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Pricing of recovered heat to a district heating grid Per Rosén Business Innovation, E.ON Sverige AB 2014-03-28.

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Presentation on theme: "Pricing of recovered heat to a district heating grid Per Rosén Business Innovation, E.ON Sverige AB 2014-03-28."— Presentation transcript:

1 Pricing of recovered heat to a district heating grid Per Rosén Business Innovation, E.ON Sverige AB

2 Heat Production Strategy and Costs of District Heating 2 Fixed Costs Movable Costs Part Load Performance Load Interval Performance Environmental Impact Base Load UnitsHighLowPoor Low Medium Load UnitsMedium GoodMedium Top Load UnitsLowHighGood High

3 Framing and pricing industrial recovered heat Step 1 – Framing the recovered heat production potential  Frame in availability potential heat flow over time  Frame in available temperatures of this flow over time  Frame in costs, both fixed and movable, to recover heat to the district heating net 3

4 Framing and pricing industrial recovered heat Step 2 – Decide Potential to fit into future heat production strategy of the district heating net How will present heat operation units be affected? -Less base load unit operation? More top or medium load units operation? Try to define avoided costs both of district heating company and of industry when using the recovered heat into the district heating net. 4

5 Framing and pricing industrial recovered heat Step 3 – Negotiations aiming for a treaty  Formalizing deliverance profile, quality and availability of the recovered heat  How should the profit be shared that comes out from an avoided cost analysis? Recommended are a profit sharing.  Decide on investment costs connected to make the recovered heat available for district heating net. Normally the industry wants to pay as little as possible of the investment costs connected to future recovered heat deliverance.  Sometimes incentives are created (a.e. low price during summer periods)  Long term treaties, years, are often preferable  Indexes are often being used (CPI, Pricing against end-user price etc. ) Advices:  Use indexes that you believe will be available during years to come  Use as few indexes as possible - preferably one Keep it simple! 5

6 Summery of pricing industrial recovered heat The basic idea to land a treaty on recovered heat deliverance, I believe, is the same indifferent of nations. The price level of recovered heat varies in a large spectra depending on district heating company present and future heat production options but also options of the industry has to be taken into consideration using an avoided cost strategy However…. If district heating company is owned by the city, the price of recovered heat can be set higher to promote and make the industry more competitive…. A cost based driven district heating business where authorities set the price level to end-users the incitement to use recovered heat is lowered (a.e. Denmark and Poland) due to low incentives for the district heating company to find cheaper heat production solutions At least in Sweden, Germany and Finland there is no restrictions to negotiation between the district heating company and the industry who wants to deliver recovered heat to make it beneficial for both parties. 6

7 Framing and pricing industrial recovered heat most important factors are…. Trust & Knowledge 7


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