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Case Study: Passivsystems Working with Dong Energy in Denmark

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Case Study: Passivsystems Working with Dong Energy in Denmark CONFIDENTIAL Case Study: PassivSystems working with Dong Energy in Denmark Introduction to the Danish Energy Market Following the oil crisis in the 1970s, Denmark set out to become energy self-sufficient. Consequently, as concerns over carbon emissions grew in the 1980s, Denmark found itself with relatively high carbon dioxide emissions per capita, primarily due to the coal-fired electrical power plants that had become the norm after the energy crisis. Denmark has been self-reliant on energy since 1999, with significant oil and gas production in the North Sea, and is a net exporter of energy. Denmark is the second largest producer of oil in the EU and oil plays an important role in the energy mix. Natural gas and renewable sources have been gradually replacing solid fuels and oil in primary energy supply. However, imported coal is an important fuel in electricity generation. Transport (34%) and households (28%) are the most energy-consuming sectors. Denmark demonstrates the lowest energy intensity among EU Member States, although due to the high presence of fossil fuels in the energy mix, CO2 per capita production and intensity are significantly higher than the EU average More recently Denmark has set itself strong targets for carbon reduction and the elimination of fossil fuels, with 35% of energy to be delivered from renewables by 2020 and 100% by 2050. Renewable energy has experienced a significant growth since the late 1980s with both wind and energy from waste contributing to energy production. Currently 25% of energy generation and over 40% of electricity comes from renewable sources, which by far exceed the EU averages. Of the 2.5 million homes in Denmark, approximately 1 million are connected to a district heating network which provides both space and water heating. The heat is generated in co- generation plants primarily using waste and Biomass, with a low carbon footprint: however, when additional heat is required in extreme weather conditions, the top up plants tend to use either natural gas or oil. The remaining 1.5 million homes use fossil fuel for space and water heating – typically gas or oil boilers as they are not close to a District heating network and some may also be off of the gas grid. Danish building regulations have eliminated the use of electrical heating in recent years. Oil production has now peaked and will be used up in around 20 years. In order to achieve the ambitious carbon reduction targets and move away from the culture of plentiful energy supply of the last 20 years, it is clear that as well as moving to renewable energy sources overall energy consumption should be reduced. Dong Energy The Danish state company Dansk Naturgas A/S was founded in 1972 to manage resources in the Danish sector of the North Sea. After some years, the company was renamed to Dansk Olie og Naturgas A/S (DONG). In 2005, DONG acquired and merged Danish electrical power PassivSystems Ltd Medway House, Newbury Business Park Newbury, Berkshire RG14 2PZ, United Kingdom Tel +44 (0) 1635 525 040 Fax +44 (0) 8082 800 490 www.passivsystems.com CONFIDENTIAL producers Elsam and Energi E2 and public utility (electricity distribution) companies NESA, Københavns Energi and Frederiksberg Forsyning. The result of the merger was the creation of DONG Energy. The majority (76%) of DONG Energy is owned by the Danish Government who will maintain a majority share until at least 2025. DONG Energy is one of the leading energy groups in Northern Europe and is the largest power producer in Denmark with market shares of 49% for electricity production and 35% for heat production. Its business is based on procuring, producing, distributing and trading in energy and related products throughout the value chain. It has approximately 800,000 electricity and 300,000 gas customers in Denmark. Objectives of the Trial The PassivSystems technology platform is already deployed commercially for energy management of gas and oil central heating in the UK with an average reduction in energy recorded in trials of 23%. The system is easy to use with a simple occupancy based interface with remote access using a smart phone. Home energy management systems are of strategic focus to Dong and in Q4 of 2011, Dong Energy approached PassivSystems regarding a ‘Go To Market’ partnership for PassivSystems products in Denmark to launch a product at the start of the next heating season. It was agreed to start with a 140 home trial, with a split of homes (100 in Zealand and 40 in South Jutland) with the trial to be run over the 2012/3 heating season. The overriding objective of the trial was to assess the suitability of PassivSystems’ advanced heating control product for the Danish market. The particular areas of interest to Dong are: Whether the solution will work with Danish heating systems; Potential savings versus the cost of the product; The attractiveness of the solution to the Danish consumers; The consumer experience using the system; The requirements for supporting the consumer base; The installation experience (from both a customer and Installer perspective); A product to improve customer retention. Methodology PassivSystems worked closely with Dong over a number of months to prepare for the project and to ensure it ran as smoothly as possible. An itemised check list of deliverables was prepared and used as a tracking tool. This list covered items required for customer screening and recruitment, customer journey throughout the trial, customer contract and customer support. A web site was set up by Dong for the trial where potential participants could find out more about the PassivSystems, its products and the trial. Dong sent out 3000 invitations to customers by email and within days had over 250 expressions of interest in participation for the trial. 2 CONFIDENTIAL The customer registered their interest and completed an on-line survey about their home and heating system. These responses were screened to ensure that the homes that were unsuitable for the trial – for instance homes without broadband or with more than one heat source were eliminated - and the remaining homeowners provided with a contract setting out the terms and conditions of the trial and permission to disclose historical consumption data for analysis purposes. During this time training was provided to two sets of installation teams and to a team within Dong customer service organisation who would provide first line support to customers during office hours. PassivSystems Nordic office would provide 2nd line support and 1st line out of office hours. Once the potential participants had agreed the customer contract their details were passed to PassivSystems to set up on their systems and review their central heating equipment make and models to ensure compatibility with our system. Details were also passed to the relevant installation organisation to book a home appointment. It was not deemed necessary to undertake an on-site survey prior to installation. Following installation, the customer received instruction in how to use the system from the Installer, was provided with a Danish language user guide, an introduction to the trial (which included emergency contact numbers) and were asked to sign an agreement that the system had been installed to their satisfaction. The participants will complete questionnaires relating to their use of the system at two points during the trial and Dong will host customer focus meetings during the trial. At the end of the trial all customers will receive a report of findings from the trial including any savings obtained from use of the system. Findings The installations of heating systems in Danish homes are more complex than other European models even where the same equipment is used. The homes are usually zoned using thermostat radiator valves (TRVs) rather than physical plumbed zones. They do not have any central control point or thermostat and are not typically switched off at any time of the day or night. The radiators do not have ‘balancing valves’. Danish homes may have both radiator and under floor heating in the same room and some radiator networks are single rather than parallel systems meaning that the rooms at the end of the string have difficulty in reaching temperature. Domestic hot water is not stored in large quantities and generally has a small storage cylinder which is topped up as soon as its temperature drops through usage or heat loss therefore no hot water control has been implemented. From the trial participants successful installations were achieved in 90% of homes. An analysis of savings has been undertaken from a selection of earlier installed homes with an average saving of 14% on their energy usage. Dong has held two customer open evenings were feedback was collected of the trial experience thus far. The trial participants like the overall product but were interested to hear 3 CONFIDENTIAL of the forthcoming changes including the Android tablet and Web interfaces. They also remarked favourably on the easy to use interface, the stable temperature in the main living area, the ability to better manage their homes and the I-phone interface. They would like to see better control of under floor heated rooms, the stable temperature to be continued through all rooms in the home, additional information either on the Controller or the Web Portal (such as potential costs and savings) and more features (such as security) integrated into the system. Conclusion The PassivLiving Advanced Heating Control product can be installed in Danish homes with the current heating systems and deliver savings at a rate that would make it a viable investment for a consumer and contribute to a reduction in carbon emissions. Dong have provided feedback on what is required for their home market and have expressed an interest to continue to work in partnership with PassivSystems to further develop the system to suit the complexities of the Danish market – under floor heating and thermostatically controlled radiators to provide a top class product.
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