Improve quality to minimise operation and maintenance cost
Project developers will always seek the right balance between investing in high quality to avoid operation and maintenance costs or vice versa. The effect on IRR could be neutral as an increase in investment would be offset by an increase in net cash flow, as costs would decrease. To the extent that the first projects will be de- veloped as part of the backbone of future projects, it may be relevant to overdo quality over operation and maintenance. If the project is again among the first undertaken by the municipal lead ESCO, overdoing fo- cus on quality to avoid troubles and uncertainties on maintenance and operation costs may be relevant until the organisation has climbed/completed the learning curve.
The UK governments’ ambitions for new hydrogen infra- structure n could create new sources of waste heat suffi- cient to supply the entire UK demand for domestic space heating. But this heat does not have to go to waste. If hydro- gen production can be located close to towns and cities, where there is high heat demand, district heating networks could provide significant economic, environmental, and social benefits to everyone - the hydrogen producer, the district heating network, and consumers. This was the con- clusion of a study conducted by Ramboll UK on behalf of the Danish Government’s Energy Governance Partnership at the Danish Embassy in the UK. Here, we explore wheth- er district heating is in tension with the electrification ver- sus hydrogen debate, the opportunities for district heating from waste heat from hydrogen production, and how to actually make this work through policy and planning. New study shows significant economic, environmental and social benefits from co-development of hydrogen and dis- trict heating (DH) in the UK
Build a surplus to balance income from year to year
Many DH companies prefer to offer stable prices over the years and avoid price fluctuations. Many DH com- panies have a standard price for the whole season to allow the end-users to budget correctly. It is common to create an income buffer that allows a DH company to run a small surplus one year (if the winter is colder or warmer than expected) to cover a small deficit the following year to balance the price over time. Price reductions Not relevant! The price is assumed to be fair for the en- tire city! But still lowering prices should be the aim of the DH company – of course! Conclusion A city must ensure the district heating business struc- ture created can support the development of the cit- ywide DH system. The business model chosen should be able to harvest the benefits from the highest IRR projects and make the city capable of making the low- er IRR projects come through over time.
Hydrogen has been identified by all UK governments as having an important role in the decarbonisation of heating.
Hydrogen is on everyone’s mind these days – at least in the energy sector. That is also the case in the UK, were
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