Danish Gas Technology Centre Annual report 2012

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Contents

4 Gas System 2.0

6 Meet DGC

8 Energy security in 20XX

11 The personal power plant

12 Hybrid solutions

15 The right choice

17 Natural gas or biofuels?

18 Safe source of energy

21 Shale gas and LNG

23 The green gases

25 Biogas

26 Gasification gas

29 Hydrogen

30 Green Gas Test Centre

32 Financial highlights

33 Names

34 Owners

3

Gas System 2.0

4

will supply power to the grid and heat for

homes (as will the somewhat larger local

CHP plants) when wind turbines are unable

to produce the needed electricity in periods

with little or no wind at all. Gas fired heat

pumps can also play a significant role in the

heating solutions of the future.

In this way, the gas system will contribute

to an improved security of supply and an

intelligent electricity system

Gas can even become a significant fuel

for land and sea transport, an area where

liquid natural gas (LNG) may also gain a

foothold in the future.

DGC has already engaged in the process of

developing a new and future-proof version

of the gas system. In this report we have

termed it Gas System 2.0.

Even though the Danish parliamentary

Energy Agreement of March 2012 implies a

significant reduction in the use of natural

gas in Denmark, the gas system as such will

not play a less significant role in the future.

On the contrary – the gas system may prove

to be a very active, green co-player in the

future of energy in Denmark, and we must

get accustomed to integrating the gas

system in our energy supply in completely

innovative ways.

Gradually, we can make the gas greener by

injecting CO2 neutral energy gases. The

pipeline system can be used as storage or

buffer when the renewable energy sources

are out of tune with the actual energy needs.

Gas utilisation is also facing changes: Gas

can become an important fuel in the mi-

cro CHP plants of the future. These plants

5

Peter A. Hodal Chairman of the Board

Bjarke Pålsson Vice Chairman of the Board

Peter I. Hinstrup

President

It is an important part of DGC’s mission

to participate in the development of Gas

System 2.0. And the following pages will

address this development process and the

supporting project activities.

We are convinced that energy gases will be

of crucial importance for the permanent

energy solution. We have prepared this

report about Gas System 2.0 in the hope

that many of our readers will share our

conviction.

Peter A. Hodal

Chairman of the Board

Peter I. Hinstrup

President

Meet DGC

6

DGC is a technological consultancy and

development company in the fields of

energy and the environment. DGC’s main

focus area is energy gases. DGC is the

Danish centre for consultancy services,

development, training and information in

the gas technology field, and works with all

forms of energy gas: natural gas, town gas,

biogas, LPG, gasification gas and hydrogen,

as well as with combinations of energy

gases and renewable energy.

DGC is a public limited company. It was

established in 1988 by the Danish gas

companies and is now owned by:

HMN Naturgas (38 per cent), DONG Energy

(36 per cent), Energinet.dk (16 per cent),

Naturgas Fyn (6 per cent) and HOFOR

(4 per cent).

DGC has 33 employees and generates

annual revenue of DKK 31 million.

Our head office and laboratory are situated

at the Scion DTU Science Park in Hørsholm

about 25 km north of Copenhagen. We also

have a local office in Aalborg, which is the

base for our nationwide accredited energy

and environmental measurement service.

We undertake consultancy, laboratory

experiments and tests, field measure-

ments, training and certification for energy

companies, public authorities, organi-

sations, equipment suppliers, installers,

industry, consultants and other customers

in Denmark and abroad.

DGC’s laboratory is accredited under

DANAK (The Danish Accreditation and

Metrology Fund) for gas analysis and for

measurement and safety testing of equip-

ment and installations for gas utilisation.

7

We are the Danish centre for gas technology consultancy services and we work with all energy gases.

8

Energy security in 20XX

9

Renewable energy (RE) will be the centre-

piece of Denmark’s energy policy, and the

Danish Energy Agreement of March 2012

sets ambitious targets for the share of re-

newable energy in the energy supply of the

future. A share of 50 per cent wind energy

in Danish electricity consumption in 2020 is

one of these targets.

So, to ensure energy security in Denmark,

these ambitions call for an energy source

that can be easily mobilised when there is

no wind. In this case the gas system will

become the ideal partner for wind energy.

It is easy to increase and decrease the gas

based electricity production – in order to

match the ways of the wind.

Gas based electricity is produced at the

CHP plants (equipped with gas engines

and gas turbines). The CHP plants account

for a total of more than 2,000 MW in-

stalled electricity production capacity.

Most of the plants include heat storage

facilities enabling the plants to supply

energy and heat independent of the actual

energy production.

DGC works with many aspects of cogenera-

tion and is regularly in close contact with

the CHP plants regarding environmental

documentation, operational issues, and

verification of CO2 emission reports. In 2012

we carried out environmental and energy

measurements at 57 plants.

In 2012 DGC was also involved in analysing

how best to utilise CHP plants as a flexible

resource in the future energy system with

a large share of RE.

These efforts contribute to the further

development of cogeneration so as to

guarantee our energy security.

10

Micro CHP plants for homes generate both power and heat.

The personal power plant

11

Simultaneous generation of electricity and

heat – cogeneration or combined heat and

power (CHP) - has significant advantages

in terms of efficiency and the environment

and takes place at large central power

plants, at smaller local plants and at even

smaller local plants in homes, the latter cal-

led micro CHP or the personal power plant.

For many years, DGC has been involved in

micro CHP projects. One of the projects is

the Danish national project known as the

Danish Micro Combined Heat and Power

Project (www.dansk-mikrokraftvarme.dk).

This project focuses on developing and

testing micro CHP plants for homes based

on fuel cells. The micro CHP plants gene-

rate both power and heat and, in the long

term, they are able to provide the power

grid with flexibility as they are also able

to take surplus electricity from the power

grid and store it in the form of hydrogen or

methane, for example. If a cluster of these

micro CHP plants are pooled via a centra-

lised control entity they can be operated

collectively as a “virtual power plant”.

DGC’s part of the project involves safety

assessment and laboratory testing of the

fuel cells to achieve CE approval. DGC’s

laboratory is also determining key perfor-

mance data. Other DGC tasks include

gathering and analysing data from the

plants installed in private homes.

A strong national joint venture of Danish

energy companies is behind the project:

Topsoe Fuel Cell, IRD Fuel Cells, Dantherm

Power, DONG Energy, SEAS-NVE, Syd

Energi, COWI and DGC.

Hybrid solutions

12

It is imperative to ensure close interaction

between the electricity and gas systems at

all levels (small and large energy plants),

if we want to inject an increasing share

of fluctuating renewable energy into the

Danish energy system.

Several manufacturers are now introdu-

cing combinations of electricity and gas

heating systems in so-called hybrid sy-

stems in the residential customer segment.

The electric heat pump will meet the basic

part of the heat requirements, whereas

the gas boiler/gas heat pump will be used

to meet the heat requirements that exceed

the capacity of the electric heat pump, and

for hot water production. This combination

will result in an optimised total efficiency.

In future, it may be technically feasible for

the energy companies to centrally discon-

nect the electric heat pump for a short

while in order to reduce electricity con-

sumption when there is reduced produc-

tion of wind power. And to prioritise the

electric heat pump when there is more

than enough wind power available.

This close interaction between the power

and gas grids will ensure that the largest

proportion possible of electricity originates

from renewable energy.

DGC is involved in mapping, calculations,

tests and demonstration of these systems.

13

Close power and gas grid interaction will ensure a large proportion of electricity generated from renewable energy.

14

It may turn out to be a grave mistake to discon-nect the customers from the natural gas network.

The right choice

15

The Danish parliamentary Energy Agree-

ment implies that over time district heating

(which is becoming greener) and RE tech-

nologies such as wood pellet boilers, solar

cells and heat pumps are going to replace

natural gas and other fossil fuels as the

energy source for domestic space heating.

Natural gas will continue to be an excellent

heating solution in many cases, though;

and in a long-term perspective the gas net-

work will be going to distribute RE gases,

so it may turn out to be a grave mistake –

for the individual consumer as well as for

society – to disconnect the customers from

the natural gas network.

DGC is working on a calculation model

that can be used for establishing a solid

economic basis for the right choices regar-

ding domestic space heating in the future.

For individual consumers and for society

the right choice of the optimal heating

solution is to a great extent depending on

assumptions of e.g. capital investments,

taxes and pricing of environmental and

health expenses.

The calculation model will illustrate these

expenses for different types of energy and

heating technologies – based on well-

documented assumptions.

16

It is advisable to use biomass in large boilers and natural gas at small plants.

Natural gas or biofuels?

17

In 2012, DGC carried out calculations to

compare environmental costs related to

health and costs related to climate when

burning straw, wood and natural gas in

typical district heating boilers.

The results showed that the environmental

costs of burning straw are considerably

higher than the environmental costs of

burning natural gas, while the latter are

more or less equal to the environmental

costs of burning wood.

The harmful effects caused by burning

straw and wood are primarily due to emis-

sion of SO2 and NOx. These species are

resulting in negative regional health

effects, whereas the harmful effects caused

by burning natural gas are primarily result-

ing in negative global climate effects. So, to

prioritise between biomass and natural gas

is implicitly to prioritise between regional

health effects and global climate effects.

This leads to the conclusion that it is

advisable to primarily use biomass in large

boilers with flue gas purification and

primarily use natural gas at small plants.

Safe source of energy

18

Gas is a very safe source of energy. The

Danish gas project has an excellent safety

record.

It is an important part of DGC’s mission to

maintain the high safety level by predicting

and preventing any safety problems. We

do this through laboratory tests, measure-

ments, training and by publishing guide-

lines.

In 2012, as an example, at a very early stage

DGC addressed a potential safety problem

in relation to the periodical import of natu-

ral gas across the Danish-German border.

Imported gas has a slightly different com-

position than gas from the North Sea. It is,

therefore, very important that the tech-

nicians who adjust domestic boilers know

exactly which type of gas is being supplied

at the very moment of adjustment in order

to prevent incomplete combustion.

For this purpose, DGC has developed a

relatively simple, robust piece of equip-

ment: The Wobbe test burner. It helps the

technician to find the correct and precise

adjustment of the boiler in order to

maintain safe operation.

19

It’s important to know exactly which type of gas is being supplied in order to prevent incomplete combustion.

20

Denmark has gas reserves in the North Sea that can meet our domestic consumption for at least another ten years.

Shale gas and LNG

21

A reliable and stable Danish energy supply

at competitive prices will continue to be

based on a well-functioning gas system and

Danish natural gas.

Denmark has its own gas reserves in the

North Sea that can meet our domestic

consumption for at least another ten years,

and a number of initiatives were taken long

ago to secure both new supplies and the

necessary infrastructure to bring other gas

to the Danish transmission system.

The significant reinforcement of the

pipeline connection to the European gas

network across the Danish-German border

in 2012 offers clear advantages relating to

both supply and market. Europe is within

convenient pipeline distance of 70 per cent

of the world’s gas reserves, so the new ini-

tiatives ensure maximum energy security

for Danish gas customers now and in the

future. Add to this the possibility of discov-

ering and extracting shale gas. The Inter-

national Energy Agency estimates that

there is 650 billion m3 shale gas deposited

in the Danish underground. This is suffi-

cient to meet our domestic consumption for

150-200 years.

Another possibility is to establish receiving

terminals in Denmark for tankers carrying

liquefied natural gas (LNG). Globally, the

use of LNG is growing rapidly.

DGC is monitoring closely the progress of

both shale gas and LNG. In 2012, we have

looked into the environmental concerns

related to shale gas and the use of LNG in

small-scale plants. Read more about these

issues at www.dgc.dk.

22

Denmark’s total energy consumption is

approx. 800 PJ per year. Well over 20

per cent of this, i.e. 160 PJ, is covered by

natural gas. In the immediate future, new

energy gases such as biogas, gasification

gas and hydrogen will be replacing some

of the natural gas.

Biogas will cover 5 to 10 per cent of the

energy consumption, i.e. 40 to 80 PJ per

year and gasification gas a similar part.

An optimal utilisation of biogas and gasi-

fication gas will thus provide approx. 120

PJ, corresponding to three quarters of the

existing natural gas consumption. Conse-

quently, in theory it is possible to replace a

significant part of the Danish natural gas

consumption with green, fossil-free gases.

On top of this, fossil-free gas (wind

based gas) can be injected into the gas

grid in the form of synthetic natural gas

produced from hydrogen via wind turbine

based electrolysis.

This green transformation of the gas

system is a vital factor of Gas System 2.0.

DGC works with all aspects of green gases

and their integration in Gas System 2.0 as

described in the following sections.

The green gases

23

24

It is estimated that biogas will be able to meet 5-10 per cent of the total Danish energy consumption.

Biogas

25

Biogas is an important element of the

future energy supply in Denmark, and it

has been estimated that biogas will be able

to meet 5-10 per cent of the total Danish

energy consumption.

A large part of the biogas will be upgraded

to natural gas quality and then injected

into the natural gas grid. The biogas plants

will in this way have optimum production

opportunities and the connection to the

natural gas system will make them inde-

pendent of local consumption patterns.

And with the injection of biogas the gas

system gradually becomes greener. The

Danish Energy Agreement of March 2012

implies significant support for biogas

expansion and biogas injection into the

natural gas grid.

It is an important part of DGC’s mission

to support the synergy between the gas

system and biogas via development

projects and technological service, which

DGC did in 2012 by carrying out a large

number of projects, tests and measure-

ments in this field.

Gasification gas

26

Over the past years DGC has been working

with mapping the possibilities of adding

gasification gas in the form of synthetic

natural gas (bio-SNG = Synthetic Natural

Gas) to the gas system.

Bio-SNG can be produced from biomass

(preferably wood). The gasification gas is

driven out of the wood using thermal

gasification.

In 2012, DGC analysed the socio-economic

and financial aspects of this and prepared a

first estimate of the production price of

a m3 bio-SNG.

The estimate was a price per m3 of approx.

6 DKK in the case of a plant in the size of

the one that E.ON is planning to build in

Sweden (approx. 200 MW bio-SNG). This is

the same as the price of upgraded biogas.

Larger plants would be able to produce at

a lower price due to economy of scale. In

future it would also be possible for smaller

standard plants – that can be built in large

numbers – to produce SNG at a competitive

price.

Consequently, gasification gas can contri-

bute to a greener gas system in the same

way as biogas, and it can provide flexibi-

lity and energy security in an integrated

energy system mainly based on renewable

energy sources.

Read more in DGC’s reports on gasification

at www.dgc.dk.

27

Gasification gas can contribute to a greener gas system in the same way as biogas.

28

The idea is to produce hydrogen using electrolysis driven by surplus electricity from wind power.

Hydrogen

29

Across Europe, there is significant inter-

est in developing the possibilities of grid

injection of hydrogen. The main idea is to

produce hydrogen using electrolysis driven

by surplus electricity from wind power.

A critical technical aspect of the continuing

development of this concept is to investi-

gate how the existing gas appliances on

the European market react to the intended

mixtures of natural gas and hydrogen.

DGC’s comprehensive work with natural

gas quality and gas appliances – most

recently as project manager of the pan-

European GASQUAL project – gives us a

very strong position when participating in

projects relating to hydrogen and natural

gas. So, together with GDF SUEZ and more

than 10 other European partners DGC has

initiated a sizeable EU project proposal

aiming to investigate to what extent Euro-

pean gas appliances are able to operate

with natural gas mixed with hydrogen.

For a number of years, DGC has also been

working on how the natural gas grid reacts

to hydrogen in different concentrations.

For this purpose we have a unique test

facility attached to our laboratory, where

we study how components in the natural

gas grid are affected when they are ex-

posed to hydrogen over a long period of

time. A number of tests and analyses have

been carried out using both plastic and

steel pipes.

Additionally, DGC holds the chairmanship

of the International Energy Agency’s

collaboration on hydrogen.

Green Gas Test Centre

30

In 2012, DGC established Green Gas Test

Centre with support from the GREEN LABS

DK programme.

The centre undertakes gas analyses in

connection with production, upgrading

and utilisation of green gases when estab-

lishing, testing and operating production

facilities and when running R&D projects.

Also, the centre analyses main compo-

nents and trace constituents in biogas, bio

natural gas, off-gas from upgrading plants,

gasification gas and hydrogen.

And the centre performs laboratory

analyses, online analyses and on site

control of measuring equipment.

Green Gas Test Centre is located in DGC’s

existing laboratory in Hørsholm, and it

was opened 15 November 2012 by Martin

Lidegaard, Minister for Climate, Energy

and Building.

31

Green Gas Test Centre performs analyses of e.g. biogas, gasification gas and hydrogen.

Financial highlights

32

Turnover ConsultancyTechnological service

20.611.6

19.811.6

Total turnover

Project and consulting costs

32.2

16.0

31.4

15.8

Gross profit

Operating costs Interest

16.2

15.3 0.0

15.6

15.3 0.0

Net profit before tax

Tax

0.9

0.2

0.3

0.0

Profit of the year Assets Fixed assets Current assets

0.7

2.114.8

0.3

3.713.9

Total assets Liabilities Capital and reserves Short-term debt

16.9

8.38.6

17.6

8.69.0

Total liabilities 16.9 17.6

Amounts in million DKK 2011 2012

PROFIT AND LOSS ACOUNT

BALANCE SHEET

Names

33

Board of Directors (March 2013)

Peter A. Hodal (Chairman)

Vice President, Energinet.dk

Bjarke Pålsson (Vice Chairman)

President, Naturgas Fyn

Susanne Juhl

President, HMN Naturgas

Jens Jakobsson

Vice President, DONG Energy

Ole Albæk Pedersen

President, HMN Gassalg

Astrid Birnbaum

Manager of Supply of Heat and Gas, HOFOR

Allan Schefte

Vice President, DONG Energy

Søren Stjernqvist

President, Teknologisk Institut

Management

Peter I. Hinstrup

President

Jan K. Jensen

Executive Vice President

Mette Johansen

Head of Finance and Administration/HR

Per G. Kristensen

Vice President, Projects

Leo van Gruijthuijsen

Head of Laboratory

Kim L. Jacobsen

Head of Information Technology

Owners

HMN Naturgas

Gladsaxe Ringvej 11

DK-2860 Søborg

Tel. +45 3954 7000

www.naturgas.dk

DONG Energy

Kraftværksvej 53

DK-7000 Fredericia

Tel. +45 9955 1111

www.dongenergy.dk

Energinet.dk

Tonne Kjærsvej 65

DK-7000 Fredericia

Tel. +45 7010 2244

www.energinet.dk

Naturgas Fyn

Ørbækvej 260

DK-5220 Odense SØ

Tel. +45 6315 6415

www.ngf.dk

HOFOR

Ørestads Boulevard 35

DK-2300 København S

Tel. +45 3395 3395

www.hofor.dk

34

DESIGN: DGC • PRINT: ARCO GRAFISK A/S

Danish Gas Technology CentreDr. Neergaards Vej 5B

DK-2970 HørsholmDenmark

Tel. +45 2016 9600 Fax +45 4516 1199

E-mail dgc@dgc.dkwww.dgc.eu

Sustainable Gas Technology

Customers in 2012

AFNOR

Averhoff Energi Anlæg

Bjerringbro Varmeværk

Broen

BWSC

Bånlev Biogas

Cowi

CTR

Danish Malting Group

Dansk Gas Forening

DONG Energy

E.ON Danmark

Electrolux Professional

Energinet.dk

Energistyrelsen

Force Technology

Gassco

Gastech-Energi

GERG

Grindsted El- og Varmeværk

Grundfos

Haldor Topsøe

Hanstholm Kraftvarmeværk

Hedensted Fjernvarme

Hess Denmark

Hirtshals Kraftvarmeværk

HMN

HOFOR

HS Tarm

International Gas Union

IRD

Jenbacher

Jerslev Varmeværk

Lloyd’s Register

Marcogaz

Max Weishaupt

Miele

Miljøstyrelsen

Mærsk Olie og Gas

Naturgas Fyn

Novo Nordisk

Q-kontrol

Ringkøbing Fjernvarmeværk

Ringsted Forsyning

SEAS-NVE

Snam Rete Gas

Stockholm Gas

Stoholm Fjernvarme

Støvring Kraftvarmeværk

Svenskt Gastekniskt Center

Teknologisk Institut

Viessmann