HOT|COOL NO.4/16 - "From one generation..."

HOT|COOL NO.4/16 - "From one generation..."

N0. 4 / 2016

INTERNATIONAL MAGAZINE ON DISTRICT HEATING AND COOLING

FROM ONE GENERATION DISTRICT HEATING TO ANOTHER

DBDH - direct access to district heating and cooling technology

www.dbdh.dk

CONTENTS

4 6 8

THE COLUMN

AUSTRIAN DISTRICT HEATING BUSINESS MODEL 2.0

DISTRICT HEATING AS PART OF A EUROPEAN ENERGY UNION

11 15 19 23 26 28 30

THE CHANGING REQUIREMENTS FOR THE DISTRICT HEATING GENERATIONS

SWITCHING TO 4TH-GENERATION DISTRICT HEATING IN ALBERTSLUND, DK

CAMPUS ENERGY (US AND CANADA) – ENERGY EFFICIENCY AND STEAM TO HOT WATER CONVERSIONS

STEAM CONVERSION IN COPENHAGEN

NEW MEMBERS

MEMBER COMPANY PROFILE: IFU

LIST OF MEMBERS

FROM ONE GENERATION DISTRICT HEATING TO ANOTHER

HOT|COOL is published four times a year by:

DBDH Stæhr Johansens Vej 38 DK-2000 Frederiksberg Phone +45 8893 9150

Total circulation: 5,000 copies in 50 countries

[email protected] www.dbdh.dk

ISSN 0904 9681 Layout: DBDH/galla-form.dk

Editor-in-Chief: Lars Gullev, VEKS

Pre-press and printing: Kailow Graphic A/S

Coordinating Editor: Kathrine Windahl, DBDH

E N E R G Y A N D E N V I R O N M E N T

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By Lars Gullev, Managing Director VEKS and Chairman of DBDH THE COLUMN

DISTRICT HEATING - MORE THAN 100 YEARS OF HISTORY, BUT STILL RAPIDLY DEVELOPING

This issue of Hot Cool highlights • how US and Canadian universities are converting district heating systems from steam (1st G DH systems) to hot water (3rd G DH systems), thus reducing the heat loss, for example to between 33% and 50% of the current loss. • how in Copenhagen, Denmark, the last of the original steam system, established from 1906, is converted to hot water, so that the total district heating system in Copenhagen in 2021 will be a 3rd G DH system. • how in Albertslund, Denmark, the first projects to convert the current 3rd G DH system have now been launched so that the entire municipal district heating system in 2026 will be a 4th G DH system. • how existing district heating systems in older buildings can be converted from 3rd G DH systems to 4th G DH systems. I hope this issue of Hot Cool can create inspiration for the further development of district heating everywhere - whether the district heating systems are developed from 1st G DH systems to 3rd G DH systems or from 3rd G DH systems to 4th G DH systems. The important thing is that we always make sure to communicate to politicians and the public that well-run district heating systems allow the utilization of vast energy resources, which without a district heating systemwould be lost to our society. Furthermore, district heating systems facilitate renewable energy to be utilized on a large scale for the economic benefit of citizens and society. That is the Christmas present that we in the district heating sector can give to everyone. Thank you for a pleasant 2016 and welcome back to an even more exciting 2017 – happy new year!

The first steam-based district heating systems were put in commission in the 1880s in the United States. The systems are today known as 1st G (generation) DH systems, and it was steam that was the energy transferring medium in the district heating systems until around 1930. At that time, water took over, and the flow temperature was reduced from the present more than 200 degrees C to about 120 degrees C - we had now started the 2nd G DH systems. In Denmark, we began to see the first heat accumulators as part of the district heating systems - primarily in order to provide greater flexibility in the operation of the CHP plants that produced district heating for the transmission network. The next major development leap within district heating technology occurred in about 1980, when pre-insulated district heating pipes replaced steel in concrete channels. The 3rd G DH systems were born. The flow temperature of the district heating network was lowered, which meant that the heat loss was also reduced. Renewable energy began to contribute to the production of district heating - partly in the form of biomass replacing fossil fuels, but also the construction of large solar plants, which began supplying heat into the district heating network, took place in more and more countries. The flow temperature had now been lowered to 70 -90 degrees C. We have now addressed the 4th G DH systems where the flow temperatures are as low as 50-60 degrees C. This low temperature level means that the heat loss from the pipes is further reduced, but what is most important is probably the fact that low temperatures enable a use of energy resources in the community that was previously lost – most prominently the utilization of waste heat from the industry. Furthermore, the potential is increased for utilization of renewable energy on a large scale - for example by utilising solar heat which can be seasonally stored in large heat storages for use in the winter. A flow temperature of 50-60 degrees C is low, but test district heating systems are already conducted where the water temperature is as low as 35-50 degrees C, so the development certainly has not come to a hold yet.

E N E R G Y A N D E N V I R O N M E N T

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By Roman Geyer, Research Engineer, AIT Austrian Institute of Technology GmbH, and Ralf-Roman Schmidt, Research Engineer, AIT Austrian Institute of Technology GmbH

Making the current district heating (DH) systems future proof required substantial changes. The existing district heating networks in Austria already have to struggle with unstable market situations and new requirements. In order to increase the economic and energetic efficiency as well as the share of renewable energies, DH operators have to adapt their business models and also have to consider completely new aspects. Background to the Austrian DH situation Currently, more than 2,400 district heating (DH) networks are operating in Austria, besides some larger networks in urban areas the majority are small biomass bases rural DH networks. About half of the total supply is based on fossil fuels, the remaining share is distributed between waste incineration, biofuels and others – the total share of CHP is about 2/3. Due to unstable fuel and electricity prices, the long-term perspective of these systems is becoming increasingly insecure. The integration of alternative heat sources (such as solar- and geothermal energy as well as residual or ambient heat via heat pumps) can minimize investment risks, maximize the security of supply and reduce the CO2 emissions. However, many existing systems in Austria are not designed for a significant share of alternative heat sources which are fluctuating and/or decentral and/or have a low temperature level. Weaknesses of current business models Typical business models for urban and rural DH-operators in Austria are shown in Figure 1 and Figure 2 (black print). They are based on “classical” heat distribution to the customer: heat is produced and delivered to the customers without a deep customer relationship. Moreover, the contracts are usually rigid and don’t have many degrees of freedom for the customers. Having fixed and variable prices (consumed energy) is the most used tariff system of DH operators in Austria. Due to (mostly) high fixed prices, customers do not see too much financial incentives for energy savings or optimization of their heating system. Although DH operators see their customers as key partners, they actually do not play a big (active) role in existing business models. Further on, DH network operators rely mainly on high temperature supply units. This is a barrier for lower system temperature and in turn prevents the transition towards the 4th generation. As a consequence, far-reaching changes (technical-ecological structural transformations) are necessary for suitable future business models in order to make greater efforts to meet customers' needs and increase the system efficiency.

Figure 1: Typical business model for an urban DH-network in Austria (presentation form: Business Model Canvas; picture source: Stratego), the new elements of the business models are red underlined

Introducing innovative elements Within the STRATEGO project a coaching scheme was implemented for the two largest cities in Austria (Vienna and Graz) and two small biomass-based rural DH networks being representative for many others. In multiple coaching sessions together with Swedish partners, side visits and national workshops with local stakeholders as well as meetings with national authorities, different solution options for tackling selected key challenges in Austrian DH networks have been developed. In this framework, following innovative elements for business models in a) urban and b) rural networks have been discussed (new elements are printed in red colour and are underlined in Figure 1 and Figure 2): a) Urban district heating networks: Although many urban district heating operators have their focus already on providing their customers different services and packages, the existing business models lack of financial benefits and incentives for reducing the network temperatures, integrating alternative heat sources and increasing the flexibility. Possible new elements include: Figure 2: Typical business model for a rural DH-network in Austria (presentation form: Business Model Canvas; picture source: Stratego), the new elements of the business models are red underlined

E N E R G Y A N D E N V I R O N M E N T

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b) Rural district heating networks: Many small DH networks struggle with profitability, especially during summer when the operation is inefficient due to high heat losses due to high network temperatures. Possible new elements include: • Network optimisation (Figure 2: Value Proposition 4 ): Onemain reason for high return temperatures are faults at the substations on the customer side due to inappropriate installations and operation. Very often, planners and installers (Figure 2: Key Partnerships 1 ) of district heating networks in rural areas are not aware of the requirements of DH networks in connection with the installation of the secondary side respectively the consequences if they are not fulfilled. Therefore, workshops (Figure 2: Value Proposition 4 ) are planned to integrate the relevant stakeholders at an early stage to show them the importance of the customer side . In addition, the cooperation between different DH networks should be strengthened for knowledge transfer (Figure 2: Key Activities 2 ). Final remarks For the implementation of innovative elements in the current business models, additional efforts are required. This is including an integrated cost-benefit analysis in order to evaluate the feasibility of the new elements and strategies for the transformation of the current business model. Here, major barriers are the organizational structures and philosophies of many companies as well as regulatory conditions and the market design in which the business model is implemented. However, following approach for developing innovative elements of business models supporting future proof district heating networks can be described: • Motivate the stakeholder to think “out of the box” and allow also new and creative ideas (e.g. show international best practice examples) • Involve key partners, local stakeholders and possible new actors (such as energy contractors) to develop new business models for creating a win-win situation • Identify the needs of the customers and allow them to take part in the development process • Deliver a sound concept featuring economic and ecologic advantages and at the same time addressing technical and non-technical barriers Acknowledgement This work is a result of the STRATEGO project, supported by the Intelligent Energy – Europe (IEE) programm (Contract N°: IEE/13/650/SI2.675851).

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