Lithuanian Experience in District Heating Reform

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Lithuanian Experience in District Heating Reform
Vytautas Stasiunas Lithuanian District Heating
Association President 21 October,
2005 International conference Heating Sector
Institutional Reform in the Former Soviet Union
Baku, Azerbaijan
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• WORLD
• Why are you throwing away the exhaust steam from
  your engines when people are willing to pay you
  three times its cost of production for heating
  purposes? All that is necessary is to install our
  sytem of Underground Steam Heating Mains
• (Birdsill Holly, who established the first
  district heating system in 1876 and a little
  later was granted a patent for the first combined
  heat and power plant)

• LITHUANIA
• In 1903 a low-pressure steam heating was
  installed in Vilnius Central Power Plant. This
  was the first district heating in Lithuania. Heat
  was delivered througout the premices of power
  plant machinery room, accumulator room,
  workshops, office and residential premises.

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Main factors retaining DH undestroyed in Lithuania

• Big investments during 1960-1990
• Cold climate conditions, where heating season
  lasts for 6 -7 months/year
• Big demand for heat energy for hot water
  preparation all-year-round
• The effective and well-timed support from West
  European countries (particularly from
  Scandinavia)

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DH market share in Europe
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Members of LDHA DH companies
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Key indicators of the DH sector
Unit 2001 2002 2003 2004
Heat delivered to the network GWh 10824 10623 10440 10300
Heat delivered to consumers GWh 8166 8244 8309 8140
Technological heat losses 21.1 18.8 18.1 17,8
Average cost of fuel EUR/toe 135 131 131 126
Turn over for heating mio. EUR 272 278 277 268


Average price EUR/MWh 33.3 33.7 33.3 32.9

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DH Ownership structure, 2004
The lease of heat utilities to foreign and
domestic investors started in 2000
(ownership 100 in municipality)
(9.5 with JV)
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Heat balance, 2004
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Guidelines of DH Development

• The share of CHP electricity would make up not
  less than 35 in 2020 (currently it makes about
  17.2)
• The share of CHP heat would make up not less than
  75 in 2020 (currently it makes about 50)
• Modernize CHP plants in Vilnius and Kaunas and
  construct a pilot CHP plant in Panevežys
• Construct modern CHP plants in Siauliai,
  Klaipeda, Alytus, Marijampole and other cities
  until 2020

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CHP electricity delivered to the network
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Fuels used for DH production

It is foressen that production of heat using
local, renewable and waste resources would make
17 in general heat balance in 2010, and 23 - in
2020.
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Fuel input for DH production 2004

• DH companies more and more often go for
  installation of biofuel fired boilers. The total
  installed capacity of such boilers has reached
  more than 220MW.
• Biofuel makes 10.0 in the general fuel balance
  and this share in the regional DH companies
  exceeded 21.

Lithuania
Sweden
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Technological DH distribution loss

• Main heat transfer lines in the network were
  installed 30-40 years ago and their operational
  resource is coming to the end.
• In 2004 approx. 72 mio. LTL (about 21 of the
  total investment amount) invested in this field

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Heat energy consumption, 2004
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Heat users
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Average DH tariff in Lithuania, 2004

• The average price of heat is dropping down
• it was 115.1 LTL/MWh in 2003,
• while in 2003 113.5 LTL/MWh

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National Energy Strategy - Heat Sector
Adopted by Seimas 10/10-2002

• Strategy for the Heat Supply Development
• Heat supply development plans for municipalities
• CHP in DH systems (after the closure of Ignalina
  NPP)
• Encourage use of local and renewable energy
  sources
• Improve energy efficiency
• Competition among heat producers
• Procedure for independent heat producers
• Modernise heat supply systems
• Procedure for the purchase of CHP electricity

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Energy Law
Adopted by Seimas 16/5-2002

• Energy savings
• Energy efficient use of primary energy sources
• Reducing energy intensity
• Diversification (fuel imports, indigenous fuels)
• Promotion of indigenous fuels
• Reliable and cost-effective production
• Reducing effects on the environment
• Forming legal and economic conditions for
  investments
• Increase economic efficiency competition,
  private invest.

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Heat Law
Adopted by Seimas 20/5-2003

• Heat operator tasks (supply heat, maintain
  system)
• Heat planning and zoning etc.
• Relation with heat consumers (responsibilities)
• New customer contract principles
• Regulation of consumers disconnection options
• Transparency for consumers
• Access for external parties to supply heat
• Separation from municipal economic activities

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Competition in DH sector

• The competition between the suppliers of
  alternative types of fuels.
• The heat production shall be based on the
  competition between the heat producers.
• The hot water preparation and supply shall be
  based on competition.
• The state (municipalities) shall promote
  competition in the field of maintenance of
  heating and hot water systems inside the
  multy-family apartment houses.

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Municipal Heat Plans

• The municipalities shall manage the heat sector
  in conformity with the special Municipal Heat
  Plans.
• The main objective of the Municipal Heat Plans
  shall be to satisfy the consumers heat demand on
  least costs.
• The Municipal Heat Plans shall be in conformity
  with the state strategy, national objectives in
  the energy industry.
• The government may provide assistance and support
  in implementing the Municipal Heat Plans.

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There are 60 municipalities in Lithuania
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Heat Supply License

• The heat suppliers shall obtain the heat supply
  license.
• The heat supply license to the heat supplier
  supplying not less than 5 GWh of heat/year is
  issued by the National Control Commission for
  Prices and Energy.
• The heat supply license to the heat supplier
  supplying less than 5 GWh of heat/year is issued
  by Municipalities

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Heat pricing

• The heat and hot water prices shall be the single
  - component or the double - component.
• The heat and hot water prices might be
  differential depending on the heat supply system,
  consumer groups, volume of heat consumption,
  season of consumption.

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Heat consumption in old and new erected houses
Build in Consumed heat amount, kWh Consumed heat amount, kWh Consumed heat amount, kWh Consumed heat amount, kWh Price 1 m2 LTL (excluding VAT) Period
Build in Total For heating For hot water preparation Space heating of 1m2 (kWh/m2) Price 1 m2 LTL (excluding VAT) Period
40 flats multy-family apartment house (heating area 1756 m2) 1962 23000 18054 4946 10,28 1,04 10/2003
40 flats multy-family apartment house (heating area 1756 m2) 1962 38000 33891 4109 19,30 1,95 11/2003
40 flats multy-family apartment house (heating area 1756 m2) 1962 41000 36704 4296 20,91 2,12 12/2003
40 flats multy-family apartment house (heating area 1756 m2) 1962 62000 58011 3989 33,04 3,35 1/2004
40 flats multy-family apartment house (heating area 1756 m2) 1962 65230 61307 3923 34,92 3,52 2/2004
40 flats multy-family apartment house (heating area 1756 m2) 1962 43300 39567 3733 22,54 2,28 3/2004
40 flats multy-family apartment house (heating area 1756 m2) 1962 28000 23649 4351 13,47 1,36 4/2004
40 flats multy-family apartment house (heating area 1756 m2) 1962 154,46 2,23
102 flats multy-family apartment house (heating area 6923 m2 2001 37000 11967 13608 1,73 0,18 10/2003
102 flats multy-family apartment house (heating area 6923 m2 2001 75000 46508 17067 6,72 0,69 11/2003
102 flats multy-family apartment house (heating area 6923 m2 2001 58000 32998 13578 4,77 0,49 12/2003
102 flats multy-family apartment house (heating area 6923 m2 2001 106000 75181 19395 10,86 1,12 1/2004
102 flats multy-family apartment house (heating area 6923 m2 2001 106000 77716 16860 11,22 1,16 2/2004
102 flats multy-family apartment house (heating area 6923 m2 2001 82000 51926 18650 7,50 0,77 3/2004
102 flats multy-family apartment house (heating area 6923 m2 2001 58000 32777 13799 4,73 0,49 4/2004
102 flats multy-family apartment house (heating area 6923 m2 2001 47,53 0,70
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Long-term renovation program Lets renovate
dwelling- renovate City

• On June 2004 Vilnius City Municipality started
  the implementation of long term renovation
  program Lets renovate dwelling - renovate
  City.
• World fund for Environmental Protection gave a
  loan of 6,5 million USD (3 million USD is
  intended for building renovation).
• Pilot project overall renovation of 3
  multi-family apartment buildings - is implemented
  within this project framework.

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Legal Acts on Renovation of Multy-family
Apartment Houses

• Lithuanian Housing Strategy (Adopted on
  21-01-2004)
• Support Programme on Renovation of Multy-family
  Apartment Houses (Adopted on 23-09-2004, modified
  on 21-06-2005)
• Measures and terms of implementation of Directive
  2002/91/EC of the European Parliament and of the
  Council on the energy performance of buildings
  (Adopted on 27-12-2004)
• Law on State Support for Housings Procure or
  Rent and Modernization of Multy-family Apartment
  Houses (Adopted with modifications on 24-03-2005)

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Bilateral Danish Support

• Support from the Danish Energy Authority for
  implementation of Lithuanian DH Training
  Network project
• Project duration 2001 2004 y.
• Project results
• 11 training programmes prepared
• 25 employees from DH companies were trained
• 6 guidelines prepared
• LDHA strategy for 2004 developed

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EU Structural funds support for LDHA

• Support from the EU Structural Funds for project
  Training of District Heating Companies
  implementation
• Project duration 24 months
• Project value 204 900 Lt
• Funding 150 842 Lt
• LDHA funding 54 058 Lt

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Project Training of District Heating Companies

• Project Goal increase skills and knowledge of
  the employees of the District Heating Companies
  in the area of management, marketing, finance
  management and accounting, EU energy policy
• Projected group 47 high level and middle level
  managers and accountants from heat supply
  companies

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DISTRICT HEATING - CITY WITHOUT CHIMNEYS