part 1: overview of cogeneration and its status in asia - Fire

86 Part II: Cogeneration experiences in Asia and elsewhere
3.3 Denmark – One of the European Leaders in Cogeneration
Being more than 90 per cent dependent on imported oil, Denmark was vulnerable to oil price
escalations as a consequence of the first oil shock. Danish Energy Policy 1976 focused on oil
substitution and security of energy supply. Power plants switched from oil to coal and targets
were set to increase the growth in cogeneration to meet the heat demands from 8 per cent in
1976 to 25 per cent by 1995. This was achieved mainly due to the supply of natural gas from
the North Sea.
The Electricity Supply Act 1976 gave sufficient authority to the government to intervene in the
planning and operation of the power sector, such as selection of technology, including
cogeneration, and placing the power plant near heat loads. The power utilities were obliged to
accept the deliveries of cogenerated electricity at high buy-back rates, 10 to 15 per cent lower
than the utility tariff charged to large consumers. The Heat Supply Act 1979 was aimed at
adopting the most appropriate space heating and hot water supply systems, and municipal
authorities gained the right to make the connection to district heating systems mandatory.
By the mid 80s, cogeneration was widely used in large towns and fresh initiatives were taken
in 1986 to develop around 450 MW of small scale cogeneration programmes in about 300
small towns with the power utilities playing a major role. In 1988, guidelines were issued by
the Ministry of Energy, which required all municipalities to ban the use of electric heating in
new buildings in areas having collective heat supply facilities. The Heat Supply Act was
revised in 1990, which obliged all municipalities to ensure that cogeneration schemes are
approved and that local heat markets are created.
In 1990, ‘Energy 2000 - a plan of action for sustainable development’ was initiated with an
ambitious emissions target and in which cogeneration development was emphasized. All new
power generating capacities planned up to 1995 were to be in the form of conversion of
existing districting heating systems to small-scale cogeneration systems fuelled by gas,
waste or biofuels. This plan also initiated the substitution of coal with gas in large-scale
cogeneration facilities for which 15-25 per cent grants were available.
Energy taxes were introduced in the late 70s to keep power prices at a consistently high level
and taxes were adjusted to maintain the prices charged to consumers constant. But the
accompanying legislation ensured the competitiveness of cogeneration projects in relation to
individual oil firing. Following the introduction of legislation in December 1991 to limit CO2
emissions, a subsidy was introduced for small-scale cogeneration plants that deliver
electricity to the grid (0.1 DKr/kWh for cogeneration based on gas and 0.17 DKr/kWh for
cogeneration based on biomass).
The Danish industries have done little in the past to meet their own energy needs. Thus only
about 150 MWe of industrial cogeneration is in operation today. With the introduction of energy
tax for industry and the availability of grants and subsidies, about 450 MWe of economic
cogeneration potential have been identified.
In 1993, utility generation accounted for 29,782 GWh of electricity and 19,546 GWh of heat.
The energy efficiency of conversion was 58 per cent that would have been 40.3 per cent
without cogeneration. Non utility cogeneration accounted for only 607 GWh of production. On
the whole, over 10 per cent of fuel are saved through cogeneration in Denmark. This figure is
a little low because of the low load factor, i.e. cogeneration plants often operate in noncogeneration
mode due to the low heat demands. Heat from cogeneration plants accounted
for 64 per cent of the total heat supply to district heating network, and almost half of this was
for space heating alone.