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NO. 1 / 2024
INTERNATIONAL MAGAZINE ON DISTRICT HEATING AND COOLING
NEW HEAT SOURCES and RE-technologies
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Contents
THIS EDITION'S FOCUS THEMES
NEW HEAT SOURCES AND RE-TECHNOLOGIES
By John Tang Jensen 5 4
CO2 DOES NOT RECOGNIZE BORDERS! By Anders Dyrelund
TARIFFS, ACCOUNTING, AND BUDGETING IN DISTRICT HEATING COMPANIES
HOW TO ESTABLISH A DH COMPANY
By Morten Helveg Petersen 8
FAREWELL: 10 YEARS IN EUROPEAN ENERGY POLITICS
COVER PHOTO A Dutch delegation from Gemeente Súdwest-Fryslân visited Sdr. Felding Varmeværk to study how multiple heat sources in a smaller DH company work. Here we are in front of the heat pumps that are a part of the new investments in an even greener portfolio for Sdr. Felding. They recently added an electric boiler and a large storage to make their heat production more flexible. This means that the locally owned DH company can deliver low-cost, renewable heat to the 800 end users on the network. The visit was part of a project where Gemeente Súdwest- Fryslân, DBDH, the Danish Embassy in the Netherlands, Enber, the Province of Fryslân, VNG, BNG, and a Danish expert team combine Dutch and Danish experiences to identify new and better ways to organise and finance DH networks in the Netherlands. The project is supported by funds from the Danish Energy Agency.
By Dan Andersen and Anders N. Andersen 12
OPTIMAL PRODUCTION PLANNING AT LARGE AND COMPLEX HEAT SUPPLIES
18
MEMBER COMPANY PROFILE: DISTRICT HEATING IS THE GREEN TRANSITION CORNERSTONE Hjoerring Municipality
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Total circulation: 5.000 copies in 74 countries 10 times per year
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ISSN 0904 9681
Yet another COP with the intention to stop fossil fuels took place in 2023. International institutions like the UN and the EU should try to break down legal and institutional barriers. CO2 DOES NOT RECOGNIZE BORDERS!
By Anders Dyrelund, Senior Market Manager, Ramboll
plants. In 1979, the Danish Heat Supply Act gave municipal- ities the obligation to plan for cost-effective extension of DH to utilize surplus heat from waste and power generation, and the power generation shifted from oil to coal and natural gas. The policy was enforced by combining incentives and regula- tion. A large tax on fossil fuels and electricity stimulated ener- gy savings in buildings and the extension of DH. The building code enforced more insulation and low-temperature heating. The option of obligatory connection to DH and a ban on elec- tric heating in new buildings stimulated efficiency and cost-ef- fectiveness. The policymakers understood that DH is a natu- ral monopoly and the key to meeting the objectives, e.g., that the marginal efficiency of DH from CHP is more than 200%, whereas it is only 30% for electric heating. Around the year 2000, this potential was utilized, and Denmark started the second phase of the journey towards a fossil-free society in 2050. Sustainable biomass replaced fossil fuels in large power plants and many DH systems. Biomass, which else would be wasted, was used in a clean and efficient way for heat and power generation with flue gas condensation. The market for district cooling started, and the DH market share increased. However, domestic natural gas was still a priority. Around 2020, Denmark started the third phase of the journey, replacing the remaining fossil fuels with wind and solar. In this phase, DH plays an even more important role, being the key technolo-
The message from the UN Sustainable Development Goals is clear: affordable, clean, low-carbon energy for the growing population. Recently, resiliency has been added to the list of energy policy objectives. Therefore, the history of the green transition in Denmark, starting with the oil crisis in 1973, is a good showcase, in brief:
Cost-effectiveness for society, including the cost of CO2 is the key to sustainable solutions.
Therefore, break down barriers between sectors, institu- tions, and all stakeholders.
Ensure that competent ministries regulate to the benefit of society.
DH has eliminated thermal losses from power generation and waste incineration.
Transition from oil to coal and gas and further to biomass and wind
Cost-effective zoning of the district heating (DH) and close to 100% connection.
DH integrates the fluctuating renewable energy as a virtual battery.
In 1976, the Danish Electricity Supply Act gave the Ministry the power to approve power
Continues on page 4
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gy for replacing gas for heating and for integrating the fluctuating renewable energy. The DH, acting as a virtual battery, is already a reality stabilizing the power grid and reducing curtailment of wind turbines. The core of the gas grid will remain and distribute biogas for industries and back-up for wind in symbiosis with DH. The first pro- jects for carbon capture from biomass are in the pipeline, followed by electrolysis and e-fuel factories for decarbon- izing transportation. There will be a surplus of waste heat from all these processes, from cooling and from data centers and industries. The challenge will be to allocate these huge waste heat resources in the most cost-effec- tive way for society. Most industrialized countries are now in the process of implementing energy policy objectives in line with the Danish policy. EU member states are, e.g., obliged to im- plement a package of EU directives. The buildings shall, according to the building directive, offer good thermal comfort, and their carbon footprint shall be reduced to almost zero in a cost-effective way, taking into account that renewable and efficient energy can be transferred to buildings via DH and DC. Moreover, member states and local communities are requested to plan for how DH and DC can utilize the many efficient and renewable sources for heating and cooling. This is a challenge for states that are dependent on fossil fuels like Denmark was in 1973, but the Danish Journey can inspire. The EU directives have been inspired by the Danish tran- sition, and some of the good Danish showcases have been presented in EU JRC (Joint Research Centre) publi- cations and in Hot|Cool. The showcases demonstrate the importance of technical and institutional efficiency and how it has developed in the Danish journey, not least the longer lifetime of the network, lower heat losses, and digital communication with consumers, as well as local democratic ownership being the key to efficient stakeholder engagement and co-operation to plan and implement the most cost-ef- fective solutions for the society. Energy efficiency first - stop wasting resources. This issue of Hot|Cool focuses on how DH is vital for the efficiency and integration of fluctuating renewable en- ergy. A closer look at the cases will show that society still faces severe barriers against a cost-effective transition meeting the Sustainable Development Goals, even in Denmark, such as wrong tax incentives, focus on CO2 instead of cost-effectiveness, national CO2 reduction instead of global reduction, building level reduction instead of na- tional level reduction, etc. Therefore, international insti- tutions like the UN and the EU should try to break down such legal and institutional barriers.
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CO2 does not recognize borders.
TARIFFS, ACCOUNTING, AND BUDGETING IN DISTRICT HEATING COMPANIES
By John Tang Jensen, District Heating Expert, Danish Embassy London
District heating companies are, in many aspects, not different from other companies selling goods to consumers. There is only one product, “heat,” and the price normally is the same for all customers. The district heating companies, though, have a monopoly, and the sales for the coming budget year are predictable and follow a season with high sales in winter and low sales in summer.
to keep heat price development stable because heat is a large part of the consumer economy, and consumers do not like sudden price increases and prices above alternatives, which causes conflicts. This article discusses some important princi- ples regarding tariffs, accounting, and budgeting, which can make the district heating sector and company pricing reliable and fair.
Budgeting and accounting then should not be much different and probably easier compared to other industrial companies operating on unpredictable market conditions and market prices. There are some principles that may need to be consid- ered when making budgets, tariffs, and accounting to ensure best practices are used and provide utilities with a stronger position in case of conflicts. The most important principle is
Pricing principles To ensure reliable and fair heat prices, some principles should be followed regarding transparency, discrimination, cross-sub- sidizing, and investment allocation. Transparent Heat prices must be transparent and comprehensible for con- sumers, which means the payment must reflect a cost that can be found in budgets and accounting reports. If, for example, prices are based on budgets, the district heating company should publish prices for all consumer groups on the website or send them to customers by mail/letter. Non-discriminating Prices must be non-discriminating, which means payment for consumers having the same capacity demand and annual de- mand profile should be the same. If this principle is followed, it, for example, should not be possible to charge different prices between consumers depending on distances from the net- work (Periodic payments). Normal heat network consumers have a heat demand profile related to outdoor temperature and the use of hot tap water because most district heating consumption is for heating buildings and hot water. It is non-discriminating if this consumer group has the same payment for the same capacity and delivery. For consumers using the heat for different purposes having a capacity and profile not related to outdoor temperature like industry (processes), paint shops, swimming pools, churches, etc., it would be discriminating if these consumer groups are not identified separately and have own pricing according to the cross-subsidization principles. When it comes to prices for connecting consumers, the price can be dependent on actual connecting costs, a standard con- nection fee, a price per meter branch pipe, or a combination of the last two (One-off payments). Cross-subsidization Heat prices must be cost-reflective, which is when each individual heating consumer partly pays the costs inflicted on the district heating company by the consumer’s connection to the network and presence as a consumer and partly the costs associated with heat supply.
Investment allocation If investments are paid too fast by consumers compared to the lifetime of the equipment, early consumption can subsidize late consumption. This can also be an issue if heat network companies (for flexibility, supply of security, and price security reasons) invest in more complementary heat source capacity than necessary. Capacity that gives the choice to choose the cheapest heat sources and to store heat produced when prices are low and used when prices are high can be beneficial for heat network companies. Such capacity choices deliver low heat prices over time, but if a loan is paid too fast and depreciation is too fast compared to equipment lifetime, consumer prices momentarily can get very high. If extra heat source capacity, for example, is established for flexibility reasons, the average equipment lifetime will increase, and depreciation time should follow this. If the equipment is not used much, though, the lifetime cannot be expected to be forever. Then, it may be suitable to set a maximum depreciation time of, for example, 30-40 years, but without any requirements on linear depreciation. Impact on tariffs The pricing principles mean that the tariff system must be con- structed in a way that ensures the following: The fixed costs of the district heating company are covered by fixed fees, and variable costs are covered by consump- tion-based fees.
The costs are covered by income from the tariff elements to which they can naturally be attributed.
Each individual consumer pays the share of costs required for its own heat supply so that no consumer will benefit financially at the expense of others – different consumer groups may be established if demand profiles differ. A specific heat source delivery cannot be allocated to a specific consumer, except when third-party access where supply and consumption are by the same company/ person and at the same time is a part of regulation.
Depreciations should follow the lifetime of equipment, and it should be possible to adjust the depreciation time if the
It should be possible in the budget system to use the depre- ciating principles and equity capital systems to level out pric- es. If, for example, fuel or electricity prices go up, depreciation should be allowed to go down and saved capital to be used for holding prices on a lower level. Visa versa if fuel and electricity prices are falling. This is a balance, and if prices in general are going up, of course, heating prices should follow over a longer timeframe. Several complementing heat sources reliable on different fuels and electricity is another and more important way of levelling out heat prices. If, for example, a heating network both has a CHP and a heat pump capacity, the CHP heating production should be preferred in time with high electricity prices and heat pumps in time with low prices. As long as the technology producing the heat is depreciated more according to produc- tion and the technology producing less heat is depreciated less, a system with complementary technologies will level out heat prices and benefit both consumers and companies. If the accounting and budgeting systems are not able to follow the use of different complementing technologies, the pricing ben- efits of having more technologies may be lost in the short term, and projects may not show feasibility.
equipment is changing production and lifetime. Maximum depreciation time is perhaps 30 years.
Impact on accounting District heating network companies have a monopoly, and the government must establish a regulator function responsible for following the sector the same way as for water-, electricity- and gas companies. The regulator’s role is to monitor the sec- tor and to report to society and the Government if the sector is using its monopoly status and power to suppress consumers by not having fair delivery and pricing systems. For district heating companies and the district heating sec- tor, it will be resilient and reliable if all are following the same accounting principles because it then would be easier for the regulators to monitor and control companies and solve con- flicts between companies and consumers. Especially when it comes to regulation of depreciation, equity capital and profit it is important that legislation and regulator on one side give space for levelling out prices from year to year. On the other side legislation and regulator should not allow unnecessarily accumulation of capital not benefitting consumers and giving profit out of line with normal standards. A standard accounting system on national level will give regu- lator the possibility to benchmark and intervene if companies for some reason do not manage to follow best practice. This require that regulator collect all annual accounts reported to a common system and will be the foundation for following the sector in general and the basis for handling complaints. Impact on budgeting A standard accounting system will make it easy to create a budgeting system, where costs can be allocated to Fixed fees and Consumption-based fees. Some costs should allocate di- rect to a certain fee and others like for example heat source costs should be possible to share between output fee and con- sumption-based fee, because heat source costs are not entirely Consumption-based costs and may include investments etc. Because district heating network companies have monopoly, transparency is very important, and the direct transformation from budget costs based on standard accounting systems to actual fees ensures that pricing principles are followed.
For further information please contact: jtjensen10@gmail.com
FAREWELL: 10 YEARS IN EUROPEAN ENERGY POLITICS
By Morten Helveg Petersen, Member of the European Parliament
and Steel Community. Energy politics and Europe somehow go hand in hand, and during the constitution of the European Parliament over the summer of 2014, I won my seat on the ITRE committee and went to work. The Paris Agreement and the European Energy Union In 2016, European leaders gave a handshake on the decision to create a European Energy Union. Ever since, the energy un- ion has been a point of orientation in the ITRE committee, with numerous law initiatives pointing towards the internal market for electricity. The European Energy Union agreement followed shortly after the Paris Agreement emerged in 2015. This historical global accord involved 196 UN member states committing to limit- ing temperature increases to less than 1.5 degrees. Although experts across the world today find it unlikely that we will be able to reach the goal of the Paris Agreement, it still marks the starting point of the global climate policy environment we are surrounded by today. The Paris Agreement also heightened awareness of climate issues and emphasized the need for mar- ket-based green energy solutions. Between the Paris Agreement and the Energy Union, it was straightforward to envision significant market expansion, and it became a key issue policy for me to pave the way for green Danish climate solutions going forward. Many Danish com-
The European elections in June 2024 mark the end of my ca- reer as a Member of the European Parliament after 10 years of service. It turned out to be a time period in which energy policy rose to the top of Europe's political agenda. On the brink of goodbye, these are my reflections. More than anything, the story of EU politics over the past ten years is the story of the rise of energy politics on the political agenda. I like to recall how energy- and church policy were at rock bottom on the popularity scale amongst Danish politi- cians when I entered the Danish parliament in 1998. Not sexy, no profile, basically, nobody wanted to work on those commit- tees. Today, of course, energy politics have left church policy behind and crawled to the top of the agenda. Energy politics is at the centre of Europe’s security situation as well as citizens’ every- day life. I did not predict the magnitude of this development when elected to the European Parliament in 2014. Still, I did aim straight for a seat in the Committee on Industry, Research and Energy (ITRE). Although, at the time, climate policy was far from being the all-consuming societal topic it is today, it was an issue somehow lurking on the horizon. Also, as a keen supporter of the European community, I was never blind to the historical fact that the European Union was created on top of energy cooperation in the European Coal
our borders with the purpose of providing cheap, green energy for European citizens. Today, of course, this is also a matter of energy security, and ACER has steadily grown in size and im- portance ever since we established the agency. Climate election By 2018, the climate debate had reached a new level. I can- not pinpoint a single issue that made the difference, but by then, public attention had grown, and as lawmakers, we ex- perienced how the climate issue had grown in importance through citizen inquiries, lobbyist approaches, and so on. There was a climate angle to almost any policy in the system, and it all culminated with the 2019 elections, which was coined the “climate election” due to the clear climate policy mandate Eu- ropean citizens provided in the elections. The European Commission answered the people’s call by pre- senting the EU Green Deal, a historical political idea designed to decarbonise the European Union going towards 2050. For my part, I regained my seat in the European Parliament and entered my second period, knowing I had chosen the right path when I opted to enter European energy politics in 2014. Once again, I entered the ITRE committee. Soon enough, though, the Covid-19 pandemic cast its shad- ows over the world, and the legislative work slowed down for a while. Despite the pandemic turmoil, the European Commis-
panies stand on the foundation of the Danish history of wind power, energy efficiency, and district heating. It became my business in European politics to pave the way for these compa- nies and their green products and technologies in the emerg- ing CO2-neutral economy. In those early days of my career in the European Parliament, I experienced one of my thankfully few defeats in the Europe- an Parliament. Following Russia’s invasion of Krim, there was a growing concern about Putin’s next move, not least amongst my Eastern European colleagues in the European Parliament. In 2014, I went to work on the European Security Strategy with enthusiasm. Essentially, the goal was to ensure the EU moved away from our increasing dependence on Russian natural gas imports, and while such a goal seems evident today, it was not in those days. Back then, Europe’s naivety was intact, and the European Energy Security Strategy failed to be adopted during the European Parliament’s plenary session in June 2015. By the end of the term in 2018, I became a rapporteur on the establishment of the European Union Agency for the Coopera- tion of Energy Regulators (ACER). It was one of the files point- ing towards the Energy Union, and the file was close to my heart because of the European cooperation and integration involved. ACER’s mandate was and is to develop conditions for cross-border green energy, and there is something fulfilling in the idea of a Europe where green electricity flows freely across
Energy dependence as a weapon The final step for energy politics toward the top of Europe’s political agenda was, of course, Putin’s invasion of Ukraine in March 2022. It struck Brussels like a hammer and completely changed the discourse of EU law-making; first and foremost, everyone realised that our energy dependence is a weapon that can be turned against us. Discussions over climate ambitions in the individual law files disappeared; across the board, more ambitions crept into the files. As much as the backdrop - the war in Ukraine - is sad and terrible, it definitively gave Europe’s green transition a boost. I have been lucky to be in European energy politics for ten years of explosive development. As I leave the European Par- liament, energy politics is perhaps more interesting than ever, but it leaves no regrets with me. Europe’s green transition is
sion presented its Fit for 55 package in the summer of 2021, a comprehensive law package designed to reduce the EU’s net target GHG emissions by at least 55 % by 2030. It was all energy policy, and the next few years should bring me back to working with energy efficiency in the Energy Performance of Buildings Directive as well as the electricity market. However, I began with the EU Offshore Renewables Strategy, for which I became the lead negotiator. I was keen on this file in particular because of the Danish potential and the opportunity to make Denmark a net exporter of green electricity due to the optimal condi- tions for offshore wind power in the North- and Baltic Seas. Also, in the Offshore Renewable Energy Strategy, much focus was on cross-border cooperation, which is so crucial for a suc- cessful European electricity market, and I was delighted when countries around both the North Sea and the Baltic Sea later agreed to enter precisely such cooperations.
Morten’s energy files for the last two periods:
2016 REPORT on an EU Strategy on Heating and Cooling
2018 REPORT on the Energy Performance of Buildings Directive
2019 REPORT on a European Union Agency for the Cooperation of Energy Regulators REPORT on the internal market for electricity (recast) REPORT on common rules for the internal market in electricity (recast) REPORT on common rules for the internal market in natural gas REPORT on the re-use of public sector information (recast)
the most remarkable project of cooperation I have ever been involved with. I am truly impressed with the commitment to carbon neutrality I have experienced from all walks of societal life: political colleagues, industry, NGOs, civil servants, and cit- izens. I would like to take this opportunity to thank also the European district heating community for your cooperation and commit- ment to the cause. As a lawmaker, this is what you need from industries to work your way through the necessary energy re- forms, and more importantly, such commitment is a precon- dition for a successful journey towards global carbon neutrality in 2050.
For further information please contact: mortenhelveg.petersen@europarl.europa.eu
2021 REPORT on the Connecting Europe Facility and repealing Regulations RECOMMENDATION FOR SECOND READING on establishing the Connecting Europe Facility and repealing Regulations
2022 REPORT on a European strategy for offshore renewable energy
2024
REPORT on geothermal energy REPORT on the energy performance of buildings (recast) REPORT on the Union’s electricity market design (recast)
OPTIMAL PRODUCTION PLANNING AT LARGE AND COMPLEX HEAT SUPPLIES
By Dan Andersen, BSc, Graduate Diploma in Business Administration
Anders N. Andersen, PhD, Ext. Ass. Professor at Aalborg University, R&D projects responsible at EMD International
This article describes Fjernvarme Fyn, a Danish district heating company that has become one of Denmark’s largest and most complex heat and power plants. It explains the flexibility that daily optimization tools must have to handle multiple heat sources and participate in numerous electricity markets.
Introduction and background Fjernvarme Fyn is Denmark’s 3rd largest district heating com- pany. This article will focus on the effects of the significant buildout on renewable energy, giving volatile electricity mar- kets. This calls for a strategy of having multiple heat and elec- tricity sources at a district heating company. A brief overview of Fjernvarme Fyn’s portfolio will be given, followed by the pro- cess of building a digital twin for the basis of optimal produc- tion planning. When failures occur (and they will), it is essential to have validated and financially feasible backup plans to en-
sure immediate and robust changes to operation following the company’s guidelines and targets.
Green transformation creates volatility in the power markets. The introduction of renewable energy and further expansion for technologies such as wind and solar production that feed into large national grids are key factors to significant and in- creasing price volatility in the power markets across the EU. Both for a large supplier with an extensive portfolio of power-
Variable heat cost versus electric spot without charge
Figure 1 Heat cost versus electric spot prices
plant units with grid connection or a large consumer of power from the grid, it is crucial to know how power prices will affect your economy during production and even more so during sudden unexpected changes in the production plan.
Figure 2 shows how the regulating power market (mFRR) has gained a more significant percentage of the total daily produc- tion in the west Danish price area “DK1 West” in 2022. Figure 2 illustrates monthly duration curves for prices in mFRR in 2022. Data are from the local Danish TSO “Energinet.” From the du- ration curves, we observe that in several hours, the electricity prices are very high or very low, giving a considerable financial potential to DH companies, which can both consume or pro- duce with very short notice during situations. Risk management is crucial to unlock the full potential of pro- duction and minimize future electricity costs while ensuring that production facilities receive uninterrupted power supply as needed. Fjernvarme Fyn - Large-scale portfolio optimization Fjernvarme Fyn is owned by the Municipalities of Odense and Nordfyn. The company owns the largest combined heat and power plants in Funen, has more than 300 employees, and is one of Europe’s largest heat utilities. The company covers approximately 97% of the heating demand in Odense and the surrounding area, corresponding to more than 100,000 homes, industrial companies, and institutions. The district heating sup- ply takes place according to the general guidelines specified in the heating plan, which defines supply areas and more. Fjern- varme Fyn’s goal is to provide customers with the best possible heat supply at the lowest possible prices while contributing to increased energy and environmental awareness among cus- tomers. Figure 3 shows the location of Fjernvarme Fyn in Denmark. The system includes 2,300 kilometres of underground pipes, providing domestic hot water and heat to 100,000 households and businesses. How to get an overview of the many heat sources at the plant The complete plant consists of 12 different units with different electricity and heat input and output performances. See the plant overview in Box 1. On a system like Fjernvarme Fyn, the main objective is to produce the right amount of hot water for the district heating grid at the lowest possible price while supporting the company’s emission goals. Fjernvarme Fyn has combined the portfolio as several individual plants to ensure
The need for optimal production planning for consumers and suppliers is thus essential.
• As a power supplier with a large-scale portfolio of power plants, you would produce electricity when the price is high.
• As a consumer needing large amounts of energy, you would consume when the price is low.
Supplier mindset and perspective Let’s look at a large portfolio of maybe up to 20 CHP units with different marginal prices and multi-fuel. Such a diverse setup makes it difficult to calculate when and how to supply to the power grid in combination with heat delivery unless advanced software tools are taken into operation. The example shown in Figure 1 from different CHP units demonstrates how complex it is to identify the optimal operation point. Figure 1 illustrates how eight different units (A to H) all have different price-production rate characteristics depending on heat and electricity. Consumer mindset and perspective The fast-developing and expanding trend in volatility in the power markets will increase the demand for fast response for stabilizing energy products. Figure 2 shows a duration curve for mFRR in 2022 from the electricity market in DK1 West. It is remarkable that the midrange area where demand for mFRR activation is slowly decreasing still indicates that the need for national TSO supporting regulation and activation is increas- ing. Each month consists of 744 hours. As an example, look at “dec- 22,” where it is shown that only between hours 271 and 401 is the period where mFRR is not active (17% of the month). The rest of the time, mFRR is active, giving the possibility to pro- duce or consume electricity at very high price levels if the plant has the setup supporting this.
Figure 2: Monthly duration curve for mFRR in DK1 West from dec-21 to dec-22.
the possibility to spread the production into several plant units (heat and power) and by then ensure that production always is produced on the plant with the lowest marginal costs accord- ing to various input parameters, such as market fuel prices, tax, CO2, power prices, etc. It is a unique technique to ensure the right economy 24/7 and to ensure the benefit of optimal production plans from the OPTI platform. Fact box 1 shows a countermove to a volatile power market due to the large renewable energy buildout. This ensures the lowest possible production price to benefit the customer. This is a unique size and portfolio complexity in Denmark since Fjernvarme Fyn produces electricity and heat using various renewable energy technologies. For example, Unit 4 utilizes 165,000 MWh of excess heat from the META data centre server halls, using heat pumps driven by 100% renewable energy to lift the temperature, and then distributed to 7,000 households in collaboration with Fjernvarme Fyn. The fuel portfolio furthermore includes waste, straw, wood- chips, oil, coal, gas, sewage heat pumps, electric boilers, seawa- ter heat pumps, and motor engine heat from several backup units. Heat accumulation through a central 3,000 MWh heat storage tank helps achieve an economic optimum “24/7”.
The diverse portfolio creates a unique interaction with the electricity market, where live bidding on the Nordic electricity exchange stock “Nordpool” is processed within 5 seconds every time a new bid is placed. Figure 3 illustrates the supply area for heat distribution and the main heat supply plants in the port- folio. Fact box 1 shows each plant’s specs, and fact boxes 2 and 3 show yearly production in heat and electricity. The digital twin of Fjernvarme Fyn The starting point of optimal production planning is the plant’s digital twin as an energy model that transforms the physical parameters into simple mathematical calculations. EMD In- ternational A/S delivers energyPRO, and in combination with the OPTI platform, it is possible to transform any energyPRO model into the platform. This process generates a digital twin, and the platform can be launched. The digital twin forms the basis for the model used to trade in the electricity market. It is a simple and flexible system that provides excellent opportu- nities to continuously adjust the model as the energy markets or the portfolio expands. OPTI Platform – a simple production planning tool Figure 4 shows the tool’s user interface that Fjernvarme Fyn uses for optimal production planning. This software platform integrates computational technology with limitless capabili- ties through cloud technology, where calculations are made in a few seconds with high capacity. Featuring a user-friendly interface, the platform is a pioneer in Denmark, transforming the green future for several companies. The platform calculates all input parameters at a speed of 10
Fact box 1 - Plant overview
Unit Fuel
Output Note 1 Waste incineration 23 MWe + 116 MJ/s Bypass / CHP 2 Woodchip
40 MWe + 150 MJ/s Bypass / Back Pressure
Fact box 4 OPTI platform
3 Electric boiler
100 MW
by Energinet TSO
4 META Heat Central 40 MJ/s
Closed optimazation loop
1. User-friendly 2. Quick Economic overview 3. Premodus default modes 4. Fast learning curve 5. Fast Cloud Solver World Wide 6. Direct access to energy stock 7. Easy synchronisation to BRP 8. Virtual hard ware - setup
5 Sludge Heat Pump 5 MWe + 20 MJ/s 6 Cordless tank
65,000 M3 + 3,000 MWh
7 Coal
350 MWe + 480 MW Back Pressure
8 Straw
30 MWe + 110 MJ/s Bypass / Back Pressure
9 Gas Engine
4.1 MWe
10 Gas Engine
2.4 MWe
11 Electricity
1 MWe + 1 MJ/s
12 Oil
500 MJ/s + 200 MJ/s (gas)
Figure 3: Fjernvarme Fyn, located in central Denmark, is an interesting district heating company with a palette of different heat sources and production technologies.
Production Percentage
30,8 Coal
Fact box 2 – yearly production of heat (% and TJ)
27,4 Straw /woorchip
Coal
30,8
2878,26 TJ
Straw /woorchip
27,4
2560,53 TJ
28,5 Waste
Waste
28,5
2663,325 TJ
1,9 Oil
Oil
1,9
177,555 TJ
Total 9345 TJ
Natural gas
0,1
9,345 TJ
0,1 Natural gas
Electricity
4,2
392,49 TJ
4,2 Electricity
Biogas
2,7
252,315 TJ
Wasteheat from industry
4,5
420,525 TJ
2,7 Biogas
4,5 Wasteheat from industry
Production Percentage
Coal
Fact box 3 – yearly production of electricity (% and MWh)
Straw /woorchip
Coal
30,8
434927 MWh
Waste
Straw /woorchip
27,4
155777 MWh
Waste
28,5
149462 MWh
Oil
Oil
1,9
291 MWh
Natural gas
0,1
0 MWh
Natural gas
Total 740,458 MWh
Electricity
4,2
0 MWh
Electricity
Biogas
2,7
0 MWh
Wasteheat from industry
4,5
0 MWh
Biogas
Wasteheat from industry
The process steps in the morning are: 1. Automatic Analysis of the (Stochastic) Forecasting Models from the PBAs. 2. Choose the best forecast for electricity and weather. 3. If manual inputs or special requests are required, enter these (Optional). 4. Analyze the Economics (Optional). 5. Optimize the Day ahead. 6. Generate bid matrix of the complete portfolio. Consump- tion and production.
million calculations per hour, regardless of complexity. The us- er-friendly interface shows decisions with a complete overview of all economic decisions and units in the portfolio.
Fact Box 4 sums up the most essential advantages of the platform.
Daily work process in OPTI OPTI supports the daily work process of a production planner at a large district heating company.
Figure 5 : The portfolio optimization for several units
via electric kettles or more intraday sales/purchases. If necessary, these bids are automatically placed in the PBA intraday/bidding robot, which processes the bids quickly and efficiently. 8.5 Deviations on gradients that cannot be reached due to plant performance or maintenance. OPTI calculates de- viations and corrects the plan via bids - automatically in the intraday/bidding robot at the PBA, which trades the bids quickly and efficiently. 8.6 Analysis of regulated power bids for upcoming days / make bids and place these if desired. 8.7 Automatic control of evening forecasts and hot water tank forecastsMake individual plans for all plants. 8.8 Send and print plans to the control room. Perfect equilibrium - best economy Perfect optimization occurs when all plant specifications and operational ranges are known for each facility in the portfolio. Awareness of specific fuel costs, taxes, CO2 levies, and other var- iable expenses is also essential.
7. Send the bid matrix to the Nordpool before 11:30. Pause: The morning routine is now finalized, and the planner is waiting for the electricity market to reach a clearing - which is done no later than 13:00 8. Make individual plans for all plants. 8.1 Get the electricity market clearing, and if the results are all ok, jump to 9. If not, go to point 8.2. 8.2 In case of significant deviation, the portfolio is rebal- anced, and the optimal plan is generated again (a 24/7 loop is used). 8.3 In case of too much production (Low electricity market clearing), the optimization analyzes how to produce surplus via electric boilers internally or sell it in the mar- ket. If necessary, these bids are automatically placed in the intraday/bidding robot at the PBA, and the PBA handles the bids quickly and efficiently. 8.4 In case of too little production (High electricity mar- ket clearing electricity), the optimization analyzes how more heat should be produced either internally
Figure 4: OPTI platform and user interface.
Figure 6: An optimal economic behavior during the ordinary large hot water tank planning.
When these costs are optimized with a global wind and weather model, contributed by electricity forecast on energy markets, load plans for each individual facility can finally be generated for optimal economic performance in the overall portfolio. Day-ahead bids at Fjernvarme Fyn to NordPool-spot Operation and hourly load plans are generated based on day- ahead input down to 5-minute intervals. Still, they can also be executed instantly in case of breakdowns, accidents, or other changes such as unplanned maintenance. Additionally, flexi- bility bids mFRR, according to Figure 2, can easily be calculat- ed, and all costs can be included according to individual pref- erences. Optimization can occur behind the meter and with ordinary production post-meter, and, in combination with spe- cific and unique plant characteristics, any plant or facility can be considered for the OPTI platform. Precise illustration for the company and operation staff Figure 5 illustrates the ordinary portfolio planning for 14 in- dividual units. The plan is transferred daily to electricity bids cleared at the Nordpool energy market. A fast and straightfor- ward overview is the primary purpose and backbone of the platform. When a fault or outage suddenly appears - short reac- tion time is crucial. A fault or outage in the production portfolio will immediately bring production to economic risk, whether seen from a power supplier or consumer view. The financial loss from missed elec-
tricity production can be extremely high when unprepared. No human is prepared for a situation where significant faults occur, which can cause millions of $ spent wrongly due to a manual choice in a stressful situation. The OPTI platform has a fast safety mechanism that helps op- erations in case of emergency faults and outages. This is be- cause every calculation predefines the worst-case scenario at any event that can create faulty operations among entire port- folio units. If a new event or outage appears, pre-calculations from the last optimization are already done. The operator chooses to vali- date a new production strategy. After a few seconds, the OPTI platform generates a new scenario for the optimal production plan using other units and generate load plans at economic equilibrium. The production planning tool acts like insurance to support the company’s economy in an emergency by optimizing the whole portfolio, even though maintenance strategies cannot eliminate outages for large complex plants. No decisions must be made before a final economic evaluation is performed, and OPTI will help support this. “New understanding” of large hot water tanks economy Historically, large accumulation tanks have been used as stor- age or as simple buffers in case of unit or plant failures or high demand for heat. Figure 6 illustrates the optimal economic behaviour at Fjernvarme Fyn and the large storage tank. Fact box 5 explains the technical specifications for the storage tank in operation. This mindset needs to be readvised as overall and general pur- pose in the industry. New ways of optimization and better and more precise load forecasts will help generate more profit by leveraging the electricity and heat markets to your advantage. This article described how optimization tools must be used for the day-to-day planning of bidding amounts and bidding pric- es in the different electricity markets. (Link to the scientific report “The business-economic energy system modelling tool energyPRO https://www.sciencedirect. com/science/article/pii/S0360544222016954)
Fact box 5 The large storage tank at Fjernvarme Fyn
Volume: 75,000 m3 Net Volume: 66,000 m3
Net Energy Content: 4,145 MWh (92°C) Max discharge: 10,000 m3/h or 627 MJ/s Height 45 meters
OPTI performs Economic Optimization each day and helps easy planning for maintenance at other plants meanwhile demands can be supplied from large heat water tanks.
For further information please contact: Christian Ingerslev Sørensen, cis@emd.dk
Member company profile:
DISTRICT HEATING IS THE GREEN TRANSITION CORNERSTONE
In the heart of Hjoerring, a strategic approach is reshaping the landscape of district heating through innovative, locally sourced renewable energy production.
Gone are the days of conventional heating methods, as the municipality embraces a dynamic mix of resources that in- cludes a waste-to-energy plant, wood pellets, wood chips, wind, and solar parks, as well as the integration of heat pumps and electric boilers. Furthermore, surplus heat from local in- dustries, like biogas and hydrogen production, methanization, pyrolysis, and refrigerated warehouses, forms a crucial compo- nent of this sustainable ecosystem. New heat sources over the next two years As we gaze into the near future, a wave of electrification is set to surge through the district heating sector. One notable example is a district heating company's ambitious plans to establish its own wind and smaller solar parks. Anticipated over the next two years is a substantial growth in the utilization of surplus heat from local industries, forming the backbone of the region's energy resources. The strategic mindset driving this green transition in Hjoerring is encapsulated in five fundamental principles: 1. Identification and optimization of local energy resources. 2. A commitment to achieving 100% renewable energy through local resources. 3. Stimulating local job creation. 4. Shielding against international energy crises. 5. Fostering symbiosis, where the synergy between elements equals more than the sum of their parts. These principles are not just lofty ideals; they translate into tangible benefits for the municipality. Cheaper heat, improved economic viability for companies, a coveted green label, and the creation of new job opportunities are the dividends of this strategic approach. The Ukrainian crisis served as a catalyst. The urgency of this transition was underscored by the war in Ukraine, which triggered a surge in natural gas prices across Europe. This crisis served as a catalyst, propelling Hjoerring to center stage as a pioneer in local energy production and sur- plus heat utilization. Today, these elements are pivotal tools in the overall development of the municipality. Energy Plan 2.0 – the path to sustainable growth At the heart of this transformative journey is a strategic plan known as "Energy plan 2.0." As we look to the future, the mu- nicipality is gearing up for the next level. Engaging in dialogues with local politicians, businesses, energy producers, and dis-
trict heating companies, the focus is on connecting the district heating grids among different companies. The objective is to ensure that these companies consistently tap into the most cost-effective energy sources. The hope is that the allure of cheaper green energy will serve as a catalyst for establishing these interconnected grids. Local ambassadors and a practical roadmap Beyond the city center, the municipality actively converts vil- lages from individual gas-heated houses to district heating. This transition begins with a strategic dialogue between the municipality and local district heating companies. The subse- quent steps involve rallying a group of local ambassadors with- in the village, crafting a practical roadmap, conducting citizen meetings, and launching campaigns to inspire and motivate. The collaborative effort includes representatives from the municipality, district heating companies, local ambassadors, banks, and real estate agents. In the evolving narrative of Hjoerring's energy landscape, the shift towards local, renewable, and surplus heat-driven district heating is not just a strategy—it's a beacon lighting the way to- ward a greener, more sustainable future. Location: Northern part of Jutland, Denmark Characteristics: Rural area with a few towns and numerous smaller villages Population: 62,000 citizens, predominantly residing in single houses Heating profile: 67% of households heated by district heating Number of district heating companies: 11 Ownership: All companies are citizen-owned and organized with boards Economic principle: Operate under the Danish principle of “self-balancing,” prohibiting negative or positive annual accounts Transition to renewable energy: Currently undergoing a transformation from conventional to renewable energy sources Timeline for transformation: Expected completion within the next 2-3 years Hjoerring Municipality at a snapshot
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