Dalkia is used to developing and managing district heating schemes in Europe, but has now begun to take its skills to a rather different business environment – China. Here Timothée Prenez writes on the company’s award-winning work in one Chinese city – Jiamusi.
Work in upgrading, managing and expanding the urban heating network of Jiamusi, a city located in the North East of China, has won an award at the District Energy Climate Summit held in Copenhagen in November 2009 for Dalkia, the district energy operator of Veolia Environment and Electricité de France, respectively world leaders in environmental services and power generation. This first international district energy summit, organized by the IEA in conjunction with the International District Energy Association, Euroheat & Power and the Danish District Heating Association included participants from North American, European and North Asian countries.
The new award brings an international recognition to the pioneering involvement of Dalkia in China in the district energy industry.
The 25 year concession in Jiamusi signed in 2007 was the first district heating contract awarded in China under the new concession framework issued by the authorities in Beijing.
Dalkia’s aim is to replicate in mainland China its success in improving district energy efficiency in Eastern Europe. In the last 15 years, Dalkia has become a major district heating provider in Poland, Czech Republic, Slovakia, Hungary, Romania, Estonia and Lithuania. China is Dalkia’s next focus, with its existing operations now in Jiamusi, Harbin and Chongqing.
Independent, small coal-fired boilers represent the main heating source in many cities in China. Their low efficiency and lack of effective air-pollution control system caused significant air pollution problems which led to regulations encouraging local authorities to close down small coal-fired boilers in favor of large district heating systems (DHS). This presents substantial growth opportunities for operators such as Dalkia, but it also means significant investment over the initial years of operation.
The difficulty in securing financing for district energy in China was overcome by Dalkia through collaboration with the Asian Development Bank (ADB), in similar fashion to its earlier cooperation in Eastern Europe with the European Bank for Reconstruction and Development (EBRD). The collaboration was in line with ADB’s objective of supporting energy efficiency and environmental protection in China, and will be phased out when commercial lending becomes more available for the district energy industries.
DALKIA IN JIAMUSI
In 2005, Dalkia started exploring the opportunity of entering the heating market in Jiamusi. The city’s total area for heating was assessed at 18.9 million m2.
The urban heating network of Jiamusi Heating Company (JHC), a company owned by the municipality, was already supplying 29% of the total heating surface (5.5 million m2). JHC’s demand peaked at 410 MWth, 70% of which was supplied by two local CHP plants and the rest by JHC’s own heat-only boilers.
JHC has been in chronic deficit for over a decade, and therefore lacked the financial strength to raise the funds to meet the city development objectives. JHC’s assets also suffered from reduced maintenance which resulted in large energy and water losses. This in turn led to increased dissatisfaction from the users, as interruptions of service and low indoor temperature were the norms.
In May 2007, Dalkia signed a 25 year concession to manage the former JHC’s network. A new joint venture, Dalkia (Jiamusi) Urban Heating Co (Dalkia Jiamusi), was set up with minority participation from a municipal utility company, Jiamusi New Times Urban Infrastructure Construction and Investment Group.
The project took two years to materialize as it was the first concession agreement in the heating sector in China.
After two years of operation, Dalkia Jiamusi increased the network coverage by 56% to 8.6 million m2. Dalkia’s aim is to supply 14.5 million m2 by 2020 (75% of the current heating area).
Modifications of JHC’s network
Dalkia Jiamusi formulated a development strategy for the Central Zone and the two largest development zones in the West and in the East of Jiamusi..
This strategy translated into three main investment programmes:
- modification of the East network from 85°C heat supply to 95°C heat supply
- construction of a new North feeder with 120°C heat supply
- construction of a new South feeder with 120°C heat supply.
The capacity for growth of the urban heating at Jiamusi was limited by its network configuration, even though two existing CHP plants were capable of delivering more heat from their existing capacities.
The major part of the existing network had been designed to supply hot water from the CHP directly to numerous radiators in the end-users’ premises. This limited the heat supply temperature to 85°C and the pressure to a maximum of six bars, and subjected the network to large heat losses – it was losing water at a rate of 1200 m3/h.
To overcome these technical constraints, Dalkia Jiamusi built about 90 new substations on the Eastern network upon taking over the management of the network in the summer of 2007. This enabled the primary water supply temperature to be raised to 95°C and enabled the existing network to be connected to additional areas which were previously supplied by independent boiler houses.
With the construction of the North feeder in 2009, and the South feeder projected for 2012, Dalkia Jiamusi will be able to increase the supply temperature to 120°C, buy more energy from the larger East Cogeneration plant, and increase the supplied area to 14.5 million m2.
Automation of management tools
A supervisory control and data acquisition (SCADA) system was installed, enabling real-time management of the substations and the network, and resulting in improved optimization of energy efficiency and users’ comfort.
Dalkia also implemented its proprietary Enterprise Resource Planning (ERP) system, with specialized modules on maintenance management, energy management, fuel supply and customer service.
Dalkia is studying the possibility to develop heating by using geothermal resources in the municipality of Jiamusi. Some studies have indicated the presence of a geothermal resource in the north of the city.
Dalkia may develop a 10 MW–15 MW capacity installation for the initial phase. Ideally a two-well geothermal installation will be used, which re-injects the water to the ground and therefore preserves water resources.
Biomass is also an obvious source of fuel as Jiamusi is located in the middle of large cornfields. Biomass is a renewable source that is supported by public authorities as part of ‘green growth’ and renewable energy development policies. It is a major development axis for Dalkia, which has 190 biomass plants in operation worldwide.
Enhancement of employees’ competencies
Dalkia recognizes that the experience and knowledge of the existing management and staff is a very significant part of the asset being acquired. Moreover, mutual cooperation between the management and the labour force is crucial to the successful operation of the project.
Dalkia Group has a strong history of successful integration of human resources in its acquisition of companies and of contracts where transfers of employees are considered. Jiamusi is able to benefit from the experience and knowledge from 100,000 sites managed by Dalkia worldwide, as Dalkia pursues an active policy of upgrading employees’ skills and experience through training courses organized by related companies or by third parties. For key employees, this policy extends to exposures to overseas operations for a period of time.
IMPACT ON THE ENVIRONMENT
Dalkia Jiamusi monitors key energy and environmental parameters, and the current results show:
- a reduction of more than 65,000 tons (58, 967 tonnes) of carbon dioxide
- savings of 26,000 tons (23,586 tonnes) of coal
- reduction of water loss 23%
- a decrease in heat supplied by coal-fired boiler houses from 30% in 2005 to 10% now.
These improvements were mainly due to:
- development of the network to buy cleaner energy from the two CHPs; and removal of 64 coal-fired boiler houses and nine JHC coal-fired boiler houses in 2008.
- modernization of JHC’s former network design to significantly improve energy efficiency and reduce water loss. This included 179 substations being renovated and/or installed between 2007 and 2008, 21 new substations planned to be built in 2009/2010, the average age of network is decreased with the refurbishment and more than 5500 valves on the primary and secondary networks were replaced.
Future reduction of carbon dioxide emissions is estimated as follows:
- 70,000 tonnes/year of carbon dioxide by reducing network loss (around 1.7 million tonnes of carbon dioxide over 25 years)
- 200,000 tonnes/year of carbon dioxide by connecting buildings that will switch from low-efficiency heat-only-boilers to Dalkia Jiamusi’s network (around 5.2 million tonnes of carbon dioxide over 25 years)
- 20,000 tonnes/year of carbon dioxide if feasibility studies show viability for the first phase of a geothermal project.
CUSTOMER RELATIONS SATISFACTION
Dalkia Jiamusi has successfully improved the quality of services and earns trust from the customers. As an indicator, bad debts decreased from 7% to 2% after Dalkia Jiamusi’s takeover of the urban heating facilities.
- newspapers – are a common medium for Dalkia Jiamusi to share public information with the customers.
- local radio – Dalkia regularly participates in local radio programmes to respond to specific queries from the public.
- public stand on the main square – before each heating season, a stand is operated by Dalkia Jiamusi on the city main square to provide information to the public on the new heating season.
- internet – Dalkia China developed a internet website (www.dalkia.cn), available in Chinese and English.
Dalkia also designed a website specifically for Dalkia Jiamusi (https://jms.dalkia.cn). It differs from the Chinese website in the inclusion of features specific to the local environment.
Customer services improvement
Dalkia Jiamusi set up a 24 hour one-stop-shop help desk to ensure quick response to any incident or customer inquiry.
Centralized collecting office
Before the acquisition, JHC heavily relied on fee collectors to recover heating fees. As this method is not efficient, Dalkia Jiamusi centralized the fees collection from the inhabitants into three strategically located collection offices. Customers’ information is managed by an ERP system which facilitates and accelerates the fee collection process. All customers receive a personal intelligent card to pay the fees at a counter or to an automatic machine which avoids long paperwork process. Cars are available from the collection office to pick up old and handicapped people.
Customer satisfaction survey
Dalkia has a standard policy of continual service improvement, acting upon results of annual survey campaign to assess the quality of its service delivery.
Dalkia’s contribution to the local environment also includes participation in the local community activity. The company has taken part in a wide range of community events, from making a donation to the Sichuan earthquake-hit area by Dalkia Jiamusi and its staff, to including Jiamusi in a global painting competition organized by the Group in 2008.
In addition to the District Energy Climate Award, Dalkia has won several more prizes for its efforts in developing the urban heating industry in Jiamusi.
Timothée Prenez is a Project Officer with Dalkia Asia (Beijing), China. He identifies investment opportunities for the company in China
Email: timothee.prenez @dalkia.cn
|Dalkia Jiamusi centralized the fees collection into three collection offices|
Dalkia* is the leading European provider of energy services to local authorities and businesses. Since its creation, it has focused on energy and environmental optimization. It meets customer expectations by delivering customized, end-to-end solutions to ensure comfortable living and efficient energy supply, including management of district heating and cooling systems, industrial utilities and building energy systems. With nearly 52,800 employees in 41 countries, Dalkia reported €8.6 billion ($11.8 billion) in managed revenue in 2008. www.dalkia.com
*Energy services in the USA are operated under the name of Veolia Energy.
Municipality of Jiamusi
Jiamusi, the third-largest town in the Heilongjiang Province in the People’s Republic of China, is located in the north-east of the country, 100 km from the Russian border, 400 km from the province’s capital, Harbin, and 1800 km from the country’s capital, Beijing.
The larger municipality of Jiamusi has a population of 2.45 million people. The city of Jiamusi covers 56 km2 and has a population of 820,000 people.
Climatic conditions in Jiamusi are favorable for the development of a heating network. With 5073 degree days annually (on a 10 year average, base 18°C) and a temperature that can reach -26°C during winter, the heating season lasts six months, from 15 October to 15 April. The average temperature from December to February is -18°C.
New district heating pipes being installed in Jiamusi, China