District heating as the infrastructure for competition among fuels and technologies

1. District heating as the infrastructure for competition among fuels and technologies Poul Erik Grohnheit, DTU Management Engineering. Bent Ole Gram Mortensen, University of Southern Denmark ECM3: Third International Symposium on Energy Challenges and Mechanics - towards a big picture, 7-9 July 2015 Aberdeen, UK Session 16: ENERGY POLICY AND ECONOMY, 7 July 2015 Contact: pogr@dtu.dk (Poul Erik Grohnheit)

2. Overview ECM3, Aberdeen, UK The urban heat market Illustrations of technologies competing on the heat market Summary of abstract and conclusion of the paper submitted to the conference Selected reference on the district heating market 2003 to today

3. The urban heat market Many conversion technologies • Supply from renewable or fossil sources, including the natural gas grid • Electricity supply to electric resistance heat, electric boilers or - small or large - heat pumps • Key technologies for DH are CHP, waste incineration, industrial waste heat geothermal heat and large heat pumps • CHP, heat pumps and electric boilers are important for balancing intermittent electricity (wind and solar) ECM3, Aberdeen, UK

4. Combined heat and power – small-scale • From 1970s: Very popular technology for optimisation models, e.g. EFOM, MARKAL, TIMES, Balmorel, etc. • 1990s: Significant technical progress, e.g combined cycle gas turbine. • Important technology for local biomass. • Dedicated plants as base load for small district heating grids, thus limited flexibility and competition. • Future: adding heat pumps, expansion and interconnection of district heating grids. ECM3, Aberdeen, UK

5. Virtual and physical heat pumps • Large-scale extraction-condensing combined heat and power plants can be treated as virtual heat pumps with a high COP factor • Enables a flexible response to the electricity market dominated by wind: Both generation and consumption of electricity can generate heat. Production of electricity and heat in extraction-condensing units. Acknowledgement: William Orchard, 11th IAEE European Conference, Vilnius, September 2010.

6. Waste incineration • Denmark 1903: Waste incineration in a densely populated municipality with no access to space for landfill • District heating development in some cities with supply from CHP from local power stations, later in many towns with heavy fuel oil from new refineries • 1960s many small waste incineration plants for existing district heating grids • From 1980: National heat plan with systematic use of all sources for district heating • Future: Decreasing amount of waste to energy due to more recycling. The map shows the location of the 27 waste-to-energy plants in Denmark in 2005 and their areas of collection. Source COWI. ECM3, Aberdeen, UK

7. Immaterial infrastructure: Legal framework, organised markets, and institutions • 1971: Spot market in Norway for excess hydro power. • 1992: Norwegian power exchange. • 1995-2000: Nord Pool Spot expanded to Sweden, Finland and Denmark. • The market organisation copied in many countries. • Today: Essential for balancing wind power in Denmark – 40 % of the domestic electricity demand. • CHP/DH companies operate on the electricity spot market. • Future: Much more wind in North Europe – mainly off-shore Middelgrunden outside Copenhagen, 20 x 2 MW DTU Test facility for off-shore wind turbines , Østerild, North Jutland. ECM3, Aberdeen, UK

8. Summary of abstract and conclusion ECM3, Aberdeen, UK District heating networks offer the possibility of competition between fuels technologies for comfort heat and cooling in buildings. Cogeneration of electricity and heat is a key technology for energy efficiency. Additional technologies for small-scale networks are heat pumps, solar panels and local biomass Key technologies for large-scale urban networks are incineration of urban waste and geothermal heat. With heat storages district heating can contribute to balancing the intermittency of wind power. Update of article from 2003 European directives on competition in the electricity and gas network industries and promotion of renewables and cogeneration Limited support for the synergy from the district heating infrastructure. Recent research on district heating in North Europe, e.g. 4th generation district heating. Legal and institutional framework, in particular market places for electricity trade on an hourly basis. Tools for quantitative modelling tools. Heat roadmap Europe.

9. Selected references ECM3, Aberdeen, UK Grohnheit, P.E.; Gram Mortensen, B.O. (2003) Competition in the markets for space heating. District heating as the infrastructure for competition among fuels and technologies. Energy Policy. Lund, Henrik, et al. (2014) 4th Generation District Heating (4GDH): Integrating smart thermal grids into future sustainable energy systems, Energy. Mortensen, Bent Ole Gram (2014), Legal Framework as a Core Element of District Cooling Success - The Case of Denmark. Journal of Power and Energy Engineering Petrović, Stefan, Karlsson, Kenneth. B. (2014). Danish heat atlas as a support tool for energy system models. Energy Conversion and Management. Grohnheit, Poul Erik; Møller Andersen, Frits; Larsen, Helge V. (2011) Area price and demand response in a market with 25% wind power. Energy Policy. Persson, U.; Möller, B.; Werner, S. (2014): Heat Roadmap Europe: Identifying strategic heat synergy regions, Energy Policy