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APPENDIX ~ District Heating in Europe During the past two decades urban district heating has grown considerably faster in several European countries that in the United States. Europeans have increased the number of their systems, uses served, and energy supplied, particularly in Sweden and Denmark. Similar growth has taken place in West Germany, the Netherlands, France, and Great Britain, although mostly since 1973. Comparing European and U.S. systems is not easy. In the first place, Europe now has few district cooling systems; most are for heating only. Also, most European countries have no cheap source of oil or natural gas. Most depend on imported DetrOleum ~ wh itch i costly and not always in reliable supply. . ,= ~_ ~. , . . ~ In addition, the European tradition of long-range planning by a strong central government contrasts sharply with the focus on local government and the free market in this country. Similarly, until recently few European homes had central heating, which has made district heating more attractive in Europe than in the United States. Nevertheless, there is something to be learned by reviewing some district heating systems in Europe, especially about how such systems are planned and put into effect. The discussion that follows is based on ~ ~ the committee's visits to district heating sites in France, Belgium, the Netherlands, West Germany, Denmark, Finland, and Sweden. FACTORS INFLUENCING DI STRICT HEATING IN EUROPE Clearly, there are reasons why district heating systems have, until very recently, declined in U.S. cities while they were growing in European cities. A number of factors influence whether district heating will be adopted and how successful it will be. These include *Except where noted, this appendix is drawn from papers presented at the National Academy of Sciences' recent International Symposium on District Heating and Cooling (National Research Council, 1984) and from Schipper (1983, 1984a, 1984b). 130

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131 climate, population density, heating standards, costs and ownership patterns, and planning and government policy, among others. Climate is an important factor affecting district heating in Europe. In general, the longer the heating or cooling season the more economically viable district heating will be. Climate cannot be measured solely in degree-days; load duration must also be considered. Load duration is measured by dividing installed capacity by sales. Values between 1,700 and 2,000 hours are considered desirable. The Swedish and Danish winters, with load duration values between 1,800 and 3,000 hours and few great cold peaks, are more favorable to district heating than those of the northern United States. In the latter, a somewhat shorter winter (1,500 hours) has occasional outdoor temperatures far below those experienced in Denmark and most of Sweden (IEA, 1983~. Moisture, wind, and the thermal properties of buildings further determine how much heating or cooling is required to maintain a given temperature. Providing domestic hot water increases the potential use of district heating. In Sweden and Denmark, for example, per capita domestic hot water use is similar to that in the United States. This increases the use factor approximately 25 to 33 percent per household. Hot water loads in commercial buildings tend to be smaller except for hospitals, which have large, 24-hour requirements for hot water. Because of such special conditions, very high temperature water may be needed. Population density is even more important than climate in determining the success of district heating systems. Higher-density areas have higher demand per square mile. Density is measured in connected load (or sales) per unit length of the distribution system. Most European systems serve high-density residential areas. About 80 percent of the French, German, Swedish, and Finnish systems are located in densely populated areas. In Denmark, however, low-density detached and semidetached residences account for 50 percent of the district heating load. Thus, the Danish experience suggests that low-density residential areas can be served economically by district heating. In addition to climate and population density, heat demand is an important factor for district heating. In Europe, heat demand is typically lower than in the United States because Europeans are accustomed to lower indoor temperatures than Americans. Heating standards in Europe have influenced district heating economics. Prior to 1972, a typical Danish apartment used about 85 million Btu annually for heat and hot water, with oil as the fuel. This figure dropped to approximately 52 million Btu in 1984. The unit demand has declined so dramatically that the economics of conversion to district heating are altered. Similarly, in newer Swedish suburban areas, construction techniques have reduced heating demand per apartment to less than half that of pre-1972 buildings.

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132 In Sweden, however, more than 80 percent of apartment buildings were not centrally heated when district heating began to grow significantly (Figure C-1. Those central systems that did exist in Sweden and Denmark were generally old enough to require modification, which facilitated the conversion to district heating. Sweden and Denmark made almost universal use of hot water distribution systems, which also made conversion to district heating relatively easy. District heating has three important economic characteristics. First, it requires a significant, early capital investment, usually with a long payback period. This makes the profitability of district heating and cooling systems vulnerable to the cost of capital. Second, the relative attractiveness of new district heating depends on both the costs of competing energy sources and on the operating costs of the system itself. Operating costs may be as high as 80 percent of total annual costs, but can be significantly reduced if cogeneration is used. Finally, extension costs (for adding new users in high-density locations) are relatively low once the system is in place, but only until the system is operating at maximum capacity. European experiences vary widely. The costs of starting a system in West Germany today appear higher than those for heating with natural gas (Suding, 1984~. Thus, subsidies are now necessary to implement district heating systems in West Germany, but not to expand them. This may explain why there are more systems in Scandinavia than in West Germany, whether measured per capita or as a fraction of all energy used by residential and commercial users. Scandinavian systems began to grow strongly before 1973, which suggests that the essential motivation was a source of reliable, low-cost energy. In Sweden, the fuel base was low-cost heavy oil rather than expensive light oil. The fuel base in Denmark was heavy oil and cogeneration. In Scandinavia new district heating systems were seen, especially after 1973, as able to proceed relatively risk-free. While the type of ownership can affect the success of district heating and cooling systems, there is no single pattern of ownership in Europe. Swedish systems were developed by municipalities, normally using existing electric utilities, which often were distributors rather than producers of electricity. In Sweden, district heating is often delivered by separate municipal companies having similar ownership patterns. In Denmark, district heating systems are both privately and publicly owned, with similar ownership patterns for heat-only and cogenerating systems, although the larger systems are often parts of municipally owned electric utilities. The same is true in Switzerland. In France systems are both privately and municipally owned. Electrical generation accounts for 90 percent of the revenues for most U.S. municipal or investor-owned public utilities, while district heating and cooling accounts for less than 10 percent. These figures reflect the decline of steam systems owned by large utilities in the United States. In Europe, district heating may represent a significant or even dominant source of utility revenues.

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133 35 30 c, 25 111 he > ~ 20 I Cities al ready possessing D. H. I I I pi us new locations 15 10 5 To Situation in 1980 _ 1 973 a..-....... ~ ~//////~////~_ 11 1 (about 1 7) IShaded area since 1973 oil embargo) 1950 1960 1970 1980 1990 2000 YEAR FIGURE C-1 A 1980 forecast for district heating development in Sweden (courtesy Swedish District Heating Association).

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134 The widespread use of district heating in Scandinavia warrants more detailed review. The growth of new suburban areas and a massive national housing effort during the 1960s have significantly contributed to district heating use in multifamily housing. Similarly, residential cooperatives have provided a base for district heating in Denmark. Energy conservation was rarely considered in either Denmark or Sweden in the 1960s. The cost advantage of district heating appears to arise from its efficient use of low-cost fuels, which, in combination with the Scandinavian climate, gives a high value to a reliable, affordable supply of energy. The same conditions should have applied to West Germany, but central district heating was found in only 12 percent of residences in 1960 compared with 73 percent in Denmark and nearly 80 percent in Sweden (Schipper, 1983~. West Germany's lack of a well-established central heating tradition probably explains the difference. Swedish building owners and tenants have used central heating and apportioned the costs without metering since long before the appearance of district heating. In Germany and France, a tradition of estimating the cost of heating individual apartments yielded slowly to a use of imprecise evaporation meters to determine how to apportion costs in centrally heated buildings. Heating in these countries was, in general, considered a private matter, not a public service. The Scandinavian success with district heating may result from the common recognition of the desirability of reliable and affordable comfort (Lagerholm, 1984~. After 1965, central heating was used to heat most new apartment houses in Sweden and Denmark. While the oil embargo caused a great change in public policies toward energy and heating in every European country, the essential planning elements were already in place in Scandinavia to expand and even accelerate district heating by expanding existing systems. In West Germany, on the other hand, a national district heating plan (see Figure C-2) had to be developed, with little effect to date (Ebert 1984~. During the postwar reconstruction of West German cities, the need to build new houses rapidly, the lack of a central heating tradition, and the low price of light heating oil and coal made individually fired boilers the dominant heating system for new buildings. This different approach to heating may reflect a real difference in social attitudes in Scandinavia and West Germany about collective heating. GOVERNMENT PLANT ING Government planning in Europe has played a central role both directly and indirectly in developing district heating systems. Government planning directly helps organize and design district heating systems and indirectly controls the urbanization that creates the population density needed for district heating. Such government planning does not occur in the United States.

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136 European government authorities plan the production, transmission, and distribution of district heating. Public and private enterprises are engaged in production and distribution, with distribution normally the responsibility of public enterprises. In most cases, systems are developed by organizations created for that purpose and coordinated with the planning agencies of local governments. The latter typically enhance the opportunities for district heating. Since district heating benefits from dense development, most systems begin in urban centers where there are commercial and multifamily residential units. However, as district heating becomes more pervasive, planning and development controls play a larger role. The United States differs from European countries in its approach to planning and control of development, particularly with regard to property rights and land use planning. European local governments more often curtail individual property rights in the public interest than do those in the United States. In West Germany, for example, some state constitutions provide for a municipal urbanization zone in cities that grants property owners development rights. Property owners outside this zone lack such rights. In Scandinavia, there is a long tradition of public ownership of land for future urban development. When such land is sold for development, a connection to a district heating system may be a condition of sale. With recent fragmenting of governments in Scandinavian metropolitan areas, however, some of these systems have broken down. In contrast, property owners have development rights in the United States. The only question is what restraints on exercising these rights may be appropriate. While in some cases the restraints are severe, particularly for environmentally sensitive areas, this is more the exception than the rule. In Oregon, state law requires each city to establish an urban service boundary approved by the State Land Use Commission. The metropolitan area of Minneapolis-St. Paul has a similar requirement, as does Hawaii. In both cases, however, the limit on individual development rights is not as absolute as in West Germany. Partly by controlling development, European countries have produced more compact and clustered cities than those in the United States. In Europe, land is controlled typically by dividing large areas into residential, industrial, commercial, or other zones. In the United States, on the other hand, land is zoned by designating a specific use for each parcel. The more common zoning system, used worldwide, details a three-dimensional plan for development. This more complete three-dimensional development control facilitates the integration of cost-effective district heating systems In Europe, national laws in each country require local governments to plan for a wide variety of municipal services and developments, including energy use. European governments are more rigid in controlling development than the United States, and the options for district heating use are clearer.

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137 Density of development and heating demand are important factors for district heating systems, since by far most of their costs are for their distribution systems. The pattern of urbanization is particularly important for comparisons of district heating systems as multicommunity networks. Generally, urban densities are similar in the United States and Europe for city centers and smaller communities. In comparing how the United States and European countries approach local government planning, it is important to understand that the sizes and populations of government jurisdictions affect what powers are exercised. Local governments number in the hundreds in West Germany; those in the United States number in the tens of thousands. Yet West Germany's national government deals with municipalities only through states, while the U.S. government deals with them directly. The gross densities of northern Europe, including Denmark, are similar to those in the Boston-to-Washington corridor in the United States. The settlement patterns are also similar, except that major U.S. metropolitan areas are somewhat larger and U.S. communities are somewhat farther apart. The gross densities and settlement patterns of Scandinavia are more like those of several less densely settled Midwestern, northern, and western U.S. states. U.S. states are similar in area and population to European nations, and U.S. counties are similar to European states. National energy planning is considered particularly important in West Germany and Denmark (Trojborg, 1984; Bernsen, 1984; Furboch, 1984~. One West German planning program identifies surplus heat generators adjacent to major areas of demand, delineates discrete regions for potential district heating supply plans, brings together appropriate local interests in these regions, and uses the regions as the basis for federal and state funding (Furboch, 1984~. Another program (Figure C-3) seeks potential areas for district heating near fossil fuel-fired power plants (Ebert, 1984~. The Danish Energy Planning Act of 1979 requires the Ministry of Energy to cooperate with local and regional authorities in developing plans for a nationwide heat supply system (Figure Con. The planning considers waste heat from existing and new power plants, industries, and municipal waste incineration plants, as well as natural gas and renewable energy resources such as surplus straw, waste wood, wind, sun, and wet biomass. Such energy planning is typically carried out by state and local governments in the United States, although usually not as systematically as in Denmark or elsewhere in Europe. District heating in Scandinavia received no unique subsidies to make them more competitive with other energy systems through the mid-1970s. However, district heating was promoted by a combination of factors, including the growth of planning, into which district heating development could be incorporated, the predominance of successful utility ownership that recognized the advantages of combined heat and power generation, the premium price paid for imported oil, coal, and steam, and no source of natural gas. Further expansion of district heating has been made more difficult in Sweden in the 1980s by

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138 RHINE / 1~0- RH KIN OCR for page 130
139 DISTRIBUTION OF HEAT CONSUMPTION it' 00 90 80 70 60 50 40 30 20 10 Oh 1977 . _ 1982 2000 Individual oil Renewable energy both D.H. and individualized Conventional District Heating Cogeneration Natural gas Electrical heat Year FIGURE C-4 Planned distribution of district heating in Denmark in the year 2000 (Bernsen, 1984~.

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140 low-cost hydroelectric power and radically lowered heating demand in new homes. This has led to direct subsidy programs, as well as more aggressive marketing by district heating companies.