District Heating in Denmark

Transcription

1 District Heating in Denmark The development from fossil fuels to green fuels and green electricity. Bo Riisgaard Pedersen Special Advisor, DEA Page 1

2 Agenda A few facts on district heating in Denmark. Development of Danish district heating. Looking ahead any future for district heating? Current discussions in Denmark. Sharing the Danish lessons learned. Page 2

3 Organization GEUS The Geological Survey of Denmark and Greenland Danish Geodata Agency The Telecommunic ations Board of Appeal DMI- The Danish Meteorologica l Institute Ministry of Energy, Utilities and Climate Danish Climate Council Danish TSO Energinet.dk Danish Energy Regulation Authority Danish Energy Agency Established in 1976 An agency under the Ministry of Energy, Utilities and Climate Around 400 employees Page 3

4 Danish Energy Agency (DEA) - Key areas of responsibility in policy and regulation Focus areas Policy formulation, revision and implementation Market design Analysis of the energy sector Regulation and supervision Data collection & statistics Examples The Danish Energy Agreement of March 2012 (guidelines across party lines towards 2050) Long term energy system scenarios on 100% independence of fossil fuels (50 % RE in 2030) Ongoing review and update of the Danish taxes, subsidies and incentive structure in the energy market Page 4

5 Danish green highlights Energy consumption per GDP-unit is lower than in any other EUcountry. The world s highest share of new renewables (non-hydro) in electricity generation 56 % in Very high degree of energy security. World leader in advanced energy technologies - district heating and CHP, wind turbines, biomass plants, energy saving technologies. District heating is a cornerstone in the Danish energy system. Page 5

6 Facts on Danish district heating Page 6

7 Facts on Danish District Heating 60,000 km. district heating pipes. 63% of all households DH-heated. Average heat consumption: 8.3 MWh per person per year.. Annual turn-over of DH: 3.8 billion USD (= 1.0 % of GDP). 400 heat companies (12.5 % owned by municipalities and 85 % are consumer-owned) Heat cost is ~2-3% of average household income. Page 7

8 District Heating Production by Fuel Biomass exempted from energy tax District Heating = Heat supply for 63 pct. of all households. 21 pct. are heated by biomass-based DH. Page 8

9 The development of Danish DH since the 1970 s Page 9

10 Danish Energy Agency Page 10

11 Danish heat regulation Denmark 1979: Heat supply act, article 1: 1. The objective of this Act is to promote the most socioeconomic and environmentally friendly utilization of energy for heating buildings, supplying them with space heating and hot water and reduce the dependency of the energy system on oil. 2. In agreement with the objectives mentioned in subsection (1), the supply of heat shall be organized with a view to promoting the highest possible degree of cogeneration of heat and power.

12 DH project evaluation 1990: Secondary act for project approval Municipal obligations, and socioeconomic calculation principles. Municipalities can ask utilities to propose supply plans for specific areas Regulation requires each new heating project to make a project proposal. Compares the suggested project and possible alternatives An acceptable project needs to better than the reference (Businessas-usual)

13 DH project evaluation Includes: Overview (Investment, production and consumption data) Corporate-economic evaluation (heat production cost) Quantitative evaluation Environmental evaluation Qualitative evaluation Socio-economic evaluation Quantitative evaluation (including main environmental factors) Only green light if: 1) Beneficial consumer prices 2) Sound economy of DH company 3) Positive socioeconomic CBA (incl. costs of CO 2, NOx, SO 2 etc.)

14 Guidelines for DH evaluation (by DEA) Ministry of Finance in DK issues general guidelines for economic assessment at the national level Energy Agency implements the general guideline to be used for the energy sector (including technical guides and calculation methodologies) A new forecast and assumptions every year (cost of CO 2, Emission factors, costs of harmful emissions, prices on electricity and fuels) Supplemented by catalogue of technical solutions and data for calculation

15 CHP: From Cities to Nationwide Coverage Changes in the generation layout during 25 years Page 15

16 The Heating Sector after Oil Crisis in 1973 Large expansion of district heating, mostly CHP. DH covers 50% of total heat demand. Reduced heat demand (better insulation etc.). Introduction of efficient individual gas boilers. Result: Energy consumption per m2 reduced by 20% compared to 1990, 40% compared to 1980 and approximately 60% compared to 1970.

17 Looking ahead does DH still have a role to play in modern energy systems? Page 17

18 Wind Power replaces Electricity from Combined Heat and Power Plants Electricity Production, : Wind turbines: From 12 % 39 % of national power supply. Combined Heat and Power Plants: From 41 % 30 % of national power supply. Page 18

19 CHP s and Fluctuating Wind Power Today Natural gas turbines = fastest response to market signals (high electricity prices) Legend: Decentralized CHP Centralized CHP Wind mill park Coal fired power units are required to operate down to 35% of rated power. Some are now capable to operate at 10% load. High electricity prices: Heat accumulation decouple electricity and heat demand. Low electricity prices: Electric boilers or HP for district heating (2½-3½ % of total DH capacity and increasing). Page 19

20 Denmark s Electricity Mix by 2020 Latest forecast: 54 pct. fluctuating green electricity by 2020 In 2005, wind power made up 18 pct. of the total electricity supply. In 2015 this share had grown to 42 pct. Page 20

21 Future District Heating in Denmark From green fuels to green electricity: Green electricity will become a main energy carrier, also in the heating sector Page 21

22 Current discussions Negotiations on the next Energy Agreement will begin this year. An important focus area will be to ensure that taxes, tariffs and subsidies are better suited to support the transition - also in light of the change to the Danish PSO tariff due to EU regulation. Revenues from energy tax, CO 2 tax and other fees on fossil fuels ~ 2 pct. of GDP (2014). Not all of these revenues are returned to the energy sector as subsidies to CHP, RE, EE etc. Page 22

23 Revenues from Energy and CO 2 -Taxes etc. finance subsidies for DH and CHP Billion DKK, Current Prices 39 Bill. DKK = 2.0% of GDP '95 '00 '05 '10 '14 Motor gasoline Gas/ diesel oil Natural gas Coal Electricity CO2 Sulphur Average PSO for biomass and decentralized CHP = 2.8 bill. DKK = 0.1% of GDP PSO was financed by the state budget until 1999, where the PSO was financed via the electricity bill The size of the PSO vis-a-vis state revenues is shown in above figure. Page 23

24 Lessons learned The combination of local ownership, actual cost-based heat tariffs and focus on heat projects with a net benefit to the community has created a DH sector with very low LCOE throughout the supply chain. but has also meant a high degree of system integration and exchange of experiences between actors. Decades of Danish experience of driving down heat costs has meant a continued focus on high quality products, both in terms of performance and lifetime. Sektor-kopplung is not just a technical and regulatory issue but also very much an organisational/networking/cooperational issue. Page 24

25 Energy Governance Partnership Germany - Denmark Method: Authority to authority Aim: Share in depth lessons learned & build stronger relations Status: Initiated in January 2017 Dialogs with Baden-Württemberg and BMWi Danish Minister for Energy, Utilities and Climate visited Germany in March Further identification of partners (Federal and Bundesländer level) June: Meeting with BW on up coming agreement Decarbonisation of heat market in Berlin State of Green study tour on EE & DH 26 th -28 th June 6/20/2017 Danish Energy Agency, Helle Momsen, Advisor Page 25

26 Energy Statistic - download data Heat Supply in Denmark - download publications Page 26

27 Vielen Dank für die Aufmerksamkeit Bo Riisgaard Pedersen, Danish Energy Agency More publication and tools available at DEA s cooperation webpage Page 27

28 Additional slides for Q&A Page 28

29 Danish expertise and knowhow Danish companies and research institutions have decades of experience within DH technologies such as biomass (straw, wood waste and MSW), solar, storage, system efficiency etc. High quality equipment with low LCOE has been developed A lot of companies involved in feasibility studies, design, engineering, construction and operational management. Page 29

30 310 Biomass-Based DH-Plants in Denmark Wood or straw: 200 district heating plants 45 CHP plants Biogas (excl. individual farm plants): 32 CHP 5 district heating plants Municipal Solid Waste: 22 CHP plants 6 district heating plants Many large-scale CHP s around major cities are currently being converted to biomass as many large cities adopt low carbon or zero carbon climate strategies Page 30

31 Biomass in Danish DH sector Currently 1.2 million tons straw used for energy production annually (almost 60% of collected volume) Plants differ greatly in scale and advanced technology has been developed for both small, medium and large scale plants. The majority of biomass heat plants has between 100 and 10,000 connected households and has a thermal output between 1 and 10 MW. Page 31

32 Large scale solar heating Usually a very good investment for the heating companies. Positive socio-economic benefits. Currently, 1.2 mio. m 2 plate collector area equivalent to 1.6 pct. of total heat production Often seasonal storage (pit) Page 32

33 DH-analysis: Economic optimal development of DH-production Reduction of demand for CHP with increasing amount of wind energy Coal and natural gas to be phased out quickly Large heat markets: Conversion on short term to biomass and on long term to heat pumps and waste heat Smaller heat markets: Conversion to heat pumps and solar heating Page 33

34 Contribution of CHP to Total National Thermal Power Generation (%) Global average = 9% 0 Source: IEA: CHP: Evaluating the Benefits of Greater Global Investment (2008). Page 34

35 DH as Combined Heat & Power CHP-contribution to total production District heating: 69% of total DH from CHP s Electricity: 61% of total thermal el-production from CHP s Danish Energy Agency

36 Green Power Producers (2015) 45 electric boilers (550 MW) 5,300 wind turbines (5,070 MW) 94,000 solar PV s (785 MW) 670 local CHP s (2,300 MW)

37 Challenge of Wind Power beyond 2020 Today Danish Energy Agency

38 Increased Importance of Interconnections

39 Main points in this presentation Central authorities provide regulation framework and clear guidelines to municipalities to plan and approve local implementation of heat projects High share of consumer based ownership Non-profit principle Local entrepreneurs in place Cheap finance available Variety of technical solutions Focus on LCOE The regulatory and organisational setup in Denmark have encouraged a competent and experienced industry within design, engineering, construction and operational management of DH Page 39

40 Danish heat regulation Main principles of the heat supply act: Local authorities are responsible for the approval of new heat supply projects and make sure that projects with the most socioeconomic benefits are chosen. Production of heat must, if possible, be produced as combined heat and power. The collective heat supply price must offer consumer prices based on the exact necessary costs, meaning that the heat price should not be higher or lower than the actual heat production costs. Denmark 1990: Secondary act for project approval Municipal obligations, and socioeconomic calculation principles. Municipalities can ask utilities to propose supply plans for specific areas