District Energy Cities are key to sustainable growth. Julia Panzer Public Affairs Manager, Danfoss Group

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1 District Energy Cities are key to sustainable growth Julia Panzer Public Affairs Manager, Danfoss Group 1 Delegation Visit, March 2016

2 Danfoss facts Employees 23,400 Worldwide sales Factories Top three markets Ownership Headquarters more than 100 countries 61 in 20 countries USA, China and Germany Privately held Nordborg, Denmark 2 Delegation Visit, March 2016

3 Key financials (2015) Net sales 38.0 bn DKK 5.1 bn EUR EBIT (excluding other income and expenses) 4.2 bn DKK 568 m EUR Free cash flow (before M&A) 3.4 bn DKK 456 m EUR Net sales bn DKK the last five years EBIT bn DKK the last five years Gains from divestments 3 Delegation Visit, March 2016

4 Our global markets Share of net sales per region 2015 North America 24% Eastern Europe 9% Western Europe 39% Latin America 5% Africa/Middle East 3% Asia-Pacific 20% 4 Delegation Visit, March 2016

5 Setting the scene Putting energy efficiency first - 38% of emissions reductions needed by 2050 could come from EE Energy efficiency is the most costeffective way to decarbonize our economy, while helping to decouple GDP growth from energy use Energy-efficient technologies that are ready for implementation exist and it is a good business case Cities are key to unlock energy efficiency Urban efficiency: Buildings, energy systems, industry, water, food infrastructure 5 Delegation Visit, March 2016

6 Political targets Political Targets in Europe by % reduction of CO2 20% share of renewables in energy mix 20% increased Energy Efficiency Political targets in Denmark All Buildings fossil free by 2035 Transport fossil free by 2050 Building Energy consumption frame: 20-25kWh/m2 6 Delegation Visit, March 2016

7 Decoupling of Growth and Energy Consumption Since 1980, the Danish economy has grown by almost 80 per cent without increasing gross energy consumption. And total water consumption has been reduced by 40% Source: State of Green Delegation Visit, March 2016

8 Denmark is a pioneer in district heating District heating development in Denmark From Denmark doubled its heating energy efficiency District energy as backbone for 1. Decoupling of growth and energy consumption 2. Green transition through integration of renewables Today, district heating supplies around 63% of all households in DK Index: 1980=100 8 Delegation Visit, March 2016

9 Our application expertise is your Danfoss Heating Segment- Our application expertise is guarantee for the right solution your guarantee for the right solution Commercial building applications Residential multi-family building applications Residential 1-2 family house applications District energy network applications 9 Delegation Visit, March 2016

10 Looking at Solutions 10 Delegation Visit, March 2016

11 Large potential for energy savings Buildings account for one-third of total final energy consumption in the world Globally, space heating and cooling account for over one-third of all energy consumed in buildings EU example: EU example: Industry 27% Buildings 41% Water heating 25% Space heating 58% Cooking 7% Transport 32% Electric appliances 10% 11 Delegation Visit, March 2016

12 Energy efficiency is required on both the demand and supply side of the heat sector Source: Aalborg University, David Connolly 12 Delegation Visit, March 2016

13 Energy-efficient solutions in Denmark - short payback time Well-proven solutions already exist. Why wait? Energy renovation Estimated savings Repayment period Estimated investments (DKK) Replacing manual valves w thermostats 20 25% 2 3 years 500 DKK per radiator* Balancing valves 5 15% 2 3 years 200 DKK per radiator** Replacing the oil or gas boilers with heat pump (air-water heat pump) Replacing an older oil boiler with modern condensing boiler 50 75% years DKK* 20-30% 5-7 years DKK *** New low energy windows 20 25% years DKK**** Insulation of exterior walls and roof 10 12% years DKK**** * ** *** **** Calculations are based on an average Danish household of approx. 130 m 2 equivalent to the average of the approx. 1.6 million households that the Danish District Heating companies supplies Based on buildings with several apartments investment will vary with the number of apartments Based on data from the Danish Oil Industry Association (EOF) Figures from the Danish portal Bolius knowledge center for homeowners 13 Delegation Visit, March 2016

14 District Energy - Where are we heading? Urban leaders are embracing a new vision for supplying energy to their cities, one that combines local renewables, cogeneration plants and district energy in one low-carbon network 14 Delegation Visit, March 2016

15 Heat Storage Is 100 Times Cheaper Electricity = 170/kWh Thermal = 0.5-3/kWh Source: Aalborg University, David Connolly 15 Delegation Visit, March 2016

16 Copenhagen - System in Copenhagen was introduced step by step The transmission grid delivering heat to individual district heating networks is: - 54 km long - 3 CHP s and 3 waste incinerations, 1 geothermal plant - Has 3 pumping stations - 14 peak load boilers - 27 heat exchanger stations - Supplies heat to households 16 Delegation Visit, March 2016

17 Green District Heating as the heating backbone With multiple GREEN sources Straw & woodchips Wind Waste Geothermal & heatpumps Solarheat 17 Delegation Visit, March 2016

18 District heating as solution to carbon reductions and integration of renewables 18 Delegation Visit, March 2016

19 Implementation with UNEP 19 Delegation Visit, March 2016

20 UNEP s Global District Energy in Cities Initiative 20 Delegation Visit, March 2016

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24 More information Mette Uhd Nørgaard Corporate Communications & Reputation Media Relations DK-6430 Nordborg Tel.: Mobile: Delegation Visit, March 2016