What role do district heating systems play in the energy transition, price competitiveness, and electricity demand management? And how does all this fit into the context of decarbonization?
By Albert Moles, CEO of FEDA and Jordi Travé, Director of FEDA Ecoterm
Andorra, a country surrounded by mountains
Andorra is a country with 468 square kilometres located in the Pyrenees center between France and Spain. It lies among mountains from 850 to 3,000 meters high. The stable population is just 75,000, but the country welcomes more than 8 million tourists every year, mostly in the winter season when people come here to ski.
Andorra’s climate is mountainous with Mediterranean components. The country has hot summers and cold winters with abundant snow. Access to Andorra from neighboring countries is by mountain roads, while the energy supply question presents a certain complexity.
Small-scale energy transition
States, experts, and energy sector companies agree that decarbonization will entail a sharp increase in electricity use. It will acquire a new investment, converting power stations using fossil fuels to renewable energy facilities. Working at a small country scale requires adapting measures to the territory’s reality and using all available means to achieve the transition. In short, a systemic vision of the issue is required, along with the capacity to adapt global policies to local realities.
A heating system historically fuelled by gas oil
Energy demand in Andorra is approximately 2,400 GWh/year. Electricity represents only 25% of this energy demand: the transport sector (people and goods) accounts for 50%, while 25% is consumed in heating. Until the early 2010s, heating was nearly all generated by domestic fuel and individual boilers.
As a consequence of the crises of 2007 and 2008, which led to increased volatility in European energy markets and had a direct impact on fossil fuel prices, new and rehabilitated buildings in Andorra have more and more been installed with electric heating systems. As a result, the country’s demand for heating oil has decreased by 35% over the last 15 years.
Moreover, this trend has been reinforced even more by the need to reduce CO2 emissions in response to climate change. Accordingly, whether due to the variability of fuel prices or raising awareness of the need to contribute to climate action, Andorran society is increasingly reluctant to invest in systems based on fossil fuels.
Why DH in Andorra?
DH systems enable the transformation of the energy model. They respond to heat demand – which is very high in Andorra and has been historically covered by fossil fuel – while also guaranteeing service quality and competitive prices. Moreover, as these systems reduce electricity demand, they also avoid the need for a large investment in the electricity grid to respond to peaks in demand. In this way, district heating helps to reduce the risk to the competitiveness of electricity prices.
Low national production, mainly hydropower
Despite a small share of recovered energy and the introduction of photovoltaic power, national electricity production depends essentially on hydropower, with little storage capacity.
During the months when the snow is melting, the country’s energy meets 50% of national demand, but in the winter months, this production covers less than 10% of consumption.
The country’s water resources are limited, so Andorra is developing photovoltaic and wind power projects to reduce substantial energy imports to cover demand in the winter months. Especially during spells of cold weather and in the evening and at night.
Andorra has to acquire this energy in markets in neighboring countries when prices are high and when, in the future, restrictions on supply will be imposed due to the variability of renewable energy sources. The use of renewable energy is expected to grow continuously, gradually replacing power generation based on fossil fuels.
District heating: the necessary solution to Andorra’s energy transition strategy
After the 2008 crisis, FEDA began working to mitigate commodity risk in the purchase of energy. Accordingly, the company launched measures to structure and cover purchases, structure and manage demand, and increase production.
However, the capacity for renewable energy production in Andorra is limited by the country’s mountainous nature, and the different technologies all have their peculiarities. The lack of space to store large volumes of water and the fact that the country only has small river basins means that hydropower is produced mainly in the spring.
Solar power is generated mostly during the summer, spring, and autumn months, while wind power is obtained consistently throughout the year. Accordingly, to cover demand in winter – which is much higher due to Andorra’s peculiarities – none of these renewable energy sources is sufficient.
All this explains FEDA’s commitment to the development of the district heating system. Here, the aim is to prevent the power grid from having to supply heating formerly provided by gas oil while also increasing power production through cogeneration projects that permit production at times of highest demand, combining heating and power generation.
A northern model in southern Europe is possible.
Despite its location in southern Europe, Andorra’s climate is more like that of a northern country, especially in winter. Winter tourism, revolving around snow, skiing, and mountaineering, is a hugely important income source. European regions inspire FEDA’s management model and status as a multi-service business model with a similar climate. To prevent the long-term collapse of the power grid and avoid extra investment costs to cover peak demand, the company created FEDA Ecoterm. It has the dual mission of reducing the need for electric heating (channeling this demand into district heating systems) and increasing domestic electricity production at peak demand times. This initiative has also had a notable impact on diversifying Andorra’s energy risk and creating local jobs.
Description of projects managed and value generated
Accordingly, in 2014 an intense phase was launched for the construction of district heating systems, with specific projects closely adapted to the particularities of each different area.
The first system was installed in Soldeu (a village with a ski resort at an altitude of 1,600 metres, used as the venue for World Cup competitions). The energy source for this district heating system, which supplies the ski resort as well as homes and hotels, is liquefied natural gas, used to generate 13 GWh/year of thermal energy. The facility is also equipped with a cogeneration engine, which produces 6 GWh/year of electricity in the winter months.
This district heating system made it possible to replace individual oil heaters at existing facilities and avoided the need to install electric heating in new buildings.
A second, very different system was built to provide heating in the urban centre of the country’s capital, Andorra la Vella. In this case, the energy comes from a waste recovery facility that supplies 30 GWh/year of heating energy to the system for residential and service buildings, preventing the emission of 6,700 tonnes of CO2. The steam generated by the incineration of waste is also used to produce 20 GWh/year of electricity, distributed over the 12 months of the year. New buildings in the area will no longer use electric heating.
Similarly, a new neighbourhood in Escaldes-Engordany will also be supplied by a district heating system powered by centralised heat pumps. In managing the network’s inertia and temperature, the aim is to avoid the production of heat in the grid during peak demand periods.
Finally, work on a fourth project is about to begin. Pas de la Casa is a ski resort located at an altitude of 2,000 metres. The aim is to replace the energy provided by individual boilers through the installation of a district heating system fuelled mainly by biomass.
The electricity required by these projects will be provided by a high-altitude wind farm currently at the study stage, which will produce 40 GWh/year.
In order to manage the energy transition and achieve a CO2-free model, FEDA, Andorra’s electricity system operator, has chosen the path of global energy management and transformation into a multi-service, multi-energy company. The systemic vision adopted enables the operator to optimise energy management and efficiency. Throughout its activity, moreover, FEDA is driven by a local vision, closely adapted to the needs of the territory and its customers.
FEDA is the public corporation that manages the power grid in Andorra, producing nearly all the country’s electricity and importing the rest from neighboring countries. FEDA is the driving force behind the energy transition to a more sustainable and environmentally-friendly model.
After the crisis of 2007-2008 and the volatility that this generated in prices in energy markets, FEDA began integral management of energy risk in Andorra by diversifying production sources, restructuring demand, and ensuring flexibility. As part of these measures, FEDA became firmly committed to district heating, which is now a key element in transforming the energy model and Andorra’s decarbonization.
The company’s subsidiary, FEDA Ecoterm, established to develop DH, currently manages four projects.