Transcript Key Challenges in Developing Small Scale Heat Generation

Russia’s District Heating:
Experience from the Transition
and Future Directions
Igor Bashmakov
Center for Energy Efficiency, Moscow, Russia
CHP/DHC Roundtable, International Energy Agency
Paris, October 10-11, 2007
Russian District Heating
Is regularly ignored, when energy and GHG mitigation policies are
discussed and determined, while
It accounts for over 31% of domestic final energy consumption in Russia,
and for over 32% of total fossil fuel use (more then electricity generation),
and
Is the largest single product market in Russia split into more than 50000
local markets with:
– US$ 33 billion annual sales, and
– US$ 50 billion efficiency improvement investments potential, but with only about
US$ 1-1.5 billion annual investments (it will take 30-50 years to release the
potential);
– at least 52% of the nation-wide potential for improve heat use efficiency and 1620% fossil fuel consumption and GHG emission reduction
Over 60% of district heat is consumed by buildings
Heat consumption went down in 1995-2000 and was frozen since up to
2006
The future for large CHPs in Russia is gloomy. The market for large CHPs is
squeezed by the competition vice
Given the shortage of meters, heat in Russia is still traded in the mist of
heat quantities and real costs
Large businesses have moved to the heat market
Russian 2005 District Heating Indicators
Indicator
Units
Combined heat and power plants
Volume
Units
485
Units
242
Units
64828
Heat generation
Million Gcal
1,616
Distribution losses
Million Gcal
243
Including CHPs of RAO EES Rossii
Total boilers
Heat networks
1000 km
177.7
Final heat consumption
Million Gcal
1,374
Fuel efficiency of boilers
%
73
Million toe
194
Heat tariffs, average
$/Gcal
21
Heat tariffs, range
$/Gcal
10-300
Total fuel inputs to heat generation
Heat sales
Potential savings
improvements
from
efficiency
$ billion
33.0
$ billion
15.0
Heat supply systems design and
performance problems
Substantial supply overcapacity
Excessive estimates of consumers’ heat loads
Excessive centralization of small DHSs
Low density of heat loads and corresponding high level of
distribution losses in small DH networks
No regulation of heat supply parameters to balance with demand
at many sources
High distribution systems maintenance costs undermine the
competitiveness of small DHSs
Lack of standards for reliability, efficiency, quality of services and
economic affordability for consumers to evaluate the DHS
performance
Lack of incentives to improve efficiency and shortage of qualified
personnel, especially in small-scale DHSs
Installed heat capacity surplus (shortage) for
the sample of 210 local DHSs
(assuming normal capacity reservation 35%)
2000%
1500%
Mainly
small
DHS
1000%
500%
0%
0
20
40
60
80
100
120
140
-500%
Reported data
CENEf's estimate
160
180
200
Operation of obsolete heat
generators faces a long list of
problems
High specific fuel consumption
Unsatisfactory metering of fuel consumption and heat
generation
Low remaining lifetime of equipment
Lack of regular boilers tuning
Low quality of fuel leading to failures of burners
Insufficient possibilities to regulate heat supply
parameters
Lack or poor quality of water preparation systems
High fuel costs
Shortage and low qualifications of personnel
Specific fuel consumption in heat
generation
(sample of 230 Russian boiler houses)
1200
1000
Mainly small
coal and oil
powered DHS
кгут/Гкал
800
600
400
200
0
0
20
40
60
80
100
120
140
160
КПД 80%
КПД 60%
КПД 40%
Газ
Нефть и нефтепродукты
Дрова
Уголь
180
200
220
Heat losses in DHSs as a function of
heat load density
(sample of 190 Russian DHSs)
100%
90%
High heat supply
centralization
efficiency zone
heat supply losses, %
80%
Marginal heat
supply
centralization
efficiency zone
70%
60%
Effect of low heat
supply networks
maintenance
quality
50%
40%
30%
20%
10%
0%
0
100
200
300
400
500
600
700
800
900
reverse indicator of heat load density
Real losses estimates by CENEf
Normative losses estimates
1000
Consumers’ behavior in the heat
market is poorly known
Uncertainty with the product on sale
Deprivation of households’ “market rights” to determine the
quality and quantity of product they buy and to negotiate the price
Substantial overbilling for heat, which was never delivered
Low heat meters and regulation devices saturation rate (below
15%)
Low flat-level water consumption meters saturation rate (below
15%)
Minor behavioral change in terms of hot water consumption even
after flow meters are installed and heat tariffs are growing
Poor insulation of buildings and insufficient development of
housing weatherization services
Lack of energy efficiency incentives where consumption is not
metered, or there are weak budget limitations
Limited ability and willingness to cover escalating energy costs
and strong opposition to any price increase
Limits to purchasing power:
the Bashmakov wing
120%
collection rate
100%
80%
60%
Threshold 2:
rigidity of
payment
collection
measures brings
no results
Threshold 1:
collection rate
declines
40%
20%
0%
0
2/1
4/2
6/3
8/4
10/5
12/6
14/7
communal and housing (numerator) and energy expenditures
(denominator) as percentage of family income (%)
16/8
Seven principles of municipal
energy planning
1. Clear setting the desired performance indicators for years to come
2.
3.
4.
5.
6.
7.
based on the benchmarking approach: reliability indicators, energy
efficiency, quality of service, economic indicators
Reliability, quality of service and prices as drivers behind the level of
centralization
Ability to translate performance indicators requirements into
municipal measures and actions to improve and modernize heat
supply systems in place with an account of energy efficiency as a
valuable resource
Checking for the ability to mobilize investments to realize the
proposed program
Shifting the affordability control focus from tariff to customers’
purchasing power. Energy costs for households have been staying
in the narrow range of 2-4% in many countries for decades
Full life-cycle costs analysis with flexibility tests for energy prices
volatility
Differentiation of connection charge based on heat loads density
and reserve capacity
Ten steps to reform Russia’s DHS
markets
1.
Mandatory development of sustainable municipal energy
plans
•
•
•
•
2.
Clear targets and policies to achieve them
Reliability, security and safety requirements
Energy systems synergy and accounting for energy substitution
(DHS zones, gas supply zones, etc.)
Load density analysis and level of energy supply centralization
“Menu” of well-designed heat market models to select
from, and corresponding market rules and contractual
arrangements
•
•
•
Single network system with free access (many heat sources
working for one network)
Indivisible system (limited number of sources working for one
network with high density of heat loads)
Planned decentralization for zones with low heat load density
Ten steps to reform Russia’s DHS
markets
Mandatory development
energy plans
3.
•
•
•
•
of
sustainable
municipal
Clear targets and policies to achieve them
Reliability, security and safety requirements
Energy systems synergy and accounting for energy substitution
(DHS zones, gas supply zones, etc.)
Load density analysis and level of energy supply centralization
“Menu” of well-designed heat market models to select
from, and corresponding market rules and contractual
arrangements
4.
•
•
•
Single network system with free access (many heat sources
working for one network)
Indivisible system (limited number of sources working for one
network with high density of heat loads)
Planned decentralization for zones with low heat load density
Ten steps to reform Russia’s DHS
markets
Regional and municipal heat supply reliability and
efficiency standards
3.
•
for municipal indicative planning
•
•
•
Base year
Target year
Performance monitoring and heat system operator evaluation
Separation of DHS products: heat supply and comfort
supply services
4.
•
•
•
•
Metering and billing system
Customer – energy service company or final consumer
Organization of collective consumer (especially in multi-family
buildings)
Turning the heat consumer into heat buyer by setting
association of communal services payers (ACSePs) and
attracting ESCOs on the competitive basis to provide leastcost
heat comfort to ACSePs
Ten steps to reform Russian DHS
markets
5.
6.
7.
8.
Energy efficiency improvements as an important
resource for municipal energy planning and launching
“profits-from-savings” mechanisms to generate
revenue source to repay DHS rehabilitation
investments
Transition, where necessary, to accounting for really
consumed and metered heat or comfort service, to
more accurate norms for consumers who are not
equipped with meters
Providing more operational freedom to DHS
companies and new system of interaction with
municipality
Clear evaluation of consumers’ purchasing power to
stay within the limits of affordability
Ten steps to reform Russian DHS
markets
Make heat pricing flexible
9.
•
•
•
•
Seasonal heat prices
Fuel allocation methods at CHPs
Elimination of cross-subsidies and setting right price signals to
inspire the rational level of DHS centralization
Transition from the “cost plus” principle to sustainable “upper
limits” tariffs given transparent correction rules set by “pricing
formula”
10. Development of powerful information instruments and
“IKEA-like” pre-fabricated technical and managerial
guidelines
•
•
•
•
Tales on lost heat for kids
Plus 20
From A to Z in housing communal services
Manuals for DHSs maintenance experts