Overview of the Economic Feasibility


Please refer to ((District Heating Plant, Ballen-Brundby)) for background information on the plant.

B-B District Heating Plant
Fig. 1 Ballen-Brundby District Heating Plant

This section presents an overview of the economic feasibility of the plant.
The plant was constructed in 2004 and began operations in 2005. The numbers in this section are primarily based on a MSc thesis released in September 2009. The full report can be found here:
seacourse.dk/download/Groth09.pdf(external link)

The table below presents the project scenario for the plant and the reference scenario for the continued use of oil and electrical heating. All values are held constant in 2007-prices (i.e. no inflation effect). The breakdown of the numbers can be found in Costs in the project scenario and Costs in the reference scenario, respectively.

Table 1. Project and Reference Scenario Specifications
Specifications Value Project Scenario Reference Scenario
Lifetime Year 20 20
Investment DKK 16 752 009 N/A
Gross demand MWh/year 7 651.5 6 056
Electrical heat consumption MWh/year 550.4 530.4
Oil fuel consumption MWh/year 72 5 526
Net distribution loss App. % 31.5 N/A
Boiler efficiency App. % 84 84
Operation costs DKK/year 363 149 432 608
CO2 emissions Tons/year 486.7 1 923

In order to illustrate the net impact of the district heating plant, all calculations will be compared against a reference scenario, where local buyers reinvested in a private oil furnace rather than connecting to the district heating plant.

The graph below shows a cost comparison of annual payments to the district heating plant (orange bars) and the individual oil furnaces (green bars) to fuel, state taxes and maintenance and operation costs for the first three years of plant operation. All values are including VAT.

Cost comparison

The first two bars for each year show the fuel costs, which increase for the oil-based consumers over the three years (the green bar). The changing fuel costs for the district heating users reflect changing real prices for oil and straw.

The middle two bars show the maintenance and operation costs for the individual oil furnaces (green) and the district heating plant (orange). Although the costs appear to be higher for the district heating plant, the costs of maintenance for the individual oil furnaces are understated - for example, time spent cleaning the oil furnace or waiting for oil deliveries have not been monetized and included. M&O costs for oil furnaces are assumed equal to 1 755 DKK per household.

The final two bars show the taxes payable on the emissions from either the straw-based district heating plant (orange) or from the individual oil furnaces (green). Specifically, oil-fired heating incurs an energy tax, a CO2 tax and a sulphur tax. Straw-fired heating only incurs a sulphur tax, which is why it is so much lower than the green bar.

The graph below shows the development of the costs for the project and the reference over time.

Total cost comparison

The bottom line represents projected fuel costs, taxes and maintenance and operation costs for the individual oil furnaces for 258 consumers. The top line represents the same costs for 258 district heating consumers. All projections are based on averages from the 2009 Danish Energy Authority guidelines for socioeconomic assessments.

Created by tanja.groth. Last Modification: Friday 09 July 2010 12:14:09 CEST by tanja.groth.