HOT|COOL NO.2/2021 - "Economics, Finance & Money"

NO. 2 / 2021

INTERNATIONAL MAGAZINE ON DISTRICT HEATING AND COOLING

ECONOMICS, FINANCE & MONEY FOR DISTRICT HEATING

THERE IS NO PLANET B

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Contents

FOCUS ON ECONOMICS, FINANCE AND MONEY

PREFACE WE WILL HELP YOU STOP SMOKING!

26 28 31 24 3

4 7 10 22 18 14

HAMBURGS REPURCHASE OF THE HEAT BUSINESS By Stefan Kleimeier

GREEN BUSINESS AND BLACK BOTTOM LINE By: Steen Schelle Jensen

LOWER TEMPERATURES, LOWER CO2 EMISSIONS AND HIGHER PROFITABILITY By: Kristina Lygnerud

ENERGY FROM LOCAL WOODY GREEN WASTE IN METROPOLE ROUEN, FRANCE! By: Ann Bouisset

WARMING UP! By: Frits Verheij

WHEN PLANNING FOR THE FUTURE! By: Steen Westring

MEMBER COMPANY PROFILE: LOGSTOR

SMART COST-EFFECTIVE DISTRICT COOLING IN TAARNBY By: Hasmik Margaryan, Anders Dyrelund, Anders Carøe and Antoni Trumulis DEMONSTRATING 100% FOSSIL FREE DISTRICT HEATING & COOLING SOLUTIONS ACROSS EUROPE By: Mathilde Johanne Cordua and Frederik Palshøj Bigum

NEW PIT THERMAL ENERGY STORAGE (PTES) IN GREATER COPENHAGEN By Lars Gullev

DBDH Stæhr Johansens Vej 38 DK-2000 Frederiksberg Phone +45 8893 9150

Editor-in-Chief: Lars Gullev, VEKS

Total circulation: 8,000 copies in 60 countries 4 times per year

Layout: DBDH / 071.dk

Coordinating Editor: Henrik Søndergaard, DBDH hs@dbdh.dk

Prepress and printing: Kailow Graphic A/S

info@dbdh.dk www.dbdh.dk

ISSN 0904 9681

District heating and cooling (DHC) benefits energy security, the economy, and the environment. It is one of the most effective means to implement renewable energy (RE) and benefit from the heat and power coupling. But, the DHC potential remains mostly unexploited globally. Only 6% of energy consumption in the world is in the DHC networks, and only 8% of the energy in the DHC networks is renewable energy today. It is a bit sad! We cando better! There are opportunities in almost any country to deploy new DHC infrastructure, improve energy efficiency, utilize surplus heat from industry and reduce fossil fuels. But it isn't easy on your own. As a CEO of a DH Utility, I know it is hard work to implement large-scale energy transformations in a region. I know how important it is to talk to professional colleagues. I know how beneficial it is to meet DHC experts to boost the experience, knowledge, and practical skills before planning and implementing new technology. And this is where the DBDH network comes in handy. DBDH publishes Hot Cool, but the main business is helping cities or regions in their green transition. DBDH uses its vast network to find specific experts capable of giving answers for a sustainable district heating solution in your city - or integrate green technology into an existing district heating system. Any city, or utility in the world, can call DBDH and find help for a green district heating solution suitable for their city. A similar system is often operating in Denmark, being the most advanced district heating country globally. DBDH then organizes visits to Danish reference utilities or expert delegations from Denmark to the city. For real or virtually in webinars or in digital meetings. As the new chairman, I will encourage DBDH to continue implementing activities like "The mentor program," where high-level managers from Danish DH companies were personal coaches for DH managers in specific UK projects. Or the "Heat Planning Project" in Germany where Danish DH experts presented how we do it in Denmark. WEWILL HELP YOU STOP SMOKING! By: Jørgen Nielsen, The new Chairman of DBDH, and CEO of TVIS District Heating Company

But first and foremost, I will encourage all of you to share your interests, knowledge and concerns with us at DBDH. Then we will do our best to support you in finding the best green solution for your city.

I am proud to be the new chairman of DBDH - supporting

DBDH is a non-profit organization - so guidance by DBDH is free of charge.

cities trying to stop smoking.

Just call us.

PS: Stop smoking can save money. Read this issue of Hot Cool and find out how!

By: Steen Schelle Jensen, Head of Business Development – Heat/Cooling, Kamstrup Green business and black bottom lines

Digitalization drives operational and financial sustainability

As the complexity of district heating continues to increase, digitalization provides an even stronger basis for decisions, making it a necessity for utilities to deliver both green business and black bottom lines. Front runners have already delivered measurable results from data-driven value creation throughout the value chain.

To further explore the optimization possibilities, Kamstrup recently joined forces with Norfors Utility and smart bypass supplier Frese in a collaboration to create the optimal balance in the network. This included considerations on utilizing capacity in the best possible way, running closer to the limits, lowering temperatures centrally, and compensating for it locally, when necessary, e.g., with a smart bypass. Utilities can also benefit from using data for complex decisions on network maintenance and expansion, which make up 12% of the costs. Digital twins (e.g., based on frequent meter data) enable utilities to monitor the performance of the pipes underground. This allows better utilization and renovation planning of existing assets so utilities can potentially avoid or defer heavy investments in this area. For instance, Aars District Heating uses data-driven analytics to find the network’s weakest links and prioritizing renovation efforts based on where it will have the most significant impact. Results so far include reducing annual heat loss by 7.8 MWh per consumer in one area by replacing poorly performing service pipes. Furthermore, they have gone from 200 to 16 bypasses and subsequently lowered the return temperature by about 3°C. Also, comparing the actual network load and capacity to its design criteria reveals how well they match so utilities can extend the current infrastructure’s lifetime and optimize dimensioning and planning of new networks to avoid expensive oversizing.

In many district heating utilities, finances are under pressure fromdecreasing revenues as winters get warmer and buildings become more energy efficient. However, if district heating is to remain relevant and assume its position in the future integrated energy system, utilities must offer low prices and attractive offerings to end-users. Supplying district heating against this paradoxical backdrop while delivering on the green transition requires true business excellence and continuous improvement, which is a massive task for any utility. But it also holds potential savings that are key to future-proofing district heating. This article explores that potential concerning four main business issues – and how digitalization enables utilities to unlock it. Improving the security of supply The core of security of supply is just that: ensuring a reliable supply to your end users of the heat you produce. But being able to document what you have delivered is only the result. Ultimately, security of supply is about getting to the point where you can also measure and optimize the very process and flow of heat. Where are the bottlenecks? How is the heat distribution throughout the network? How fast can you detect incidents? And the savings potential in running production closer to the limits is enormous.

72% of costs in an average Danish utility are related to production (figure 1), so optimizing this part of the value chain

has a huge impact. According to a Danish report from 2018, millions of Euros can be saved by optimizing temperatures based on data instead of theoretical considerations or simulation in hydraulic network models. The report concludes the potential savings in data-driven temperature optimization. Here, hourly values from intelligent heat meters are used to train an algorithm to determine the necessary temperature level on the production side based on a combination of meter data and weather forecasts.

5%

72%

11%

12%

Source: Danish District Heating Association

Greater Copenhagen utility, HOFOR, supplies heat to approximately 35,000 buildings. Half of themare largemultifamily buildings with a high heat demand, and HOFOR estimates that 50% of the heat installations are operating poorly. In other words, they return the district heating water with a temperature that is too high instead of utilizing the energy more efficiently. According to HOFOR, lowering the return temperature by 3 °C, as a result of eliminating faulty or misadjusted heat installations will create annual savings of EUR 15 million. Another example is Assens District heating that is reaping the benefits of the utility’s investment indigitalization. Remotely readmeters, frequent data, and targeted analytics enabled them to lower their forward temperature by 6-8°C, cut pipeline losses by 14.5%, and reduce annual heat production by 2.5%. Monitoring the exact temperature, flow, and pressure throughout the distribution network has allowed them to continuously digitalize and optimize their network and operations, resulting in a return on investment of only 4-5 years.

”The project establishes that data-driven temperature regulation has the potential to reduce forward temperatures by an average of 3-10°C, resulting in an annual savings potential of EUR 32-106 million in the district heating sector. Moreover, data- driven temperature optimization enables several other opportunities such as better integration of heat pumps in the district heating network and additional savings potential if the regulation of temperature and pressure levels is split into different zones.” Potential in dynamic data-driven temperature regulation in the district heating sector, Damvad and Green Energy Association, December 2018

Green transition requires low temperatures

Low supply temperatures are necessary to integrate more renewable energy sources,

Transparency drives cost-efficiency First and foremost, improving cost-efficiency is about seeing the basis for optimization in your system – and knowing how to act accordingly. For instance, smart meters allow utilities to ease and streamline administration, billing, and customer support, accounting for up to 5% of an average Danish utility’s costs (figure 1). By digitalizing system operations, you naturally also get a higher degree of transparency in your expenses, enabling you to target optimization efforts across the entire business. Several utilities have already generated significant savings from increased digitalization.

which impacts costs significantly. Studies show that cost reduction gradients for renewables and recycled heat, like geothermal, solar, or industrial excess heat, are a factor 6-7 more cost-sensitive than energy sources that are burned, like traditional waste and biomass (figure 2). In other words, with a heat supply based on clean energy sources, utilities generate much higher savings for every degree they lower their temperatures. This makes low-temperature district heating a prerequisite for a cost-effective green transition.

Figure 2: Cos reducion grdiens per fuel ype

Invesmen

Elecriciy genered

He loss

Pek fuel cos

Min fuel cos

Elecriciy used

200

150

100

50

0

-50

-100

Wse CHP

Biomss CHP

Geoherml

Geoherml invesmen

Indusril excess he

He pump

He pump invesmen

Solr herml invesmen

Biomss

Source: Economic benefits of 4th generation district heating, Helge Averfalk and Swen Werner, 2019

This requires that you be in complete control of your network, so you know the exact risk you take on as well as the potential you can unleash. But that also allows you to propose the ideal offering because when you know everything in your system, you can take more responsibility and extend customer relations. Næstved District Heating, did precisely that by adopting a business model offering to take full ownership of their customers’ heat installations and using digitalization to monitor performance. Not only is the leasing agreement very attractive, but Næstved has effectively moved the entire population to lower, and more uniform forward temperatures plus eliminated the highest return temperatures (figure 3).

As mentioned, one way to reduce temperatures is through more efficient temperature management on the supply side, including optimizations based on actual conditions out by the end users instead of assumptions or fixed network metering points, e.g., in wells. This requires utilities to tie the entire chain much closer together from production to buildings, so you know the demand and forecasts and can operate accordingly. Low temperatures naturally also generate savings from less heat loss in the network, accounting for 11% of an average Danish utility’s costs (figure 1). DTU studies state that lowering temperatures can deliver as much as a 20% reduction of heat loss.

The next step could be business models that tie together flexibility in the buildings (e.g., in relation to peak shaving) with the production link allowing utilities to continually balance the district heating system across the entire value chain. Peak load is costly compared to baseload, and digitalization plays a vital role in evening out supply and demand and enables the necessary control and planning. It’s time to know Navigating the complexity of operating a district heating system today is one thing, but it only becomes more volatile as it becomes a piece in a much bigger puzzle. For utilities, the goal remains to produce, manage and distribute energy as efficiently as possible – but efficiency requires transparency that you can translate into actionable knowledge. This

2019 vs. 2017

Supply Temperature

Figure 3: Temperature optimization in Næstved District Heating

makes smart meter data and digitalization the foundation for fulfilling district heating’s full potential as an attractive and cost-effective heat source and the cornerstone of an integrated and truly intelligent energy system. Fortunately, there are already solutions on themarket designed to solve the challenges in different parts of the value chain. And as the examples above reflect, close collaboration between utilities and suppliers leads the way for district heating that is sustainable in every way.

Finally, there are significant savings in handling the increasing complexity ofmultiple heat sources and fluctuatingproduction in an energy system where district heating connects the different sectors. Here, data provides the basis for utilities to continuously balance production and consumption in the best and cheapest way possible – e.g., forecasting when to produce, sell, or use electricity based on electricity prices. Or deciding when to overproduce thermal energy to store in buildings and the distribution network. Electricity prices will fluctuate even more in the future, so the consequences of misjudgements due to wrong or inaccurate information will be very costly. Ultimately, the more data you have, the better your basis will be for making the right decisions. Enhancing customer attraction There are different ways to improve end users’ perception of district heating as an attractive product. But all of them revolve around customer closeness and digitalization as a crucial lever. It could involve expanding your product portfolio with new offerings and services – possibly defined by whether a customer prefers heat that is green, convenient, or low-priced. Or it could be optimizing your price models to accurately reflect both the energy used and the capacity available to ensure fair earnings.

For further information please contact: Steen Schelle Jensen, ssj@kamstrup.com

Lower temperatures, lower CO 2 emissions and higher profitability

By: Kristina Lygnerud, Energy department manager, Swedish Environment, Research Institute (IVL) and Associate Professor in Industrial and Financial Economics at Halmstad University.

With lower system temperatures, it is cost-efficient to use renewable heat sources and waste heat. The slow takeoff can be seen as a chicken or egg dilemma. What should come first? Investments to lower temperatures -allowing efficient use of renewable heat sources and waste heat- or renewables or waste heat- rendering low system temperatures cost-efficient?

technology is a family of many different network configurations for heat distribution. Notably, cold and warm networks are siblings in this family of configurations. Returning to the book, finalized this Spring, it covers several things: what to do in the building and in the district heating system to allow the low temperatures. Early installations have been identified and analyzed in-depth, generating hands- on experiences. Last, but not least, we have dedicated two chapters of the book to the economics and competitiveness of low-temperature district solutions. At lower distribution temperatures, the economic benefits of renewables and recycled heat are based on efficiency gains stretching from heat supply to the buildings, illustrated below.

Since 2018, a team has built a guidebook on implementing low-temperature district heating (LTDH) (work of Annex TS2, IEA-DHC). Together, we have tossed and turned existing knowledge around to condense all relevant information into a guidebook to facilitate implementation. When we started the writing process, we defined Fourth Generation District Heating (4GDH). Now, three years later, our definition of 4GDH applies to all new technological features and concepts using low temperatures, which are considered best available from 2020 onward. As experienced in previous technology generations, a wide diversity of technology choices in 4GDH is expected. Hence, cold district heating systems are also included in our definition of 4GDH. The corresponding technology comprises all heat distribution technologies that will utilize supply temperatures below 70°C as the annual average. 4GDH

Figure 1. Economics of LTDH

Heat supply

Cash flow from reduced annual supply costs from lower temperatures

Network

Cash flow for proper maintenance and some minor additional investments for obtaining lower temeratures

Substations

Buildings

More specifically, the main efficiency gains are:

More heat extracted from geothermal wells since lower temperatures of the geothermal fluid can be returned to the ground

Less electricity used in heat pumps when extracting heat from heat sources with temperatures below the heat distribution temperatures since lower pressures can be applied in the heat pump condensers

More excess heat extracted since lower temperatures of the excess heat carrier will be emitted to the environment

More heat obtained from solar collectors since their heat losses are lower, thereby providing higher conversion efficiencies

More heat recovered from flue gas condensation since the proportion of vaporized water (steam) in the emitted flue gases can be reduced

More electricity generated per unit of heat recycled from steam combined heat and power (CHP) plants since higher power-to-heat ratios are obtained with lower steam pressures in the turbine condensers

Higher heat storage capacities since lower return temperatures can be used in conjunction with high temperature outputs from high-temperature heat sources

Lower heat distribution losses with lower average temperature differences between the fluids in heat distribution pipes and the environment

Ability to use plastic pipes instead of steel pipes to save cost

The table discloses the chicken and egg problem or the catch 22 if you prefer. In countries with a district energy tradition and CHPs, boilers, or short and low term storage, the CRG is in the range of 0.16-0.07 euro/ MWh ˚C. Not until these countries lower temperatures AND start using low-temperature heat sources like geothermal, solar, or waste heat, the CRG becomes appealing and in the range of 0.68-0.51 euro/MWh ˚C.

(CRGs) were defined and explored using lower temperatures in heat distribution networks for various heat supply options. They concluded that the cost reduction gradients for new heat sources (e.g., heat pumps, solar collectors, geothermal heat, and low-temperature excess heat) are approximately five times higher than those for traditional combustion in CHP plants. This is shown in the table on next page.

Table 1: Overview of assessed economic effects, indicated with the cost reduction gradient (CRG) in euro/(MWh∙°C), of reduced system temperatures

In sum: tangible and appropriate technologies and methods are available for the implementation of low-temperature district heating. Early adopters have tested and implemented lower temperatures in both existing and new heat distribution networks. Thus, buildings can and should adopt the utilization of lower temperatures in the future. Reductions in specific heat demand will also facilitate the use of lower temperatures. Current technologies and methods can be further elaborated and refined by research and development.

During the guidebook's writing process, we also identified that companies engaging in low-temperature installations focus on technology - dealing with the business model aspects later. A paper was written based on the analysis of six Low- Temperature District Heating (LTDH) cases (Lygnerud, 2019). This paper addresses the following research question: Do district heating companies that implement low-temperature solutions develop their business models simultaneously as they make the shift in technology? The answer to this question is no. The main conclusion is that none of the six studied cases upgraded the business model or logic. Instead, the high- temperature context was applied to the low-temperature solution, leading to the loss of the potential value created in the low-temperature context. The central values made, but not capitalized on, are related to: 1. The customer value when offering a differentiated, green, district energy solution. 2. The prosumer relationship is long-term and generating a profit for both sides. 3. Increased flexibility in the heat supply. The inclusion of low temperature in the district heating portfolio can increase competitiveness, but it necessitates a shift in the business logic. When discussing business models, it is relevant to consider the one component that generates revenue, namely price. Motivational tariffs are being applied notably in Denmark and Sweden; however, the dilemma is how significant the motivations should be. And when to reduce them not to erode the benefit of the district heating provider (once the customer has become an efficient actor in the network). When printing the book, there was no consensus on building the best motivational tariff for low-temperature installations - this needs further research.

The most significant barrier to undertaking LTDH investment is that it is not business as usual.

One crucial factor explaining the limited interest in futureproof LTDH technology is that the risk of limited heat supply in 2050, when fossil fuels are not available, has not yet become apparent for most end-users and heat providers. While the economic benefit of low-temperature district heating can reduce the LCOH from future district heating systems, the benefit in current systems remains limited. Hence, this benefit alone is not currently strong enough to push the transition towards more decarbonized district heating systems. Carbon pricing, or other efficient policy drivers, must be used. It can be a solid, parallel economic driver for incentivizing decarbonization. Old institutional rules must also be appropriately revised for better alignment with low-temperature district heating. To conclude, old habits die hard. In combination with lock-in effects from the application of current technology and a lack of understanding of how to efficiently link stakeholders to each other, it is difficult to escape the paradox of catch 22.

For further information please contact: Kristina.Lygnerud@hh.se

International Energy Agency Technology Collaboration Programme on District Heating and Cooling, https://www.iea-dhc.org/ LOW-TEMPERATURE DISTRICT HEATING IMPLEMENTATION GUIDEBOOK ISBN 978-3-8396-1745-8

References: Averfalk, H., & Werner, S. (2020). Economic benefits of fourth generation district heating. Energy, 193, 116727. doi:https://doi.org/10.1016/j.energy.2019.116727 Lygnerud, K. (2019). Business Model Changes in District Heating: The Impact of the Technology Shift from the Third to the Fourth Generation. Energies, 12(9), 1778.

When planning for the future!

By: Steen Westring, Operations Manager, Albertslund Fjernvarme

Back in 2009, when the COP15 (United Nations Climate Change Conference) in Copenhagen was planned, the top management and the political majority of Albertslund Municipality decided on an ambitious climate goal: By 2025, we will have fossil-free electricity and heat supply in Albertslund! At Albertslund Supply/District Heating Company (ADHC), we felt it was a bit crazy. Albertslund had no direct control over the fuel mix of the electricity delivered to Albertslund - but as a partner of the Greater Copenhagen District Heating Network, we could influence the decisions about the fuel mix when producing DH. We started planning for the future ….

In 2015 a new DH strategy supporting the “Fossil Free Vision for Albertslund Municipality” began full power. The politicians confirmed the 2025 goal of a fossil-free DH supply in Albertslund and accepted a plan for low-temperature DH (LTDH) in the municipality. “We believed in the idea. However, the reality meant convincing the building owners, used to 100 degrees DH in the wintertime, to make extensive changes.”

• Transforming from 2nd or 3rd-generation DH supply to a 4th-generation DH supply (4GDH) by January 2026. By the end of 2016 every house owner in Albertslund was informed twice in direct mails: "By 2026, your house shall be ready to receive 60 degrees DH water." We told the house owners how we would support them and guide on how to improve their homes.

• The strategy was approved by the "Users Council" and by the politicians with only little discussion, and we received no formal complaints on the decision from the +7.000 end users.

When we made the plan for 4GDH, more than half the housing stock was about to be energy refurbished. But, in 2025 the majority of the homes will be ready for LTDH.

Now, we have to decide how to continue: One possibility is two parallel DH systems:

1. A 3GDH for the non-refurbished houses, 2. and a 4GDH for the new houses and the refurbished houses.

We will focus on the privately-owned houses developing energy refurbishment concepts with the local housing organizations – and offering house owners free energy consulting. If we can improve "the rest," we can reach 100% LTDH.

With 4GDH comes more focus on data. In 2020 we changed every +7.000 DH meters to smart meters. We built a Wireless M-Bus system in Albertslund. It makes billing easier, and it gives an in-depth knowledge of the energy performance in all buildings. Smart meters and “No money up front" Smart meters are considered a stepstone for lowering temperatures. Another important stepstone towards 4GDH was the "No money up front": An opportunity for end-users to rent a new DH unit from the utility. To be a part of it we require well-functioning radiators and valves inside the houses. We make sure the new DH unit is installed correctly and take over the maintenance of the units. The customer don’t have to pay anything up front - but only pays a monthly rent and service fee. We improve efficiency, and we get better connections with the end-users.

People should not freeze, so let's make sure they don't! In Denmark, we dimension heat systems for an outdoor temperature at minus 12 °C. But how often is it minus 12 °C? Not often!

And if it becomes minus 12 °C, we can increase the temperature for the few hours needed. LTDH 360 days a year is a vast improvement to HTDH 365 days a year.

What if everyone is not ready for lower temperatures in 2026? We believe we can find individual solutions for them. It could be an electric boiler at a historic building or some retired peoples home with no wish or money for energy refurbishment projects. If we raise the temperature for one and lower the temperature for 500, it makes sense. It's not all LTDH or no LTDH. Albertslund 4GDH is closely connected with the renewal of the town. Houses are refurbished, and the existing 3GDH are too. We believe the additional investment for the next step to 4GDH is profitable indeed. And research agrees with us. With more data, we will prove it!

For further information please contact: steen.westring@albertslund.dk

Foto: SKANSKA

By: Hasmik Margaryan, Civil Engineer, Taarnby Forsyning Anders Dyrelund, Senior Market Manager, Ramboll Anders Carøe, Engineer, Ramboll Antoni Trumulis, Senior Consultant, Ramboll

Taarnby Forsyning, the public utility in Taarnby Municipality, a suburb of Copenhagen, DK, has, despite many obstacles, established a remarkable district heating and cooling system in the new Kastrup Business District, north of Copenhagen Airport. By integrating all sectors for the urban infrastructure in the city district - in this case, public transport, district heating (DH), district cooling (DC), electricity, wastewater, groundwater, and not least buildings - it has been possible to develop a smart and sustainable business district and offer all buildings in the business district sustainable, cost-effective and environmentally friendly heating and cooling. The DH is part of the efficient Greater Copenhagen District Heating System - and Taarnby Municipality is co-owner of the heat transmission company CTR. Cost-effective, low carbon heat from waste and biomass-fueled combined heat and power plants (CHP) is transmitted to the DH distribution networks. Taarnby Forsyning has since 1985 distributed heat fromCTR to most of the municipality to the benefit of the heat consumers in Taarnby. They are now going to distribute heat to all buildings in the Kastrup Business District. The first screening of the DC potential in the business district indicated that all the commercial buildings would have a significant demand for cooling capacity and that DC would be cost-effective and efficient. That is entirely according to the EU directives for EE, RES, and Buildings and the objectives of the Danish Heat Supply Act. However, it was almost impossible to get started due to legal barriers and regulations. Although it is profitable for the society and the DH consumers to establish DC to new consumers and produce the cooling in combination with DH, there were several barriers in the Heat Supply Act, which was supposed to protect the heat consumers. Moreover, the building code discriminates DH and DC compared to less cost-effective building-level solutions by defining normative energy factors, which do not reflect cost-effectiveness or sustainability and contradict EU directives. Smart cost-effective district cooling in Taarnby Sector integration – the key to cost effective projects

Therefore, Taarnby Forsyning and the consumers could not agree on how to harvest the benefits of the traditional combined district heating and cooling (DHC). Fortunately, we found the key to increasing profitability by including more sector couplings based on favorable local conditions. Therefore, Taarnby Forsyning could give an even better offer to the first two consumers, Ferring and Skanska, which they could not resist. The consumers paid a connection fee, which was competitive compared to the alternative building level chiller. This co-financing was sufficient to attract additional commercial financing and establish DC as a new business unit of Taarnby Forsyning. Besides, the consumers pay a fixed annual fee per kW and a variable seasonal energy fee per MWh, which is competitive compared to traditional chillers.

The heat pump was put into operation in spring 2020, and the first cooling consumers are connected in spring 2021. The project has been implemented according to the plan and budget, within a minor deviation.

In the following, we describe the features and sector couplings, which improved the cost-effectiveness of the district cooling:

Energy planning - the key to profitability

The municipal owned multi-utility

In the first screening of the DC potential, we could see that DC in the district, due to economy of scale and sector integration, could be very profitable for the society of Denmark, and the local community in Taarnby, including Taarnby Forsyning and the cooling consumers, compared to cooling at the building level. Traditional DC benefitting from the economy scale and combined heating and cooling would be cost-effective. However, that was not enough to overcome the various barriers due to the large initial investments and the legal obstacles. A heat pump at the wastewater treatment plant extracting heat from the wastewater (and thereby wasting valuable cooling capacity and cold energy into the wastewater) would not be cost-effective due to the efficient heat from the Greater Copenhagen DH system. However, by combining these two projects for heating, cooling, and wastewater, the project was very profitable, and it was possible to overcome the barriers.

As the municipality owns Taarnby Forsyning, the company's overall aim is to be efficient and create value for money for the residents and businesses in the municipality. As a multi-utility, it can explore synergies between the city and the municipal services, in this case, heating, cooling, wastewater, and water. We could benefit from three essential couplings: • The wastewater treatment plant was upgraded with facilities to clean the air from the process and thereby paving the way for the new business district next to the plant and thereby also consumers to the district cooling • Themanagement of Taarnby Forsyning could decide that the best solution would be to allocate available space at the wastewater plant for the energy plant and the storage tank, as land in the business district was limited and very expensive. • The max load hours of the heat pump could be increased from 2,000 to 6,000 hours by using the available cooling capacity to extract heat from the treated wastewater. This double use of the heat pump was the most crucial key to the project. And not to forget, it was important that the staff of Taarnby Forsyning had a vision and refused to give up and that all three utilities were under one umbrella.

The heat pumps

The energy plant is the heart of the system. It is connected to the cold water storage tank, to the district heating and cooling grids, to the wastewater outlet, to the 10 kV power grid via a transformer owned by Taarnby Forsyning, and it will be connected to ground source cooling in the second stage. The heat pump installation includes four ammonia heat pumps in two parallel lines in two steps. The total capacity 6,5 MW heat and 4,5 MW cold. The supply temperatures are 8 °C to the district cooling and 75 °C to the district heating.

The buildings

Combined DHC offers the building owners additional benefits, saving valuable space for technical installations in the basement and on rooftops and eliminating the local negative environmental impact of advanced facilities in the buildings.

The Kastrup Business District and public transport

The Wastewater treatment plant

Taarnby Forsyning has, since the suburb of Taarnby was established more than 100 years ago south of Copenhagen, been responsible for water and wastewater in the municipality and wastewater treatment. Today, the wastewater treatment plant processes wastewater from 43,000 inhabitants and Copenhagen Airport. It has become a vital asset of the municipality hosting the DC facilities and being a source for heating and cooling.

The new metro to Copenhagen Airport in the year 2000 was the starting point for a new business district between the Kastrup Metro Station and the sea. The old industrial district was upgraded, not least as the bad smell from the wastewater treatment plant was eliminated and paving the way for the new urban development. The first new building close to the plant, the Blue Planet aquarium, was inaugurated in 2010. The remaining 170,000 m2 of offices and hotels will be established from 2021 to 2025. Efficient public transport attracts offices and institutions, which all have a cooling demand, and we can conclude that the metro and DC goes hand in hand in the Danish climate. In fact, having established the DC branch and filled up the tank with cold water, it took only two months to negotiate contracts with three more consumers in the second stage.

The District Heating network

The DH system was established as a new branch of Taarnby Forsyning in 1980, as Taarnby Municipality joined the Greater Copenhagen district heating system. Today the system distributes almost 100% renewable heat from CHP plants fueled by waste and biomass, in total 180,000 MWh. A project for extending the network with an additional 50,000 MWh is in the pipeline. That is enough to ensure all heat from the heat pump to be utilized even on warm days. The heat pump will generate 20-25% of the total production to the network. Taarnby Municipality has, following the Heat Supply Act, approved that Taarnby Forsyning can supply DH to all buildings in the district replacing gas boilers, as DH is the most cost-effective heat supply form in the Kastrup Business district. The network can be operated at temperatures up to 95 °C, but fortunately, the consumers around the heat pump can accept 75 °C, which a two-stage heat pump can provide.

The chilled water tank

A 2.000 m3 chilled water pressureless steel tank was established next to the heat pump installation. The cold storage capacity is around 13 MWh, delivering 2 MW cold in 6 hours, or 8 MW in 1.5 hours. The tank's purpose is to deliver this peak and spare capacity and allow the heat pump to be operated cost-effectively and concerning the fluctuating electricity prices and the value of heat in the Greater Copenhagen DH system.

The district cooling network

As Taarnby Forsyning operates both PEH pipes for water supply and pre-insulated steel pipes for DH, there has been a fair competition between the two pipe concepts. The main reasons for choosing the pre- insulated pipe technology have been that it would be possible to detect leaks and guarantee the same water quality as in the DH system. The additional investments in the pre-insulated pipe network were modest due to the short distance between the consumers.

The ground source cooling

To provide additional cooling capacity in summer and to store cold from winter to summer and heat from summer to winter, the plan is to install ground source cooling in the second stage. Thereby it will be possible to use the maximal heat capacity of the heat pump in winter, even if the process cooling demand will be less than expected and the wastewater flow will be lower than average.

The secrets of district cooling In the first stage of the project, it was not possible to find the real benefits of DC, as there were only two consumers in the first critical stage - and for safety reasons, they did not want the heat pump capacity to be lower than individual calculated. In the long run, having up to 10 consumers, we expect to demonstrate that the total simultaneous cooling capacity is much less than the sum of all capacities being installed individually in the buildings. We will monitor the actual consumption hour by hour for all consumers. We will demonstrate the total system efficiency, including heat pumps, storge tank, wastewater, ground source cooling, and interconnection with the Greater Copenhagen district heating system.

We usually establish a generic district cooling system for existing buildings in 4 steps, but in Taarnby, we had mainly new buildings and the opportunity to do it in only two steps.

A jolly good case-story The project is a good case, which demonstrates the benefit of local democratic ownership of utilities. This has been an essential factor for the success of the project. Still, it will also be important for the dissemination of experience, as Taarnby Forsyning has a common interest in sharing experience, to mention a few:

• The approved plan was presented in Hot Cool 2/2019 and at the platform Stateofgreen shortly after the approval

• 2020 The European Heat Pump Association awarded Taarnby Forsyning in the category of large industrial heat pumps

• The case of Taarnby Forsyning has been selected as the first of eight cases by the EU JRC in the study: Integrating renewable and waste heat and cold sources into district heating and cooling systems, February 2021

• The Taarnby projects for DHC are among the IEA Annex73 Towards Net Zero Energy Public Communities, case studies 2021.

Many delegations have already visited Taarnby Forsyning, and more are welcome.

OVERALL DATA FOR THE SYSTEM:

Stage 1

Stage 2

Floor area for cooling

m2

53,000

169,000

Cooling demand, consumers summer

MW c

4.3

10.2

Cooling demand, consumers winter

MW c

1.0

1.0

Cooling capacity wastewater winter

MW c

3.0

3.0

Heat Pump cooling capacity

MW c

4.5

4.5

Heat Pump heating capacity

MW h

6.5

6.5

Ground source cooling capacity

MW c

0.0

2.0

Chilled water tank cooling

MW c

2.0

2.0

Cold production heat pump

MWh c

3,500

9,000

Heat production heat pump

MWh h

45,000

49,000

Investment in business case in 2018

Mill.DKK

62

80

NPV benefit for society

Mill.DKK

60

103

NPV benefit for local community

Mill.DKK

23

60

For further information please contact: Hasmik Margaryan, ham@taarnbyforsyning.dk

Demonstrating 100% fossil free district heating & cooling solutions across Europe

Lessons learned from the ongoing WEDISTRICT project

By: Mathilde Johanne Cordua – Climate Assistant and Frederik Palshøj Bigum – Project Manager, Ramboll

The Horizon 2020 project Renewable District Heating and Cooling (DHC), in short W.E.DISTRICT, investigates technologies in four demonstration sites in Europe. The WEDISTRCIT project aims to showcase DHC systems that help improve efficiency, enable fluctuating renewable energy sources (RES), and provide cost-effective security of supply. Through theWEDISTRICT project, an overviewof the current stock of DHC and the future development trends for the district energymarkets inEurope has been assessed. By identifying inefficiencies, barriers, and improvement potentials in the current DHC systems in Europe, the ‘lessons learned’ are taken into account in theWEDISTRICT designs for new and retrofitting of existing DHC. Today, the heating and cooling of buildings in the EU account for 50% of the total energy consumption. 70% of this energy is still generated from fossil fuels. To identify improvement possibilities, it is necessary to understand the current stock of DHC and the energy market of the European Union member countries. The state of the DHC and market structure vary significantly between the member states of the EU. Hence the assessment of each country of the EU28, and Norway, the UK, and Switzerland are divided into three groups based on their share of district heating (DH) compared to the total heat demand in the residential sector.

SMALL SHARE OF DH:

MEDIUM SHARE OF DH:

LARGE SHARE OF DH:

Less than 10% of residential heating

Greater than 10% but less than 50% of residential heating

Greater than 50% of residential heating

Most of the countries are represented in the group of small shares of DH, which also shows the most diverse range of the state of the DHC. The medium share group is a mix of countries, some of which have older DH systems that need investments for refurbishments. Some countries have traditionally relied on other sources for heating, although they have invested in the development of DHC. Lastly, the countries with a significant share of DH are generally at the forefront of innovation, with political support and established market structures that can further improve.

COUNTRIES WITH SMALL SHARE OF DH

The countries with small share are Slovenia, Croatia, the Netherlands, France, Switzerland, Norway, Italy, the United Kingdom, Greece, Spain, Portugal, Ireland.

The fuel type used are typically fossil fuels like natural gas, oil, and petroleum products.

Overall, the installed heat capacity is for all countries very similar, with approx. 75-80% coming from individual boilers (mainly natural gas), 10-15% comes from DH boilers, and the rest from combined heat and power (CHP).

Historical reliance on fossil fuels, as well as extensive natural gas networks. Together with the natural gas prices being relatively low under current market conditions, the switching to DH for heat supply is difficult.

Cooling is primarily supplied by individual chillers, with no or limited district cooling (DC) available.

The majority of the countries does not have a culture of utilizing DH due to the warmer climate. Therefore, the regulatory frameworks put in place are not in favor of DH which creates higher risks for investors and a barrier for further development and refurbishment of the existing systems. General low awareness of DHC and lack of practical know-how. DHC projects are typically heat recovery from incineration, which provides both heat and cooling in smaller networks of buildings.

Dependency on the expertise of international companies to provide solutions for every aspect of developing an efficient DHC market.

COUNTRIES WITH MEDIUM SHARE OF DH

Poland, Czech Republic, Finland, Latvia, Romania, Hungary, Bulgaria, Austria, and Germany are the countries with medium DH share.

The total DH capacity is decreasing in most of the countries.

Individual boilers are the most typical for heat production.

The Eastern European nations have a history of using DH networks, many of those constructed during the Soviet era. These DH systems are today generally in poor condition, with high thermal losses making investing in refurbishment of the existing infrastructure a requirement to improve energy efficiency.

Refurbishment of existing infrastructure is very important, considering the declining heat demand and current state of the network.

Relatively high degree of knowledge regarding DHC, but external forces such as economic influence, competing individual heating solutions, population density, as well as population decrease hinder the improvement and development.

The DH are competing with individual heating solutions.

In the Czech Republic and Germany, DH companies are obligated to pay carbon emission taxes, while the individual heating solutions do not. In Hungary, the price level of natural gas is more attractive than DH heat prices, creating better financial incentive for individual solutions.

The legislative framework generally favors individual solutions. Thus, heat price regulation must be thoughtfully constructed to increase the competitiveness of DH systems.

Typical for newer projects are to focus on heat with heat-only boilers with flexible production based on biofuels. In countries with DHC projects, cooling originates from RES like water.

COUNTRIES WITH LARGE SHARE OF DH

The countries with large share of DH, above 50% of their gross heat production, are Denmark, Lithuania, Slovakia, Estonia, and Sweden.

The countries have an overall increasing heat production with a focus on using biofuels.

Heat-only boilers are mainly used in Baltic countries, while Nordic countries use CHP. The Scandinavian countries’ DH production mostly originates from solid biofuels and natural gas.

General high awareness of the DHC technology as well as a historical utilization of DH together with a sustained effort for continuous development of the networks.

Themain distinction between the countries appears in the general state of the networks and the political framework related to investments and operation of the system.

Loans with very low interest rates available for non-profit companies through government schemes decrease the risk of the DH companies, and the non-profit structure drives down the cost of heating.

Saturatedmarkets shift the development from extension of networks towards increasing the overall efficiency of the networks by use of RES and new technologies.

There is a natural limit for when DHC is feasible and when individual solutions are, which partly has to do with the density of the population. Thus, most of the DH system are facing challenges in competing with new individual solutions, such as high-efficient HPs.

Support schemes that make individual heating solutions attractive for private households can undermine the potential for DHC.

Some countries have tax regulation on the utilization of this excess heat from industrial processes, consequently, heat that could have been used for DH is now simply wasted.

Fossil fuels still represent a great proportion of the heat production. Often solid biomass is seen as the easiest substitute, however, biomass is a scares resource.

The typical DHC project focus on using RES and excess heat in the DHC production. In some cases, smart solutions are implemented using wastewater as an energy source for both production of heating and cooling.

Lessons learned from current DHC stock and trends in Europe The huge variety of DHC systems and climate zones in the EU calls for improvements with very different starting points. However, the following are some of the generally identified lessons learned regarding the regulatory and planning measures that are important to allow for the development of sustainable energy systems:

Create a sound methodology and guideline for carrying out cost-benefit analyses of heat supply options in line with the EU’s Energy Efficiency Directive (EED) provisions.

Creation of long-termfinancing schemes in linewith other infrastructure projects and buildings at a low, competitive interest rate - while ensuring a transparent market for electricity-related services, consider time-dependent energy prices, capacity, and regulation.

Access to laying pipes on public and, if necessary, private land.

Ensure fair competition between DHC and building-level solutions. Implement the EU directives regarding the building codes to improve the performance of the buildings, as DCH often is the most cost-effective way to integrate renewable energies.

Existing DHC can be retrofitted to provide higher technical and institutional performance. E.g., by establishing combined heating and cooling and installing pressure and temperature control of all end-user substations.

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