HOT|COOL NO. 3/2017 - "North America"


ANNUAL TARIFF FOR ALL CONSUMERS The ordinary annual tariff includes the following components: • A small fixed tariff for the heat meter in Euro/consumer to cover the meter costs and administration. • A time dependent variable (dynamic) tariff in Euro/MWh to cover the short-term variable costs. The time intervals could be seasonal, monthly, daily or even hourly, depending on the variations in themarginal production cost. Themodern remote- controlled heat meter will be able to register the accumulated consumption and deliver information to the billing system. The summer tariff should only cover the variable production costs of the plant in operation, which could be a very low price. The winter tariff should cover the production costs of the most expensive production plant in operation and not the average production cost. Thereby, the consumer will be informed about the market price of the heat depending on the time and optimize own investment in accordance with this price. Consumers will e.g. be encouraged not to investment in more expensive roof-top solar heating panels. Consumers with Aquifer Thermal Energy Storages (ATES) will e.g. be encouraged to use the plant more efficiently, storing heat from summer to winter. Several Danish DH companies have introduced such a time tariff. Hillerød DH company has e.g. a seasonal tariff. Figure 1 and 2 show an example on a daily variable tariff. • Adjustment for long-term variable costs. The total revenues from the variable component should cover the long-term variable costs, which typically will be the variable energy production costs, the cost of production capacity and around one third of the network costs. It is interesting that the revenues from a dynamic tariff are normally larger than the short-term costs or even the long-term variable costs, leaving a smaller share to the fixed tariff component. • A capacity tariff in Euro/kW/a to cover the remaining fixed costs, if any. This tariff should include a discount to large consumers, reflecting that large consumers have more cost- effective alternatives and that the costs of supplying large consumers are relatively smaller than the costs of supplying small consumers. Thereby, the tariff could be more cost-based and almost equally competitive to all consumer groups.

• A compensation for lower return temperature, based on the average weighted return temperature, which can be calculated by the modern heat meter (accumulated return pipe enthalpy divided by the accumulated circulated flow). The compensation could be a discount factor in the variable tariff depending on difference between a reference maximal return temperature and the average return temperature. The value should reflect the long-term benefits of a lower return temperature, taking into account production costs, heat losses and capacity costs of the network. Several Danish DH companies, e.g. Roskilde DH company, have substituted the traditional cooling tariff (based on the difference between average supply and return temperature) with such a return temperature tariff. In Roskilde, the reference return temperature even depends slightly on the average supply temperature measured at the consumer. HOW TO SHARE THE FIXED COSTS The handling of the fixed costs is a big issue, as a large share of the costs of providing thermal services are fixed, once it is decided that there shall be a network having the same lifetime as the buildings. The fixed cost is typically around two thirds of the cost of the network. The reason that only around two thirds of the network costs are fixed in the longer term is the economy- of-scale factor for network investments. In case the consumers e.g. save 30 % of the flow, the long-term re-investment costs of the new network will be around 10 % lower. Some DH companies that have invested in networks, solar heating, heat pumps and storages, have a large debt to pay back and must be sure that all consumers pay their share as if it had been their own investments in buildings. For the DH company, it is important to have a certain share of fixed tariff or a commitment from the consumers.

Figure 1. Heat production day by day


Made with FlippingBook - professional solution for displaying marketing and sales documents online