Transcript Key Challenges in Developing Small Scale Heat Generation

Key Challenges in
Developing Small-Scale
Heat Generation
Installations
Igor Bashmakov
Center for Energy Efficiency, Moscow, Russia
Market and Technology Developments in Small Scale Heat Generation
International Workshop, Baku, Azerbaijan, October 20, 2005
Russian District Heating
Is regularly ignored, when energy and GHG mitigation policies are
discussed and determined, while
It accounts for about 45% of all domestic energy consumption in
Russia, and for over 50% of fossil fuel use, and
Is the largest single product market in Russia split into more than
50000 local markets with:
– US$ 30 billion annual sales, and
– US$ 50 billion efficiency improvement investments potential, but with
only US$ 500 million annual investments (it will take 100 years to
release the potential);
– at least 20% of the nation-wide potential for fossil fuel consumption and
GHG emission reduction
Over 50% of district heat is consumed by buildings
Industrial consumption went down by 35% in 1995-2001
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 recently moved to the heat market
Russian District Heating Indicators
Indicator
Units
Combined heat and power plants
Including CHPs of RAO EES Rossii
Large boilers
Individual
boilers
heat
generators
and
Volume
Units
485
Units
242
Units
>190000
Units
>600,000
Heat generation
Million Gcal
2,300
Own use
Million Gcal
74
Distribution losses
Million Gcal
442
Heat networks
1000 km
183.3
Million Gcal
1,784
%
71.5
Million toe
462
Heat tariffs, average
$/Gcal
18
Heat tariffs, range
$/Gcal
5-300
Final heat consumption
Fuel efficiency
Total
energy
generation
inputs
to
heat
Heat sales
Potential savings
improvements
from
efficiency
$ billion
30.0
$ billion
10.0
Russian Heat Balance. 2000-2001 (million
Gcal). Supply side
Indicator
Public utility
companies
Generation
1515.7
CHP
680.0
Industrial and
municipal
boilers
613.2
Individual
boilers
Total
170.7
2299.6
170.7
73.9
0.0
2225.7
RAO EES Rossii
494.0
Industrial CHPs
176.0
21.2
52.7
592.0
441.7
1463.0
157.0
20%
284.7
27%
91.0
19%
17%
74.0
17.0
8.8
3.6
61.4
86.0
12.3
105.3
48.4
147.4
35.1
2.1
153.7
Own use
Sold to the network
Heat losses
Share of heat losses (%)
Heat losses attributed to
Industry
Agriculture
Residential buildings
Public buildings
Other
91.0
Large is not always bad, while
small is not always good
Municipal plans need to decide on the level of heat supply
centralization
In Helsinki, over 90% of customers are connected to large DHS
Large DHS are attractive, if appropriately managed and if heat
loads density is high
Nevertheless, the market niche for small-scale heat generators
(SSHG) is growing, as the distributed power trend progresses
This niche is divided into two sectors:
– over 600,000 individual heat generators, and
– over 100,000 small district heating systems
Put together, they generate about 15% of heat in Russia
SSHG are applied predominately in the agricultural sector,
residential, public and commercial buildings
Small 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
High distribution systems maintenance costs
undermine the competitiveness of small DHSs
Lack of benchmarking indicators to assess and
compare DHS performance
Lack of incentives to improve efficiency and shortage
of qualified personnel, especially in small-scale HGs
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
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
Operation of obsolete small 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
Seven principles of municipal
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
Investigating heat loads density
in municipal energy planning
Low
density –
market for
natural gas,
other fuels
and
renewables
High
density
–
market
for DHS
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
10%)
Low flat-level water consumption meters saturation rate (below
10%)
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 no 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
Heat costs
DHS companies are evaluated mainly based on the
reliability of heat supply, whatever the costs. These
costs are in the range from US$ 8 to 300 per Gcal
Heat generation and transportation costs are often not
allocated, but if allocated, heat transportation costs in
many DHS exceed generation costs
In many DHS, fuel efficiency improvement is not a
crucial factor for general DHS efficiency improvements
due to the low (10-25%) share of fuel costs
There is no effective system to control costs, as well
as build-in cost reduction motivation
Heat tariffs
Lack of tariff flexibility
–
–
–
–
the tariff menu is poorly populated
no winter and summer tariffs
no differentiation in the connection charge
no appropriate fuel costs allocation for CHPs, which
undermines its market share
Cross-subsidies send wrong signals to
customers
and
investors.
They
make
decentralization attractive in the industrial sector
and not attractive in the residential sector
Not just SSHG technology
In Azerbaijan, small triple generation systems (electricity,
heating and cooling) may be a valuable solution
The problem of establishing small-scale heat generators
is not just a problem of technology availability
SSHG should be assessed based on a comprehensive
approach accounting for many different factors
Municipal energy plan should allow it to avoid duplication
of gas supply and heat supply systems development
Evaluation of municipal economic futures becomes a
key. Used in the FUSSR General plans do not perform
this role.
Key Challenges for SSHGs
Uncompromised safety
Ability to compete economically with large DHS
Applied mainly in areas with low heat load densities
Only small distribution systems attached, if any
Higher flexibility in meeting heat demand fluctuations
Reliable fuel supply (possible double fuel or gas/solar combination)
High boiler fuel efficiency
Affordability and low capital intensity of boilers with high working
resource
Appropriate balance between building efficiency and boiler capacity
established through the life-cycle costs analysis
Large variety of boiler capacities on sale and hot water storage to
escape oversizing
Low equipment service costs