N0. 4 / 2015 INTERNATIONAL MAGAZINE ON DISTRICT HEATING AND COOLING ECONOMICS AND OWNERSHIP OF DISTRICT HEATING DBDH - direct access to district heating and cooling technology www.dbdh.dk CONTENTS 4 THE COLUMN 6 EXPECTATIONS FOR PARIS AND BEYOND 7 ECONOMICS AND OWNERSHIP OF DISTRICT HEATING 10 RISKS TO DISTRICT HEATING EXPANSION 13 IS DISTRICT HEATING A NATURAL MONOPOLY AND WHY IS THAT IMPORTANT? 15 AALBORG DISTRICT HEATING EXPANSION OF THE DISTRICT HEATING SUPPLY 17 IS DISTRICT HEATING FROM A-Z RELY ON 50 YEARS OF EXPERIENCE IN ALL DISTRICT HEATING APPLICATIONS 16 CHP POWER PLANT SUB-STATION BOILER HOUSE CONSUMER CONNECTIONS MAIN PUMPS DISTRIBUTION PUMPS BOILER SHUNT PUMPS PLATE HEAT EXCHANGE FLOW FILTER PUMPS PRESSURE HOLDING SYSTEM LULL HEAT PUMPS P4 THE COLUMN By Lars Gullev, Managing Director VEKS, and Chairman of DBDH DISTRICT HEATING IS NOT A BANANA In this issue of Hot Cool, we share four articles that will discuss and focus on what a natural monopoly is and how it could be managed and optimized in a district heating environment. We ha Specifying the perfect district heating substation takes an experienced partner 2 kW-4 MW District heating flatstations and substations. Whatever you need, we can supply it. You know the challenges in finding the perfect substation match for your building or network. At Danfoss, we offer you exper P6 By Lars Chr. Lilleholt, Danish minister for Energy, Utilities and Climate EXPECTATIONS FOR PARIS AND BEYOND Within the short space of a week we will be engaged in a historic meeting at COP21 in Paris, a meeting which in many ways will define the international energy and climate agenda of the c P7 ECONOMICS AND OWNERSHIP OF DISTRICT HEATING FOCUS ECONOMICS AND OWNERSHIP OF DISTRICT HEATING By Morten Duedahl, Business Development Manager, DBDH Ownership, procurement, financing, risk and ESCO are some of the words most often used when people talk about their main concerns regarding deli P8 We will have a closer look at some true concerns. None of the authors claim this is easily done not at all. Lets not forget that these are expensive projects that cost a lot of money, will last for many years, and that the whole structure around the system, e.g. business case and ownership, has P9 Just going from Denmark to Germany and on to England, the meaning differs quite a lot. In these future articles, we will discuss from a more academic point of view at least two types of ESCOs. One is the classic not-for-profit that is well known many places e.g. Denmark, Sweden and Germany. We a P10 FOCUS ECONOMICS AND OWNERSHIP OF DISTRICT HEATING RISKS TO DISTRICT HEATING EXPANSION By Kristina Lygnerud, PhD, University of Halmstad By expanding district heating, Europe could become less dependent on imported energy, reduce emissions of CO2 and create green job opportunities. Expansion P11 and that it reduces CO2 emissions. Indeed, to the right kind of investor district heating investments should be very interesting and low risk. An interest to invest in district heating is growing from the point of view of fund managers of different sorts, investors that require stable returns o P12 To conclude, there is potential for further, European district heating growth. To the right investor new district heating ventures have the potential to be very interesting both in terms of long term return and environmental impact. Additionally, social sustainability can be achieved through th P13 FOCUS ECONOMICS AND OWNERSHIP OF DISTRICT HEATING Ole Jess Olsen, Professor Emeritus, Department of Management Engineering, Technical University of Denmark IS DISTRICT HEATING A NATURAL MONOPOLY AND WHY IS THAT IMPORTANT? During the cause of a normal day, most people will consume services su P14 It should be emphasized that the supply of district heating is a natural monopoly, whereas the supply of heat is not as it can be provided by alternative technologies such as oil boilers, wood stoves and electric heating. IIn Denmark, providers of district heating in some areas are protected by P15 AALBORG DISTRICT HEATING EXPANSION OF THE DISTRICT HEATING SUPPLY Jesper Møller Larsen, head of Aalborg Forsyning Varme FOCUS ECONOMICS AND OWNERSHIP OF DISTRICT HEATING Jesper Møller Larsen, head of Aalborg Forsyning Varme (in the following Aalborg District Heating), tells us that Denma P16 Market or regulated conditions Aalborg District Heating has two different tracks to follow when making an agreement with a new customer: The market terms, which means that the supply company simply starts canvassing and explain to the potential customer why a conversion is a god idea. And when P17 FOCUS ECONOMICS AND OWNERSHIP OF DISTRICT HEATING By Michael Herborn, PhD Fellow, Department of Law, University of Southern Denmark and Bent Ole Gram Mortensen, Professor, Department of Law, University of Southern Denmark IS DISTRICT HEATING STILL A (NATURAL) MONOPOLY? It is often said that P18 Broadly speaking, these three techniques represent the guiding principles behind natural monopoly regulation. The choice of which regulatory approach adopted is a question of the prevailing politics of the day, more than being based upon a purely legal analysis. In the 1930s and 40s, monopoly m P19 Defining a product market is necessary before it is possible to analyse the level of competition that takes place. Under EU law, a market is defined according to geography and the substitutability of the product under consideration. The same would also be characteristic of other competition law P20 Remarkable deep geothermal project provides heat for 20 hectares green house area and district heating grid for municipality with 2,300 residents. By Benjamin Richter, Associate Partner and Dr. Willie Stiehler, Associate, both Rödl & Partner DIRECT UTILIZATION OF DEEP GEOTHERMAL ENERGY IN GERM P21 Geological structure of Kirchweidach Geothermal energy is energy stored in the earth s crust with a high and almost inexhaustible potential. Only technical and economic aspects are still restricting its use. The utilization provides a constant coverage of heating baseload and guarantees the sup P22 Fig. 4: Schematic representation of the domestic power grid (Illustration designed by Rödl & Partner) Agricultural production leads to success of the project The vegetable farmer Steiner benefitted from the planning security of the deep geothermal source from the very start. He illustrates the P23 By Ansgar Böhm, Technical Manager Geschäftsbereich Energie ENERGY-EFFICIENCY-QUARTER HUNGERKAMP Innovative heating and power station connected to a small-scale district heating network 4TH GLOBAL DISTRICT ENERGY CLIMATE AWARDS 2015 Launched in 2009, by DBDH, the Global District Energy Climate P24 Project development Both as a regional producer of electricity and heat and as a district heating network operator, BS Energy is always looking for interesting prospects to offer its customers green energies and local sources of supply in order to contribute to climate protection. An occasion t P25 Natural gas boiler The third production module is a natural gas boiler used both for peak load needs and as a short-time replacement during maintenance and a general backup. Its thermal capacity amounts to 6,500 kW and the module is operated approximately 150 hours per year. The gas boiler prod P26 NEW MEMBERS OF DBDH ACO-ENGINEERING GENTOFTE FJERNVARME ACO-Engineering has specialized itself in the manufacturing of pillow plates (thermo plates) to be used in thermal processes. The plates are e.g. used in ACO-Engineerings own heat exchangers, which have gradually become standard with man P27 NEW MEMBERS OF DBDH IFU GEMINA TERMIX IFU (Investment Fund for Developing Countries) provides advisory services and risk capital to Danish companies wishing to do business in developing countries and emerging markets. Since the launching of the Termix 20 hot water system in 1986, Gemina Term P28 MEMBER COMPANY PROFILE ABRATEK From West Zealand to North Jutland. Corporate lawyer Claus Michael Kjær set off his career in the metal industry at Viggo Bendz A/S, a company selling spare parts for construction machinery. He got to know all the different materials involved in the production p P29 Under the abovementioned circumstances, Abrateks advancements in district heating are very much aligned with Denmarks long-term energy goals and the progress of biomass heating generation projects: It takes something extraordinary to meet these goals. This is what we work with and what we can o P30 LIST OF MEMBERS Aaen Consulting Engineers Aalborg Engineering Aalborg Forsyning ABB Consulting engineers and planners Supplier of boilers and boiler systems Municipal district heating supply Phone +45 8617 5055 www.aaenas.dk ra@aaenas.dk Phone +45 9631 3950 Fax +45 9631 3951 ae@aalborg- P31 Frederiksberg Forsyning FW Rørteknik Municipal district heating supply Statinary tanks Phone +45 3818 5100 Fax +45 3818 5199 ff@frb-forsyning.dk www.frb-forsyning.dk Phone +45 7519 2277 fw@fw.dk www.fw.dk GEO Gottlieb Paludan Architects Phone +45 4588 4444 geo@geo.dk www.geo.dk Phone + 70% Operating costs 30% Investment costs www.logstor.com Discover a lifetime of value When as much as 70% of the total cost of a District Energy pipe system goes into its operation, it is vital to make the best investment decisions right from the start. At LOGSTOR, we deliver value across the ent