DBDH publishes Hot Cool, but the main business is helping cities or regions in their green transition. We will help you find specific answers for a sustainable district heating solution or integrate green technology into an existing district heating system in your region – for free! Any city, or utility in the world, can call DBDH and find help for a green district heating solution suitable for their city. A similar system is often operating in Denmark, being the most advanced district heating country globally. DBDH then organizes visits to Danish reference utilities or expert delegations from Denmark to your city. For real or virtually in webinars or web meetings. DBDH is a non-profit organization - so guidance by DBDH is free of charge. Just call us. We'd love to help you district energize your city!
NO. 5 / 2024
INTERNATIONAL MAGAZINE ON DISTRICT HEATING AND COOLING
ENERGY STORAGE
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Contents
THIS EDITION'S FOCUS THEMES
By Toke Kjær Christensen 4 3
ENERGY STORAGE
PREFACE: ENERGY STORAGE
ENERGY STORAGE AND SMART ENERGY SYSTEMS
PLANNING
By Susanne Schmelcher 8
GERMANY: THE MISSING ACTOR IN THE HEAT MARKET
DIGITALIZATION
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HOW DOES THE END-USER’S BEHAVIOR INFLUENCE THE OPERATING TEMPERATURES IN DISTRICT HEATING NETWORKS? By Michele Tunzi, Tom Diget, Kees van der Veer, Anders Nielsen
DISTRICT HEATING GENERATIONS By Robin Wiltshire, Andrej Jentsch, Lars Gullev 19
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AUSTRIA: THE POSSIBLE ROLE OF SEASONAL THERMAL STORAGE By Ralf-Roman Schmidt, Gerhard Totschnig, Bernhard Mayr
DBDH Stæhr Johansens Vej 38 DK-2000 Frederiksberg Phone +45 8893 9150
Editor-in-Chief: Lars Gullev, VEKS
Total circulation: 5.000 copies in 74 countries 10 times per year
Magazine layout Kåre Roager, kaare@68design.dk
Coordinating Editor: Linda Bertelsen, DBDH lb@dbdh.dk
info@dbdh.dk www.dbdh.dk
ISSN 0904 9681
PREFACE
The Backbone of a Sustainable Energy Future ENERGY STORAGE As the world transitions towards a more sustainable energy future, energy storage has become a critical component in the energy ecosystem. Energy storage systems provide the flexibility needed to balance supply and demand, integrate renewable energy sources, and enhance the reliability of our power grids. These systems can store energy during periods of low demand or high production, such as when the sun is shining or the wind is blowing, and release it when needed, ensuring a continuous and stable energy supply. We find it crucial to communicate the importance of energy storage and smart energy systems. Understanding and implementing these technologies is vital as global energy consumption rises and the push toward decarbonization intensifies. Countries now planning and implementing enormous energy systems can benefit from adopting a cross-sector approach to cost-effective storage solutions integrating district heating into the equation.
We bring two articles within the scope of “Energy Storage”:
The article “Energy Storage and Smart Energy Systems” by Toke Kjær Christensen (rewritten based on a journal article) advocates for an integrated cross-sector approach (System Integration) to identify the most efficient and cost-effective storage solutions for a renewable energy system. It concludes that examining individual subsectors alone cannot determine optimal storage. Instead, integrating the electricity sector with other energy system components to create a Smart Energy System offers better alternatives for incorporating large, variable renewable energy inputs than relying solely on electricity storage. Second, we bring the article “The Possible Role of Seasonal Thermal Storage for Decarbonizing an Austrian District Heating Network” by a team at AIT, Austrian Institute of Technology with Senior Research Engineer Ralf-Roman Schmidt, Research and Development Engineer Gerhard Totschnig, and Junior Research Engineer Bernhard Mayr. The article argues that seasonal thermal storage is key in decarbonizing district heating networks, shifting excess heat in summer from industrial waste heat, geothermal energy, heat pumps, and solar thermal energy for the winter and contributing to covering the winter load, thus reducing fuel demand.
In summary, energy storage is not only a technological solution but a cornerstone of the future energy landscape.
Not all about Energy Storage This issue of Hot Cool is not all about energy storage. We also bring the in-depth article “The Missing Actor in the Heat Market: How to Fill the Gap in Germany and the Lessons to be Learned from the Danish Neighbor” by Susanne Schmelcher, Director of Department for Districts and Cities at the German Energy Agency GmbH. Do not miss the article “Clarification of the term District Heating Generations” in the article by Dr. Robin Wiltshire, Chair of the IEA DHC programme; Dr. Andrej Jentsch, IEA DHC Programme Manager, and Senior Consultant; Lars Gullev, Vice-chair, IEA DHC programme. Finally, we bring yet another article by Michele Tunzi, Associate Professor, DTU, about digitalization on the demand side, this time together with Tom Diget, Chief Operating Officer at Viborg DHC, Kees van der Veer, Vice President at Brunata, and Anders Nielsen, Application Manager at Grundfos. The article answers the question, “How Does the End- User’s Behavior Influence the Operating Temperatures in District Heating Networks?”
DBDH is a non-profit organization - so guidance by DBDH is free of charge. Just call us. We'd love to help you district energize your city!
Best regards
Lars Hummelmose, Managing Director, DBDH lh@dbdh.dk, +45 2990 0080
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ENERGY STORAGE AND SMART ENERGY SYSTEMS
By Toke Kjær Christensen, Ph.D., Department of Sustainability and Planning, Aalborg University
– rewritten based on the original journal paper: Energy Storage and Smart Energy Systems by the authors: Henrik Lund, Poul Østergaard, David Connolly, Iva Ridjan, Brian Mathiesen, Frede Hvelplund, Jakob Thellufsen, Peter Sorknæs
The need for substantial electricity storage is often emphasized in the transition to renewable energy. However, focusing solely on electricity overlooks the broader energy system. This article advocates for an integrated cross-sector approach (System Integration) to identify the most efficient and cost-effective storage solutions for a renewable energy system. It concludes that examining individual sub-sectors alone cannot determine optimal storage. Instead, integrating the electricity sector with other energy system components to create a Smart Energy System offers better alternatives for incorporating large, variable renewable energy inputs than relying solely on electricity storage. This does not negate the importance of electricity storage, which will still be crucial for other purposes in the future.
A holistic approach to the choice of energy storage: Transitioning from a fossil fuel-based energy system to one based on renewable sources involves moving from stored energy to variable energy sources that require immediate use or storage. This transition often highlights the need for increased energy storage, particularly for electricity. Some argue that renewable energy's viability depends on electricity storage. However, much of the literature focuses narrowly on
fluctuating electricity and direct storage within a smart grid context, neglecting other types of grids like gas and thermal. While electricity storage is essential, converting electricity into other storable energy forms is key to achieving a 100% renewable energy supply. Therefore, identifying optimal solutions requires a holistic perspective beyond a single-sector smart grid approach.
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Scope, Methodology, and Structure: This study examines efficient and cost-effective storage options using a Smart Energy Systems Approach, showing that optimal storage solutions arise from integrating sub-sectors of the energy system. It synthesizes the authors' prior research, analyzing storage in different energy system segments, storage size, cost, and thermal storage's role. The study also considers cooling, transportation, and biomass integration, demonstrating the benefits of a smart energy systems approach incorporating efficient storage utilization. Electric, Thermal, Gas, and Liquid Energy Storage: There is a fundamental cost distinction between storing electricity and other forms of energy. Electricity storage is storage where inputs and outputs are primarily electricity, though it often involves converting electricity into other energy forms. This conversion process makes electricity storage more expensive than storing thermal energy, gas, or liquid fuels. For instance, thermal storage is approximately 100
times more economical than electricity storage, and gas and liquid fuel storage technologies have even lower investment requirements. These comparisons are based on technologies like underground natural gas caverns and oil tanks. Still, future renewable energy systems could also use methane or methanol from biomass and hydrogen from electrolysis. Beyond investment costs, electricity storage also faces higher losses, especially in conversion. Gas caverns and oil tanks exhibit negligible losses, while thermal storage has about 5% losses, depending on size and retention time. Since electricity storage involves conversion to and from storage, these losses are more substantial. Due to these high investment costs and losses, the economic viability of electricity storage technologies is highly dependent on electricity price variations, which typically occur daily. However, the intermittent nature of renewable electricity sources like wind power tends not to generate significant price variations, making investments in electricity storage economically unfeasible in high-wind power systems like
Price Cycle efficiency
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Figure 2: Annualized
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investment cost per use-cycle vs annual numbers of use-cycles. In the diagram the cost is also benchmarked against the cost of producing renewable energy, here shown for a wide cost span by grey (extension along horizontal axis is for presentation only; there is no cyclic dependence for renewable energy production).
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electricity sources.
Denmark. This is because the storage is not utilized frequently enough to justify the high initial investments.
In conclusion, while electricity storage is important, its high costs and losses make it less feasible to integrate renewable energy compared to thermal, gas, and liquid fuel storage. A more holistic approach that includes these alternative storage technologies offers better system balance and flexibility at lower costs, facilitating the integration of renewable energy into the overall energy system. Community vs. Individual Domestic Storage: Economies of scale significantly impact storage costs. Community-level storage, such as district heating systems, is much more cost-effective than individual domestic storage. Large-scale thermal storage, for instance, can reduce unit costs by a factor of five compared to smaller local systems. Although district heating systems incur heat losses, the overall efficiency improvements outweigh these losses. Similarly, economies of scale apply to electricity storage, though to a lesser extent. Designing renewable energy systems to avoid electricity storage and instead use thermal, gas, or liquid fuels at the community level facilitates the integration of fluctuating renewable electricity sources. Smart Energy Systems: Smart Energy Systems integrate smart electricity, thermal, and gas grids to identify synergies and achieve optimal solutions. This approach involves new technologies and infrastructures that create flexibility in energy conversion. Smart Energy Systems compensate for renewable resources' variability by linking electricity, thermal, and transport sectors. Heat pumps and electric vehicles play crucial roles in providing flexibility and storing renewable electricity. Electrofuels also connect the electricity and transport sectors, enabling renewable electricity
Annualized investment costs per use cycle for storing different forms of energy vary with the number of use cycles per year. Investments in electricity storage generally require 300-350 cycles annually to match the cost of producing renewable energy. Even at 400 cycles per year, where electricity storage investment costs fall below the upper range of renewable energy production costs, these include purchasing power to fill the storage, operation and maintenance—excluding storage or conversion losses. Thus, even without losses, the high initial investment costs in electricity storage make stored power only economically competitive with renewable electricity production if used almost daily. On the other hand, investments in thermal, gas, and liquid fuel storage remain feasible with significantly fewer annual cycles. These storage options allow energy storage over weeks, months, and even years due to lower investment costs. Therefore, the feasibility of these alternative storage technologies is much better, especially when the energy system is restructured to connect renewable energy with thermal, gas, and/or liquid storage technologies. While electricity storage directly impacts the integration of fluctuating renewable electricity sources like wind power, a simple comparison based on investment costs, cycle efficiencies, and investment costs per cycle shows that electricity storage is insufficient for achieving system balance. The electricity system requires constant balance, but other storage types offer more favorable solutions. By restructuring the energy system to connect renewable energy with thermal, gas, and liquid storage technologies, it becomes more cost- effective and efficient to integrate fluctuating renewable
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drive down electricity spot market prices, but a smart energy system with deferrable loads across heating, cooling, and transportation can mitigate this effect. Conclusion: Considering energy storage is essential for integrating renewable energy, both in the existing system and in a future 100% renewable supply. A narrow focus on electricity storage leads to adopting the most expensive storage form. Instead, leveraging thermal and fuel storage technologies offers a more cost-effective and efficient strategy for integrating renewable energy. A cross-sector smart energy systems approach identifies superior storage options and conversion technologies, minimizing reliance on electricity storage. Exploring alternative storage types for extensive renewable electricity integration provides better system balancing and flexibility at lower costs. While electricity storage remains necessary for other purposes, it should not be prioritized for reintegrating electricity back into the grid.
storage as gas or liquid fuels. A smart energy systems approach is essential for designing cost-effective and efficient renewable energy systems. Smart Heating and Cooling: While future heat demand will decrease, eliminating the need for space heating entirely is technically challenging. Therefore, a cost-effective solution involves balancing energy conservation with renewable energy supply, considering both individual and communal systems like district heating. Studies have shown that combining heat savings with district heating in urban areas and individual heat pumps in rural areas is the least-cost approach. District heating allows for waste heat from electricity production and industry, which can replace a significant share of natural gas and oil. Integrating wind and other fluctuating renewable electricity sources with large-scale heat pumps and thermal storage will be crucial. Power-to-heat technology provides virtual electricity storage, offering a cost- effective way to store renewable electricity as thermal energy, efficiently meeting heating and cooling needs. Smart Biomass and Transportation: Electrifying the transport sector is practical for balancing electricity system production and demand, but not all transportation demands can be met by direct electricity use. Long-distance transport, marine, and aviation will rely on gaseous and liquid fuels from renewable resources. Electrofuels provide flexibility by storing renewable electricity as gas or liquid fuels, enabling the integration of fluctuating renewable resources. This approach allows for deferrable loads and addresses the dispatch issues associated with renewable energy storage. The Overall System: Comprehensive analyses of regional, national, and European energy transitions using a smart energy systems approach have demonstrated the feasibility of 100% renewable energy systems. These systems balance renewable energy production and demand hourly through thermal, gaseous, and liquid fuel storage. A smart energy system enhances the economic viability of renewable energy by increasing the value of fluctuating power generation. Wind power, for instance, can
For further information please contact: Toke Kjær Christensen, tkchr@plan.aau.dk
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Lessons to be learned from the Danish Neighbor: THE MISSING ACTOR IN THE HEAT MARKET: HOW TO FILL THE GAP IN GERMANY
By Susanne Schmelcher, Director of Department for Districts & Cities, German Energy Agency (dena)
With the adoption of the Wärmeplanungsgesetz (WPG) (the Heat Planning Law) in Germany, the regulatory framework for heat planning has been established. In implementing the WPG, German municipalities systematically evaluate which supply variant offers strategic advantages within an overarching sustainable heat supply concept for their municipal area. The question of implementation options within specific spatial contexts and local heat generation is gaining prominence. In the past, this level has played a minor role in Germany because the supply options were usually decided at the individual building level. Even though the entire municipal area is affected by the heat planning, there will still be significant differences in the options that can be drawn for the respective individual neighborhoods. If we set aside the efficiency gains from building envelope renovations, which must be carried out by building owners and are undoubtedly crucial, the situation in municipalities simplifies as follows: For areas currently served by district heating or designated for future expansion, a sustainably implemented heat plan provides a decarbonization service for potential heat customers. District heating companies are legally obliged by the WPG to decarbonize their networks. Therefore, residents of these areas no longer need to concern
themselves with transitioning their heating systems, as this responsibility is outsourced to professional entities such as private companies or municipal utilities (Stadtwerke). In areas designated for decentralized heating, residents must individually select the appropriate heating technology—a process already well-established in Germany due to the high rate of individual supply. While residents of these areas may need to engage more intensively in their own decarbonization path, in the future, the electricity grid will largely serve as the backbone of their heat supply. This infrastructure, too, will undergo decarbonization efforts led by professional entities. A key question arises concerning areas that are unsuitable for individual heat pumps and lack district heating plans: who will organise and implement the transformation within these areas? To establish heating networks in existing neighborhoods, the following components are always required: expertise, labor, capital, and an accessible heat source. Finding an actor who brings all these components together is challenging. Private individuals often lack the necessary expertise, despite their intrinsic motivation and willingness to invest labor and capital, while professional actors lack incentives if the effort is not
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are either distributed to customers or reinvested, while losses prompt necessary price adjustments.
economically viable in the medium term. This creates what we refer to as an ‘actor vacuum,’ particularly in areas with heterogeneous ownership structures. Key lessons from Denmark Denmark has extensive experience with district heating. From a German perspective, looking at Denmark offers valuable lessons. Initially motivated by socio-economic concerns rather than environmental issues, Denmark prioritized national energy independence. Over time, there has been a shift towards climate-neutral energy sources, with district heating playing a central role. Political measures and national guidelines strongly promote district heating, enhancing local communities and value creation. Rooted in local responsibility, Denmark follows the “hvile-i-sig-selv” principle (principle of “non-profit” self-financing), ensuring trust and collaboration are fostered locally. Experiences and innovations are openly shared, leading to greater acceptance of risks and advancements in supply technology. Transparency in technical solutions, implementation processes, and heat pricing is ensured, with the Danish Utility Regulatory Authority publishing heat prices biannually to promote competition and efficiency. Surpluses
Staus Quo in Germany The current situation in Germany demonstrates that the approach to heat energy procurement as a neighborhood- driven project to foster local value creation is only sporadically implemented in rural areas. For the most part, the value chain for energy carriers extends beyond national borders. Therefore, strategic planning of heat supply at the local level as a community project contradicts the German status quo at least partially. This is evident in the current structure of German heating systems, where out of a total of 41.9 million residential units, the most common heating systems include 33.7% gas central heating, 23% oil central heating, 11.6% individual gas heating, and only 15.2% district heating 1 . The procurement of energy sources for heating in Germany involves a complex interplay of market actors, trading platforms, and political frameworks aimed at ensuring reliable and cost-efficient heat supply. An established market largely delivers heat energy carriers directly to end customers through
1 BDEW (2023: BDEW-Studie: „Wie heizt Deutschland?“
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centralized infrastructures. In essence, Germans primarily rely on the state and markets to deliver heat energy carriers to their doorstep and manage heat generation independently within their own premises. This dependence became evident during the recent energy crisis stemming from the Russian invasion of Ukraine, prompting political measures such as the energy price break to protect citizens and businesses and ensure affordable heat supply, production, and employment security. Despite the past success of this system, weaknesses are apparent, especially during times of political uncertainty. Currently, the discussion in Germany revolves around the extent to which the decarbonization of heat supply should primarily occur locally, leveraging local potentials, or by importing climate-neutral energy carriers across national borders. The former would represent a new approach for Germany. Scenario studies suggest that the efficient transformation of Germany’s heat sector should primarily occur through heat pumps and heating networks. Heat pumps can align with the principle of individual decision-making by building owners, enabling them to manage heat generation as their personal choice. Other conditions apply to district heating networks. These require local community support. Currently, Germany lacks a framework that assigns the initiation, organization, and operation of energy supply concepts to local communities, which is crucial for such areas. Neighborhood- based approaches prioritize collective benefits over individual buildings. Key actors within the Heat Networks Sector The aforementioned 15,2% share of district heating indicates that heating networks in Germany already represent a viable supply option. Unfortunately, there is not enough data available for an in-depth analysis of this segment. Therefore, only an overview of the currently involved actors can be provided, with very vague quantitative statements regarding their shares. Private companies hold a significant share of district heating networks in Germany. This includes large energy supply companies as well as smaller private operators. Municipal utility companies (Stadtwerke), often publicly owned, also operate a significant portion of district heating networks in Germany. Municipal utility companies play a central role in the energy supply landscape, especially in the context of municipal heat transition. They have high market shares in heat and gas supply, accounting for 88% of the heat and 60% of the gas business in the end customer sector 2 . In addition, there are other actors with relatively small market shares. Larger industrial companies operate their own district heating networks for industrial processes and heating factory buildings. While their share is relatively small, it is significant in industrial areas. Some public institutions, such as universities, hospitals, and municipal buildings, also operate their own district heating networks. However, their overall share is limited and varies greatly by region. The described actors are characterized by their ability to combine the components of expertise, labor, and capital. With an accessible and economically feasible heat source, they can implement heating networks.
2 Fachrat Energieunabhängigkeit (2024): Sicherheitsorientierte Energiepolitik – Eine Finanzierungsstrategie für die Erdgasunabhängigkeit von Deutschland.
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Role and Limits of Cooperatives Cooperatives and citizen energy projects are other actors in the context of local heat network implementation. In rural areas, a mix of expertise, labor, capital, and accessible heat sources can sometimes be found. Here, waste heat from agricultural biogas plants or self-operated biomass plants is often used for heat generation. These solutions are technically less demanding and, therefore, easier to operate, thus requiring less expertise. However, due to the limited availability of the energy source biomass, especially in urban areas, these concepts are less scalable. Future-oriented heat supply strategies are crucial as they integrate electricity, heat, and, ideally, industrial processes to maximize the utilization of renewable energies and promote local value creation. Sector coupling, which enhances efficiency through increased electrification, frequently offers economic benefits. However, implementing sector coupling concepts faces technical challenges and complexity within the German regulatory framework. Due to the described absence of communal utilization of local potentials, there are few established actors capable of initiating such projects. Additionally, there are limited examples of business models that could economically sustain the implementation of these projects. Therefore, expertise might already be described as the missing component here. Moreover, in the traditional sense, cooperatives only make sense where the actual building owners also live in the buildings, meaning that the heat customer and the cooperative member are identical. The Path to Scalable Heat Networks Models Cooperatives offer a model structurally resembling the Danish approach and strongly focuses on local communities and value creation. A central challenge is that cooperatives in Germany need to go beyond their traditional applications to create a scalable option for heating networks in heterogeneous, densely populated areas, which are often characterized by a strong presence of tenants. Furthermore, heat grids are more efficient when combining different demand profiles, such as from the commerce, trade, and services sectors or non- residential public buildings. Here, the one-share-one-vote principle is difficult to accept for larger entities or stakeholders with special interests. The assumption is that in this deviation from the traditional cooperative model, the necessary components (labor, capital, expertise) for successful implementation are not sufficiently available. Additionally, the specific question arises as to who feels responsible for the initiation. In terms of expertise, professional know-how, and consolidated knowledge is important. Non-professional actors cannot provide the required competence everywhere, and it is not feasible for scaling purposes for them to acquire this knowledge. It is to be expected that the realization of heating network projects with local participation will require a broad alliance of local actors working together on implementation. The roles and necessary qualifications of the various parties must be clearly defined according to their competencies.
In this constellation of actors, municipalities play a central role in various areas. They can initiate projects and moderate the development process. Additionally, they can support the planning and development process by implementing necessary measures in urban planning, such as land allocation, permit agreements, and approval procedures. Also, their properties can serve as heat production sites or anchor customers for heat projects. This can lead to greater investment security and engagement from all involved parties. Ultimately, municipalities can also act entrepreneurially, allocate budgetary resources, and thus become investors in heating network projects. However, in fulfilling these tasks, municipalities rely on support from other actors, as they themselves are constrained by limitations such as staff shortages, know-how, and limited budgetary resources. Landkreise (counties) play a crucial role in the context of district heating networks, particularly through their local energy agencies (examples from Baden-Württemberg) and county offices. These institutions are often well-positioned to consolidate the necessary expertise and conduct analyses of local heat potentials. Due to their proximity to the affected communities, they can initiate and coordinate cross-municipal projects tailored to the specific needs and resources of the region. Moreover, counties, as well as municipalities, can act as promoters and supporters by providing financial resources, facilitating approval processes, and promoting acceptance among the population. Their role as regional actors is crucial to maximize local value-added effects. Local potential end users are also key stakeholders in the acceptance and implementation of such projects. A “local advocate” can influence acceptance and help maximize local participation. This role should ideally be filled by someone from the directly affected area and is often based on voluntary work driven by intrinsic motivation for sustainable development of their own neighborhood. It can also be fulfilled by a group of individuals serving as the nucleus for a community energy initiative or cooperative. Local energy generation companies with experience in planning and implementing renewable energy projects also play an important role in tapping regional energy sources and pooling energy generation facilities. The local value- added effects depend significantly on who owns the heat generation plants, where they are built, and which companies are involved. Value-added is significantly increased when the generation plants are owned by local actors or when they are at least involved in them. External capital providers are also necessary, as the minimum equity share required by banks needs to be met. For many local banks, the investments are too high and concentrate too much risk in a specific sector and place, leading to higher needs for equity by the lender. Equity cannot always be brought in by the above-mentioned stakeholders alone, and therefore, the projects need to be opened for other investors if required. Large industries, suppliers of energy sources, waste heat, or grid operators might also be interested and motivated to invest. Another possibility is to bundle investments in a larger number of heating networks within the framework of investment funds.
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The Qx Model for 100% Renewable Heat The following example of the Q1 district heating project in Gettorf, Schleswig-Holstein, conducted by Q.X Projekt GmbH, illustrates how a renewable energy-based heating supply concept can be successfully implemented. This model involves both local and regional actors from the public and private sectors. Notably, this model integrates the need to promote local interests with the aggregation of professional stakeholders. There is no universal solution for such projects, as they must always be adapted to the specific local conditions while considering the interests of all involved parties. The model includes five key stakeholders who collectively invest in the heating supply project: the manager and operator, the owners of local energy generation facilities, the municipality, a citizen representation through a cooperative, and external capital providers. The central conflicts of interest arise from the municipality‘s obligations for public service and public interests on one hand and private sector engagement on the other. Additionally, conflicts may arise between the interests of the cooperative as a representative of the citizens and the economic goals of private investors. Therefore, the question of which resources each limited partner brings to the table and with what objectives must be considered when allocating company shares. It is crucial that no party holds an excessively large share to prevent other stakeholders from losing interest. In the case of the Q1 project model, it is assumed that involving all five stakeholders is beneficial. Even though not all stakeholders might be involved in every case, their inclusion enhances the project‘s bankability. Lenders prefer projects with multiple participants as this significantly reduces the risk of defaults. However, a higher number of participants requires effective management of the increased complexity and transparency. Therefore, a balanced approach between the number of participants, complexity, and transparency is essential. An optimally structured model can minimize the required equity share, which allows for a higher leverage effect. It is particularly attractive if only 10% equity is needed, as this
increases the possibility of mobilizing additional funds without relying on external sources.
The Q1 project in Gettorf is currently testing this model to expand it to other suitable cities across Germany if successful. The prospect of accessing a larger market with this model is intended to attract investors with larger organizational structures – both external and cooperative – to participate. This could enhance professionalism, especially on the cooperative side, and improve access to more favorable financing options, which might not be fully utilized in single-project scenarios. The model is based on the legal structure of a GmbH & Co. KG, represented here by the Quartiersgesellschaft. This entity acts as the central player, taking on the roles of manager and operator. It technically implements and operates the concept while securing the financial resources provided by the limited partners. On the production side, the Quartiersgesellschaft aggregates regional renewable energy providers who supply various components of the heating supply system. To achieve 100 percent renewable energy, a diverse mix of generators and energy sources beyond the power grid is required to ensure high resilience and flexibility. By providing their generation facilities as technical resources, these providers participate as limited partners in the project. In practice, however, the operators of these facilities have their own business models and act as suppliers within the context of the supply concept. They are equipped with the necessary interfaces to the heating supply concept but do not necessarily provide the majority of the required financing. The total investment costs for the Gettorf Q1 heating supply concept, including the generation facilities, amount to €10,000 per resident, corresponding to a total volume of €80 million. This sum exceeds the financial capabilities of the involved parties, such as the facility operators and the municipality, necessitating external capital.
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One organizational form that can effectively integrate a local actor structure is the GmbH & Co. KG, where the described actors can become part of the GmbH & Co. KG in different roles. The GmbH part takes on the initiation of the local heating supply project. The GmbH is directly legally liable and manages the daily operations of the GmbH & Co. KG. Limited partners (Kommanditisten) are silent partners in the GmbH & Co. KG, contributing capital to finance the heating network and participate in the profit and loss of the GmbH & Co. KG. Thus, the capital for construction and operation of the heating network is provided through the equity of the limited partners, public funding and bank loans. Limited partners are liable only up to the amount of their investment. They can be individuals, companies, local investors, or even the municipality itself. The technical implementation is planned and executed by commissioned professional engineering firms and specialized companies , bringing in the expertise component. This includes the planning and installation of heat generators, heat transfer stations, and the laying of heat pipes. After the construction work is completed, the heating network is put into operation, with the GmbH & Co. KG taking over the ongoing management, maintenance, and servicing of the heating network.
economically successful projects. The cooperative is currently in its founding phase. However, once it reaches a sufficient size, it could engage nationwide and participate in additional projects.
This is where investors come in, who specialize in financing large infrastructure projects and are willing to accept longer durations (e.g., 15 years). These investors seek ESG (Environmental, Social, and Governance) titles that are specifically used to finance projects or initiatives that have positive impacts on the environment, society, and corporate governance and meet their own ESG criteria. Projects like Q1 in Gettorf could precisely meet these requirements. External investors can thus participate as limited partners in the project, accepting moderate returns and ensuring that customers benefit from more favorable heating prices. The municipality plays a crucial role as the landowner and responsible party for public services. Through right-of-way agreements, the Quartiersgesellschaft gains the right to lay the network infrastructure, which remains the property of the Quartiersgesellschaft. Alternatively, a concession could be considered, where the municipality leases the network infrastructure for twenty years. Several factors need to be considered here: The municipality might be able to finance infrastructure investments more cheaply (longer depreciation periods = lower interest rates) to ensure favorable heating prices. However, financing on the investor side of the generation park poses a challenge due to the need to account for a potential “exit” after 20 years, which must be factored into the financing and could lead to higher heating prices. In the presented model, the Quartiersgesellschaft is to be granted the right of way. To safeguard the interests of the citizens and the municipality, it is important that these two stakeholders hold at least minority shares, i.e., 25.1% of the shares, which corresponds to a blocking minority. This allows both parties to jointly influence key development aspects of the heating supply concept. This means that decisions, such as the sale of the entire company or parts thereof, the admission of additional shareholders, or the setting of heating prices, are generally subject to a three-quarter majority. In this model, the cooperative and the municipality jointly hold this blocking minority. The citizen cooperative acts as a bridge between public shareholders and private investors. Its role is to represent and secure the interests of citizens vis-à-vis the municipality and external investors. In this case, it is a professionally managed cooperative operating nationwide and implementing concepts in the interest of citizens. If these concepts are viable, the cooperative becomes involved and engages only in
The Q1 model is now being tested in practice and, if successful, will be continuously adapted and expanded to other projects.
Summary/Result In summary, Denmark’s experiences in the field of heat supply offer valuable insights for Germany, particularly regarding the implementation of the Heat Planning Law (WPG).
The following factors should be considered:
Local Involvement: Denmark’s success highlights the importance of local involvement and expertise. Germany could address the “actor vacuum” by strengthening local actors and integrating them into heat supply systems. Cooperation Models: Danish cooperatives demonstrate the benefits of local management in heat networks. In Germany, new cooperation models could enhance the implementation of 100% renewable concepts, potentially leading to moderate heat prices and increased local value creation. The example of the Q1 project in Gettorf provides initial guidance in this regard. Role of Municipalities and Counties: Municipalities and counties are crucial for initiating and supporting heat projects. They should utilize their resources, act as facilitators, and seek support to overcome existing constraints. Investment Strategies: Various perspectives emphasize the need to acquire private capital for the German ‘Wärmewende.‘ Therefore, it is important to find models that align with local interests while ensuring financial viability. The Q1 project in Gettorf illustrates how these lessons can be practically applied. By adapting and integrating these strategies, Germany can work towards a more sustainable and effective heat supply system.
For further information please contact: Susanne Schmelcher, susanne.schmelcher@dena.de
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Digitalization of the demand side: HOW DOES THE END-USER’S BEHAVIOR INFLUENCE THE OPERATING TEMPERATURES IN DISTRICT HEATING NETWORKS?
The future of district heating lies in the 4th Generation systems, which operate at lower temperatures to improve efficiency and sustainability. This article explores recent studies in Danish multi-apartment buildings, focusing on how user behaviors influence operating temperatures and heating costs.
14 HOTCOOL no.5 2024
By Michele Tunzi, Associate Professor, Technical University of Denmark, DTU Construct
Tom Diget, Chief Operating Officer, Viborg District Heating Company
Kees van der Veer, Vice President, IT and Software, Brunata
Anders Nielsen, Application Manager, Grundfos
Introduction The current technological challenge of district heating is to develop new solutions to sustain the 4th Generation DH (4GDH) transitions. The core idea is to secure the expected comfort and hygiene for space heating and domestic hot water systems in buildings with low average supply and return temperatures in the range of 55 °C and 25 °C in the networks. Reducing network operating temperatures can secure the phase-out of fossil-fuel-based heat generation, integrate low-grade heat sources, minimize distribution heat losses, and reduce overall heating costs. This article aims to share the latest knowledge from surveys in typical Danish multi-apartment buildings with water radiators used as heating elements for space heating systems. In particular, to highlight the impact of common user behaviors on the overall operating temperatures and their effect on the heating bills.
Can existing buildings be operated with lower temperatures? Contrary to a common belief, existing buildings can operate effectively at temperatures lower than their original ‘design’ temperatures during most of the heating season without undergoing extensive retrofitting of their heating systems or building envelopes. [1] Heating systems are designed to maintain indoor comfort even during extreme outdoor temperatures with no heat gains. However, the heat demand during the heating season can fluctuate significantly, rarely close to the calculated design heat demand. Additionally, commercial components are available in discrete sizes, and the heating elements and heat exchangers are typically oversized. A survey conducted in ordinary apartment buildings connected to the Viborg district heating network in Denmark highlighted that existing buildings from the 1940s to 1990s can be comfortably heated with a supply temperature of 40- 55 °C for the majority of the heating seasons. Even during cold spells, the supply temperature in those buildings was below the “design” radiator supply temperature of 70 °C.
Figure 1: Existing apartment buildings connected to the Viborg district heating network, Denmark
Normally, the total energy delivered for space heating during very low outdoor temperatures (below -5 °C ) only accounts for 3-5% of the total share. Hence, in line with 4GDH requirements, it will not be an issue for district heating operators to increase the supply temperatures in the networks only for a limited number of hours while maintaining a low supply temperature profile for most of the year. How does the digitalization of the demand side help our understanding? Historically, the absence of comprehensive data from substations and heating systems led to buildings being viewed as ‘black boxes’. This perception hindered the advancement of strategies for optimal control and operation of these systems, restricting the potential for achieving low-temperature operation. While the degree of digitalization on the demand side varies among countries, implementing the new European Energy Efficiency Directives (EED) in recent years has accelerated the adoption of remotely accessible digital devices. This development has led to innovative monitoring and control, facilitating low-temperature operations and enhancing end- user billing transparency. It is expected that all energy meters and submeters (heat cost allocators for space heating and hot water consumption) in large buildings with central heating or connected to district heating networks will soon be remotely readable. Lessons learned from heating system operations in existing apartment buildings in Viborg The basic knowledge is that to heat a flat, all available radiators must be in operation and controlled locally with thermostatic radiator valves to secure the expected indoor temperature according to the end user's preferences. However, analyzing data from energy meters, heat cost allocators mounted on each radiator ( see Figure 2), and a few temperature sensors allowed us to gain insight into the standard ways of controlling and operating the space heating systems in apartment buildings. It was found that, on average, 30 to 40% of the radiators are normally closed and not active.
Figure 2: Typical radiator in apartment buildings with thermostatic control valve and heat cost allocator
The main reasons can span from the end-users believing they can reduce energy consumption to having unoccupied flats in the buildings. The effects are the same independent of the cause. First, this leads to a non-uniform heating distribution among flats. Flats with fewer operating radiators and different indoor temperatures can enhance heat transfer from neighboring flats, “stealing” heat from each other. But, if the outdoor temperature drops and the heat transfer from adjacent flats is reduced or the supply temperature is controlled under the assumption that all radiators are in operation, increasing the number of active radiators is the only way to maintain the same comfort. This was evident from an ongoing test in one of the buildings with 156 radiators. It was found that during 16-18 December 2023, the average outdoor temperature in Viborg was around 8°C, and the number of radiators in operation was 94. Whereas, during 5-8 January 2024, the outdoor temperatures dropped to - 9°C, and the number of radiators in operation increased by almost 10%, as highlighted in Figure 3. Secondly, fewer radiators heating the entire flat inevitably increases the overall return temperature because the valve controlling the flow in the radiators will open more (or fully) to
16 HOTCOOL no.5 2024
Figure 3: Number of radiators in operation for December 2023 and January 2024.
For example, in a common residential apartment building in Viborg, Denmark, with a yearly heating consumption of 314 MWh(30 apartments), a yearly average return temperature of 37 °C can secure a discount on the overall heating bill of 940 EUR. The yearly bonus can be increased to 3,200 EUR if the average annual return temperature can be reduced to 32°C – equivalent to a discount on the heating bill of 107 EUR per apartment. On the contrary, an annual average return temper- ature of 45°C corresponds to a yearly penalty of 1,930 EUR. The introduction of motivation tariffs helped, among other ac- tivities, to incentivize the improvement of the heating systems operations and reduce the yearly supply and return temper- ature in the Viborg district heating network from 80/50 °C in 2002 to 68/40 °C in 2023. However, there are two potential ar- eas for improvement: 1. The penalties or bonuses are equally divided among all flats/ tenants. In cases of rented properties, the building owner does not have any interest in investing to secure optimal op- eration of the heating systems 2. By equally dividing the fines or incentives, the heating bills do not fairly reflect the actual influence of each end-user in the overall average return temperature
compensate for the lack of heat emitted from the non-active radiators. The difference is evident from the extra temperature measurements from the sensors mounted on the distribution pipelines in two staircases of one building part of the survey, as presented in Figure 4. Higher temperatures were observed when more radiators were turned off in the apartments connected to the distribution pipelines in Staircase 1, resulting in an overall return temperature of 45 °C. On the contrary, on Staircase 2, where the users have good habits in keeping most radiators in operation, the overall return temperature in the distribution pipelines was as low as 28 °C. The economic impact of return temperature on the end-users energy bills While the magnitude of the impact may differ depending on local conditions, in a building equipped with 175 radiators, the presence of just two poorly performing valves within those ra- diators could increase the overall building return temperature by 5°C [2]. Such an increase in the overall return temperature at the building level inevitably influences heating bills. Danish district heating operators incorporate penalties or bo- nuses into the final heating bills based on the yearly average return temperature from each building. These price adjust- ments are linked with the motivation tariffs part of their heat- ing price structure. [3]
Figure 4: Impact of radiator operation on the overall return temperatures in two different staircases
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