Contracts, Business Models and Barriers to Investing in Low Temperature District Heating Projects

Abstract

Approximately 1.2 EJ of energy are potentially available for recovery each year from urban heat sources in the EU. This corresponds to more than 10 percent of the EU's total energy demand for heat and hot water. There are, however, a number of challenges to be met before urban waste heat recovery can be performed on a wide scale. This paper focuses on the non-technical issues related to urban waste heat recovery and is written on the basis of opinions gathered from stakeholders in the field. Three non-technical issues are focused upon. First, a number of important barriers to wide scale urban waste recovery are identified, and where applicable, recommendations are made regarding how to overcome these barriers. Second, important issues and challenges regarding contract design are identified and discussed. Key elements of heat supply contracts between the district heating company and the owner of the waste heat are described. Finally, the impact on business models of properties specific to urban waste heat recovery are discussed. Data were collected from two separate sources, both related to the ReUseHeat Horizon 2020 project, which addresses the application of urban waste heat recovery in existing district heating networks. First, a number of interviews with stakeholders were carried out. Second, information was collected from demonstrator sites involved in the ReUseHeat project. It was concluded that, for urban waste heat recovery to be taken up on a wide scale, there is still a large amount of work to do to overcome these major issues. This paper is novel in that key non-technical issues of urban waste heat recovery are discussed from the perspective of a large sample of actual stakeholders and practitioners in the field.

Model-Based Contract Design for Low Energy Waste Heat Contracts: The Route to Pricing

“…Contractual efficiency in waste heat recovery is not well-covered in the academic literature. However, the issue was considered by Lygnerud et al who identify key factors for achieving contractual efficiency [27]. These are listed and described below.…”

The Role of Low Temperature Waste Heat Recovery in Achieving 2050 Goals: A Policy Positioning Paper

“…In 2016, the European Commission drafted a strategy for district heating and cooling which, among other things, aims to better integrate it with the electricity system. Further, the strategy aims to reduce energy waste in industry by utilising waste heat in district heating systems ( [21]). However, the strategy is not currently implemented across the European Union in a structure that resembles the directive.…”

“…Around 2.7 EJ/year of industrial waste heat is estimated to be available in Europe. Additionally, around 1.2 EJ/year of low temperature heat is available from data centres, metro stations, waste water treatment plants and service sector buildings ( [21]). For context, the EU's total demand for domestic heat and hot water is estimated at 10.7 EJ/year ( [28]).…”

“…The conventional wisdom is that heat is collected or produced locally and distributed to customers in a citywide distribution network ( [19]). The most recent technological development is the usage of local, low temperature heat sources stemming from city infrastructure such as metro systems and sewage and commercial activity from sources such as data centres ( [21]). Low temperature heat recovery is referred to as 4th and 5th generation district heating technology where the 5th generation represents lower distribution temperatures than the 4th.…”

“…Despite the great potential for urban waste heat recovery, uptake has, so far, been low. Research has shown that urban waste heat recovery investment is hindered by untested technical solutions, the absence of standardised contracts and the current cost of carbon, making the business model more appropriate for circumstances beyond 2050 ( [21]). This paper was written from the perspective of the ReUseHeat project, funded by the European Commission.…”