Implementing CHP District Heating – Reducing Energy Costs and CO2 Emissions

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District Energy & the WMCWG Study

description

Michael Smith, Non-Executive Director, Cofely District Energy Limited

Transcript of Implementing CHP District Heating – Reducing Energy Costs and CO2 Emissions

Page 1: Implementing CHP District Heating – Reducing Energy Costs and CO2 Emissions

District Energy & the WMCWG Study

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What is CHP & District Energy ?

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Transmission Power Losses

Cooling Towers Heat Rejection

CHP Centralised Power Generation with gas fired boilers

Stack Heat Rejection

Space Heating and

Hot Water from boilers

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Transmission Power Losses

Electricity and waste heat used locally for space heating and hot water - instead of being rejected to atmosphere.

CHP Decentralised Energy Generation with CHP

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Piping heating & potentially cooling to buildings – “Energy Linking”

Heat Losses - 1°C per km

Reliability ~ 100% (99.98% for Southampton)

District Energy

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National Context

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District Energy in the UK today ?

Sheffield

Milton Keynes

Birmingham

Woking

Southampton

Nottingham

London – • Olympics and Stratford City • Bloomsbury Heat & Power • Whitehall

Lerwick

Newcastle

Leicester

Exeter

Our Members supply over 600 GWh of low carbon heat each year

Gas Fired CHP, 42%

Energy from Waste, 54%

4%

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Owners and operators of the largest district energy schemes in the UK We face the pains and successes of district energy on a daily basis Joining the organisation will ensure you gain the tools to develop your

scheme

Together the UKDEA Members represent

Over 100 MW of low carbon generation plant (CHP, biomass, EFW etc)

Supported by over 500 MW of conventional back up boiler plant

Delivering over 600,000,000 kWh of heat each year

across energy networks which, if combined, would extend for more than 200 km

Key Facts

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Who are we ?

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GDF SUEZ – The Business Lines

Leading Global Energy Player Operating in over 40 countries

218,000 employees 6 Business Lines

Turnover €89 billion

ENERGY FRANCE

ENERGY EUROPE&

INTERNATIONAL

GLOBAL GAS &LNG

INFRASTRUCTURES ENERGY SERVICES ENVIRONMENT

€14 Billion turnover

17% of the group’s turnover

80,000 employees

40% of total GDF SUEZ Staff

1,300 locations in Europe

30 Countries

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GDF SUEZ: Financials

1st company in the “utilities” sector worldwide (Forbes Global 2000);

€30 billion net invested over 2008-2010;

73 GW of installed power-production capacity;

Rank Company Sales (US$BIL) Profits (US$BIL) Assets (US$BIL) Market Value (US$BIL)

17 GDF Suez (incl. IP) 120.97 10.05 255.82 75.61

27 EDF Group 89.46 4.73 278.76 71.53

62 E.ON 120.74 1.76 215.15 47.44

129 National Grid 21.91 6.34 75.17 21.69

236 Scottish and Southern 30.27 1.73 27.69 14.34

282 Veolia Environment 50.39 0.56 66.17 10.3

579 Centrica (British Gas) 31.16 -0.21 25.93 19.69

660 United Utilities 4.69 1.8 20.54 4.93

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Cofely’s UK District Energy Schemes

£2.5bn revenue stream over the concessions

77,000 tonnes CO2 saved per annum

270 GWh energy sales per annum

Manchester

MediaCity UK Midlands

Leicester District Energy Birmingham District Energy Berryfields Estate Coventry Heatline

London

South Coast

Olympic Park & Stratford City Whitehall Bloomsbury Heat & Power Greenwich Millenium Village Equinox, Hatfield

Southampton Geothermal Eastleigh

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Cofely District Energy

Services to Energy Companies

External Clients

Energy Companies

New ESCOs

SGHC

Cofely Ltd

GDF SUEZ

GDF SUEZ Energy Services LTD

Cofely District Energy Group Ltd

ICE (UK)

Cofely District Energy Ltd

BDEC

BHP

LDEC

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Case Studies

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Southampton Geothermal Heating

Company, Southampton

City Wide DE Scheme

70,000,000 kWh energy

generated p.a.

11,000 tonnes CO2 saved p.a.

Providing heat chilled water &

electricity to

45+commercial consumers

800+ residential consumers

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Energy Efficiency in Action

– Energy Efficiency in Action

• Energy Efficiency in Action

BBC TV Studio’s

Parkview RSH

Hospital

Civic Centre

Southampton Solent University

Skandia Life

DeVere

Hotel

Quays

West Quay The Heat Station

IKEA

Carnival

ABP

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Birmingham District Energy

Company, Birmingham

City Wide DE Scheme

12,000 tonnes CO2 saved p.a.

3 Core Partners

Providing heat chilled water &

electricity from

3 Energy Centres

6.1MWe CHP

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A Partnering Framework

25 year contracts with BCC, Aston and BCH

Financial savings (developed on a whole life costing basis) maintained throughout the contract by indexing charges to national fuel prices, RPI etc.

100% risk transfer to Cofely District Energy

As scheme expands profits are shared with these core consumers – number of potential connections in the pipeline

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BDEC in Numbers

6.7 MWe of CHP

60,000 MWh of heat per annum 4,900 MWh of chilled water 4 energy centres distributing via a network of 4km buried pipework & cables £6 million per annum energy sales

£7 million capital cost to date 12,000 tonnes of CO2 saved per annum

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BDEC: The Commercial Framework

25 year agreements with BCC, Aston and BCH

Financial savings (on a whole life cost basis) maintained throughout the contract by indexing charges to national fuel prices, RPI etc

As the scheme expands profits are shared with these core consumers – number of potential connections in the pipeline

100% risk transfer to Cofely District Energy

Scheme supplies heat, chilled water and electricity to agreed output specifications with penalties for non performance

Savings to consumers >£0.5M p.a.

Emission reductions of 12,000 tCO2 p.a. with target for 20,000 tCO2 through growth and low carbon supply

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Energy Efficiency in Action

– Energy Efficiency in Action

• Energy Efficiency in Action

The Combined Schemes

Broad Street Scheme

Eastside

Regeneration Area

Potential future energy links

Broad Street Scheme

Eastside Scheme

Phases 1 and 2

Eastside

Regeneration Area

Westside Regeneration

Area

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Olympic Delivery Authority

Energy Centres for London 2012

£100 million investment

40 year concession

Energy price regulation

16 km of energy network

2 energy centres

(district heating & cooling)

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Olympic Delivery Authority

Energy Centres and network for London 2012

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Olympic Park & Stratford City

• £100M capex

• 40 year Concession Agreement

– longest district energy services

concession agreement in the UK

• Mandated Connections within

Zone of Exclusivity – enabled by

a price control formula - again a

first in the UK

• 16 km network, 2 energy

centres

• Up to 200 MW heating, 64 MW

cooling and 30 MW electricity

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Kings Yard Energy Centre

Biomass Boilers Chillers

Gas Fired CHP

Gas Boilers

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“The Olympic Park and Surrounding Area is London’s single most important regeneration project for the next 25 years” Boris Johnson Mayor of London

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Heating

Cooling

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Leicester District Energy Scheme - Leicester

CHP and large scale district networks -

3,000 Council Dwellings

15 Administration Buildings

City Wide DE Scheme

25 year contract with

Leicester City Council

£15 million investment

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Coventry District Energy Scheme - Coventry

Unique “heat shipper” contract

Concession to purchase all heat from existing incinerator and supply into the City

City Wide DE Scheme

25 year contract with

Coventry City Council

1 mile “heatline” into the City

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Study Methodology

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West Midlands Collaborative Working Group

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The following Authorities supplied data to take part in the study:

Coventry

Wolverhampton

Dudley

Walsall

Solihull

Authorities Involved

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Buildings considered for each study were originally identified by their respective LA, who:

a. Conducted site visits to each building to examine energy

generation plant (boilers primarily);

b. Inspected and measured plant spaces;

c. Gathered actual energy consumption data: gas and

electricity either metered or from invoices; and

d. Determined potential third party consumers enthusiasm

to being part of a wider district energy scheme.

Desktop Study Methodology

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Potential Networks and Connected Buildings

Coventry Wolverhampton

Examples....

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Load Benchmark Assessment

Whole Life Cycle Cost

Analysis

Selection L/Z Carbon

Generation Plant

Operational Strategy

(Heat lead)

Operational

& financial

modelling

(hourly

basis)

Optimisation via User

Feedback

Solution

Iteration

Desktop Study Methodology

Energy

&

CO2

savings

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Case Study – results for Walsall

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What’s happening in Walsall?

Base case

o Five buildings were offered

o Total GIFA 32,952 m2

100% Council Owned buildings (Mixed type)

o Total heat demand circa 4,900,000 kWh p.a.

o Total Electricity consumption circa 4,200,000 kWh p.a

o £620,300 estimated energy costs p.a.

o 3,070 Tonnes CO2 p.a.

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Solutions developed

2 modelled options considered are:

1. A DES to include all buildings identified by WMBC

2. A DES as per Option 1 with removal of one thermal branch

corresponding to the Garage Building

Option one delivers the greatest financial and environmental benefits to the core

consumers

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Walsall Option 1 Analysis Option 1

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Walsall Operational Analysis (Option 1)

>The Scheme will: 1. Comprise all buildings offered by WMBC

2. Based on single CHP:

– 334KWe (installed at Civic Centre)

3. Save 613 tonnes CO2 (20%) p.a

4. This CHP will deliver:

– 51% (2,551,426 kWh) of the scheme’s total heat consumption p.a.

– 44% (1,898,473 kWh) of the Civic’s Centre electricity demand p.a.

5. Export 4% (74,847 kWh) electricity to the national grid

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0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

1 1001 2001 3001 4001 5001 6001 7001 8001

He

at L

oad

(kW

)

Hours

Walsall Town CentreAnnual Heat Load Duration Curve

Boilers

CHP

Load

Walsall Operational Analysis (Option 1)

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Option 2 Capex

£Cost

Total CAPEX £1,037,745

ESCO Finance £1,037,745

WMBC/External grant £ -

ESCO operating profit £29,714

Walsall Financial Analysis (Option 1)

Consumer Energy cost

savings (p.a)

CRC EES

Revenue

(£/p.a.) Walsall Borough Council £31,016 £7,355

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Walsall: Key Benefits

It is recommended to proceed with Option 1: Zero financial contribution from WMBC;

Greatest CO2 savings over base case achieved;

Highest energy cost savings to consumers per annum on WLC basis;

Largest volume of energy contribution from CHP;

Further potential savings from the CRC EES to WMBC of approximately £7,356; and

Opportunity to grow a district energy scheme to serve future 3rd party consumers and

levied via connection charges.

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Financial Summary for Whole Study

Total CAPEX : £7.9M

Total CO2 savings achieved: 5,300 Tonnes CO2 p.a.

Total energy cost savings to consumers > £0.2M p.a.

Total potential savings from the CRC EES >£60k

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Next steps

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Deliver district energy schemes across the indentified areas as combined procurement process

Include other authorities to deliver economies of scale for all

Note - Coventry have fast tracked their procurement (due to specific HCA grant) and via open tender have selected Cofely District Energy to deliver their scheme using waste heat from the existing EFW plant – “Heatline”

Next Steps

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Business Models

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Option A - LA funding & ownership

Theoretically more control over ESCO development (but the same can be achieved via joint cooperation);

Not core business to LA (generating and selling energy)

Exposure to financial risk (CAPEX cost overruns, etc.)

Exposure to operational risk: • OPEX cost • Plant efficiencies • Plant and network replacement + cost (LTR)

Not effective risk transfer

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Option B - ESCO funding & ownership with Joint Co-operation

The engagement of an ESCO (Energy Services Company) can be

utilised by each LA to:

1. Reduce risk exposure to the LA, from the delivery of the

scheme.

2. Reduce the capital costs for development of the Scheme;

3. Bring certainty to the projected energy cost and carbon savings;

4. Achieve other key objectives (sustainability targets, etc)

OJEU procurement will be required as Scheme will breach OJEU

services threshold (£156,442)

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An ESCO would generally:

1. Design, build, finance (or part finance) & operate the scheme; 2. Take all risk on energy supply and plant availability/efficiency; and 3. Provide Energy on an output specification basis with:

i. Agreed energy costs savings; ii. Carbon savings;

Each LA and other Public Sector bodies would:

1. Enter into a long term energy supply agreement with the ESCO (20+ years).

ESCO delivery

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In return for the long term energy revenues/contracts an ESCO would:

1. Deliver energy to agreed standards – high quality, availability etc..

2. Deliver energy to agreed prices – although annual charges are split into fixed and unit

elements

3. Set these total prices to give savings year 1 against alternative costs of heating, cooling and

electricity supply

4. Ensure on going savings by indexation in accordance with an agreed basket of indices;

5. Purchase all fuels including all back up/top up fuel

6. Take full risk on availability operation of CHP plant etc..

7. Operate, maintain, repair and replace all plant in the Energy Centre and Distribution Systems

8. Fund and install 100% Backup/Top-up conventional heating/cooling plant as well as the

“sustainable” plant in the energy centre

“the Key Terms”

ESCO obligations

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The Birmingham Model

Strategic Board

Energy Board

Operational co-ordination

Development co-ordination

Ownership &

Investment

Project

Governance

Risk Transfer

Joint Co-operation

Energy Services

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Partnering Awards for the Birmingham Scheme

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A useful road map is GPG 377:

Guidance on procuring energy

services to deliver community heat

and power schemes

“Used by Birmingham City Council to deliver the BDEC scheme”

Useful guide

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Future Expansion

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Once a scheme is developed there is significant potential for the LA to encourage expansion:

Planning obligations via PPS1 and other obligations via Section 106 Agreements can help to incentivise private business to connect to DE Schemes.

LA can also develop a Joint Cooperation framework with an ESCO to connect buildings where WLC analysis demonstrates viability, thus providing an ESCO with a critical energy density to develop a wider DE scheme.

Expansion to Third Parties should deliver a profit share to the core Local Authority partner, as well as delivering cost and carbon savings to consumers

Expanding the Schemes

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Energy Offering to Third Parties Once Scheme is Developed

• Capital cost savings – connection charge up to 20% less than conventional plant

• Space savings – direct connections mean no plant space required

• Planning gain – environmental benefits and no roof mounted cooling plant

• Operating cost savings – up to 10% compared to alternative cost of heating/cooling

• Savings guaranteed – prices linked to market levels to ensure savings maintained

• Carbon Savings - Delivers on LA 21, Kyoto and CSR targets

• Risk Transfer – with off site energy supplies

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Why Take a Thermal/Cooling

Connection ?

• Capital cost savings – connection charge up to 20% less than conventional plant

• Space savings – direct connections mean no plant space required – very valuable in urban areas

• No roof mounted plant – planning gain

• Operating cost savings – up to 10% when compared to the alternative cost of heating/cooling (Cofely Business Model)

• Guaranteed savings – prices linked to basket of indices to ensure savings maintained throughout life of the contract

• Delivers on carbon saving targets and indicators

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C

Contact

Mike D Smith

Non-Executive Director and Public Sector Advisor, Cofely District Energy

E-mail: [email protected]

Mobile: 07976 606858

Web: www.cofely.co.uk