Supported by:

Ministry of Foreign

Affairs of Denmark

DANIDA

DISTRICT ENERGY IN CITIESA GLOBAL INITIATIVE TO UNLOCK THE POTENTIAL OF ENERGY EFFICIENCY AND RENEWABLE ENERGY

Incorporating District Energy into City

Energy and Low-Carbon Strategies

MULTIPLE BENEFITS TO ACHIEVE

DIVERSE POLICY OBJECTIVES

Multiple Benefits

Cities and countries develop DES to

achieve a variety of objectives

HCFC emissions

Reduced CO2

emissions

Local, free and RE Sources

Lower cost of cooling

Reduced blackouts/ grid stress

Energy efficiency

and access

Balancing RE power

Green economy

and resilience

Most DC systems shift

peak electricity demand

using cold storage

lowering power

transmission investment

GIFT City could lower

electricity

consumption for

cooling by 65-80%

Paris reduced refrigerant

emissions from cooling

by 90%

Dubai provides cooling that is

30-40% cheaper than stand-

alone systems

OBJECTIVES, STRATEGY AND

TARGETS

▪ Cities need to assess and demonstrate the benefits of district cooling

in the context of local objectives and its potential.

▪ Long-term development of district cooling requires its incorporation into

local energy strategy and targets.

ADVANTAGES

1. Stakeholder buy-in

2. Reassure investors

3. Justify resource

expenditure

4. Justify local policy changes

5. Advocate for national

policy changes

Shares of the 45 champion cities that have targets for

district energy and broader energy targets

OPPORTUNITY OF SMART CITY

PROPOSALS

Shivaji Nagar, Smart City proposal, BhopalAll five cities have smart city proposals:

▪ Mixed use new development with

significant anchor loads

▪ Promoting compact land use

▪ High local government influence on

design and sustainability criteria

▪ Very few building developer(s),

reducing coordination of multiple

stakeholders

▪ Phased development can be timed

with district cooling expansion

KEY FIGURES

Development area: 1.4 million m2

Standards: Mandatory building pre-

certification of LEED/GRIHA to Silver/Gold

Cooling load: ~ 60,000 TR

Residential floor space: 22%

Commercial floor space: 39%

Institutional floor space: 39%

BEST PRACTICE IN VANCOUVER:

CITY-LED DEMONSTRATION

• City owned demonstration project: Southeast False

Creek Neighbourhood Energy Utility (SEFC NEU).

• City-owned greenfield district heating network

using waste heat from sewage

• Financially structured like a private sector project

to prove commercial viability.

• Demonstrated new connection policies in the city.

• Has led to one new district heating system and the

switching of two other systems from gas to

renewables.

BEST PRACTICE IN VANCOUVER:

CITY STRATEGY

• Demonstration project made the case for district

energy

• New city strategy in 2010 prioritised renewable

district heating and conversion of steam systems

• Multi-stakeholder consultation

• Strategy targets specific network development up

to 2020

• Strategy and vision based on the demonstration

project

Vancouver’s Greenest City Action Plan

GOTHENBURG, SWEDEN: SWITCH

FROM OIL TO WASTE HEAT

POLICY

SUPPORT

TECHNICAL

ASSISTANCE

2014

80 PERCENT OF DISTRICT HEATING

RENEWABLES/WASTE HEAT

POLICY

SUPPORT

TECHNICAL

ASSISTANCE

Gothenburg, Sweden

REDUCED POLLUTANTS

BY 50-100 PERCENT

POLICY

SUPPORT

TECHNICAL

ASSISTANCE

Gothenburg, Sweden

Mayoral Targets - 2025

• 60% CO2 emissions reduction (on 1990 levels)

Interim targets• 2015 - 20%• 2020 - 40%

CO2 emissions 1990 = 45.05 MtCO2 p/a

CO2 emissions 2012 = 40.75 MtCO2 p/a(10% reduction on 1990 levels)

• 25% Decentralised Energy

London’s Policy Framework

MAYOR OF LONDON

11

• Annual CO2 reduction of 3.5 million tonnes

• Tenfold increase in generating capacity

• £8 billion of investment

• National political is creating a favourable policy framework for DE - changing investment environment

• Public sector is working to remove barriers and harness the private sector’s financing and delivery capability

The Opportunity

MAYOR OF LONDON

Scheme Types

MAYOR OF LONDON

The generation of electricity local to demand and recovery of waste heat for building space heating and domestic hot water production

• Type 1 - Single sites• Small or medium CHP units 0.3 to 3.0MWe• Limited infrastructure - up to 3,000 residential units• Capex up to £10 million and a pay-back period of

around five years for commercially viable schemes

• Type 2 - Multi-site mixed use schemes• CHP units 3.0 to 40MWe• 3,000 to 20,000 residential units• Capex up to £100 million and an extended pay-back

period of around ten years

• Type 3 - Area wide heat transmission projects• Extensive heat pipe networks connecting multiple heat

producers such as power stations, industrial waste heat or energy from waste facilities

• May serve 100,000 plus residential units and a large range of mixed public and private commercial facilities

• Paybacks in excess of 10 -15 years but with the potential for steady

• Cash flow and utility type yields

Decentralised Energy Project Delivery Unit•DEPDU provides technical, financial and commercial advisory services to help others develop and bring to market larger scale DE projects

- €3.3m funding (90% from the European Commission’s ELENA technical assistance facility, 10% from the GLA)

- Private and public sector support

- Focus on heat network schemes supplied from CHP and sources of waste heat

- Targets: projects with total investment of £60.5m to market by July 2015 (leverage ratio 25:1)

•To date the GLA has supported over £62m of DE projects to market. The programme is actively supporting a pipeline of 18 DE projects, with a total investment potential of over £150m.

• 2016 successor being planned – Energy for London

MAYOR OF LONDON

Cofely’s Olympic Park and Stratford City Energy Network

MAYOR OF LONDON

• 2008, awarded a 40 year concession to provide a heating and cooling network for the Olympic Park and adjacent Westfield Stratford City Development

• >£100m, design, built, finance operate two energy centres and 18km of district energy network.

• Combined cooling, heat and power (CCHP) using both gas and biomass boilers.

• First energy centre provided heating and cooling to the 9 major competition venues within the Olympic

• Second energy centre provides similar services to Westfield’s Stratford City Shopping Centre.

• Combined capacity of 200 MW heating, 64 MW cooling and 30 MW electricity, the district energy network will serve remaining venues and new homes and businesses to be built in the coming years.

Gospel Oak DH - Camden Council- Heat network supplied by heat

from a new 4.6MW gas turbine CHP at the Royal Free Hospital

- 3.5MW GT heat recovery system

- 1.3km heat network supplying about 1,500 units on existinghousing estates

- CAPEX: £5.7m

- Project commissioned in 2012

- CO2 savings: 2,890 t/year

- DEPDU role: assist LB Camden with initial feasibility, design and energy supply contract preparation

MAYOR OF LONDON

Case Study – South Kilburn DE (LB of Brent)

- Regeneration project

- 2,400 new homes and related facilities and infrastructure

- The LB of Brent is procuring a £15m site-wide heat network through an ESCo concession agreement

- OJEU notice issued in 2011 and 3 bidders selected to be taken to the Invitation to Tender (ITT) stage

- DEPDU role: assisting the LB of Brent with initial feasibility study, ESCoprocurement process and development of a concession contract

- Expected construction start date: 2016

- 3.1km heat network

- 1.5MWe / 2.5MWth CHP

- CO2 savings: 835 t/year (estimated)

MAYOR OF LONDON

Brent’s South Kilburn

London’s EfW Potential

MAYOR OF LONDON

Veolia’s SELCHP: heat network implemented 2013 serving Southwark Estates. Network expansion under development

Grundon’s Lakeside EfW: investigating heat off-take potential towards London supported by GLA

Cory’s Riverside Resource Recycling EfW: energy master planning with the London Borough of Bexelyand the GLA

Viridor’s proposed BeddingtonEfW project: a London Borough of Sutton ESCo initiative to build and operate a Sutton-wide heat network. GLA supporting the energy master planning for the Hackbridge area and the heat network technical procurement.

The NLWA’s Edmonton EfW: heat network development business plan led by the Lee Valley Heat Network, a North London Borough initiative

London 2050 Infrastructure Investment Plan

• The energy demands of the growing city will put increasing pressure on the existing system which is already close to capacity.

• Regulatory system makes it difficult to prepare for that growth.

• National policy moving towards the electrification of heating and transport, meeting this objective becomes increasingly more expensive.

• Need to ensure energy supply infrastructure that is:

• Secure and reliable

• Affordable and cost-competitive

• Delivers 80 per cent carbon dioxide emissions reduction by 2050 in line with Mayoral and national government policy

• Electrification of heat: a 50% decentralised scenario would result in an electricity distribution capacity 50% smaller than a centralised scenario ie one that derives all heat from the national electricity system.

Peak electricity supply capacity

will need to increase by at

least 140% from 5.4GW in 2011

to more than 12GW in 2050

Peak electricity supply capacity will need to increase by at least 200% from 5.4GW in 2011 to more than 16GW in 2050

MAYOR OF LONDON

The City of Warsaw

Main features of the capital city of Poland:

• administrative area: 517 km²

• inhabitants within this area: 1.7 million

• inhabitants within agglomeration: up to 3.3 million

• density of population: 3300 per km²

• registered enterprises: 360 000

• registered vehicles: 1.2 million

• budget expenditure for 2015: € 3.4 billion

• unemployment: 4.5%

• 78 universities and colleges

• 270 thousand students

Sustainable Energy Action PlanCovenant Of Mayors initiative

•Warsaw joined in 2009

• Key document: Sustainable Energy Action Plan for Warsaw in the perspective of 2020 (SEAP)

SEAP target – improvement of energy efficiency and reduction of GHG emissions - calculated as:• 80% of CO2 emission in 2020 comparing to the base year,

• 80% of energy consumption in 2020 comparing to the base year,

• at least 20% of energy will be produced from RES.

Currently Warsaw prepares, within the new Polish scheme, the Low-Carbon Economy Plan, basedon SEAP and being its enhancement. It will cover specific projects with secured funding, will help in getting additional funds for their implementation and will give us a general vision of low-carbonWarsaw in future.

SEAP targets for 2020 compared to

the base year 2007

YearEnergy

consumption[MWh/year]

CO2 emission[MgCO2/year]

2007 28 394 431 12 952 984

2020 22 715 545 10 362 387

History

1952Zakład Sieci Cieplnej

Warszawa w Budowie

1953Miejskie Ciepłownie w m. st. Warszawie

1960Stołeczne

Przedsiębiorstwo Energetyki Cieplnej

(SPEC)

2003SPEC S.A.

2012Dalkia Warszawa

2014Veolia Energia Warszawa

Privatization

• Changes in ownership structure

• Strategic Committee with good cooperation

• Benefits for citizens

• Guaranteed investments

The biggest district heating network in EU

1 720 km of network

15 000 substations

18 600 buildings

22 000 meters

78% cities demands

Warsaw as a low heat prices area

Competitive heating prices

70% cheaper than electricity

55% cheaper than heating fuel

33% cheaper than natural gas

Investments

Investments 2015 2016 2017 2018

Modernization and construction of network

25 km 29 km 28 km 27 km

Modernization of substations

511 substations

1300 substations 1300 substations 1300 substations

1 308 equipments

Modernization of group substations24 21 100 until 2020

Construction of 2 pumping stationsbegining finalizing x x

New customers 115 MW 115 MW 115 MW 115 MW

Moduls of hot water (DHW)

5 MW 5 MW 5 MW 5 MW

167 180 180 180

BES - Building Energy Services Services for consumers

Intelligent Heating Network Project

79 chambers, 3 pumping stations, 1850 substations, RES, water loss detection system network

x

Automatic meter reading

12 695 substations

Ownership regulations 0,35 mln € 0,5 mln € 0,5 mln € 0,5 mln €

Expenditures 47 mln € 36,3 mln € 37.5 mln € 35 mln €

€ 250 million for Praga districts of Warsaw• Housing policy is the largest part of the Programme.

• Construction of new blocks of flats and renovation of old ones

with total investments equal to € 130 million.

• 5 000 flats will be connected to district heating.

• Level of investment in this project - € 17 million.

• The historical area of Praga (located, unlike

the rest of the City, on the right bank of the Vistula

River) is divided into 3 districts: Praga Północ,

Praga Południe and Targówek.

• The state of housing and energy solutions in the area requires huge improvements.

Selected Warsaw activities – second phase of revitalization programme in years 2015-2022

Public-Private Partnership –chances for Cities

• Public-private partnership may be a good solution to provide financing for projects, that generate substantial energy and cost savings. Warsaw plans to utilize PPP on much larger scale than before. Currently we are using PPP for financing 2 current building projects: on retrofit of school buildings and on construction of Mokotów District Hall Building.

• We identified up to 30 school buildings that need retrofit covering also electric installation and lights replacement, water supply improvement and energy management system with sensors. Certain level of savings should be guaranteed by the private partner (Energy Performance Contracting). In next months we will be completing energyaudits of the buildings.

• Energy efficiency and RES will be taken into consideration in the PPP project of construction and operation of the Mokotów District Hall Building. The building will be designed, built, financed and operated by a private partner, so the energy cost will consist a large part of the maintenance bill over the contract period, which may exceed 20 years in this case. The contract with the consultant which will assist with preparingthe construction tender was signed on 25th September, 2014.

Consolidation

•Very mature market for district energy with above 50 per cent of the market share for heating or cooling of buildings.

Refurbishment

•Very high market share of district energy

•However systems need some refurbishment in order to increase customer confidence, energy efficiency and profitability.

Expansion

•District heating and cooling systems appear in some areas, but the total market share remains low (15–50 per cent).

•Genuine interest in increasing the market share.

New

•District energy has a very low market share (0–15 per cent).

•The city is in the process of stimulating district energy, with small starter networks or demonstration projects envisioned.

Types of city engaged in district energy

Consolidation

• Many cities in Nordic countries particularly Denmark

• Frankfurt

• Gothenburg

• Seoul

Refurbishment

• Many cities in China, Russia, Mongolia, and Eastern and South-eastern Europe

Expansion

• Rotterdam

• Dubai

• Vancouver

• Paris

• Tokyo

• Cyberjaya

• Toronto

• Milan

New

• London

• GIFT City

• Port Louis

• Kuwait City

• Sydney

• Christchurch

Example cities

o Ten key steps that cities can take to support the development of district energy systems

o These steps can be taken individually or packaged to meet specific city conditions and needs.

o Depending on city type some steps may have already been completed

Key steps in developing a district energy system

Annual energy consumption by building type in Paris (2009)

Cooling Electricity (not including cooling)

Hot water, cooking and other

Heating

Why have an energy strategy and energy targets?

• Most efficient and measurable way to meeting city objectives

• A long-term vision can reassure investors making possible longer-term infrastructure developments such as district energy

• Development of a strategy can mobilize district energy champions and bring together the broad range of actors needed to coordinate district energy development.

• The time and resources spent delivering district energy projects can be justified against the potential benefits defined in the energy strategy

These can relate to: air pollution, fuel poverty, stress on electricity network, greenhouse gas emissions, reduced fossil fuel consumption. Objectives can come from the national level such as pollution limits or CO2 reduction targets.

These actors include: local authority departments (planning, transport, waste, water), local utilities, consumer groups, external consultants, other cities, etc.

Such data should include: heat and cool consumption, building efficiency, fuel consumption, expenditure on heating and cooling

These technology pathways must account for costs, fuel price risks, timescales, changing regulatory environments and local economic benefits.Should include an assessment of district energy’s potential.

District energy specific targets are a key best practice and vary significantly by city and in detail

For example Paris’ 2007 Climate Action Plan targeted 60% of renewable energy in district heating by 2012 but the 2012 Climate Action Plan had to revise this target to be by 2020.

Developing an energy strategy that includes heat and coolObjectives

Identify city

objectives for the

heat and cool

sectors.

Different Actors

Bring together

the various

actors in the

development of the strategy to ensure it is holistic and has

full support.

Data Collectio

n

Ensure data is

collected on heating

and cooling that can link back

to the city objectives

Heat and Cooling

Assessment

Carry out a heat and

cooling assessmen

t that identifies technolog

y pathways to achieve

city objectives.

Targets

Develop technology specific targets to provide investor certainty

and to measure progress.

Reflection and

Revision

An energy strategy in

a city is constantly evolving

and should be updated after a period (e.g. 5

years) and progress

evaluated.

Ambition of DES in energy strategy will depend on city type

- Latvia: refurbishing and keeping heat tariffs lowMany of Latvia’s towns and cities have district heating systems in need of refurbishment. The objectives of such refurbishment is to reduce the subsidies required to district heat networks and make them more efficient whilst keeping heat affordable.

Many municipalities do not have the capital for large scale improvements. A lack of investment can push tariffs up making it harder to retain customers, which makes the problem even worse.

For many municipalities the solution will be slow and long-term with small incremental improvements made that do not impact the business model significantly.

Large refurbishment project that will include pooling of networks, connection of waste heat and removal of small coal-fired boilers. Strategy developed with Danish expertise (Danfoss and COWI) with significant driver being pollution reduction

Connection to a large transmission line and pooling of networks is being achieved in stages connecting and upgrading individual districts at approximately 200MW each stage

Short payback period of less that 2.5 years per stage means that capital for each stage can be reinvested in future stages and financial benefits can be demonstrated quickly.

- Anshan, China: refurbishing in stages

NATIONAL RECOGNITION FOR

DISTRICT COOLING

Barrier: Impacts of cooling and the potential

and benefits of DC not communicated

▪ Full impacts of cooling on environment,

electricity grid, economy and consumers’

finances not separately assessed

▪ The economic potential and long-term

benefits of DC not studied, particularly

waste heat and renewables use

Recommendation: Independent study of

cooling impacts and optimal technology

pathways

Image – cooling strategy – if itexists?

NATIONAL DISTRICT COOLING

STRATEGY

Barrier: Lack of national strategy and targets

can limit DC growth potential

▪ Unclear where responsibility lies to

champion the sector

▪ New policies, regulations and incentives

need to be justified against clear strategy

▪ Cities and developers not always

considering district cooling

▪ District cooling judged on short-term cost-

effectiveness only

Recommendation: Develop a district cooling

strategy to promote sector that specifies how

DC meets wider national targets/commitments

Best practice city policies

43

THANK YOU!

For more information on the Global District Energy in Cities Initiative

and to become a partner, please visit the website or contact:

• Ms. Lily Riahi, Programme Manager and lead, District Energy in

Cities Initiative, UN Environment lily.riahi@un.org

www.districtenergyinitiative.org