Editorial Security of supply as a driver for new alliances

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1 Newsletter e-harbours #7, February 2015 Editorial Security of supply as a driver for new alliances Over the last few years the debate on the European Energiewende focused on the share of renewables. Now the public debate on energy is entering a new stage: even the average consumer started talking about secure energy supply. This winter the security of supply of energy has become an almost daily topic in the newspapers. The shutdown of Belgian nuclear power stations, the recent reshuffle of E-on into a fossil and a renewable business unit and the constantly repeated call for subsidizing backup fossil systems are indicators of a rapidly changing energy landscape. Only a year ago, the competitive price of renewables was the big issue. Now we can identify three new challenges for our energy systems: one for the grid-operator, who has to accommodate flexibility in time and place, one for a fossil backup system that can offer affordable flexible production and last but not least: a key role for the consumer, who can offer flexible consumption, and get a financial reward in return. energy transition. Their need for a stable and secure energy system is best answered by themselves. Close cooperation between all stakeholders in the energy systems now defines the next steps in the upcoming years. These alliances need to cooperate in a true energy chain. This not only asks for different strategies, but also different data, new business models and a new facilitating role of local government. Local and regional settings, cultural backgrounds and regulations still vary. So each region has its own challenge and has to develop its own forms of cooperation. Three cities in the North Sea Region, Hamburg, Malmö and Zaanstad (part of the larger Amsterdam Area), share their quest and their stories in a series of 3 major international events: - March 18/19th, Malmö - April 22nd, Zaanstad June, Hamburg We look forward to meeting you at those events. Dick Emmer Alderman Sustainability City of Zaanstad This all goes to show that the e-harbours story is not a fairy tale, or science fiction, but a call for new alliances: Large consumers can and should play a vital role in the

2 Newsletter e-harbours #7 2 District heating in Zaanstad About 40 percent of total energy consumption in the Netherlands is employed for heat production in households and businesses. At the same time, a lot of excess heat is dumped in the atmosphere, or in waterways especially at industrial sites. Employing this excess energy to heat houses and institutions saves a massive amount of fossil fuels. In the Dutch city of Zaanstad, dozens of companies and institutions are working on a local heat system, connecting industrial sites with care institutions and households. The ultimate goal is to connect households, about one in seven houses in the city, to a district heating network fuelled by excess heat from local industries. This would reduce the emission of greenhouse gasses like CO2 by about 10 kiloton, a great leap in the realization of the climate goals of the Municipality. Civil engineer Henry Staal helps to lay the foundations for the heating network, coordinating the project for the Municipality of Zaanstad. In this interview, Henry Staal shows how this ambitious project is realized, step by step. Heating Network Zaanstad We want to build an open district heating network that is profitable for all involved partners In everyday life it is quite a difficult task to get a district heating network realized, Henry Staal remarks. The initial investment in this type of network is in general very big, amounting to millions of euros. An investment like this has a long life span, not 5 years, but minimal 30 years. And you hope to earn back the initial investment in 10 to 15 years. Henry Staal Long term agreements It is not easy to find companies that have residual heat available, and are willing to sign a delivery contract for years. We are very happy that some companies and institutions in Zaanstad are prepared to commit themselves for that longer period (also on the demand side!), but in many others at the moment do not want to go beyond a contract for five years because of the current economic climate. We cannot base a business case on that. This is why we have decided to build the district heating network piece by piece, focusing on the already built environment and connecting already existing institutions and apartment buildings first. This way, we do not have to build long pipelines to reach a large group of customers. E-harbours newsletter Issue: #7 Publication date: Feb 2015 Available for free download at: Sign up for a free subscription at: Text: Sander Kooistra Photo: E-harbours (where nothing else stated) Production: LassooyDesign BNO, Wormerveer The e-harbours project is financially supported by the Interreg North Sea Region program.

3 Newsletter e-harbours #7 3 With focusing on the built environment we don t have the risk that newly to be built buildings can be built years later than planned. We predict that we can realize the necessary profitability there, and then we will start looking what we can do next. Technique is no obstacle Heating networks in fact employ quite simple techniques. The real obstacles we encounter are more of the contractual type. What to think of industrial sources that shut down the factory for a number of days every year, for maintenance and repairs. It means they cannot supply heat for several days, for example around Christmas.. The real deal is working together with all involved stakeholders in a way that builds trust which is needed to sign long term contracts. With that openness and willingness to cooperate are essential. No charity When I talk about the district heating in Zaanstad, it is always about meeting the demands and preconditions of all the involved stakeholders. Unfortunately we see that climate goals and carbon reduction are often minor factors in the decision making process about project proposals. The crucial point is making the switch to economic goals/ drivers and feasibility. You cannot realize this type of projects, when there is no economic driver. Therefore it is helpful that subsidies as for example the Stimuleringsregeling Duurzame Energieproductie (SDE+) are available. In a community like Zaanstad, you cannot win the hearts of the people just with green stories, even though most people endorse the climate goals. The heating network has to bring economic profits too. We are not doing this just for charity. Read the whole interview at eharbours.eu. What I like a lot about a heating network is that, once it has been built, renewable sources can be connected. The amount of solar panels installed in the Netherlands has about doubled in the last year. Everybody is very enthusiastic about PV-panels, but the energy they produce does not fit our consumption patterns very well. Even in the Netherlands we are rapidly approaching the situation that at certain moments the electricity spot price will become negative, that you can get paid for using excess electricity. We can use that excess power to produce heat: for example by powering heat pumps, that upgrade residual heat with a low temperature to heat with a usable temperature. That way, the heating networks can profit from the unbalance in the durable power system. Even at the current rates for electricity we can reach a very reasonable price for the heat, but when the electricity rates get negative, it is a real windfall..

4 Newsletter e-harbours #7 4 City of Hamburg introduces innovative policy Subsidies for Demand Side Flexibility The City of Hamburg plans an innovative subsidy to promote demand side flexibility. The subsidy will support consumers of energy that invest in making their energy usage more flexible and more adaptive to the available supply of energy. This so-called Demand Side Flexibility is urgently needed to help electricity grids accommodate a lot of renewable energy (solar, wind), while maintaining their stability. The urgency is felt especially in Germany, where the turnaround towards renewable sources ( Energiewende ) is progressing much faster than expected. The city of Hamburg is the first public authority that actively supports the provision of flexibility on the demand side of the energy market. The subsidy-scheme, backed by the European Fund for Regional Development, is planned to bring about investments of more than 120 million euros on the basis of 24 million in subsidies. The scheme will be available until Share of renewables is rising fast December 9th 2014, in a futuristic meeting room at the Hamburg Department of City Development and Environment, a dozen energy experts gather to discuss the planned subsidy. Among them consultants that advise the biggest industries in the Hamburg harbour on energy solutions. Hans Schäfers from the Hamburg University for Applied Sciences (HAW Hamburg) presents the facts about the German Energiewende, the backdrop to this subsidy plan. He shows that the share of renewables in the German energy mix is rising fast, much faster than projected only a few years ago. The yearly addition of solar installations and wind turbines to the energy system is restricted (to 2.5 GW a year) but even then the total installed capacity of renewables will reach 50% of total power consumption years ahead of predictions. This challenges the electricity system, since the production of renewable energy can vary greatly day by day, even hour by hour. Large percentage of flexibility is needed If we do not find more balancing instruments to keep the grid stable, Hans Schäfers says, we will end up in the situation where we have to shut down wind turbines temporarily, throwing the renewable energy away. Thus the need for stability in the system could give a new lease of life to old fashioned power units burning natural gas, coal, or even lignite coal ( Braunkohle ). In that case, the Energiewende would not succeed in lowering the CO2-emissions in Germany. Within a few years, Hans Schäfers states, We will need a large percentage of all flexibility available in industries in this country to reach the goals of the Energiewende. Then the financial value of flexibility will undoubtedly be much higher than today. We have to start now to make more companies aware of the chances. The subsidy scheme will be available for companies investing in installations that are able to provide demand side flexibility, increasing the consumption of electricity when there is a surplus in the grid, and reducing the uptake in times of great demand. Such an installation could be a combined heating and power unit (used by many industries that need heat in their processes) equipped with additional electrical heaters. The subsidy takes into account the type of technology used, and the amount of CO2-emissions that can be prevented (since no fossil fuels have to be burned to keep the grid stable).

5 Newsletter e-harbours #7 5 Visit the conference March 18/19 in Malmö Meeting Point Urban Magma: an eruption of innovative raw energy Be sure to take part in the first annual conference of Meeting Point Urban Magma, coming March in Malmö! The organizers see this conference as a first step towards a center of excellence for sustainable cities: Fusing our expertise and experience in business, academia and municipalities, we can light the fire that pushes development forward. The conference focuses on two main themes. First: how can a sustainable city promote successful international business clusters in clean technologies? How can they help grow regional companies in clean tech, and attract national and international businesses to the cluster? The second theme of the conference is industrial symbiosis, that can have an important role in advancing sustainable cities and business clusters in harbours, industrial parks, and surrounding regions. The conference features a number of keynote speakers, that all have first-hand experience in the development of clean tech and industrial symbiosis. Workshops delve deeper in the chances and opportunities that sustainable solutions provide. Visits to state-of-the art regional initiatives are part of the program. The organizers remark: Through regional site visits, you will learn firsthand about the accomplishments and goals of Urban Magma and E-harbours. You will hear about ongoing processes that aim to innovate utility systems and industrial symbiosis. You will challenge our viewpoints, give us a thumbs-up, lead us down new paths, and join us in pinpointing crucial questions that sharpen our sustainability work and enable Skåne and other regions to deliver at peak ability. The conference is arranged by Urban Magma, the City of Malmö, E-harbours, Union of the Baltic Cities, and Sustainable Business Hub. The organizers plan to make this conference a yearly event, moving from one Baltic city to another. For more information on the conference and registration, go to

6 Newsletter e-harbours #7 6 Hans Grünfeld comments on the role of energy users in the transition End-users: the guardians of a stable energy system in the future According to Hans Grünfeld, the challenge is threefold: (1) Accommodating the highs and lows in production. (2) Minimalizing investment in the grid by local coordination of supply and demand. (3) Maximum utilization of energy flows like water and waste. For all these aspects an active commitment of end users is crucial. When the transition continues, and the energy system develops from a mainly centralized conventional provision to a chiefly decentralized sustainable system, how can we make sure that the lights stay on and energy remains affordable? Hans Grünfeld, general director of the Dutch organization of (big) energy users VEMW, delivered a keynote speech recently at a congress in Amsterdam on the development of energy systems. Grünfeld voiced the concerns of his members (that take up about half of the energy consumption of Dutch business yearly), but also presented a clear vision of their future role: The energy users of today are the guardians of a stable energy system in the future. The only constant factor The energy user is the only constant factor in a rapidly changing energy world, and the only party involved that can bring about the necessary balance between production and consumption. ( ) With a rising share of intermittent sources (like wind and sun), their production will be determined by the weather, not the market conditions. Grid operators will be faced with competition from consumers that own a micro energy-facility, leaving no role for energy providers anymore. Being self-sufficient, many consumers will not even need a grid connection. Coordinating supply and demand for energy thus becomes more and more challenging. Dual fuel use Industrial production processes will have to be adjusted more to the availability of energy. (.) the future energy system asks for a structural and maximal utilization of the flexibility the industry can provide. I explicitly want to name the possibility of dual fuel use here, switching between gas and electricity in steam production and industrial processing. Limit grid investment On a regional level grid operators and consumers will have to start looking for chances to limit investment in the grid by preventing peaks in supply and demand. Perhaps the solution (both on a regional and on a local scale) will have to be found in advanced storage systems. Also, the integration of systems like PV and biogas in industrial areas, making it possible to accommodate demand while the supply is intermittent, could provide a solution. The end-user plays a crucial role in the selection of solutions, not only while we need to make maximum use of his own potential, but also because his demand for energy will be the leading factor in the quest for the optimal solution. The full speech (in Dutch only) is available at Hans Grünfeld will be one of the keynote speakers at the conference Port & City Connected Energy, April 22nd in Zaanstad, the Netherlands.