Expert Interview – "Returns of up to 10% Can Be Generated Today"

Expert Interview – April 19, 2022

Interview with Dr. Claudia van Laak of the Open District Hub and Dr. Karsten Schmidt from Ampeers Energy about district sector coupling

It is often said that cities are crucial for the success of the energy transition. Not only is by far the largest amount of electricity and heating consumed here, cities also make it possible for synergy effects to be achieved with their diverse infrastructure. How can cities and districts become climate-neutral as quickly as possible and above all economically, and what role is sector coupling playing here? We put this question to Dr. Claudia van Laak, Office Manager, and Dr. Karsten Schmidt, Deputy Chairman of the German association Open District Hub.

Dr. Claudia van Laak, Office Manager of the German association Open District Hub
Dr. Karsten Schmidt, founder of Ampeers Energy GmbH and Deputy Chairman of the Open District Hub

Ms. van Laak, before we talk about sector coupling in districts, can you please explain briefly what the Open District Hub does?

Van Laak: The Open District Hub is a non-profit association which links different industries, in particular the energy industry, the property industry and technology providers which contribute to the supply of heating or electricity to buildings. Also represented here are companies involved in building automation, companies which clarify legal matters relating to modern energy supply in the district and various research institutions. The Open District Hub is therefore a place where all of these companies can meet, experiences can be shared and knowledge is transferred from research into practice.

Can you give a couple of examples of how sector coupling in districts works and what synergy effects can be exploited?

Van Laak: For example, anyone who has a PV system on their roof can make their own excess electricity available to others. Alternatively, green electricity can be converted into heat when no electricity is needed. Another intelligent option provided by sector coupling is the ability to charge electric vehicles using electricity from your own roof.

This obviously makes much more sense when several buildings are virtually connected to one another. This pooling produces synergy effects, from which business models emerge, with which in turn money can be made. Existing buildings will not become climate-neutral if we only rely on efficiency measures such as insulation. Energy has to be used intelligently and sensibly where it is needed. This is where sector coupling comes into play.

Mr. Schmidt, particularly in the case of electricity there are already business models to promote investment. What are they about and which models are the most promising?

Schmidt: THE most promising model does not exist, it is always a combination of different models. Ultimately it is about making renewable energies economically viable in the context of district energy supply in such as way that the property owner can start using the technology without having to pay extra or increase the rent paid by residents for refinancing purposes. That is the trick the business models need to pull off.

What could such a cost-effective solution based on new business models look like in practice?

Schmidt: When, for example, in addition to a heat pump, a PV system is installed on the roof of an apartment building, the electricity can be supplied to the heat pump. This is just one possible use for the electricity, though. It could also be used as tenant power or charging products. And any remaining electricity that is not used can be fed into the public grid. All of the electricity from the building’s system would therefore be used. The solution is to realize the modernization of the system technology cost effectively and to refinance by tapping into new sources of financing.

In Austria, for example, electricity can be shared in so-called energy communities. Here, excess electricity generated in a property can be fed into the public electricity grid and used in another property in the portfolio. This is attractive for property owners who for example own a listed building in the town center on which a PV system cannot be installed, but have a property on the nearby outskirts of the town which is potentially suitable for this. The excess electricity produced by the house on the outskirts of the town can be made available to and used in the property in the town center via the public grid.

We have talked a lot about electricity. What role does the heating sector play for climate neutrality in districts?

Van Laak: The heating sector plays a crucial role. In Germany there are about 21 million buildings and 75% of these are still heated with oil or gas. Again, the trick will be to make the heating of buildings climate-neutral. The electrification of heating through heat pumps is one option. There are also projects which are looking at the degree to which hydrogen or generally climate-neutral gases can make heating carbon-neutral. Behind this there is of course always the question of financial attractiveness. It is important that we do not view the sectors of electricity, heating and mobility separately from each other, but bring them together in seeking to achieve climate neutrality.

Ms. van Laak, what are the biggest obstacles preventing us from making districts climate-neutral?

Van Laak: The investor-user dilemma is definitely an issue. That is to say, how will the owner of the building be persuaded to invest? How economical is the transition to climate neutrality? And finally, the long approval and planning process with local authorities is another hurdle. Local authorities are often short of resources and personnel. Sometimes the goals of the building department are not consistent with those of the local authority’s climate protection manager. On top of this, there is a shortage of skilled workers, which is actually the biggest obstacle. What is the point of the concepts gathered in the Open District Hub if no one can put them into practice?

How can the dilemma between economic interests and technical feasibility be solved?

Schmidt: With the system technology and intelligent software solutions available to us, we are able to achieve a carbon reduction of around 90%, regardless of the type of building. The building energy supply has to be viewed in a cross-sector and integrated manner. This will allow the investor-tenant dilemma to disappear. If districts are supplied with energy for heating, electricity and mobility in an integrated manner, a return of up to 10% can be generated today in existing and new buildings. This is the belief we hold in the Open District Hub.

When it comes to economic incentives, the focus should currently be more on carbon reduction than on technical solutions, with all of the aforementioned measures possible even without funding. Now what matters is the speed at which the refurbishment rate can be increased fourfold, as the current problems such as the shortage of skilled workers will not go away or will get even bigger in future, when the baby boom generation retires. Here, standardized solutions in planning are very important. With software-based planning tools and a high level of prefabrication, modernization projects which normally take between three and six months can be completed in six to eight weeks. If these points are taken on board and implemented, momentum will gather.

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