Investment Planning of District heating Systems

1
Investment Planning of District heating Systems

• Content of Presentation
• Private sector participation (PSP) needed
• Potential and barriers
• Three approaches of research
• Example of results in Poland
• General about the Model
• Flow of losses of DH in the Model
• Economic connections of measures and benefits in
  the Model
• Example water losses in the Model
• Time steps in the Model

2
Private sector participation (PSP) needed

• International development banks (World Bank,
  EBRD) are not sufficient to finance DH
  rehabilitation even though they are willing to
  increase their portfolio in DH rehabilitation
• Countries are not willing to provide with
  sovereign guarantees to the international
  development banks
• Therefore, PSP is necessary in DH system
  rehabilitation in large scale
• The risks and institutional barriers are still
  substantial for the PSP and,
• Due to risks, only few companies are on the
  market Dalkia, MMV, E-on, RKS, ..

3
Potential and Barriers

• Huge potential
• Heat is a necessary commodity on the northern
  globe
• 40-50 billion needed for DH rehabilitation in
  Russia, where rehabilitation has hardly begun
• Existing DH systems collapsing (Moldova)
• Blocks of flats largely heated by electricity
  (Serbia)
• Rehabilitation needs to start in large scale (EU
  accession countries)
• Rehabilitation needs to continue (new EU
  countries)
• but

• but a lot of barriers
• Institutional ownership of fixed assets,
  decision making, tariff regulation
• Market related price distortions, short term
  decisions
• Financial business sustainability
• Social subsidy targeting, affordability
• Technical outdated, uneconomic

4
Three Approaches

• Approach 1
• Design of a computerized Model for stretegic
  planning of DH system rehabilitation in economies
  in transition
• Approach 2
• Analysis of the benefits and investments in the
  completed DH projects. The Model has been
  adjusted according to the materialized
  experiences of the comprehensive DH
  rehabilitation programs of the World Bank in
  Poland, the Baltic Countries and in Bulgaria
  and,
• Approach 3
• Quantification of the impact of the immaterial
  measures by means of a questionnaire analysis
  (not reviewed here).

5
Example Results of DH Rehabilitation in Poland
6
General about the Model

• Focus
• Investors point of view
• Objective
• Which measures and in which implementation order
  the economic/financial return would be maximized
  during a given period of time?
• Response
• Develop a model for the investor to help on
  strategic level
• Programming tool
• GAMS - General Arithmetic Modelling System
• LP and NLP benefits of investments
• Output
• Strategic plan of rehabilitation for the given
  period of years
• Target
• The Model should give the best estimate of the
  optimal order and quantity of investments for
  rehabilitation of a DH system in the economies in
  transition.

7
Flow of Losses in DH
8
Economic Connections in the Model
9
Example Water Losses

• Water consumption level (W) depending on the
  rehabilitation rate (R ) of the water temperature
  controllers of space heating in the consumer
  substations (he) and on the district heating
  network (ne) respectively in eight district
  heating enterprises indexed from b to i

10
Time Steps of the Model
11
Thermal Chain

• Heat production with boilers, CHP and bulk heat
  purchase
• DH network with three sizes of pipelines
• Consumer substation separated with heat metering,
  heat exchangers and the temperature controller at
  space heating circuit
• Demand side management with thermostatic valves
  and cost allocators

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Input data (1)
13
Input data (2)
14
Input data (3)
15
Input data (4)
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Output

• The efficiency of DH has increasd as basis of
  investments
• EA Economic analysis
• FA Financial analysis
• LP Linear programming
• NLP Non-linear programming