4. future of district heating in view of eu regulations on ... · pdf filefuture of district...

Heat / Kristian Rehnström1

Future of District Heating in view ofEU Regulations on Emission andEnergy Efficiency– Finnish Perspectives

IX International Conference DISTRICT HEATING 2012Wroclaw, Poland 13-15 March, 2012Kristian Rehnström


Brief presentation about Fortum and the speaker

Kristian RehnströmKristian Rehnström•• Head of Customer Management and RegulatoryHead of Customer Management and Regulatory

Affairs, Heat BalticsAffairs, Heat Baltics•• Previous positions in FortumPrevious positions in Fortum

–– Head of Sales, Heat FinlandHead of Sales, Heat Finland–– Development Manager, Heat FinlandDevelopment Manager, Heat Finland–– involved with district heating since 2001involved with district heating since 2001–– joined Fortum in 1997joined Fortum in 1997

•• Experience as member of board of directors fromExperience as member of board of directors fromseveral Finnish DH Companiesseveral Finnish DH Companies

•• M.Sc (Engineering)M.Sc (Engineering)Helsinki University of TechnologyHelsinki University of Technology

Kuusamo

UimaharjuJoensuu

Nokia

SuomenojaKauttua

TartuJelgava GanibuJelgava CHP

Pärnu

Klajpeda

CzęstochowaŚwiebodzice

BristaCity KVV6/Stockholm/ CHP

HässelbyHögdalenCity KVV1/Stockholm

BytomZabrze

KirkniemiNaantali Järvenpää

Existing plantUnder construction

Fortum’s CHP plants in EuropeFortum’s CHP plants in Europe

Fortum CorporationFortum Corporation•• Key figures 2011Key figures 2011

–– Net salesNet sales EUR 6.2 bnEUR 6.2 bn–– Operating profitOperating profit EUR 1.6 bnEUR 1.6 bn–– PersonnelPersonnel 10,80010,800

•• Listed on NASDAQ OMX Helsinki since 1998Listed on NASDAQ OMX Helsinki since 1998


Contents

• Summary of District Heating in Finland

• EU regulations on energy efficiency

• EU regulations on emissions


District Heating in Finland 2011

17.1.20124

Consumption of DH (weather corrected), TWh



17.1.20123

Market shares of heating solutions

Source: Statistics Finland

District heating

Electricity

Heat pumpsLFO

Wood

HFO

Natural gas



17.1.20128

Production of DH 201133.4 TWh

CHP electricity producedin connection to DH14.9 TWh

CHP

heat only boiler



17.1.201210

Fuels used for district heating and CHPproduction 2011- fuel energy content total 56.6 TWh

Coal

Natural gasPeat

Wood, bio

Oil Other


Characteristics of the Finnish Heat Market

• No direct legislation on district heating– General statements of the Competition Law apply

• Heat price for the end-customer set by district heating company– Price changes reflect the changes in costs, e.g. fuel costs– Price competition from other heat products, e.g. heat pumps, electricity,

pellets, oil, gas

• Voluntary connection to district heating– DH has several competitors on the heat market

• District heating companies have on commersial basis outsourced ~30 %of their heat demand to be produced by third party

– Commersial contracts between DH-company and heat producer


District heating lives in a competitive environmentwith other heating alternatives

0,00

50,00

100,00

150,00

200,00

District heating Heat pump Oil Pel let

€/M

Wh

(incl

VA

T 23

%)

Investment costs

O&M

Variable costs

Fixed costs


Exemple of action taken to beat the competition onthe heat market

• Total change of pricing from Jan 1st

• Customers may choose heat productfrom three different alternatives

• In those products that have acapasity fee, the fee is based onmeasured and used capasity

• Change enables the customer biggerflexibility and a fair possibility toinfluence the heat price

• Fortum pioneer with multiple heatproducts in Finland


Mandatory vs VoluntaryEnergy Efficiancy Mechanisms

• The Finnish EEA system covers years 2008-2016 and play a crucial role to meetEE targets in Finland

– The primary tool in the implementation of ESD (2006/32/EC),– Signed by the industries (incl. energy sector), property and building, municipal, oil, goods and public

transport, agricultural sectors,– Parties are ministries, industry, associations, companies and communities,– The EEA scheme covered 80 % of Finland’s total energy consumption in 2010

• Results from years 2008-2010– Savings of heating energy and fuels 2.6 TWhheating energy and fuels 2.6 TWh per annum, electricity savings 1.3 TWhelectricity savings 1.3 TWh per annum

(70 % in industry, 25 % in energy production, 5 % in other sectors)• Equal 1 % of Finland’s total energy consumption

– Savings in energy costs 130 M€, CO2 emission reduced by 1.3 million tonnes,– Energy subsidies granted 23 M€(energy audits and investments),– Total of 190 M€ in investments reported for savings measures– Actions: Growing number of energy audits, speed up investments, continuous improvement of EE,

energy saving guidance to customers (e.g. online information of hourly energy use)

11


Details from the Agreementof the Energy Sector

• The agreement consists of:– Energy production actions programme– Energy services actions programme

• Target savings by 2016 are:– Improve efficiency of primary energy use by 1,000 GWh– Improvement of electricity production by 1,000 GWh– Electricity savings of 150 GWh in electricity and DH distribution and heat

production– Heat or fuel savings of 150 GWh in DH distribution and heat only production


Results (Energy Sector only) 2008–10Primary Energy

0

200

400

600

800

1000

GW

h

Target 2016 Savings 2008-10

Electricity Production

0

200

400

600

800

1000

GW

h


Electricity Losses

0

200

400

600

800

1000

GW

h


Heat Losses

0

200

400

600

800

1000

GW

h


49 % 48 %

46 % 21 %


Key EED issues for the district heating sector

• Proposal aims to achieve 20 % primary energyprimary energy efficiency improvement by2020, compared to baseline projections

• Growth of district heating:– Connecting 10 % more customers. Does it increase consumption by 10 % or

save energy by 10 %?• Does disconnecting current customers save energy?

Heat demand = 100solution: own heat pump→ electricity 35

Heat demand = 100solution: buy from neighbourghbour→ heat 100

Heat demand = 100Coolooling demand = 100

”waste”heat (DH)(heat energy = 100)free cooling DC(cooling energy = 100)

End use = 200

heat pump(electricity = 35)

chiller system(electricity = 40)

End use = 75


Key EED issues for the district heating sector

• Target is to reduce usage of primary energy.

• Savings should be calculated by the effect it has on the target.

• District heating and CHP is a solution to reach energy efficiency.


Steering of emissions by taxation– a Finnish exemple

0,00

2,00

4,00

6,00

8,00

10,00

12,00

14,00

16,00

18,00

electricity(class I)

coal gas LFO HFO peat

Fuel

tax

(€/M

Wh)

to 2010 from 2011+ 93 %

+ 82 %

+ 190 %

+ 69 %

+ 108 %

Taxes calculated for CHP-plant

+ 412 %

proposition 2015proposition 2013


Back up slides


Aim of the Proposal for theEnergy Efficiency Directive

• Proposal aims to achieve 20 % primary energy efficiency improvement by 2020,compared to baseline projections

– In absolute terms, this is 368 Mtoe in 2020 compared to projected consumption in that year of 1842 Mtoe– At the moment – with all the measures on EU and national level in place so far – we would only reach 1678

Mtoe, or 9% of savings

19

http://europa.eu/rapid/pressReleasesAction.do?reference=MEMO/11/440&format=HTML

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