast things should move forward, the long-term policy is still very stable, providing a good basis for investor confidence.
The COP21 agreement will be a driver for investments in low carbon technologies, not least of which will be for energy infrastructure in cities such as district heating and cooling. Some cities might not be ready yet, as there are more important investments required for climate adaptation or infrastructure for water and waste water treatment. However, cities which can afford a good level of thermal comfort and a high environmental standard can benefit from district heating and/or district cooling city infrastructure depending of course on their climate zone, as these technologies are probably the most significant instrument when it comes to improving the carbon foot print of a city. Due to the new international energy policy agreement made at COP21 we may foresee a potential for many billion Euro investments in this infrastructure. This can be investment in completely new systems or rehabilitation of old systems, e.g. shifting from steam to low temperature district heating. The following challenges are most commonly faced by cities and related stakeholders: • Optimization and design of least cost solutions, e.g. the zoning of the infrastructure and building level solutions (the technical efficiency) • Identifying least cost solutions for the local community and agreeing on how to implement the best solution (the institutional efficiency) and not the least beneficial solution • Financing the proposed investment at the lowest financial cost (the financial efficiency)
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