more complicated. If you have picked the best apple (without planning), the average value of the rest will become lower.
If the local authority can financially support the development of more projects, these could be added as the support will lift the IRR to the required 14%. Sooner or later, the ongoing sup- port from any benefactor will run out, and then no more pro- jects will be developed. The complexity of having up to three individual and competing companies operating in the same city and the effects on possibilities for expansions and altera- tions to the systems is also a relevant discussion – but another time. In this case, the solution may look like this – 3 areas developed directly by commercial ESCOs and three developed by com- mercial ESCOs financially supported by the local authority. Please also note that the free heat provider is not included in this case; maybe, more importantly, the rest of the city now has to find a different solution (The red circle has been removed). DH led by a municipal-led DH company A municipal-led DH company with a 0% threshold will, over the years, develop DH throughout the entire city. Of course, they start with the most economically viable projects and then work through the different expansions and new projects. Please note that a municipal-led company planning to build out into the entire area will consider building a project with a very low IRR before other projects. In this example, it could create the 3% project (to the right in the picture) with the pri- mary purpose of gaining access to low-cost surplus heat (as il- lustrated with the small black production site) and connecting several individual projects to that heat source through the 1% Other factors than strictly economic could similarly influence the order in which projects are rolled out. For example, areas with severe fuel poverty, areas in need of renovation, and for lo- cal and political reasons may lead to decision-makers prioritis- ing specific projects before projects with a higher IRR – again illustrated as the very low IRR areas. Conclusion This article demonstrates the effect of DH rollout in a city de- pending on the accepted level of IRR. It also shows that if the low-hanging fruits are not picked in the right way, the ultimate goal may be jeopardized. It is clear that high levels of IRR jeopardize a city-wide devel- opment of DH and could also make access to large low-carbon heat sources impossible. This way, the low-hanging fruits will be picked in a structured and planned way, and the low-hanging fruits will be picked first, but in a way that ensures that all fruits on the tree will be picked. We will have a full basket.
The case of Denmark This article is not directly related to how DH is rolled out in Denmark – besides that fact that Denmark has chosen to use this approach for the cities DH develop- ments. This approach has also been used in many other places all over the world, in a recognition that critical in- frastructure can be a municipal task and responsibility to be able to deliver to all citizens. It also does not mean that jobs are not created – Den- mark has a lot of jobs both directly in the DH com- panies and in the supporting industry. Each Danish DH company will always operate in the commercial marked for all services and in that way operate like a classic commercial company. In a way the Danish DH companies are commercial companies operating in a natural monopoly.
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