1. Green Energy and District Heating Visit from Estonia May 19, District Heating in Greater Copenhagen
Lars Gullev
Managing director, VEKS

2. Who is VEKS ? Vestegnens Kraftvarmeselskab I/S
Who is VEKS ? Vestegnens Kraftvarmeselskab I/S
Established in 1984.
Partnership between 12 municipalities.
DE transmission company with the purpose to utilize and distribute surplus heat from CHP plants and waste incineration plants.
Investment in pipe network: Euro 350 mill.
Annual turnover: Euro 150 mill.
66 employees

3. Where are we?

4. 100 years DH history in 1 minute 1897 - 1903
100 years DH history in 1 minute
Impossible to find areas for landfills inside the boundaries of the municipality of Frederiksberg.
Construction of a new hospital.

5.
1903

6. Denmark’s Wake-Up Call was 35 Years Ago
Denmark’s Wake-Up Call was 35 Years Ago
oil crisis
2 countries were more than 92 % dependent on imported energy: Japan and Denmark (oil and coal)
Sharply rising oil prices caused economic crisis and high unemployment.
A matter of national security and top economic priority to embark on new sustainable solutions

7. ´The Danish Example´ - creates attention…
´The Danish Example´ - creates attention…
In 25 years Denmark’s economy has grown nearly 80 % with basically unchanged gross energy consumption.
In 25 years Denmark has converted from being 92 % dependent on imported fuel to be the only country in EU that are energy self-sufficient.
During the last 25 years the share of renewables in district heating has increased by 300 % to a total share of approx. 46 %
Source: Danish Energy Authority

8. Global Warming is a threat…

10. Energy-, RE and CO2-targets in EU
Energy-, RE and CO2-targets in EU
Targets in EU
20 % of energy consumption has to be based on RE in 2020 compared with 1990
Denmark has a target of 30 %
20 % CO2-reduction i 2020
(will increase to 30 % if other countries set equal targets)
20 % energy savings in 2020
60-80 % CO2-reduction i 2050
EU points at CHP/DHC as important ”tools”.

11. Energy-, RE and CO2-targets in DK ”Our future Energy”
Energy-, RE and CO2-targets in DK ”Our future Energy”
% reduction of CO2 emission compared with 1990.
2030 – No coal used at CHP and power plants.
2035 – Heat and power supply 100 % covered by renewable energy.
2050 – Society (power, heat, transport, industry) covered 100 % by renewable energy.

12. DH in Greater Copenhagen
VEKS
Partnership between 12 municipalities
350,000 tax-payers
150,000 end – users
9,000 TJ (2,500 GWh)
DH in Greater Copenhagen
19 municipalities
4 integrated systems
500,000 end – users
34,500 TJ (9,600 GWh)
40 km

13. Present heat production

14. Strength of the system - flexibility
Strength of the system - flexibility
More efficient and flexible heat production by optimizing the choice of production unit depending on price on electricity
Heat production from:
27 % - Waste
2 % - Geothermal
70 % - CHP
1 % - Peak load
Heat production from:
Oil
Coal
Natural gas
Waste incineration
Wood pellets
Straw
Biofuel
Geothermal energy 14

15. Utilizing Local Bio-Resources - Biogas Solrod Municipality, Denmark
Utilizing Local Bio-Resources - Biogas Solrod Municipality, Denmark

16. Where to find Solrød and VEKS?
Partnership between 12 municipalities
350,000 tax-payers
150,000 end – users
9,000 TJ (2,500 GWh)
DH in Greater Copenhagen
19 municipalities
4 integrated systems
500,000 end – users
34,500 TJ (9,600 GWh)
Køge Bay
40 km

17. Solrød Biogas Plant Raw materiale to the biogas plant
Seaweed from the beach-cleaning.
Residues from the factory CP Kelco.
Industrial biomass.
Manure.

18. Solrød Biogas Plant Seeweed from beach cleaning
Has for many years been a nuisance to the beach's visitors and residents of the beach area.
Seaweed contains some nutrients, which will add value to the digested biomass.
Will be used for fertilization / soil conditioner in agriculture.
Potential of up to 42,000 tons, however, after excluding sand it will be significantly reduced. At the moment the annual collecting of seaweed will be 22,000 tons, of which 2/3 are rated as sand discarded.

19. Solrød Biogas Plant Residues from CP Kelco
Residues from the production of pectin in the company CP Kelco, located app. 2 km from the biogas plant. The annual amount of citrus peels is estimated to be round 80,000 tons.
What is pectin?
Pectin has the property to form a gel with sugar. For this reason, pectin is used in combination with sugar as a thickening agent in the food industry.
Pectin is produced from citrus peels as raw material and residues consists almost entirely of organic, biodegradable material.

20. Solrød Biogas Plant Other industrial biomass
Currently there is included reception of app. 60,000 tons of industrial biomass from a pharmaceutical company.
The biomass is estimated to contribute about 1.0 million m3 of methane out of the total annual production of 6.0 million m3 of methane.

21. Solrød Biogas Plant Animal manure
The industrial residues will not be optimal to use alone in the biogas plant as they predominantly have a low pH-value.
Addition of manure is beneficial to maintaining an appropriate degree of acidity in the digesters.
Farmers are expected to deliver 50,000 tons of manure in the form of pig and cattle slurry, and smaller proportion horse manure.
The biomass is estimated to contribute about 1.0 million m3 of methane out of the total annual production of 6.0 million m3 of methane.

22. Contribution to the project
Solrød Biogas Plant Raw material, methane production and contributions to the project
Raw material
To the biogas plant
tons/year
Calculated methane production
1,000 m3/year
Contribution to the project
Manure
Seaweed
CP Kelco
Industrial residues
53,200
7,400
79,400
60,000
578.8 (9.5 %)
31.6 (0.5 %)
4,514.8 (75 %)
918.7 (15 %)
Gas production and process stability
Nutrients and improved water quality
Gas production
Gas production and nutrients
Total
200,000
6,000 (100 %)
Benefits for the environment

23. Solrød Biogas Plant Process diagram
Heat capacity: 2.8 MJ/s
Power capacity: 2 MW
Heat production: 100 TJ/year
VEKS demand: 10,000 TJ/year

24. Solrød Biogas Plant Delivery and storage of digested biomass
Liquid fraction will be transported back to the farmers as fertilizer to replace existing “normal” fertilizer.
In addition to the use of existing tanks at farms, there will be an increased storage and handling requirements for app. 100,000 tons degassed biomass annually.

25. Solrød Biogas Plant Investment
Investments – excl. VAT
Price level 2013
Biogas plant and CHP plant
Million DKK (million €)
Biogas plant
Installations With short lifetime
Other installations and facilities
Buildings etc.
CHP plant
Gas engine
Pipes
Connections, pumps etc.
Transport equipment
Storage facilities at farmers
Total investments
87.0 (11.6)
26.8 (3.8)
53.5 (7.1)
6.7 (0.9)
31.5 (4.2)
24.0 (3.2)
6.0 (0.8)
1.5 (0.2)
10.0 (1.3)
15.0 (2.0)
143.5 (19.1)
Planned commissioning of the total plant is expected by mid-2015.

26. Solrød Biogas Plant Consequences for the environment
Facts
Emissions
Consequences
Annual reduction of CO2 emission
40,500 tons
Approx. 60% of the municipality's climate target
Annual nitrogen reduction in Køge Bay
62 tons
Approx. 70% reduction requirement for Køge Bay
Annual phosphorus reduction of Køge Bay
9 tons
Over 100% reduction requirement for Køge Bay

27. Solrød Biogas Plant Summary
The biogas plant ensures:
Utilization of waste from industry and agriculture.
Solves an environmental problem in the form of seaweed washed up on the beach.
The biogas plant reduces the GHG emissions:
When removing seaweed from the beach (seaweed emits GHG methane when it rots).
By substitution of fossil fuels for energy production.
When replacing soil materials in the agriculture.
The biogas plant generates digested biomass:
Better binding of fertilizers in the soil.
Reducing the environmental impact that can be achieved by leaching.

28. A New large Greenfield District Heating System in Koege, DK (conversion from natural gas to DH)

29. Background for the project
A broad consensus in the Danish Parliament that Denmark in the long term has to be independent of fossil fuels.
The EU directives require that the reduction of CO2-emissions must be done in a cost-effective way.
The Renewable Energy Directive (RE-Directive) requires that cities must plan for district heating and cooling (DHC) in order to use RE where it is advantageous for heating, preparation of domestic hot water and cooling.

30. Background for the project
No DH in the city of Koege today !!!
but the city is of particular interest for three reasons:

31. Background for the project
Industrial biomass fired CHP plant (Koege CHP plant) with large amounts of surplus heat – today more than 400 TJ/year is cooled away with seawater.

32. Koege CHP Plant 2 Units Unit 7 from 1986 9,45 MWe 41,62 MJ/s heat
Fuel:
Wood chips
Fuelolie (start up)
Proces steam to:
Junchers Industrier
Køge biopellet factory
Power to the electricity grid

33. Background for the project
Many large block heating plants, which make it particularly obvious to establish DH.

34. Background for the project
Only 7 miles from the DH transmission network in Greater Copenhagen

35. Partners
For these reasons, in autumn 2009, the municipality of Koege began collaboration with:
DONG Energy – Energy company owned by the Danish State (owner of the CHP plant in Koege).
Junckers Industrier - One of Europe’s largest manufacturers of solid hardwood flooring (supplier of 50 % of the wood chips to the CHP plant).
VEKS – DH transmission company.
Target
To prepare a development plan to examine the feasibility of establishing DH for all major properties in Koege town.
A DH supply based on utilisation of surplus heat from DONG Energy’s biomass-fired CHP plant at Koege harbour.

36. What does the Business Plan?
The Business Plan is a study of the economic, customer-economic and environmental consequences:
A positive economy for the society is necessary to subsequently obtain authority approval of the project.
A positive customer economy is needed to motivate customers to connect to the DH system.
Environmental impact must be known before such a large project begins.

37. What does the Business Plan?
The precondition for the Business Plan:
The main parts of all buildings larger than 300 m2, - or approximately 1.8 million m2 - are connected to the DH system.
Approximately 600,000 m2 of new buildings will be connected during the project period
From 2016 a natural gas consumption of 15 mill. m3/year will be replaced by DH million m2 building area connected to DH.
From 2020 a natural gas consumption of 19 mill. m3/year will be replaced by DH.

38. Tariff structure Crucial to the project economics and realizing:
The idea behind the new tariff model is for the existing natural gas customer to be able to see a financial gain by converting to DH.
DH must not only be more environmentally friendly but also competitive compared to alternative options, where natural gas is the market-determined alternative.

39. Tariff structure
No requirement about connection payment to the distribution company.
Moving the supply limit so that distribution company pays for removing the natural gas boilers, owns heat exchanger installation and takes care of future maintenance of the installation.

40. Tariff structure Price Guaranteed
The project propose a Price Guaranteed for DH of 90 % of the equivalent annual cost of heating based on natural gas:
The purchase of natural gas.
Finance a new natural gas boiler.
Operation and maintenance of a natural gas boiler.

41. Tariff structure Price Guaranteed
Price Guarantee means that customers are not burdened financially with extraordinary one-time costs of converting to DH.
The DH company’s costs to be covered through the guaranteed price contain:
Heating purchase.
Financing pipe network including connection pipe.
Financing new DH unit (user facilities) to the customer.
Administration and operation of the DH system etc.

42. Cost elements to be covered by the Tariff
Payment 1
VEKS Transmission’s general tariff by heat supply (paid by all distribution companies that have heat supplied from VEKS).
Payment 2
Pump expenses, heat loss, administration and maintenance (only costs regarding VEKS Distribution in converted area).
Payment 3
Depreciation allowance and return of fixed asset investment in the concrete converter area.

43. Tariff structure
Costs covered by Payment 1, 2 and 3 will be covered in an order of priority:
Expenses for Payment 1 and 2 will be covered first.
If there is not enough income to cover the year’s expected Payment 3, a regulation of the depreciation period will take place with respect to the framework of the depreciation act (max. 30 years)

44. Economic (Society)
A very robust reduction of economic costs over the project period (20 years):
The economic cost of fuel purchases and operation and maintenance of the current natural gas supply will be approx. € 128 million.
The corresponding cost connected to the conversion to DH will be approx. € 105 million or equivalent to a saving (NPV) of € 23 million.
The internal rate of return for the project in relation to a reference with condensing gas boilers and heat pumps are calculated to 10 %.

45. Economy (DH Company)
With the assumed guaranteed reduction in DH price of 10 % for all current natural gas customers, all DH investments will be repaid over the project period (20 years).
The largest and most uncertain project risk is associated with future natural gas prices:
If natural gas prices are reduced by 5 % throughout the project period, the corresponding lower DH tariff extend the amortization period from 20 to 23 years.
If natural gas prices are reduced by 10 % throughout the project period the amortization period will be extended to 27 years.
Since the Danish DH legal framework allows amortization periods up to 30 years, the economy for the project is considered to be robust.

46. Investments
The total investment in DH distribution system will be remunerated and depreciated by the DH customer via their contribution for the DH supply.
Loans will be taken for financing the investments.
The total DH investments are calculated to approx. DKK 600 million (€ 80 mill.) covering DH network and the associated customer installations.

47. Reduced CO2 emissions
The main environmental impact of the project is a large reduction in CO2 emissions of approx. 40,000 tonnes per year.

48. Status of the project just now
The project proposal was approved by the municipality of Koege in May 2011.
In 2011 VEKS’ Statutes was reviewed and now the municipality of Koege is stakeholder in VEKS.
Koege municipality has requested VEKS to take responsibility for establishing DH in the city and construction works started 29 May 2012.
Marketing to potential customers is going on.

49. Status of the project just now
VEKS negotiated from 2010 to 2012 with DONG Energy to purchase the biomass-fired CHP plant in Koege:
Electricity 26 MW
Heat 92 MJ/s.
Takeover took place 1st May 2012.
Construction of a DH transmission line from Koege to the existing transmission network is going on and the line will go into operation

50. From smart grids to smart cities
From smart grids to smart cities

51. Smart Grids What’s the problem with the concept?
Couldn’t it be Smarter?

52. What we need is….. Smarter customers Smarter tariffs
What we need is…..
Smarter production
Smarter customers
Smarter tariffs
District Energy can offer that!

53. Smart Cities Low grade heat sources, DHC

54.
Summary
The DH project in Koege shows how low grade energy sources - as surplus heat from CHP production and industries - can be utilised in a DH system.
DH cannot solve all the modern society’s climate and environmental problems, but…. 54

55.
Summary
… no modern society can solve the growing climate and environmental challenges without involving DH as an integral part of the infrastructure. 55

56.
Thank you
Further information: