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

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


Elecriciy genered

He loss

Pek fuel cos

Min fuel cos

Elecriciy used









Biomss CHP


Geoherml invesmen

Indusril excess he

He pump

He pump invesmen

Solr herml invesmen


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

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