Digitalisation is a very important trend in many sectors including the district energy industry.
This article will synthesise a number of key trends which emerged in digital heating workshop discussions with members of the Nordic heat partners network. A key aspect which has already received a lot of attention is customer engagement.
It is evident that digitalisation will facilitate the individualisation of heat consumption and allow district heating companies to offer a more diversified offer of tariff and services to their customers.
Another focus of digitalisation in the context of district energy has been the use of data driven analytics for smart network management, at production, distribution, and building levels.
As these two aspects have been abundantly covered this article will focus on other parts of the value chain which may be affected by digital transformation.
Humans still in the loop
Although digitalisation has often been associated with automation, which is expected to replace human labour in many different areas, the use of machine learning and digital technology does not portend a complete replacement of highly skilled technicians for the DH industry.
Many DH companies have indeed increased their services offer by designing a range of maintenance contracts and services agreement for their customers (often the building owners).
These contracts benefit from the availability of predictive maintenance capabilities and remote monitoring, but human interventions and direct sensory observations will still be required in the foreseeable future.
Digitalization has a role to play to enhance these human driven processes using technology such as QR codes and near field communication (NFC). These will allow for a better administration of assets via portals on which service requests tickets and maintenance history can be logged and tracked.
Installation apps for smart control technology comes to mind but generally a way this type of technology could be implemented will be analogous to a patient-doctor relationship between the asset and human technician.
For example, in the case of heat interface unit maintenance, NFC technology will make it possible for a technician to use a portable device to wirelessly access a history of all previous interventions and quickly visualize the recent performance of the asset.
This, in combination to data-driven performance monitoring (for predictive maintenance) is expected to help maximise the longevity of the asset and minimise the duration of human interventions.
Performance contracting and third party investment
So far we have discussed the implications of performance improvement of a network, which is naturally often seen as mainly the responsibility of the network operator.
Nonetheless, operating performance is heavily influenced by the quality of assets and processes in operation. Thus, a current trend if for district heating operators to ask vendors (services providers and equipment manufacturers) for performance guarantees.
This of course concerns the use of smart optimisation and control technology, which are based on an ‘as a service’ model. However, physical assets such as pipes, valves and HIUs are also concerned by this drive for performance assurance.
For example, recently there have been many discussions in the UK concerning the testing of HIUs to validate manufacturers claims regarding return temperatures under various conditions.
Similarly, it is increasingly deemed reasonable to express distribution and transmission pipe losses in terms of kWh rather than as a percentage to offer a more objective performance comparison basis.
Heat networks equipment manufacturers have, of course, already realised the importance of this trend.
Beyond simply improving the operational performance and quality of their products, these companies are now seeking ways to digitalise themselves to monetise performance as a service and position themselves in this area.
This is seen as a strategic necessity for many, sometimes with the real existential threat of being relegated to the role of hardware subcontractor for more innovative companies.
An interesting model for both manufacturers and network operators is that of digital performance contracting.
In this model, the return on investment will be priced by underwriting the performance of the asset (for example heat losses in a transmission pipe) and including this in the repayment plan by the user.
There will therefore be an increased need to have verification protocols and processes to measure asset performance objectively and impartially. In terms of measurement, IoT communication technology (e.g. Sigfox) will play a key facilitation role.
As for the verification aspect, a technology that readily comes in consideration is the blockchain and smart contracts.
Smart contracts might play the role of digital SPVs and help fractionalize ownership and fluidity revenue sharing between stakeholders, thus bolstering investment in heat networks by spreading the risk into different categories of investment depending on the type of asset or function.
API Management and Open Protocols
A challenge for DH operator when attempting to further their digital transformation, will be system integration, simply to allow for the management of such a complex ecosystem of assets and processes.
Until recently, it has been a possibility for district energy companies to compartmentalise operating functions. Yet, as district energy systems become more open, especially with the emergence of prosumers models, district heating operators and consumers become increasingly more averse to vendor lock-in and technology obsolescence.
The development of open platforms will contribute to prevent this and enable an improved data exchange between functions (e.g. production facilities to access smart meter data) with more transparency.
It is becoming increasingly obvious to heat networks operator, that digitalisation cannot merely rely on an organic growth.
In Sweden, large municipal and private companies have realised this and are adapting their digitalisation roadmap for a more harmonious development of their infrastructure, avoiding compartmentalisation of projects into siloes.
Beyond system integration, as the IoT blurs the boundaries between digital and physical world, data is also increasingly perceived as a resource part of the supply chain and whose flow should not be restricted.
Consequently, the opening of the DH market to multiple service providers will involve a careful management and maintenance of suites of APIs to create consistent and secure data access layers.
An example that comes to mind is demand response in which a variety of digital service providers will send consumptions forecasts and perform as aggregators. To manage these data flows, where both data and processing tools are distributed, companies will also benefit from existing and upcoming distributed storage and processing technology to guarantee performance and data integrity.
Like many industries, district heating and cooling are at a turning point of their existence.
Back in the spotlight in the context of the global energy transition, they offer an alternative to traditional modes of energy production and consumption and offer a reliable gateway for the integration of renewables.
This return to the forefront of the energy landscape is also accompanied by a major transformation for the industry: the digital transition
New technologies developed in recent years have ensured radiant prospects for our industry and its players.
But these prospects also bring many challenges for traditional players.
Under this double transition, energetic and digital, the future almost certainly give a prominent place to asset and services performance
About Romain Lambert
Romain Lambert is an algorithm developer for PassivSystems, a British SME offering digitalisation services for District Heating.
PassivSystems have developed a range of home energy services which are changing the landscape of the energy industry. We are a pioneering company at the forefront of making energy use more efficient and more affordable for millions of households. Our motivation is to help consumers, asset owners and businesses get better value for money and to make a significant difference to global emissions.
About Nordic Heat
Nordic Heat is an independent advisory service aiming to support the development of District Energy and Energy from Waste (EfW) solutions in Europe and beyond. The group’s mission is to facilitate transfer of the extensive knowledge and experience developed in Scandinavia over the past 50 years, while simultaneously facilitate exchange of innovations in technologies and business models between all stakeholders in the sector.