project proposal preparation concerning the municipal heat planning task.
“Start district heating company.”
To raise funds for project proposal development, etc., member- ship shares of, for example, €1,000 can be sold to interested customers/shareholders. Alternatively, a turnkey supplier can cover these costs up-front if an agreement has been made.
Most DH companies in Denmark are organized as cooperative societies (a.m.b.a.) owned by the DH consumers. Another op- tion may be for the municipality or a private entity to own the DH company. If the DH company is established as a limited liability cooper- ative, the owners' responsibility is limited to the share capital each has contributed. In practice, it often starts with a group of enthusiasts deciding that they want district heating in an area. In Denmark, the organization Danish District Heating Associ- ation has developed a set of Standard Articles of Association, which is used by most DH companies in Denmark and can be used by new companies at no cost. Before the physical establishment, the company should con- sider how the project will be tendered. There are specific ten- dering rules to be followed, which vary from country to country and depend on factors such as the type and size of the project.
“Screening (technical, economic, legal)”
It is important to clarify whether there is a basis for establishing a new DH company as early as possible.
DH (collective heat supply) should only be established where it is economically and environmentally sustainable in the long run. There is currently significant pressure to transition from natural gas, volatile energy prices, and high demand for mate- rials (pipes, meters, etc.) and personnel (contractors, plumbers, planners, etc.).
Therefore, a technical, economic, and legal screening of the project is crucial, focusing on the following points:
“Develop project proposal, obtain municipal approval and financing.”
Agree with a competent advisor who can provide com prehensive guidance.
In Denmark, municipalities are the authority for heat planning and approval, which may differ in other countries. However, in Denmark, it means that the municipal councils make the final decision on how heat planning and the expansion of heat sup- ply will take place in the municipality. The Danish Energy Agency sets the framework for municipal heat planning and the municipality's handling of heat pro- jects. The rules are outlined in the "Executive Order on Approv- al of Projects for Collective Heat Supply Systems," also known as the "Project Executive Order." The project proposal describes the project in detail and is usu- ally prepared by a consulting engineering firm commissioned by the DH company or the municipality. Once the project pro- posal is approved, loans must be secured to finance future in- frastructure investments. Examples of project proposals can be requested through DBDH. One of the reasons for the success of DH in Denmark (where 66% of all households are heated by DH) is the simple and at- tractive financing model used. A similar should be investigated in your country. Under this model, a DH company can finance infrastructure investments with loans through KommuneKredit, a spe- cial-purpose credit institution in Denmark, with a 100% guar- antee from the municipality. However, DH companies can also choose private mortgage credit institutions, banks, or leasing companies as an alternative to KommuneKredit. In such cases,
Be cautious with "no-cure, no-pay" advice. It may incentivize establishing DH networks that are not viable in the long run.
Prepare technical sensitivities/scenarios:
Check heat density and calculate heat loss in the network.
Utilize existing boilers (greenhouses, schools) or surplus heat (industry, wastewater, seawater, etc.) and investigate the placement of technical facilities.
Consider supply security, resilience, peak load, and backup capacity.
Consider organization and long-term operation.
Prepare a budget estimate:
Check competitiveness (pricing structure). Calculate the estimated heat price per consumer based on estimated production and administrative costs.
Calculate the necessary and probable connection percent- age (verify pre-interest among the properties involved).
Ensure close dialogue with the municipality's departments for climate, heat planning authority, properties (major public heat consumers that can connect), and land use/ local planning (placement of technical facilities).
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