Clear regulations are necessary for the effective establishment of district heating networks
DIVERSE SUPPLY
District heating networks can use a number of different heat sources, providing flexibility and security of supply at low cost
KEY COMPONENT
The development of thermal storage assets linked to DHC networks can provide significant benefits across the lifetime of the project
KEY QUOTE
Consumers, building owners and municipal governments are increasingly aware of the benefits of DHC networks and their potential to decarbonise heating by exploiting renewable heat and recovered heat
Sharing resources can make them stretch further. This principle applies to heat too. As energy security joins decarbonisation on political agendas at the European Union and national government levels, district heating holds promise to support these goals. Designed well and regulated properly, district heating networks can make use of surplus renewable electricity generation and waste heat from industries, further reducing natural gas demand and can stabilise energy prices for consumers. First, we must understand what is meant by a district heating network. By aggregating the heating load of multiple buildings—houses, apartments or commercial premises—district heating and cooling (DHC) networks allow for the cost-efficient use of heating resources at scale across a number of end-users. Each individual household or property within the network is supplied with high-temperature water, to be used for hot water or heating, by a central heat source via a network of insulated pipes and exchangers. Households and premises connected to a district heating network can change temperature and timings using controls just as they would with a typical standalone gas boiler.
SPREAD WIDELY
District heating networks can vary in scale, from just a few hundred consumers to whole cities. The networks are monopolies run by regulated companies regarding price, ownership, operation, metering, security of supply and, increasingly, decarbonisation. Most schemes that have successfully engaged and included local communities are those that have been developed by these communities themselves, according to Sem Oxenaar from the Regulatory Assistance Project (RAP), a non-governmental organisation. To ensure tariffs and prices are competitive, a diversity of heat sources is key. These can include combined heat and power (CHP) plants—which can run on fossil fuel such as natural gas, biogas or biomass (wood chips)—waste-from-energy (WfE) facilities, heat pumps, electric boilers for heating water or steam (power-to-heat), waste heat from a large source such as factories or data centres, solar thermal generation, or thermal energy storage. Across the EU there are 17,000 DHC networks, according to Euroheat & Power, a trade association. These supply around 70 million EU citizens, while 140 million citizens live in cities equipped with DHC. Penetration across Europe varies widely. Iceland, Denmark and Sweden have the highest shares of district heating in energy sources to meet heat demands from end-users, while the Netherlands, France and Kosovo have the least.
DHC RENAISSANCE
Half of all the energy consumed in the EU is for heating and cooling, with fossil fuels accounting for 75% of supply—with natural gas meeting 43% of this figure. For residential consumers, demand for energy to stay warm and clean outstrips the requirements for electricity. Over five million additional households are expected to be connected to district heating by 2030, while this number is expected to grow towards 2040 and 2050, according to Euroheat & Power. “Consumers, building owners and municipal governments are increasingly aware of the benefits of DHC networks and their potential to decarbonise heating by exploiting renewable heat and recovered heat. Recent projects include the recovery of waste heat from data centres in Dublin, to the recovery of waste heat in Rotterdam harbour,” says Pauline Lucas at Euroheat & Power. Provisions in the EU’s Energy Efficiency Directive on municipal planning for cities of more than 45,000 inhabitants encourage new connections of buildings to nearby district heating, DHC network expansion, plus the development of new DHC systems, and to exploit sustainable locally available resources. The 2021-22 energy crisis in Europe has also led to a sharp increase in requests for connection to DHC networks, driven by the stability of district heating prices. In 2021, 22% of new buildings in Germany were connected to district heating. The German government has a target of 100,000 additional buildings to be connected annually and all heating networks to be fully decarbonised by 2045. In September 2022, a new support scheme, known as BEW, was introduced in the country to decarbonise the fuel mix of existing schemes and incentivise the development of new ones. France’s district heating sector is also gathering pace with an increase of 70% of buildings connected to heat networks within the last ten years. In both countries, the energy crisis has led lawmakers to consider new ways to accelerate the pace of change in the heat market. “During the most recent winter [2022], district heating customers, on the whole, have been better shielded from volatile energy prices, compared to households with individual gas or oil boilers, while properties with individual heat pumps were exposed to higher electricity prices,” says Lucas. In Denmark too, where district heating supplies about 70% of the heating demand from buildings, 35,000 new connections occurred in 2022.
Waste heat in DHC networks
DHC networks can use the heat that is generated as a byproduct of many processes.With a potential of 2860 terawatt-hours (TWh) per year, waste heat recovery could almost completely meet the EU’s total energy demand for space heating and hot water in the residential and tertiary sectors, according to a study by Aalborg University. This would require harnessing it not only from industrial processes, such as steelmaking, cement production and refining but also data centres, public transport, sewage and wastewater treatment, and supermarkets. Waste heat from wastewater treatment could, via DHC networks, supply heating for nearly 30 million EU households annually, on average.Aalborg Portland-Cement-Fabrik is Denmark’s largest industrial producer and also one of the biggest sources of waste heat, from its cement-making kilns. Since the early 1990s, it has been supplying some of this heat to the city’s district heating network. A long-term contract between Aalborg Portland and the district heating company ensures the heat is supplied at a competitive price. “For suppliers of recovered heat, it is not only about generating revenues from what is a byproduct of an industrial process but about embedding sustainability and circular economy principles into production and commercial activity,” says Michael Lundgaard Thomsen of Aalborg Portland. Typically, the heat is supplied to the district heating company at 70℃ and can be delivered up to 80℃. “As the DHC company procures and obtains heat from other sources, such as heat pumps and electric boilers, during the summer months when there is a lot of cheap electricity, we can support flexibility by supplying heat at a higher temperature,” says Lundgaard Thomsen.The waste heat from the factory meets the heating needs of about 25,000 in Aalborg but there is potential to double this to 50,000 in a few years’ time. Aalborg will be closing down its coal-fired CHP plant in around 2028, which means new, low-carbon sources of heating will be required by the city’s DHC network.“We have been the subject of lots of interest from municipalities and also industrial producers, as our approach has shown how contracts between district heating companies and heat suppliers should be structured as well as how it can be done from a technical perspective,” Lundgaard Thomsen adds. |
ROLE OF RENEWABLES
The DHC sector has a higher proportion of renewable energy and low-carbon heat sources (43%) compared to the broader European heating and cooling (23%). This mix, largely relying on biomass, is expected to diversify to harness a greater variety of low-carbon and renewable heat sources. In Denmark, about two-thirds of the energy used for district heating comes from renewable energy and waste heat. “The share of fossil fuel burning, mainly natural gas but also oil and coal, as well as biomass burning, will reduce, while waste heat from industrial processes but also from renewable energy, via heat pumps and electric boilers using electricity from the grid that is increasingly wind and solar-based, will increase,” says Morten Duedahl at the Danish Board of District Heating (DBDH), which represents the Danish district energy sector. While it can take several years to build out a DHC network, once the core elements are in place, such as pipes for the network’s first customers and centralised heating sources, expansion is relatively straightforward, says John Flørning from Ramboll, an engineering firm.“You could switch a city the size of Glasgow to district heating within ten years. Expecting to have it supplied entirely by renewable or low carbon sources from the start is unrealistic. While it can take several years to build out a DHC network, once the core elements are in place, such as pipes for the network’s first customers and centralised heating sources, expansion is relatively straightforward, Flørning says. In the Netherlands, where natural gas represents around 80% of heating for residential and service sectors, the transition to DHC is underway, says Lucas, with the country having developed a legislative framework that will provide opportunities for cities to roll out district heating. In the city of Groningen, local utility WarmteStad has been establishing a network, engaging with local energy cooperatives to encourage inhabitants to join it.
Groningen as a greenprint for Dutch DHC future
WarmteStad is initially aiming to connect 10,000 buildings in Groningen to its district heating network, known as a heat grid in the Netherlands, extending to a further 13,000 and eventually 50,000 customers.From October 2023, a 37 megawatt solar thermal plant—the largest of its kind in the country—will be connected to the Groningen heat grid. The asset, owned by a joint venture between TVP Solar Novar and K3, will provide 25 gigawatt-hours a year to the city’s heat grid. The heat grid is already supplied by waste heat (at around 23°C) from two nearby data centres, fed into heat pumps to achieve the required grid temperature of 85°C. WarmteStad is the energy off-taker for the solar thermal, via a 30-year heat purchase agreement, which, Theo Venema from the utility, says is based upon a solar PV power purchase agreement. Dutch government subsidy ensures customers pay no difference than what they would pay for heating from natural gas.The combination of waste heat from data centres, the solar thermal plant and an aquifer thermal storage system, also owned by WarmeStad, will enable renewable and waste heat to meet 50% of the annual heating demand of the Groningen heat grid, with the remainder provided by electric boilers, heat pumps and natural gas-supplied CHP. Further decarbonisation in future will be achieved with additional waste heat, power-to-heat and bio-based liquid fuel.“When we first considered solar thermal to decarbonise Warmtestad’s heat grid four years ago there was some scepticism around the use of the technology in a northern European country initially,” Venema says. The company was convinced otherwise following visits to several solar thermal supplied district heating networks in Denmark. Venema looked into how aquifer thermal energy storage, often used for cooling, as it stores low-temperature heat, could be used to store waste heat in winter months, allowing for solar thermal to be used in the summer months.Venema’s advice to anyone looking to establish a district heating network is, to not let perfection be the enemy of good. “While fifth-generation district heating may be the most energy-efficient solution, it requires lots of expense for insulation, which perpetuates customers sticking with natural gas heating. We deliberately choose to supply heat up to 70°C, so more affordable insulation measures are possible.” |
THERMAL STORAGE
Thermal energy storage (TES), typically comprising a tank, pit, aquifer and boorhole, can provide heat storage from a few days up to several weeks. “Thermal storage is the most critical component within a DHC network. It enables use of renewable energy when it’s available and for district heating companies to optimise their networks,” says Flørning. Since the 1990s, district heating-related legislation in Denmark has indirectly required the installation of thermal storage as part of these networks. “Today, thermal storage increases the share of renewable energy used by the heat pumps, at times of low electricity prices and reduce production when electricity prices are high and instead supply from storage,” he says. The Danish grid uses 90% carbon-neutral electricity production, with 50-60% supplied by wind and solar, the rest biomass, waste-to-energy, and nuclear (from other Nordic countries). Fossil fuels currently account for the remaining 10%. When there is too much wind or solar photovoltaic (PV) generation on the grid, instead of curtailing it, DHC networks that incorporate heat pumps or electric boilers with thermal storage, can use low-cost, sometimes negatively priced, electricity to supply heating. “District heating companies are paid by Energinet [Denmark’s transmission system operator] to start up or shut down their heat production, providing flexibility. It is more cost-effective than building large chemical batteries,” says Flørning.
GOOD REGULATION
District heating’s uptake in Denmark occurred over several decades. A combination of policy, regulation and incentives have shaped the modern Danish district heating market into one oriented towards prioritising cleaner and renewable sources of heat while ensuring heat is affordable for consumers. Early legislation was introduced as a response to the oil crisis in the 1970s, paving the way for co-generation (CHP) plants, supplied with natural gas, as the highest efficiency power plants in order to reduce primary fuel consumption. Waste heat from waste-to-energy or incineration was also prioritised. Regulations around district heating companies mean they have to prioritise heat sources by lowest cost and also by recovered or waste heat. The introduction of the Heat Supply Act protected consumers connected to a network, ensuring they would be supplied with heat at the most competitive price. “This approach has opened up more district heating opportunities because if prices are kept low, overall more consumers will choose to connect,” Flørning says. “During the autumn of 2022, rates for natural gas rose significantly, whereas those for district heating saw smaller increases, which is the reason we have seen a huge increase in the interest and demand for district heating in Denmark,” he adds. When Ramboll advises lawmakers or other types of stakeholders for potential DHC networks in other countries, Flørning says it is emphasised that these networks require strong, clear regulation. In the US, Ramboll is advising legislators about how they can incentivise DHC networks in a market where natural gas is so cheap. “Without some sort of carbon tax or price, this is difficult.” In the UK, meanwhile, Ramboll has provided consultancy services to the UK government’s energy ministry around legislation to establish district heating zones in the UK and where it is suitable to supply heating and cooling. “Other markets can achieve what Denmark has but you need the right incentives and good regulation,” says Flørning. •
TEXT Sara Verbruggen PHOTO Esther, Pexels