Co-authors: Lucía Liste Muñoz and Ingrid Claussen –
Excess heat is a by-product of many industrial processes. Increasingly, manufacturers are trying to find ways to use that heat internally to increase their energy efficiency. But sometimes they just don’t need the extra heat. The most obvious solution – from an environmental point of view – is to try and find another business who does. But how does one establish such a collaboration? And what can help make it achievable? Research centre HighEFF wrote a handbook that helps businesses answer these and other questions.
Obstacles to excess heat use
It seems self-evident that releasing heat unused (whether into the air or a body of water) is an undesirable outcome in a context where countries have agreed to difficult climate targets that imply energy should not go to waste. But the reality is that access to cheap energy is seldom a sufficient incentive to establish an energy sharing agreement since the savings in energy costs are simply insufficient to justify the necessary investments in infrastructure.
Another obstacle is that heat does not travel very well. The factory receiving residual heat cannot be too far from the factory producing it.
Shared Resources: From obstacles to enablers
Previous projects have identified an array of barriers that restrain energy collaborations in Norwegian industry. The aim of project Shared Resources, however, is to shift the focus away from barriers and challenges and towards enablers.
To do so, the project maps experiences and explores new ideas for elements to be included in energy sharing arrangements – such as alternative business models, contract elements and value creating options beyond the traditional buying and selling of surplus energy. In particular, Shared Resources is concerned with the “low hanging fruits” – the cases in which collaboration is technically feasible, compatible and close to profitable.
The handbook presents its findings by means of a series of stages to be followed by the prospective parties to an energy collaboration. Each stage includes examples and guiding questions designed to make the process as simple to follow as possible.
What resources can be shared?
In addition to excess heat, businesses are encouraged to see if they can include other resources in an eventual sharing agreement – resources such as waste and by-products, services (administration, cafeteria, fire brigade, IT services), buildings (or rooms, outdoor areas, storage units, laboratories), labour (control room operators, security guards), expert knowledge, and financial resources.
In addition, the handbook reminds potential energy partners to check if they could benefit from any public incentive schemes that are in place. It also underlines the importance of taking into consideration external elements that could affect the collaboration (the authorities changing regulations or development plans, for example).
Who should own the infrastructure?
Energy sharing requires infrastructure. Who should own it? The handbook proposes three scenarios, as illustrated in the figure below.
Partners A and B each own part of the infrastructure, separately.
- Low start-up costs
- Lower management costs
- No sharing of equity
- Easier to terminate
- More adaptive to outside changes
Joint equity between the main partners
Partners A and B own the infrastructure together.
- Greater inter-dependency among parties
- Suitable for long-term partnerships
- Higher start-up costs
- Higher management costs
- More difficult to terminate
Third party ownership
A third party C owns and runs the infrastructure.
- Reduced risk for the main parties
- Third party takes care of the start-up costs
- Third party takes care of the management costs
- Higher energy/resource price because of the involvement of the third party
- Risk of being overcharged by a third party on which one is highly dependent
Let’s keep in touch
What should the pricing model be?
The price at which the surplus energy will be sold has to be determined by the contract between the two partners. The handbook lists several options: Fixed energy price (suitable when energy production and consumption are constant), Time-varying energy price (suitable when energy production and consumption are out of sync with each other), Power price (a price depending on the energy extraction rate at the time of consumption, suitable when the sharing infrastructure is over/underused at certain times), and Volume price (a price per cubic meter – of hot water, for example – suitable for when return temperatures are too high, meaning there is unnecessary distribution medium being used).
…and much more
The handbook examines many other aspects of energy collaborations, and provides tips to increase the likeliness that they will succeed. It has been made available online for consultation, at no cost to the businesses.
Download the handbook here
The handbook titled Resource and Energy Collaborations – a handbook is now available for download free of charge. It can easily be referred to electronically, or printed onto A4 sheets and folded into a booklet. See the printing instruction here.
The handbook is based on a more detailed report, called Handbook: Energy Collaboration in Norwegian Industry. You can also find more information on the handbook’s web page, on the HighEFF website.