Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
2012
Setting the stage
From his office in Gentofte, VP of Strategy Jakob Bøss looks out over the
bumper-to-bumper morning traffic on one of the major freeways feeding into
Copenhagen city. He is about to meet with his boss, CEO Anders Eldrup, to discuss
proposals from invited consulting teams from around the world on how DONG Energy
– one of the leading energy groups in Northern Europe – should move forward.
DONG Energy was formed in 2006 upon the merger of As Jakob Bøss says, “We can control the production from
six energy companies, encompassing exploration and our thermal power plants, but we cannot control the
production of oil and natural gas; energy trading; and wind.” Electricity production used to be dictated by de-
electricity production, distribution, and sales to end mand, but with more wind power in the system, demand
users. A true energy powerhouse was formed, one that must now increasingly follow the intermittent wind pro-
now meets more than half of Denmark’s electricity needs duction.
and that has an increasing international presence. Since
the merger, DONG Energy has grown its revenue by Due to the need for moving the entire energy sector
more than 50%, to over 54 billion Danish kroner, invest- towards renewable energy sources, DONG Energy has
ing 15-20 billion Danish kroner annually. simultaneously developed other technologies. Bøss
continues, “The world can move closer to a clean and
DONG Energy executives can certainly be proud of their reliable energy supply if biomass is utilized intelligently
achievements, but they still face immense challenges. but, these technologies are in an emerging state. We
DONG Energy provides energy to an increasing number have yet to find an answer to how to successfully scale
of customers while simultaneously coping with the need them and realise the full potential of biomass.” However,
to reduce CO2 emissions. At the same time, fossil fuel re- one thing is clear: Energy demand is rising, and the
serves are limited and in the long term, alternatives must current means of supplying energy is unsustainable. CHANGES IN THE DANISH ENERGY SYSTEM
Electricity production / fuel mix
be found. This necessitates substantial changes to the current
ern European markets in which DONG Energy operates, teams. We expect to see specific and creative business 60 60 60
there is a move towards renewable energy sources. solutions for how to further leverage our market posi-
40 40 40
tions, portfolio of technologies, and partnerships.”
DONG Energy has pursued wind power as an alternative 20 20 20
to fossil fuels and has developed strong, world-leading In the car on their way to the teams’ presentations, 0 0 0
competencies within this field, representing an important Eldrup and Bøss begin discussing DONG Energy, how Oil Coal Gas Wind Biomass Oil Coal Gas Wind Biomass Oil Coal Gas Wind Biomass
first step in lowering CO2 emissions. However, wind has a the company has grown to become what it is today, and
will of its own, and while wind farms provide clean energy, their perspectives on how energy will be produced and 100% 80% 0%
they lack the reliability of traditional power plants. delivered in the future. ILLUSTRATIVE
% % %
100 100 100
50 Thermal 50 Thermal 50
Wind
0 0 0
1970 1990
1973, Danish Oil and Natural Gas (DONG) became a In the mid and late 1990s, the EU developed far-
reality. Due to the oil crisis of 1973-74, the Danish reaching initiatives to liberalise energy markets. These
government decided that Denmark needed to reduce its initiatives, which were implemented within the energy
dependence on oil as the country’s sole energy source, sector over the following decade, opened the way for
which had fuelled the development of the welfare state international competition. For DONG, the prospect of
throughout the 1960s. The goal was to convert the becoming a small player in a very large market made
energy sector into a multi-tiered energy supply system clear the necessity of transforming from a natural gas
by increasing focus on natural gas, exploration for North company to an integrated energy company. An inte-
Sea oil, central power plants, district heating, and later, grated European gas market would introduce new, larger
wind power. competitors. Integrating more activities would make
DONG less sensitive to price fluctuations and margin
Throughout the 1970s, in response to the oil crisis, the pressures at certain points in the value chain and would
energy sector prioritised security of supply, with one increase DONG’s competitiveness with the new players
solution being to convert power plants from oil to coal. in the market.
Coal could be acquired at more stable prices from a
diverse set of suppliers. On the demand side, consumers
were urged to cut back on energy consumption, for
2000
From the second half of 2000 and onwards, it became
instance through campaigns highlighting the advan-
clear to DONG and others that consolidation in the
tages of better home insulation and legislation that
sector was needed to create players that were sufficiently
enforced car-free Sundays. Although some remained
large to withstand foreign competition. As a result, a
sceptical of government intervention, the need for a high
merger took place of DONG, a natural gas company;
security of supply was deemed too important to be left
ELSAM and Energi E2, electricity producers with coal-
to market forces.
fired power plants and wind; Københavns Energi;
Frederiksberg Forsyning; and NESA. Combined, these
1980 companies distributed energy to over 1 million Danish
In the 1980s, concern for the environment began consumers.
increasing in Europe, leading to the production of a
specific action plan for Denmark. Among other things, The new energy player, DONG Energy A/S, would span Focus shifted back to environmental concerns, regulations were put in place to decarbonise the
this recommended the use of less-polluting fuels, which all segments of the value chain and would be prepared and climate change became a hot topic. Denmark European power sector, including national targets for
meant transitioning from coal and oil to natural gas and to compete with other European players. Efficiency emitted around twice as much CO2 as Sweden. This reducing CO2 emissions, increasing the amount of
biomass. Even though security of supply remained im- would be achieved through improved scale and scope, was because Denmark had relied on coal-fired power renewable energy, and pricing CO2 emissions via the
portant, concern for the global environment became a which are vital for survival in the energy sector of a plants to reduce its oil dependency since the 1970s, EU-ETS system. As a consequence, DONG Energy
greater driving force in determining energy policies liberalised Europe. whereas Sweden had focused instead on nuclear and decided to alter its energy mix in the direction of more
around Europe. hydro power. At the EU level, several policies and sustainable energy sources.
in the international energy markets and optimises risk across the entire value chain therefore reduces exposure Gas
Commodity
exposure for the entire DONG Energy group through towards changes in an industry that is undergoing Exchanges
energy trading in the European energy exchanges. profound change. Exploration Oil
& Production
Gas
REVENUE
This vision is expressed in the goal of producing 85% of future energy system as more – and more intermittent – S&D supplies gas and electricity to around 1.2 million same time bringing to the market new products and
all heat and power using renewable energy sources by energy is added to the system. customers in Denmark, Sweden, and the Netherlands. services that enable our customers to support the green
2040, thereby greatly reducing CO2 emissions from The division also owns and operates over 25,000 kilo- transformation,” Eldrup comments.
power and heat production. This vision was set out in In 2010, New Bio Solutions was added to the roster of metres of power and gas distribution grids, connecting
2009 and is referred to as the 85/15 vision. It is expected DONG Energy’s business areas as part of Generation. these customers to the transmission grid. Transmission In supplying the world’s demand for energy, there is the
to be achieved through an energy mix focusing on wind New Bio Solutions aims to commercialise technology for grids are the high-capacity cables that run through challenge of, on the one hand, supplying to an evergrow-
power, biomass, and natural gas. Transformation of utilising biomass for energy purposes. Biomass is a Denmark and connect to other countries. ing population and, on the other hand, reducing pollu-
power production will require significant investments major potential source of energy on a global scale, and tion when supplying this energy. However difficult this
from DONG Energy in the years to come. As Jakob Bøss there is great potential for improving utilisation of these EU regulations prevent DONG Energy from owning the may prove to be, DONG Energy has made these two
says, “How we value investments varies from project to new biomass technologies. transmission grids, which are controlled by a state- challenges the core of its 85/15 vision – to provide clean
project, but in general we assess the expected return and owned entity. DONG Energy must furthermore allow and reliable energy. DONG Energy is confident in its
strategic fit while also taking into account the risks Besides Generation and Renewables, the other business other companies access to its distribution grid and vice strategy’s sound commercial prospects and anticipates
involved. It is a constant challenge to ensure that limited units are central to DONG Energy’s business as a whole, versa. “In our downstream operations, we need to con- a doubling of its operating profit by 2015 (compared
funds are put to their most efficient use.” even if they are not as central to realising the 85/15 tinually improve our operational efficiency while at the with 2009).
vision. Not least Energy Markets which manages the
DONG Energy is the world leader in design, construction, overall risk exposure.
and operation of offshore wind farms, holding a global
market share of around 30%. This position is challenged The other major growth area for DONG Energy besides
by other large players and is maintained through con- offshore wind is Exploration & Production (E&P), which
tinual growth in production capacity. The offshore wind is a mid-sized – and growing – oil and gas company
farms industry is in many respects driven by economies operating in the North Sea. E&P has strong
A VISION TO SATISFY
of scale in procurement of turbines and components, competencies and experience as an operator within
THE ENTIRE ENERGY TRIANGLE
optimisation and rationalisation of the construction exploration, development, and production.
process, and selection of the best sites. It is therefore Clean
paramount for DONG Energy to possess the best know- Today, E&P produces from fields in Denmark and
how as well as good access to funding. With a market Norway. In order to maintain its reserves and production,
that will grow significantly in the coming years, DONG E&P participates in licensing rounds in the areas in
Energy’s strategy is to maintain its market leadership which it operates, which also include the UK (the West of
through continuous supply chain industrialisation and Shetland area), the Faroe Islands, and Greenland. E&P
innovation partnerships. also uses acquisition to gain access to reserves and
production. Bøss says, “For many years to come, we will
Thermal power plants using coal and gas provide reliable still depend on oil and gas, not least in fuelling our cars
energy but emit CO2 in the process. Although increased and for advanced materials, and on natural gas as a
production of electricity from wind power reduces CO2 reliable, low-carbon fuel to complement renewable Reliable Profitable
emissions, wind energy is less reliable a power source energy in our power system. For DONG Energy, a key
than are thermal power plants. Flexible power plants, point of our strategy is to contribute to a high security of
international transmission capacity, and flexibility in supply in these areas through our own production of oil
consumption are thus key levers for ensuring a balanced and gas.”
Cost efficient
8 CBS CASE Competition 2012 CBS CASE Competition 2012 9
Generation
Introduction: Generation is the division of DONG Energy that operates thermal CHP
plants. Heat, like electricity, is delivered to consumers through a (district heating) grid.
District heating accounts for 62% of Danish space and water heating, a share that is
increasing. The thermal CHP plants include gas- and coal-fired plants as well as some
that are fired by biomass.
Generation is in the process of substantially altering its a development that later led to the technologies pro-
portfolio as part of DONG Energy’s overall green trans- ducing 2nd generation bioethanol.
formation.
Straw contains many nutrients that help plants grow yet
Transitioning away from coal wreak havoc in a power plant. Amongst the nutrients are
Although DONG Energy has some of the most efficient nitrogen, potassium, and phosphorus. When these are
coal power plants in the world, the decision has been combusted, nitrogen reacts with oxygen to form NOx, an
made not to build any new coal-fired power plants and to air pollutant that causes acid rain. NOx is normally cap-
convert existing coals-fired power plants to biomass. As tured in a catalyser, not unlike that found in most cars,
a consequence, in early 2011, the company divested its and turned into harmless substances. But as potassium
coal-related engineering department to the Rambøll clogs up the catalyser, large quantities of NOx are free to
engineering consultancy. escape. Phosphorus, on the other hand, is completely
annihilated by the high temperature. Other substances
In 2006, ten coal-fired plants were in operation. By 2010, in the straw pollute the ash left behind so it cannot be
the number was halved, and by 2014, only two are ex- used for cement production as can coal ash. These fac-
pected to remain. tors limit the potential for co-firing straw with coal to
10-15%. In dedicated boilers, biomass can be used as
Biomass as an energy source the sole fuel.
Since the 1990s, Danish energy companies have been
required to combust a certain amount of straw as part In addition to traditional combustion of biomass,
of their overall fuel mix – a feat that is not easily accom- New Bio Solutions is working to develop and market new
plished. Early attempts were unsuccessful. Straw not technologies that enable a more intelligent use of bio-
only combusted poorly but also contained alkali salts mass, for instance converting straw into 2nd generation
and other materials that corroded boilers and covered bioethanol and biomaterials, treating household waste
them with slag. DONG Energy experimented with a f with enzymes to produce fuels or biogas, and turning CAPACITY BY FUEL TYPE
eedstock washing technique to mitigate these issues, difficult biomass fractions into biogas. MW
7,000
6,000
5,000
Less more
4,000
3,000
2,000
1,000
0
2006 2010 2014
FINANCING AND
The European Commission has touted offshore wind as Financing OPERATING PARTNERS
the “energy of tomorrow”, and there are sufficient suita- The installed offshore capacity in Europe is expected to While wind energy is clean, Financing and legal
ble sites around Europe’s coasts to supply seven times grow rapidly in the coming years, and an additional 34 it is inherently unreliable and framework in key countries
the energy requirements of the continent. GW is expected by 2020. This corresponds to a CAPEX must be complemented by www.casecompetition.com/
investment of approximately DKK 1,000 billion, a bill more flexible sources.
UPSTREAM DONG ENERGY DOWNSTREAM casesolving/2012/QR-01
DONG Energy was the world’s first company to build that would be impossible for utilities to shoulder alone.
offshore wind farms, with the first demo farm in 1991. Being a small player in the overall energy market, DONG
DONG Energy later went on to build the world’s first Energy will have to be very successful in obtaining exter-
commercial farm in 2000. Despite being a small player nal financing if it is to maintain its current market share.
in the global electricity market, DONG Energy continues Wind farm project phases Final investment
In the past, DONG Energy has had success building decision
to be a global leader in the niche of offshore wind, both wind farms together with other players as well as selling PHASE
in terms of market share and its involvement in many of stakes in farms to institutional investors.
Idea Analysis Maturation Execution Operation
the world’s largest wind farms. Indeed, DONG Energy
has constructed around half of the current offshore wind Wind farms provide stable returns for institutional inves- SUBPHASE
capacity worldwide. tors. As the operating partner, DONG Energy, handles
1. Screening 1. Feasibility analysis 1. Design 1. Detailed design
the running and maintenance of the farm and assumes
DONG Energy has developed unique capabilities in operational risks. Subsidy schemes ensure that a signifi- 2. Concept development 2. Procurement 2. Construction
analysing, maturing and executing offshore wind cant portion of the total revenue is based on fixed prices
3. Commissioning and
projects as well as in operating offshore wind farms. The and ensure a secure outlet for generated electricity for a transfer to operation
analysis and maturation phases require detailed cost number of years, depending on the country of operation,
and production estimates to calculate the economics of after which the farm competes on market terms. This
a given wind farm. means that payoffs to investors are determined by how
much the wind blows, which may be volatile in the short Final investment
decision
The phases encompass considering a wide variety of run but can be predicted with great accuracy over longer EXISTING AND DECIDED PROJECTED EU
PHASE
details, such as farm layout and seabed conditions. periods. Institutional investors require low risk, stable re- OFFSHORE WIND CAPACITY - MW OFFSHORE WIND CAPACITY - GW
Careful planning is becoming increasingly important as turn, and long investment horizons, hence the attractive- Idea Analysis Maturation
320 1,796 Execution Evaluation
50
more and more farms are being constructed in remote ness of wind farms investments. As stakes in wind farms 200
locations. Construction is handled by highly specialised are not exchange traded, there is an extensive process in SUBPHASE
40
315
barges, and in 2009 DONG Energy acquired one of the identifying interested counterparties and executing the Screening Feasibility analysis Design Detailed design
world’s leading installers, A2SEA, eliminating what can deals. 92
68 16
30
785 Concept development Procurement Construction
often be a bottleneck in offshore wind farm construction.
Wind farms represent a new investment class for institu- 20 Commissioning and
Once farms are up and running, DONG Energy’s tional investors, and asset managers are unfamiliar with transfer to operation
monitoring and maintenance systems detect and correct how to value them, therefore making some hesitant to 10
In operation Walney 2 Lincs Demo- London Anholt Borkum Total
any issues before damage occurs, to minimize both invest. So far, DONG Energy has been successful in sell- Subphase
projects Array Riffgrund
MW 320 1,994
12 CBS CASE Competition 2012 CBS CASE Competition 2012
Operation 13
400 34) Side 16, nederste figur til venstre: Den skal starte
ved 2011, hvor der skal stå "In operation" med en værdi på 785
MW. Walney 1 skal fjernes, da den er talt med i det tal. I 2011
315
skal der da kun stå Walney 1. I stedet for "Nye demoprojekter"
Achieving flexibility THREE WAYS OF
ACHIEVING FLEXIBILITY
SELECTED DONG ENERGY
INITIATIVES
GENERATION
NEW BIO SOLUTIONS
continuously ensure the balance between demand and supply. There are three main PRODUCTION
INBICON
ways of achieving this.
RENESCIENCE
Production car batteries during periods of excess supply, etc. Smart STORAGE PYRONEER
Energy companies can make the generation of electricity energy – taken to the extreme – is energy’s answer to the
more flexible in many ways. One way is to operate more invisible hand of the free market.
flexible power plants. By optimising start-up and shut- BETTER PLACE
down times and costs, they can respond more efficiently Storage CONSUMPTION
to market changes. Another flexibility “tool” is energy The conventional energy system is built on the premise SMART ENERGY
transmission between countries. Energy was once very that it is not technically feasible to store energy and
localised; now, however, the energy grid has made possi- hence that production and consumption must be bal-
ble transmission over great geographical distances. Al- anced at all times. However, technology is advancing, and
THREE WAYS OF
though this ensures that the most efficient and cheapest new opportunities are emerging. DONG ENERGY’S
ACHIEVING FLEXIBILITY
energy source is used, the grid does have its limits: The INITIATIVES
interconnectors have a fixed capacity, which may con- One example is Better Place and its electric cars, which
strain energy transmission. in essence are batteries on wheels that can help store GENERATION
PRODUCTION - NEW BIO SOLUTIONS
energy when there is excess supply from, for instance,
Consumption wind farms. Central storage facilities, such as pumped INBICON
Adjusting the supply side does not change the fact that hydro or compressed air, are other examples of storage
energy demand fluctuates significantly over the course technologies. An example of centralised “storage” is RENESCIENCE
of the day, week and year. Therefore, adjusting consump- hydro power from water reservoirs in Norway.
STORAGE
tion based on production can also help. Smart energy,
PYRONEER
including smart grids, is about building intelligence into Water stored at an elevated level contains energy that
the energy system to control consumption and produc- can be released at will. For regions such as Denmark
tion behaviour from all actors. This can enable energy with flat landscapes, it is not feasible to build largescale BETTER PLACE
companies to use prices to regulate demand, respond hydro, or pumped hydro, power plants. This poses a chal- CONSUMPTION
more quickly to demand spikes, send power to electric lenge as these regions are then forced to think differently. SMART ENERGY
160
140
New Bio Solutions competes in a relatively new industry. How the industry will be shaped in the next 10 or 20 120
While fuel ethanol has been produced from food crops years is anyone’s guess, but the transformation is sure to
100
for years in what is known as 1st generation bioethanol, it be a game-changer for many of the industries involved.
is clear that this is not the way forward. As the world’s 80
population rises, so too does the need for both food and Challenges for the industry 60
energy. Simply converting one to the other will not help. While New Bio Solutions promises to someday compete 40
A wide range of companies have started seeking other with oil and natural gas, some of the products are not
20
solutions as increasing yield and the area of farmed land drop-in replacements. In many cases, the shift to fuels
0
can only go so far. and chemicals based on biomass will bring about dra-
‘09 ‘10 ‘11 ‘12 ‘13 ‘14 ‘15 ‘16 ‘17 ‘18 ‘19 ‘20
matic changes. Existing infrastructure will need to be
European United
A variety of inputs are being considered, each of which adapted, and new supporting industries will have to Union-27 States China Brazil Other
can be processed in several different ways. Some pro- emerge. Even if prices of products from New Bio Solu-
OECD-FAO, 2011
cesses use residual products, such as straw, bagasse, tions decrease, they will have to compete in a society
and manure as inputs. Others look at new crop types, currently shaped by fossil fuels, regular incineration
such as algae, which take up little or no land and photo- works, etc. PROJECTED BIODIESEL PRODUCTION
synthesises up to three times more efficiently than cur- BILLION LITRES
2009
rent crops. Outputs include liquid fuels such as ethanol Furthermore, New Bio Solutions at DONG Energy is
2010
2012
2011
45
and biodiesel, gases such as methane and dimethyl competing in a market space in which big oil and chemi-
40
ether, and a variety of chemicals. By-products include cal companies have strong and sometimes opposing
anything from animal feed to fertiliser. Please refer to the interests in the outcome of a possible new industry. The 35
QR-feature for more information. QR-feature explores some of the issues that will have to 30
be overcome to commercialise New Bio Solutions. 25
New Bio Solutions contains technologies at different
20
stages of maturity. While DONG Energy has begun to
license the Inbicon technology, both REnescience and 15
gies are promising but in an early stage of commercial New Bio Solutions
5
development. It is still unclear which of these will prove value chain
0
to be the most successful. www.casecompetition.com/
‘09 ‘10 ‘11 ‘12 ‘13 ‘14 ‘15 ‘16 ‘17 ‘18 ‘19 ‘20
casesolving/2012/QR-02
European United
Union-27 States China India Brazil Other
Players in the industry
New Bio Solutions cuts across several traditional value OECD-FAO, 2011
Players in the industry
chains: The input material producers in agriculture and
www.casecompetition.com/
forestry, those with process knowledge such as biotech
casesolving/2012/QR-03
and chemical companies, and downstream players in
fuel and electricity. Players from all of these industries
are competing to gain a foothold in the market. As the
QR-feature shows, each brings unique capabilities and Challenges for the industry
assets to the table, yet no single company has all the www.casecompetition.com/
pieces needed to solve the New Bio Solutions puzzle. casesolving/2012/QR-04
Wheat straw
Pre-
treatment Inbicon
Inbicon develops and sells technologies for the production of 2nd generation bioethanol. technology
Liquid
fraction
Inbicon’s historical foundations lie in the pre-treatment of feedstock. The process is a direct C5 Molasses
Fibre
descendant of the washing techniques tested for biomass combustion at DONG Energy’s
Steam
Evaporation
Experiments with washing began in the early 1990s, and Commercialization Power plant
at the turn of the millennium, when it became apparent As construction of cellulosic ethanol plants is very capi-
Distillation
that similar “washing” made production of 2nd genera- tal intensive, Inbicon’s business model has thus far in-
tion bioethanol possible, DONG Energy was years ahead
Electricity and heat
volved licensing its technologies to other players, such Fermentation
of its competitors. as energy or agri-industrial companies. While it is still Ethanol
Liquefied fibres
SFF
not a turnkey solution, Inbicon and its partners have ex- Yeast
To this day, washing, or pre-treatment, continues to perience across the New Bio Solutions value chain and
be at the heart of Inbicon’s process. Pre-treatment is can assist customers in all aspects of plant construction
needed to make the cellulose in biomaterial available to and operation.
the enzymes that then convert it to sugars. Unlike other
methods that use added chemicals and extreme pH- Potential customers are those who have the capital and
values, the Inbicon process uses mostly steam. This re- vision to invest in what may be the fuel of tomorrow. In
duces costs and eliminates the need to clean the pre- many parts of the world, raw materials for the production
treated biomass of elements that inhibit the enzymatic are cheap – many feedstocks currently have no alterna-
process and contaminate residual products. tive use. But they also have a low energy density, which
makes transportation costly. Ethanol plants will therefore
This makes the Inbicon process very efficient and en- need to be situated in areas with extensive farmed land
sures that every element of the biomass can be used. as well as a functioning infrastructure.
C6 sugars are converted to ethanol, and C5 sugars,
which are currently uneconomical to convert, are used to See the QR-feature for more information about Inbicon’s
form a molasses that can be used as high nutritional current partners and customers, usable feedstock, and
value animal feed. The residual product, pure lignin, is global legislation.
dried and compressed into pellets, which can be com- PROJECTED 2G BIOETHANOL PRODUCTION 2G BIOETHANOL PRODUCTION COST
BILLION LITRES CONSTANT 2007 USD/GAL ETHANOL.
busted to generate the pre-treatment steam and elec-
tricity. This can be done at the ethanol plant, but it is 7 4
Traditionally, municipal waste has either been placed in a landfill or incinerated. The
drawbacks to landfills are well known. The local environment is polluted, and harmful
substances may eventually find their way into the groundwater, polluting local water supplies.
Besides the smell, landfills also release methane, a greenhouse gas that is twenty times more
potent than CO2. Incineration is a much better way to handle waste and allows some of the
energy in the waste to be recovered. It is, however, far from an optimal process. REnescience
is a technology that allows waste to be handled more efficiently.
Simply put, REnescience allows the separation of solid into a liquid. The waste is then mechanically sepa-
waste into four different components: An organic part, rated into solid and liquid parts. On a volume basis,
metal, glass, and a residual product that is composed REnescience biomass yields eight times as much
mainly of plastics. The organic part can then be turned biogas as manure, and the conversion to biogas is
into biogas while glass and metals are recycled. The nearly twice as fast.
residual product is combusted for energy.
The cost of setting up a REnescience plant is less than
Using REnescience, 45-50% of the waste’s energy that of a comparable waste incineration plant, and the
content can be converted to electricity if both the biogas plant optimally handles around 10 tonnes of waste per
and the residual product are combusted. The gas may hour. The first demonstration facility was set up in 2009,
also be upgraded to natural gas and subsequently grid- and DONG Energy is looking for opportunities to go into
injected. This is a great improvement over the 20-25% full-scale production from 2013. Around 1.2 billion
recovery rate from incinerating untreated waste, which tonnes of waste are dumped in landfills every year
additionally does not allow for gas collection. Further- worldwide, and around one-third of all food produced is
more, when incinerating waste, the nutrients it contains thrown away. The potential for waste management
are lost. When REnescience is used, these nutrients are technologies is immense. The question is how the
instead kept in their bioavailable form and represent the transition process to more efficient waste handling can
residue of the biogas production. This residual product be made profitable and what role DONG Energy and
contains no harmful substances in amounts that exceed REnescience will play. The biggest improvements in
legal limit. It can thus be readily used as a fertiliser. efficiency can be made in countries that currently dump
EUROPEAN MUNICIPAL WASTE MARKET
their waste in landfills, yet these countries will also have
WASTE PER CAPITA IN KILOGRAMMES
The REnescience process is actually rather simple. Waste to make bigger investments in infrastructure, such as
is boiled in a large container, and enzymes that dissolve waste handling and residual incineration, to implement 368 544 494 574
100%
the organic material are then added to turn this material the REnescience technology. 90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Eastern Northern Southern Western
Europe Europe Europe Europe
Temperature control is critical: If the temperature gets A 6 MW plant is currently operational, and DONG Energy
too high, the ash dis-solves, and some of the nutrients in is working to begin constructing larger plants in 2013.
the biomass will be destroyed while others will turn into Both industrial-scale plants of 5-25 MW that can supply
polluting gases. When the temperature is kept exactly individual factories and utility scale plants of 50-150 MW
right, all hydro-carbons are gasified while all other that can supply entire cities are being considered. The
substances remain in the ash and can be returned to the question is which industrial players will be interested in
ground as fertiliser. Since the hydrocarbons are relatively having a local supply of natural gas that can be used to
clean, they can be co-fired in coal-fired plants in concen- produce heat or steam and also whether utilities will find
trations up to a maximum of 50%, a huge improvement it worthwhile to implement Pyroneer as part of their
over the 10-15% possible with straw. energy portfolios.
Pyroneer homepage
www.casecompetition.com/
casesolving/2012/QR-08
As a car’s battery runs flat, drivers will no longer have capacity onto to the grid when there is a sudden excess
to wait hours for it to be recharged at a power outlet. demand. Compared with other storage solutions, the
Instead, they can simply drive to a battery station and capacity is low, but the system is very responsive.
replace their depleted battery with a fully charged one.
Currently, the cars are manufactured by Renault-Nissan, DONG Energy has invested in Better Place and regards
and Better Place runs and operates battery stations it as a part of the solution for the energy system of to-
as well as provides customers with their own private morrow. Yet Better Place still struggles with the stigma
charging outlets in their driveways. attached to electric cars of the past – that they are slow,
impractical, and have limited range. To be successful,
Denmark is an optimal location for commercialising Better Place will need to convince consumers that these
Better Place. Not only is 20% of electricity provided by concerns are no longer valid.
renewable sources, but Denmark also has a tax system
that favours electric cars. Whereas regular cars are
taxed at 180%, electric cars are not taxed at all.
There are two paths to implementing “smart” consump- If control of heating, charging, and similar energy uses
tion. One is to enable consumers to manually adjust are delegated to DONG Energy, the company can ac-
consumption based on prices. This requires smart tively manage at least a part of the demand. For this,
meters. The pricing lever can be used to incentivise DONG Energy has developed the Power Hub platform.
users to cut back on consumption when there is excess If done correctly, end users will not notice a thing. Yet
demand and schedule their discretionary energy con- this requires devices that are constantly connected to
sumption for non-peak hours. Yet consumption is often DONG Energy’s Power Hub, which can intelligently
based on ingrained patterns, dictated by convenience, balance the needs of the user with those of DONG
culture, and lifestyle. Major energy users that see electri- Energy.
city as a cost that can be managed are willing to change
consumption patterns. The bulk of users are not. DONG Some devices may even send energy back onto the grid
Energy is looking into a second path, which bypasses the when there is excess demand. DONG Energy is working
user altogether. to bring additional resources onto the Power Hub.
Examples may include Better Place cars, heat pumps,
The company has recognised that, for a number of uses, emergency power systems, etc. For smart energy to gain
such as heating or charging car batteries, users do not ground, it is paramount that it can provide real value for
care when the energy is consumed; all they care about is the customers.
that their house is comfortable and their car is charged.
Smart Energy
POWER
EXCHANGE
GRID
Smart meter
Smart unit
Electric car
Heat pump
Building the supply curve production at coal- and oil-fired power plants. Strategic
The supply curve for electricity is formed by adding to- actions from DONG Energy and competitors constantly
gether the individual supply curves of all energy sources. change the energy mix and thereby influence the overall
This forms a staircase supply curve, as shown to the market for electricity.
right. The cheapest sources, such as wind and nuclear,
enter the supply curve first due to their low marginal Building the demand curve
cost. The more expensive power sources, such as gas The demand for electricity is inherently inelastic, and the
turbines and coal-fired power stations, are added after- quantity demanded is relatively unaffected by price
wards. The intersection between the supply and the de- changes. Many consumers are not directly aware of price
mand curve will then determine which energy source will changes throughout the time of day or the year but,
be the “marginal” energy source, and its marginal cost rather, see the total bill at the end of a given period. Yet
will determine the clearing price in the market. there are many other factors that affect demand for en-
ergy, not least weather conditions.
The supply curve is heavily influenced by availability of
electricity from low cost technologies, such as hydro Many homes are heated by district heating, and a warm
power, as well as fuel and CO2 prices. Heavy rainfall in winter will no doubt decrease the energy need and hence
Norway and other Nordic countries will fill water reser- the need for thermal power plants to be in operation.
voirs. This will yield cheap hydro power, which will be The long-term trend, however, is for increasing shares of
sold on the commodities exchange. This will lower the energy supply to be converted into electricity, thus in- ELECTRICITY SUPPLY AND DEMAND - ILLUSTRATIVE
spot price for electricity, inevitably leading to lower creasing demand. Price
Demand
430 DKK/MWh
400 DKK/MWh
350 DKK
Market price /MWh
320 DKK/MWh
200 DKK/MWh
150 DKK/MWh
0 DKK/MWh
Volume
Wind power Hydro power Nuclear power Coal CHP Coal condensing Gas CHP Gas condensing
Good Luck!
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CBS Case Competition
The Case
Moving energy forward