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Riga Conference November 2014 - Finance

 
 

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District Heating Leaflet

Glasgow’s City Energy team has produced an information leaflet about District Heating in Glasgow to help provide information about District Heating and how it works, with examples from within Glasgow.

STEP UP Final Newsletter

Our final STEP UP Newsletter has just gone out to our subscribers.  The newsletter has information updating you on each city's progress, SEAP and recent events and achievements. Click here to view our newsletter.

Celsius Smart Cities Workshop- 16th September 2015

This interactive workshop will bring together excellence from several advanced European Smart Cities projects that will put forward their expertise and their project results on integrated planning, energy efficiency and district energy solutions, among others.

The afternoon of the workshop was dedicated to the financial aspects of the enhanced SEAP and innovative projects.  The workshop started with a quick overview of financing opportunities provided by the European Commission and continued with local examples of financing SEAP-based innovative projects partially funded by the EU Commission, or supported by local financial models from local Energy Agencies; involved with district heating, ESCos, energy-efficiency in the residential sector through subsidies and building Energy Management Systems.

Workshop on SEAP actions financing: funding for innovation and territorial cooperation – presentations by Horizon 2020 and INTERREG EUROPE focal points

Iruma Kravale, Latvian National Contact Point for INTERREG EUROPE, Dina Berzina, Latvian National Contact Point for Horizon 2020 and Ilga Gruseva (LIFE) gave an overview of the funding opportunities that exist within these programs.

INTERREG EUROPE Presentation
Iruma Kravale

Horizon 2020 Presentation
Dina Berzina

SEAP actions local financing - role of utilities, ESCOs, grant system and SMEs innovation.

The Celsius Project Presentation
Jonas Cognell, Gothenburg Energy Company

Energy Shortage

According to Jonas Cognell at Gothenburg Energy Company there is enough waste heat produced in the EU to heat the EU´s entire building stock. Jonas is the project manager of the EU funded project Celsius (http://celsiuscity.eu/) which aims to heat up cities all over Europe by district heating.  Not only that, but it will also play a part in solving problems with oil and gas dependency, air quality and greenhouse gas emissions.

Gothenburg has a long tradition of the use of district heating, and together with other cities, experts and researchers, the Celsius project will show the benefits district heating and cooling and also help and support more cities in Europe to learn about district heating systems as well as to plan, implement and optimize smart infrastructure solutions for heating and cooling.

Demonstrators

The Celsius project started in 2014 and will run for 4 years with total funding of 26 million Euros, of which 14 million is funded by the EU.  To show all the smart outcomes of district heating and cooling; Celsius cities will demonstrate 12 projects from five topics: System integration, Sustainable production, Storage, Infrastructure and End user. The demonstrators already in operation will secure a full range of innovations and solutions covering the five categories necessary to display and demonstrate the Celsius commitment.

In Gothenburg, the energy company has about 85% of the market, and the challenge for Celsius is not to find more residential customers but to find new ways to use district heating.  Celsius has just tried a new solution with providing district heating to ferries at the quay.

In London they work with encouraging the development of small district heating networks to support energy supply to new build developments.  There are many challenges with expanding the district heating system in London; very short time frames and the lack of space to do the ground work amongst others.

In Cologne, one idea is to recover heat from wastewater systems that is currently simply flushed away. The City of Cologne will begin to use wastewater along with other non fossil energy as a sustainable source of heat for large buildings.

In Genoa, the objective associated to Genoa’s demonstrator is to increase the overall energy efficiency associated with the industrial gas distribution activity. The main components of the demonstrator are CHP (combined heat and power) and an expansion turbine which produces electricity using the high pressure from the gas network.

In Rotterdam, a short-term storage solution; which can be described as a big thermos, is being built to improve the heat retention capacity of the system.

The Biggest Challenge

Celsius will show many good examples of how to improve energy use with district heating and cooling. The project will develop a toolbox of different technology solutions, but the biggest challenge according to Jonas Cognell, is about changing the mindset of people.

There is a need to change our behavior. Celsius aims to make a roadmap on how a city can be transformed into a Celsius city.  Ghent’s example discussed earlier was a good example of how to change the mindset. Communicating effectively is the key.

Replication Cities

In order to share and spread the knowledge from the expertise generated by Celsius, the project works with replication cities.  Celsius can provide expertise and help with any issue a city may have concerning district heating and cooling. The aim is to have 50 Celsius cities at the end of the project.  Georg Houben, Project and Coordination Officer at DG Energy in the European Commission, said
"This is a good example of how companies can start a network around their knowledge, a project that goes beyond the time frame.  It is a great approach that I strongly recommend others to follow".

Local Financing and the Role of ESCos Presentation
Gavin Slater, Glasgow City Council

This presentation examines different models for ESCo development in relation to district heating, issues of risk and control, and key considerations for local authorities looking into developing an ESCo, building on lessons learnt in Glasgow.

An ESCo can offer a city and its residents many benefits, but as with all projects, raises the issue of risk. In the UK, the public sector tends to be relatively risk-adverse; however, in models where the private sector takes on more risk, control is also transferred, affecting how much a local authority can shape the scope, delivery and benefits of a planned district heating scheme. A wholly public sector ownership model, such as Aberdeen Heat and Power, increases public sector risk but provides more control over achieving key objectives, such as the reduction of fuel poverty.

Alternatively, a housing scheme model, such as Cube Housing Association in Glasgow, is one in which the residential social landlord lead takes the financial risk for the project. This scheme has allowed residents to connect to a system delivering cheaper heat, but some operational elements of the scheme have been outsourced and run to make a profit. As such, the total benefits that could have been achieved are not being fully met, leading to some complaints from residents. 

For local authorities, risk is often perceived to be greater than it actually is and appropriate risk allocation is acknowledged to be key in delivering an effective ESCo structure.  Visiting and learning from other cities is noted as a good example of how perceptions of risk can be reduced, allowing local authorities to  see and understand projects being successfully delivered in other cities, as has been the case for Glasgow through the STEP UP project.

Financing considerations are also of great importance. For Glasgow, its ability to attract funding and act on opportunities, such as the Commonwealth Games held in summer 2014, has had a considerable role in its success in developing district heating schemes. For example, the district heating scheme developed as part of the Athlete’s Village has been inherited by the city, and the council has established good working relationships with other stakeholders developing their own district heating schemes, such as the University of Strathclyde. The strategic business case for Glasgow’s ESCo has now been agreed and it is anticipated that the ESCo will begin to operate in July 2015 with the Athlete’s Village.

The presentation concludes that ESCos can be vehicles for varying types of venture and that both the advantages and disadvantages of different delivery models should be carefully considered, in relation to a city’s objectives, in order to establish the right path and set up the appropriate governance arrangements to ensure success.

Financial levers for the residential sector Presentation
Indra van Sande, Environmental Service, City of Ghent

Ghent has chosen subsidies as an item for this workshop because it is a tool that many local governments use to encourage citizens towards retrofitting.  On top of the CO2 target, Ghent has set a social target too: every measure must also lead towards stabilization and reduction of fuel poverty.
Next to making people enthusiastic and facilitating the retrofit process with easy-to-use tools, Ghent is granting subsidies to speed up the pace of retrofit in the residential sector. This sector emits 24% to the total amount of CO2 in Ghent. If the city succeeds in doubling the pace of retrofit, along with implementing all actions for new buildings, the CO2 emissions of this sector will decrease by 11%.  Doubling the pace of retrofit means that 3,500 properties must be retrofitted yearly to achieve this target.

In Ghent this is a challenge because of the scattered ownership.  If we zoom in on one district for instance we see that there are rarely owners with more than 20 premises. Homeowners usually own just one house or two.

As said before, subsidies alone cannot achieve this objective.  It is necessary to embed them in a broader strategy of encouraging enthusiasm, access to knowledge, guidance and advice, and as a third step, supporting citizens with financial incentive.  For socially deprived households, subsidies do not make much difference without guidance and information to go with it.

Many stakeholders were sceptical about energy subsidies because the wealthiest citizens often find their way towards subsidies most easily.  When asked about the conditions for subsidies, stakeholders advised the following:

  • Support should be mostly for deprived households
  • Support should be substantial, especially for the underprivileged in order to make a difference
  • The subsidies should also address the rental market
  • The support should help people in whatever retrofit phase they are in
  • Retrofit needs to be done in several phases for deprived households to make it affordable or when they can’t take up big loans.

So, following this feedback, Ghent tried to include this advice in the subsidy conditions. Firstly, 4 categories were made based on the gross income of the households (category 4 have the highest income). The first 3 categories may only be owner of 1 house. There is a menu of subsidies for the first 3 categories and only subsidies for roof insulation for the fourth category because they have enough means to invest in more. The difference between category 1, 2 and 3 lies in the kind of measures available and the maximum subsidies they can apply for.  For the most deprived households this is 4,600 €. When taken into account, this is a substantial amount, especially as they have free guidance, free loans up to 10,000 € and potential subsidies from the Flemish government up till 10,000 €.

The City council have and will provide between now-2019, almost 7 M € for these energy subsidies. These subsides have a complex set of conditions but when feedback from stakeholders suggests that the overall consensus was positive towards these measures.  Ghent is now testing this new subsidy scheme and will evaluate annually whether it can reach and involve the most underprivileged households to tackle fuel poverty as well as excessive energy use.

Energy Management System at Rigas Nami buildings Presentation
Jānis Šipkovs, ENERGODATA LTD.

The aim of the speech ‘Energy Management System at Rigas Nami buildings’ was to underline the importance of buildings’ energy management systems.  The speech focused on benefits of close cooperation between all involved stakeholders during building commissioning processes and future operation of building systems.

Modern building energy systems such as heating, ventilation and air-conditioning, lighting, alarm systems and others should be operated by using Building Management Systems (BMS) and Energy Management Systems (EMS).  Nowadays, Building Energy Management Systems, and energy meters both incorporate user behaviour.  The availability of building data showing real energy consumption coupled with energy performance indicators, can significantly increase the energy awareness of house owners.

ISO 50001:2011 ‘Energy Management System’ provides the requirements to use data to improve energy use and aids people in making informed decisions regarding it. ISO 50001 supports organizations in all sectors to use energy more efficiently, through the development of an energy management system.

The introduction of building energy management systems enables the efficient operation of building heat sub-stations, avoids indoor air overheating and ensures an optimal temperature profile during the weekend.  Indoor air temperatures and energy consumption can be controlled and monitored for any type of building. The indoor air parameters can be controlled remotely. Necessary indoor air parameters can be set at any time, for example; just before arrival of residents and visitors.

Experience has shown that building management tools significantly reduce building exploitation costs and make energy costs more predictable.

The main conclusion of the presentation was that energy management systems, in combination with advanced automation systems, under ISO 50 001 requirements will ensure significant improvements in building energy efficiency. The monitoring of buildings should be implemented on a day-to-day basis. Close cooperation between building owner and energy management specialist is needed to improve a building’s operation. 

Nowadays almost all retail facilities, offices, hotels and sport halls have such Building Management Systems, although maintenance quality of the systems, proper data management and evaluation are not present.  There is still room for improvement in this field.

Price registration and evaluation of real building energy consumption are crucial for further economic analysis of proposed renovation measures and investments in energy efficient technologies.

Janis Sipkovs has much experience in installation and maintenance of building management systems, in over 130 buildings including retail buildings, hotels and residential buildings. He has introduced online monitoring systems and remote control maintenance systems for his customers.


 

 

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