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

Suppose an additional accumulation tank is built at one of the existing CHP plants (Amagerværket) - which is likely. In that case, it will harm the present value of the PTES. Sensitivity calculations show the operational benefit in 2025 will fall from DKK 6.1 million (€ 0.8 million) to DKK 5.1 million (€ 0.7 million). If you instead expect a real rate of interest of 4%, the present value falls to minus DKK 2.5 million. And the operating benefit may reduce a bit if it is not possible to optimize the PTES completely. But on the other hand, due to the coming massive amount of wind power in Denmark, the electricity prices will fluctuate more than calculated in the model and meaning an increase in the operating benefit of the PTES. As part of the Danish target of reducing CO2 emissions by 70% by 2030 compared to the 1990 level, 500,000 oil and natural gas customers will convert to either individual heat pumps or green DH. A significant part of this conversion is in the Greater Copenhagen DH area, and the extra volume will increase the operating benefit of the PTES. It is cheap to extend the lifetime of the PTES for another 20 years, as only the liner needs replacing. Pumps and connections to the DH last much longer. VEKS will be entitled to use the storage capacity if an extension of life - and the same goes for the heat producers. Summary The tricky thing is not to dig a large hole in the ground, fill it with water, and load and unload the storage. The difficulty is the contract involving seven parties to agree on a individual share of the investment reflecting each stakeholder's benefit in establishing the PTES. This part takes more time than you can imagine.

Based on the electricity and heating system analyses, the operating benefit for each stakeholder was calculated. The operating benefit then decided each stakeholder's investment share in the PTES, including connections to existing DH networks, pump installations, etc. It sounds simple, but as mentioned earlier, it took a lot of negotiation to get all stakeholders to accept the calculated shares. The challenge was that when the PTES goes into operation - it would no longer be possible to calculate the operating benefit. It was a question of mutual trust.

The operating benefit share

• The DH transmission companies - 56% due to the reduction in peak load production.

• The CHP's - 28%

• WTE plant's - 16%

In the real world, electricity prices fluctuate more than in the optimization model, which will in-crease the benefit value. However, it can be challenging to optimize the PTES 100% in the daily load distribution, and several factors not included in this calculation are difficult to quantify: utility benefits are not included - such as avoiding start/stop of production facilities, better audit planning in the summer period, gains in the aftermarkets on electricity, etc. The operating benefit value calculation The operating benefit of the PTES increases over time when fuel prices and electricity prices rise. The annually operating costs were calculated for DKK 100,000 (€ 13,300) and DKK 300,000 (€ 40,000) to electricity for pumps. The calculation shows the PTES has a NPV (net present value) of DKK 30 million (€ 4 million) with a real rate of interest of 2%. With a real rate of interest of 4%, the present value falls to DKK 11 million (€ 1.5 million).

For further information please contact Lars Gullev,

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