GROSS ENERGY CONSUMPTION BY FUEL TYPE (PJ)

Transcription

1 chp/dhc country Scorecard: Denmark Denmark is one of the most energy efficient countries in the world. This was achieved in large part through a pro-active energy policy promoting energy saving, increased use of renewable energy and technological development. The country s energy consumption has consequently remained steady in the last 25 years, while the economy has continued to grow. Denmark also has a tradition of active fostering of international energy and climate cooperation, one example of which being the choice of Copenhagen to host the 15th Conference of the Parties (COP15) of the Kyoto Protocol in The widespread use of district heating (DH) and combined heat and power (CHP) has made a major contribution to Denmark s drive towards efficiency and energy selfsufficiency it is a world leader in terms of CHP share of electricity generation. Since 1979, strong incentive policies have strongly encouraged the growth of CHP and DH. This support was triggered by the oil crises in and the late 1970s, at a time when over 90% of energy demand was met by oil imports. 1 By 1997, energy self-sufficiency had been achieved. The discovery of North Sea gas played an important part, but efficiency gains and the rapid development of CHP played an important role. energy overview the main energy trends in recent decades have been growing energy self-sufficiency and efficiency. With the development of chp and Dh in the 1980s and 1990s, Denmark became less dependent on coal and oil as an energy source (Figure 1). initially, coal- and natural gas-fired chp, and the increased use of renewable sources, slowly replaced some oil with coal in turn also being displaced since the mid 1990s. The first Heat Supply Law of 1979 has been an important factor in CHP/DH market growth by creating a new public planning process that rationalised heat supply. The government s more recent Energy Strategy 2025 builds on this track record to address the challenges of rising fuel prices, declining internal energy production, and growing environmental pressures. It aims to promote new clean technologies and increase its share of renewables and CHP through well-functioning energy markets and international cooperation. This Profile looks at how Denmark has achieved its CHP/DH successes, the policies that have enabled them and the direction the country may take in the future. FIGURE 1: GROSS ENERGY CONSUMPTION BY FUEL TYPE (PJ) Source: DaniSh energy authority, energy StatiSticS Fuel amount (PJ) renewable energy coal and coke natural gas oil 1 1. cogeneration and on-site Power Production, Decentralised Denmark (2005).

2 the aggressive chp and energy efficiency efforts, together with increasing access to north Sea oil and gas supplies, saw Denmark becoming energy self-sufficient in 1997 (Figure 2). FIGURE 2: TOTAL ENERGY, OIL AND GAS LEVELS OF SELF-SUFFICIENCY IN DENMARK Source: DaniSh energy authority, EnErgy in DEnmark (2006). % energy gas oil along with the drive to energy sufficiency and efficiency has been the equally important trend towards decentralisation of power generation. Figure 3 illustrates the change that has taken place since the mid 1980s when a handful of large power stations generated the country s domestic electricity. today, as a consequence of the pro-chp and wind policy programmes, electricity is supplied from a much larger array of smaller scale units based mainly on chp (which are co-located with heat loads) and dispersed wind farms located in rural areas. FIGURE 3. GROWING DECENTRALISATION OF ELECTRICITY GENERATION Source: euroheat & PoWer 2 centralized production in the mid 80 s Decentralized production of today

3 climate change context Denmark is an active participant in un-led climate change negotiations and will host the 15th conference of the Parties (cop15) in as a signatory to the kyoto Protocol, it is committed to reducing its ghg emissions by 21% compared to 1990 levels in the period from 2008 to indeed, reducing co 2 emissions had already been a concern prior to kyoto with some reductions already achieved; this is making the kyoto target more challenging to reach. another issue is that co 2 emissions can vary by more than 20% from one year to the next. 3 in years of heavy rain and snowfall on the Scandinavian peninsula, Denmark imports excess hydroelectric energy from norway and Sweden. 1990, the kyoto baseline year, was one such year, causing a reduction in domestic electricity production, thus resulting in co 2 emissions for the year being below the annual average. Denmark s energy Policy Statement 2008 in its energy Policy Statement 2008, Denmark aims to tackle the climate challenge at minimal economic costs and without risking security of supply. this will be achieved by making improvements in: energy efficiency; renewable energy; and technological development. Specifically, Denmark aims to reduce the country s total energy consumption by 2% in 2011 and by 4% in 2020 based on 2006 figures; and 4 increase the use of renewable energy to 20% of gross energy consumption by to help meet these ambitious targets, the government will increase funding for research, development and demonstration of energy technology to 135 million / year. 5 chp Status: technology, applications and market activity Denmark meets an impressive level of its heat and electricity demand by using chp plants across different sectors, in particular in Dh applications. Figure 4 shows that by 2006, the chp shares of thermal electricity and Dh production stood at 47% and 82%, respectively. 6 the shares increased significantly in the 1990s but have now levelled off, as suitable applications are already served by chp. FIGURE 4. ANNUAL SHARE OF DISTRICT HEATING AND THERMAL ELECTRICITY GENERATION FROM CHP Source: DaniSh energy authority, EnErgy in DEnmark (2006) % District heating thermal electricity generation international energy agency (2006), Energy Policy of iea Countries: Denmark oecd/iea, Paris. 4. Denmark s energy Policy Statement id. 6. Danish energy authority, Energy in Denmark (2006).

4 Figure 5 shows how dramatically the pattern of chp development changed during the 1990s. until this point, largescale systems dominated, but since then, the development of smaller Dh systems and on-site, decentralised (also called autoproducer ) chp units took over, mainly in commercial / public buildings. in all, 230 Dh systems converted to chp in the early 1990s. 7 FIGURE 5. ELECTRICITY PRODUCTION BY TYPE OF CHP PRODUCER Source: DaniSh energy authority,energy StatiSticS(2006). Electricity Production (TJ) autoproducers chp Small scale chp/dh Large scale chp/dh District heating applications 8 District heating forms the backbone of the Danish energy system and existing heat networks are now almost fully served by chp plants. the public heat supply is served by: decentralised chp plants; 16 centralised chp plants; and 130 decentralised Dh plants. in general, centralised chp are large plants that formerly primarily produced electricity. Decentralised chp are small, localised plants, some of which originally produced only heat. the majority of the chp plants serving the Dh networks is owned by local authorities and co-operatives, fuelled by natural gas. With so many individual households dependent on district heat, heavy regulation of heat prices ensures that customer interests are protected. For example, the heat Supply Law stipulates that Dh schemes must operate on a non-profit basis, and heat and electricity prices must be cost-reflective. this fits well with the cooperative ownership of most Dh schemes. having now achieved a highly efficient energy system based on chp, Dh and wind, Denmark now aims to substitute fossil fuels with biomass in its chp plants to further reduce ghg emissions and enhance long-term energy security. case Study 1: Metropolitan Copenhagen Heating Transmission Company (CTR) ctr is in partnership with the five municipalities of Frederiksberg, gentofte, gladsaxe, copenhagen and tearnby. approximately 10% of total Danish heat demand is met by ctr, providing heat to households. 10 the ctr scheme has been in operation since 1984 with a goal of providing the municipalities with a supply of heat that is reliable and cost-effective. the ctr Dh chp scheme uses a diverse fuel mix, consisting of coal, oil, natural gas, straw, wood pellets and waste. the coverage of the system is illustrated in Figure Danish District heating association (Dansk Fjernvarme). Denmark answer to a Burning Platform: CHP/DHC there is no data on the use of district cooling (Dc) in Denmark. therefore, the assumption is that there is very little use of Dc. other northern european countries (e.g., Finland) have begun to expand their use of chp/dc; there may be an opportunity in Denmark as well. 9. Danish energy agency. Large and small scale district heating plants ctr, annual report and Financial Statements (2006). 4

5 FIGURE 6. THE MAIN DISTRICT HEATING NETWORK IN COPENHAGEN Source: metropolitan copenhagen heating transmission company (ctr), THE main DisTriCT HEaTing network in CoPEnHagEn. 11 (2006). this district heating scheme provides the five municipalities in the partnership with more than 90% of their residential heating needs. the heat feeding into the network is produced at various sources, including chp plants; a geothermal plant; a waste incineration plant; a steam pool; and heating stations that operate during peak periods. table 1 highlights some of the features of the scheme. TABLE 1: DETAILS OF THE CTR COPENHAGEN DH CHP SCHEME ctr copenhagen facts and figures Base load heat capacity Base load electricity capacity transmission network length (double pipes) maximum flow temperature operating pressure annual turnover Fuelsavingsofctrscheme mj/s mw 54 km 120 o 25 Bar 200 million toe/year Source: ctr,the main DisTriCT HEaTing network in CoPEnHagEn 11 (2006)

6 case Study 2: Avedøre Multi Fuel Power Plant the 570 mw avedøre-2 chp plant, shown in figure 7, serves the West copenhagen heating transmission company (VekS) and ctr Dh network described above. the project plans were approved in 1994 and construction was completed in 2002 at a cost of 400 million. 12 FIGURE 7. THE AVEDØRE CHP PLANT Source: DBDh, 2005 the plant supplies 485 mw of electricity and 570 mw of heat, meeting the heating needs of homes and electricity needs of homes. the biggest benefit of this plant is that it replaced three older and less efficient coal-fired power plants with the net benefit of reducing co 2 emissions by 10%, a saving of around tonnes per year. 13 the avedøre-2 plant uses a combination of gas and steam turbines, with a fossil-fuel boiler and a biomass boiler, as illustrated in Figure 8. this combination offers greater flexibility for the plant and allows an estimated efficiency of 95% to be achieved. initially, natural gas was expected to make up 85% of the fuel consumption in the main boiler. as natural gas prices have risen, biomass has become the primary energy source, reducing co 2 emissions by a further tonnes annually. FIGURE 8. TECHNICAL CONFIGURATION OF THE AVEDØRE CHP PLANT Source: PoWer-technoLogy.com (2008). Steam Biomass Steam coal natural gas oil Steam Steam turbine electricity District heating natural gas electricity gas turbine / hrsg 12. Power-technology.com (2008), avedøre multi-fuel Power Plant, Denmark. 13. id. 6

7 Commercial Applications the vast majority of chp units in Denmark serve Dh networks, with more limited application outside the Dh sector. however, smaller applications of chp have been installed in hospitals, hotels and commercial sites that have a high heat demand. indeed, the first ever chp system in Denmark was built near Frederiksberg hospital in copenhagen in many of these decentralised chp producers sell their excess heat to local distribution companies and, in 2006, contributed over 20 PJ of heat to Dh schemes. 14 Industrial Applications Denmark does not have as high a share of energy-intensive industry as many other countries; in 2005, only 16% of the total final energy consumption was by industry. 15 of this, over 2.5 gwh was met by Dh, representing nearly 9% of total Dh demand. 16 all-in-all, there are 200 small-scale industrial chp plants that serve greenhouses and the manufacturing, pharmaceuticals and foodstuff processing industries. 17 government chp/dh Promotion Policies the oil crises of the 1970s led the Danish government to create effective policies that have allowed the country to become energy self-sufficient by the first law regulating heat supply came into effect in the First heat Supply Law in 1979, Denmark introduced its first law on heat. the law made local authorities responsible for identifying the potential for public heating in their areas. efforts were then made to introduce collective heating schemes in the most appropriate areas, these forming the basis for district heating systems, while the local authorities were able to start drawing up heating plans in their municipalities. the planning process detailed by the law was divided into three phases: Phase 1: Local authorities had to prepare reports on their own heat requirements, the heating methods used and the amounts of energy consumed. heating options were also assessed. Local plans were aggregated at county level to prepare regional heat supply strategies. Phase 2: Local authorities had to prepare a draft of their future heat supply needs. the county councils then prepared regional supply need plans. Phase 3: the county councils prepared definitive regional heat plans based on this information. these plans were used to highlight priority areas for heat supply, and to identify where to locate future pipelines and heat supply installations. this sort of government leadership helped form the foundation for the later success of Denmark s chp/dh industry. the first heat supply law set the ball rolling and, from it, other successful policies followed. Planning regulation was certainly the most important factor in the early stages of development, effectively creating the market, after which financial incentives were introduced to ensure the ongoing economic viability of chp/dh. Financial Support Policies Taxation on fuel for heat Placing a high tax on fuel used for heat generation, with no tax on the fuel for electricity production, has encouraged a shift from heat-only production to chp operation. in January 2002, chp producers using natural gas could calculate the fuel used for electricity generation and subtract this from their total fuel consumption. the level of energy tax varied depending on the fuel used: Fuel oil: 223 per tonne coal: 139 per tonne natural gas: c0.13 per m not only did the fuel tax encourage the transition to chp generation, it also made biofuels competitive with fossil fuels as renewable fuels avoided the tax Danish energy authority, energy Statistics(2006). 15. the Susnordic gateway, governance for sustainable Development in the nordic region. 16. euroheat & Power, District Heating and Cooling: Country by Country 2007 survey. 17. Danish energy authority (2008). 18. Danish energy authority, Danish Heat supply: who, what, where, when and why (2005). 19. centre for Biomass technology(1999).

8 CHP electricity production subsidy (feed-in tariffs) this subsidy was originally only available for electricity produced by renewable technologies and fuels, but was extended to include natural gas based chp in in 2006, the shares of total electricity capacity of chp and wind were 47% and 24%, respectively. at certain times, electricity production from chp and wind exceeded national demand and surplus electricity had to be exported at a loss. this loss is effectively paid for by consumers. as a result, some chp plants are being supplemented by heat-only systems so that heat demand can still be met without an electricity surplus. this is raising questions about the benefits of further development of chp/dh. table 2 summarises the current tariff scheme. the feed-in tariff successfully incentivised many chp plants to convert from oil or coal-fired operation to natural gas and renewable fuels. An obligation to purchase (no longer in place) until 2005, all chp operators aside from large, central chp plants benefitted from customers on the local distribution network having an obligation to buy the electricity produced by local chp units. this ensured long-term revenues, encouraging investment in chp. now, the electricity is sold on the market, and is subsidised by the tariffs and surcharges discussed. Biomass and biogas CHP premium centralised chp plants (those originally mainly generating only electricity) using biomass or biogas receive a premium which is paid by all consumers. this premium depends on of the fuel used (see table 2). TABLE 2: PREMIUMS FOR CENTRALISED CHP IN DENMARK Fuel Connection to network Premium plus market price total Duration Wood chips or straw Before 21st april 2004 c8 per kwh 20 years (15 years for connections after 1st January 2004) Biogas Before 21st april 2004 c8 per kwh 20 years 21st april c8 per kwh 10 years end 2008 c5 per kwh 10 years note: CHP using a combination of biogas and natural gas receives the same payment as decentralised natural gas CHP plus a surcharge. if the plant began using biogas before 21st april 2004, it will receive a premium of c3 per kwh for 20 years, and if after this date, it will receive c3 per kwh for 10 years followed by c0.8 per kwh for 10 years. 20 Source: DaniSh energy authority, HEaT supply: who, what, where, when and why (2005). Planning Policies Obligation to connect or remain connected (1982, amended 2000) Local authorities have the power to require that all consumers connect either to a natural gas supply or to a district heating network. if used, this obligation applies to new and existing buildings, but for existing buildings connection needs to occur at the latest 9 years after notification of owners. 21 obligatory connection ensures the critical mass of consumers for building or expanding Dh systems, guarantees the business case, and thus facilitates financing through commercial loans. Electric heating ban (1988, amended 1994) electric heating is banned in all new buildings and in existing buildings that have a water-based central heating system or access to a public supply of natural gas or district heat. this helps reserve the heat loads for the collective heating systems. 20. Danish energy authority, Danish Heat supply: who, what, where, when and why (2005). 21. Danish energy association (2008). 8

9 Stakeholders Government the main government body responsible for energy policy is the Ministry of Energy and Climate Change. the two main organisations within the ministry are the Danish Energy Agency (Dea) and the Danish Energy Regulatory Authority (Dera). the Dea is involved in the heating networks, as well as being involved in creating government policy. Dera is an independent authority engaged in regulating heat prices and the supervision of monopoly companies in the Danish energy sector. its members are appointed by the ministry of energy and climate change for a period of four years. Industry DONG Energy was formed in 2006 after a number of firms in the oil, natural gas, electricity and transmission sectors merged. the company is involved in both the district heating and natural gas sectors. the Metropolitan Copenhagen Heating Transmission Company (ctr) is the largest district heating system in copenhagen. the case study in this profile describes the company. Non-governmental Organisations the Danish District Heating Association (DDha or Dansk Fjernvarme) is a member organisation representing 400 district heating companies. members range from small co-operative owners supplying a few hundred households to big municipal utilities serving hundreds of thousands of consumers. the key aim of the DDha is to influence Danish energy policy and to maintain the leading position of district heating in the country. the Danish Board of District Heating (DBDh) is an association of the industry manufacturing equipment for and delivering services to the Dh and chp sector. it identifies and facilitates energy efficient, environmental and sustainable partnerships between its members and partners in over 50 countries. the board has a broad knowledge of the energy sector including energy planning, metering, biomass and biogas and highefficiency chp. challenges to Further uptake the consistent priority given to chp/dh in policy making has made its development highly successful in Denmark. however, with wind energy also on the agenda, electricity overproduction has become the main constraint to chp/dh growth. Denmark s ambition to increase energy efficiency is also driving down heat demand, further limiting possibilities for new chp/dh. Lack of Expansion Potential as chp has is already widespread and successful, limited options are available to expand further. innovative measures will be necessary for development of chp beyond the existing capacity. Lack of Information on District Cooling or Renewable Fuel Use in District Heating Denmark is already pursuing renewable sources of heat for Dh; however, there may be more potential. this needs to be systematically studied to inform policy makers on costs and benefits. Similarly, district cooling is in use in neighbouring northern european countries; Denmark may have opportunities that could be uncovered in a potential study. 9

10 chp Potential and Benefits most of the potential for chp has already been achieved in Denmark with only a small possibility for future expansion. chp s primary application is in Dh, but the heating networks are mostly already fully served. there are, however, still some plants that are connected to natural gas networks. increasing the capacity of the Dh networks and the supply of heat will allow some of these gas users to connect to the Dh network, improving the overall efficiency of fuel use. there may also be potential for the use of district cooling in Denmark. this has not been studied in any systematic way. Some of the benefits of the successful development of chp have been assessed, and include: By 2004, chp and Dh were saving 8-11 million tons co 2 per year. 22 energy consumption per m 2 has fallen by 50% since the early 1970s (also due to increased end-use efficiency). international cooperation and export of Danish energy expertise. international cooperation Denmark s experience of developing chp and Dh can offer some valuable lessons to other countries that wish to achieve similar benefits. the Danish energy authority, Danish Board of District heating and other organisations seek to promote the export of Danish energy technology and expertise, contributing to the transfer of knowledge and technology to other countries. consequently, energy technology now represents 5.5% of the country s exports. the DBDh in particular has worked to support the successful development of Dh in china, contributing to the construction of many schemes, including the largest in the world in harbin. Summary Policy recommendations Denmark has already been very successful in the development of chp and has implemented strong policy and legislation to achieve what it has today. there remains limited further potential which could be achieved as follows: > increase renewable fuel use in chp/dhc. restructuring taxes can incentivise new investment in renewable-based chp, while also helping to meet co 2 reduction targets. > improve the integration of electricity and heating sectors. converting chp units to heat-only plants may reduce the overproduction of electricity, but in times of high electricity demand, more electricity will be produced less efficiently by power-only central stations. the country needs to explore ways of integrating the electricity and heating systems in order to ensure the most efficient use of fuel. renewable heat-only capacity and electricity storage technologies could add important flexibility. > upgrade units to a higher electricity-to-heat ratio. more power can subsequently be installed on the same heat basis. this practice is common recently as many reciprocated engines and gas turbines have reached running hours where a decision on costly maintenance or prime mover replacement must be made. > replace individual boilers outside Dhc networks. this has significant installation potential, as some gas boilers and oil-fired units are in operation. if these are replaced with micro-cogeneration of some 1,5 kwe each, it would equate to an installation potential close to mwe in the future. analyses have been made on this in cooperation with the Dea. > international cooperation. Denmark can expand its already active role in technology and know-how transfer to emerging economies, building on its expertise in energy efficiency and chp. > explore options for district cooling. there may be energy efficiency gains to be had in the use of district cooling; Denmark s neighbouring countries are already using Dc to meet some of their cooling loads. Developing a study or other analysis of the potential for district cooling is a good first step. 22. Danish energy agency, Fact sheet constant energy consumption in 25 years. 10

11 chp/dhc Scorecard to aid in comparing amongst countries, the iea has developed a scorecard of national chp/dhc policy efforts that takes into account three criteria: the effectiveness of past policies in developing the chp/dhc market over the last 5 years; Statements and commitments of intent in respect of future chp/dhc policy, for example through the creation of national growth targets; and the existence today of meaningful policy incentives that are already causing significant market growth or that are likely to do so in the near future. each country is given a scorecard rating as follows: no material policy effort or intent to promote chp/dhc. the market is not expected to grow for the foreseeable future. Some minor recognition of the role of chp/dhc, but policies are not fully effective or are otherwise insufficient to influence market development. there is a clear recognition of the role of chp/dhc, accompanied by the introduction of some measures to accelerate the market, but chp/dhc are not high priorities compared to other energy solutions. in addition, the country lacks an integrated chp/dhc strategy. as a result, market growth is likely to be modest. chp/dhc is at or close to the top of the list of energy policy priorities and a series of effective policies are being implemented as part of a coherent strategy. important growth is expected in chp/dhc markets. a world leader in prioritising chp/dhc, with a clear and proven strategy for bringing about significant market development and the implementation of at least one global best-practice policy measure. Denmark Rating: 11

12 the international chp/dhc collaborative the International CHP/DHC Collaborative was launched in march 2007 to help evaluate global lessons learned and guide the g8 leaders and other policy makers as they attempt to assess the potential of chp as an energy technology solution. the collaborative includes the following activities: collecting global data on current chp installations assessing growth potentials for key markets developing country profiles with data and relevant policies documenting best practice policies for chp and Dhc convening an international chp/dhc network, to share experiences and ideas Participants in the collaborative include the Partners, mentioned in the acknowledgments, as well as the collaborators, a group of over 40 government, industry and non-governmental organizations that provide expertise and support. the collaborative network, the larger group that is informed about meetings, publications and outreach, has almost 300 participants. if you are interested in participating in the collaborative or want more information, please visit acknowledgements this report was prepared by tom kerr of the iea. the consulting firm Delta energy and environment provided research, analysis and drafting support. the us Department of energy s alyssa morrissey was seconded to the iea during the production of this study, and provided valuable support. the authors would like to thank the Danish energy agency, the Danish energy regulatory authority, euroheat and Power, the Danish District heating association and Danish Board of District heating, the metropolitan copenhagen heating transmission company, the Susnordic gateway, helsinki energy, the Finnish energy industries and the publication cogeneration and on-site Power Production for their insightful comments and input. the iea would also like to thank the Partners and collaborators in the international chp/dhc collaborative, who provided support for this effort. Questions and comments about this document should be sent to: tom kerr international energy agency 9, rue de la Fédération Paris cedex 15 France tom.kerr@iea.org design by 12