District Energy in Chile Unlocking investments in sustainable heating solutions to improve air quality SANTIAGO

Transcription

1 District Energy in Chile Unlocking investments in sustainable heating solutions to improve air quality SANTIAGO JUNE 12 th &13 th 2017 Sebastien UGONA ENGIE LATAM

2 INDEX Chapter 1 District General presentation Chapter 2 How to make it happen? Chapter 3 Concrete cases applicable in Chile

3 District General presentation

4 ENGIE presentation Strong leadership positions POWER #1 Independent Power Producer in the world 6 th provider in Europe. GAS 3 rd seller of natural gas in Europe 3 rd largest LNG supply portfolio worldwide. #1 distribution, # transmission network in Europe. 115,3 GW installed power production capacity 10,5 GW production capacity under construction** Operations in ~ 70 countries 152,900 employees Supply portfolio of TWh #1 in storage capacity in Europe #1 supplier of B2B energy efficiency services in the world 250 urban heating and cooling networks operated worldwide 140 millions of m 2 managed in the tertiary sector SERVICES 4

5 DISTRICT HEATING Sustainable benefits MORE fuel flexibility & Renewables reduction in CO2 emissions Range of beneficial outcomes CO 2 Secure significant reduction in CO2 emissions Allow deployment of renewable technologies that otherwise wouldn t be viable. Reduce labour and maintenance cost as compared to individual systems. Benefits of heating networks Efficient transportation and use of heat for a wide variety of users Broad range of energy generation technologies Fuel flexibility Lowering costs of energy generation 5

6 DISTRICT HEATING NETWORK DISTRICT COOLING NETWORK Integrating smart thermal grids into future sustainable energy systems - The 4th Generation District Heating 1G: Steam (~200 C) - Steam pipes in concrete ducts - Powered by coal plants - Appeared in US and Europe Steam storage Coal, waste Heat Storage CHP coal, CHP oil Coal, Waste 2G: Pressurized hot-water (> 100 C) - Water pipes in concrete ducts - Fuel savings through CHP - Widespread in USSR Biomass, CHP Biomass Heat Storage Gas, waste, oil, coal 3G: The scandinavian model - Pressurized hot-water but with T < 100 C - Use of local fuels (biomass, industry waste, solar) in response to the oil crisis - US, Europe, China, Canada Solar thermal Industry surplus CHP waste, CHP coal, CHP gas, CHP oil, 4th GENERATION: - Low-temperature (40-60 C) district heating, low grid losses - Integrated to smart energy systems: gas, electricity (RES), renewable heat and recycled heat - Intelligent control and metering - Linked to a district cooling systems PV, wave, wind surplus Heat Storage Industry surplus CHP waste, incineration Long-term storage Solar thermal District cooling plant Centralized heat pump Cold storage Efficiency 1st Generation: nd Generation: rd Generation: th Generation: Source: Aalborg University and Danfoss District Energy,

7 DISTRICT ENERGY SYSTEM ENGIE international operations 3 DHC in Belgium 12 DHC in Netherland 1 DHC in Canada 11 DHC in the UK 162 DHC in France 5 DHS in Poland 1 DHS in Portugal 17 DHC in Slovakia 4 DHC in Spain 12 DHS in Italy 2 DHC in the USA 1 DCS in Malaysia 2 DHC in China 1 DCS in the Philippines 1 DHC in New Zealand 8

8 District heating In France a proven solution used to decarbonized city center * Anuario Estadístico de Energía 2016 ** BP Statistical review heating Networks / km GWh ~ 19,6 TCal 7% of total Primary Energy use of CHILE* 12% oil consumption of CHILE ** Half of this energy WAS RENEWABLE 9

9 District heating In France a proven solution used to decarbonized city center. Evolution of RES share RES mix (in GWh) A huge part of the consumption is for Residential client Most of the time (nearly all the time) Residential Building 10

10 District heating In France zoom on REN incentives mechanism Creation of a multi-annual heat fund managed by ADEME; Subsidies granted for the production and distribution parties (once the REN share is> 50%); grants representing between 20 and 25% of the investment The subsidy is calculated to make the energies competitive relative to fossil fuels competitive and a reference price. Note: the current gas price makes this mechanism very complicated. Tax reduction (5.5%) on the variable part (/ Mwh) if the REN share is> 50%; Obligation of a master plan which aims to examine the existing situation and define a tree of choices (Densification or Creation - use of local fatal heat, a local resource (eg geo) before mobilizing resources Delocalisable (eg Biomass). An energy transition law for green growth that sets an energy climate contribution to 5.33 / MWh PCS in 2017 and more in 2020, 11

11 CPCU : DISTRICT HEATING OF PARIS Paris, France CPCU (compagnie Parisienne de Chauffage Urbain) the first district heating in France is operating by Engie, since Key Figures 8 DHS PLANTS Installed capacity Energy Mix Distribution Connected customers 4000 MW Biomass, ULS fuel oil, gas and gas-fired cogeneration, energy recovery from househould waste, hard coal 450 km of interconnected networks 460,000 housing-units equivalents heated (equivalent of m²) CPCU Concrete Acheivements Growing energy efficiency ENR&R > 50 % decrease of the VAT of 15 % A responsible commitment from the public utilities sector 12

12 How to make it happen?

13 HOW TO DO THAT? How do you eat an elephant? Choose the good part to start One bite at a time 14

14 Developing a District Energy The importance of the cities in initiating projects Many district networks were developed following a major public event, a national reconstruction policy or a change in regulation which acts as a catalyst: the 98 Lisbon International Exposition, the 2004 Barcelona Forum, the 2008 Saragossa exposition or the 2012 London Olympic Games. Cities/Public authorities play a fundamental role as a regulator and a market facilitator, enabling easier access to : Construction permits Overcome regulation requirements Obtain subsidies Public can also ensure financial profitability by acting as a client and guaranteeing connections. Finally, the area must be attractive in terms of needs concentration, and should allow a technical competitive advantage when compared to stand-alone system (river, sea, waste to energy ). 15

15 Developing a District Energy How to make it grow? The involvement of cities can also influence the orientations taken by the network: in particular it can give certain social or environmental orientations, such as a percentage of green energy or tariff control. Certain municipal policies can give incentives to connect to the network, or incentives not to pursue stand alone solutions: Architectural constraints: - in Paris, French architects do not allow cooling tower close to Monuments for construction or modification permits - in Barcelona, the necessity to install thermal solar panels can be bypassed if you are connected to the network Fiscal aspects : lower IVA rate for final consumer Obligation to connect in London, Lisbon Finally, the network must keep a competitive advantage when compared to stand-alone basis and always looking for being competitive. 16

16 Developing a District Energy Financing the project through public and private involvement When the public sector is involved, the financing of these projects occurs through public investment. In such projects, the city takes on most of the risk. When the private sector is involved, the public sector can still provide important financial support: - It means that other sources of finance become available, such as grants, local authority debt and development bank loans. - The city can offer land as an equity contribution, which can provide collateral in raising financing, or it can provide tax incentives as source of finance. In our experience, most projects are financed internally, with the participation of local actors in SPV. The city can also provide land as a source of financing. - In the case of the London Olympics, the project was fully financed by Engie Services, but the land was provided by the London Municipality. 17

17 District Energy Business Models PUBLIC SECTOR WHOLLY PUBLIC Conception Engineering Infrastructure and Network Construction Implementation Infrastructure and Network Technical operations Infrastructure and Network Services commercial operations PUBLIC SECTOR DELEGATEE AFFERMAGE CONTRACT Conception Engineering Infrastructure and Network Construction Implementation Infrastructure and Network Technical operations Infrastructure and Network Services commercial operations DELEGATEE CONCESSION Conception Engineering Infrastructure and Network Construction Implementation Infrastructure and Network Technical operations Infrastructure and Network Services commercial operations 18

18 District Energy Business Models Type Business plan Financial advantages Financial drawbacks Wholly Public Creation of a separated budget The public sector finances the construction (loan) and undertakes service operations The IRR can be lower because the public sector can raise at a lower rate and lower cost than private actors. The public sector carries all the risk The level of public participation and the selling tariffs are not guaranteed beforehand. Affermarge Contract The public sector finances the construction (loan)and delegates service operations. The loan s annuity is passed on by the public sector onto the delegatee, and it is then reflected in the tariffs supported by end users. The IRR can be lower because the public sector can raise at a lower rate and lower cost than private actors. Potentially longer construction time brings additional costs to the project The public sector carries may risks (during investing and operating periods) Public participation and/or tariffs can t be guaranteed beforehand Follow-up costs Concession The public sector delegates the whole service The delegatee is in charge of the initial investment for construction and of operations. The public sector carries minimal risks. Concession does not imply integral transfer of risk Minimization of service follow-up costs Higher IRR, but to be modulated according to the actual risk repartition (contract) 19

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