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Realizing District Cooling – the planning
phase
Joakim Nilsson
Partner
Devcco – District Energy Venture
Zagreb, 26/05/2015
RESCUE - REnewable Smart Cooling for Urban Europe
(IEE/11/977) / Duration: 01/06/2012 - 30/11/2014 2
1 – be aware of your business process
Ro
ad
-ma
p/p
re-F
S
Key activities
System and business concept
Financial key figures
Stakeholder analysis
Risk identification
Ownership models
Decision points
Fe
asi
bilit
y S
tud
y
Key activities
Technical and economical feasibility study
Stakeholder negotiations
Incorporation of ownership model
Investment memorandum
Decision pointsP
roje
ct D
eve
lop
me
nt
Key activities
Project development financing raised
Project development activities to financing closure in terms of design, permits, secured off-take, procurements and insurances
Co
nst
ruct
ion Key-activities
Construction financing raised
Construction of district energy system
Operation and Management concept/contract in place
Op
era
tio
n Key-activities
Asset and operation company
Road-map/pre-FS
Road-map/pre-FS
Feasibility Study
Feasibility Study
Project Development
Project Development
ConstructionConstruction OperationOperation
RESCUE - REnewable Smart Cooling for Urban Europe
(IEE/11/977) / Duration: 01/06/2012 - 30/11/2014 3
3 – make the right decisions – pre-feasibility stage
Pinpoint key buildings – define the project’s scale
It starts with a customer demand:
• Define the market area.
• Identify key customers.
• Identify customer needs.
RESCUE - REnewable Smart Cooling for Urban Europe
(IEE/11/977) / Duration: 01/06/2012 - 30/11/2014 4
4 – make the right decisions – pre-feasibility stage
• Stakeholder analysis - Address and align objectives to avoid
conflicts of interest
• System concept – Available sources and technologies
• Indicative economic feasibility
• Risk management – Initial risk identification
• Business and ownership model – Inviting others?, expectations on
return
• Define the project/business development process – governance,
stages and decision points
• Designate a project manager to guarantee smooth operation
• Plan for financing of every step
RESCUE - REnewable Smart Cooling for Urban Europe
(IEE/11/977) / Duration: 01/06/2012 - 30/11/2014 5
5 – make the right decisions – feasibility stage
• Define project scope and targets
• Technical and economical feasibility
• Stakeholder negotiations
• Identify, and if required, initiate permitting processes
• Try to find ways to develop the market and project in phases
• Assess customer alternative cost and contracting & price models
• Conduct proper risk assessment and allocate risk accordingly
• Assess procurement strategy
• Establish business entity Decision point to reach:
Investment direction decision
RESCUE - REnewable Smart Cooling for Urban Europe
(IEE/11/977) / Duration: 01/06/2012 - 30/11/2014 6
6 – make the right decisions – Project development phase
• Implement market and sales approach – secure revenue
• Be prepared to implement temporary customer solutions
• Take care of any needed permits and permissions
• Detailed technical design (in line with permitting requirements and
procurement strategy)
• Prepare and execute procurement
• Secure financial solutions
• Apply proper steering model (profitability, performance, time)
Decision point to reach:
Investment decision
RESCUE - REnewable Smart Cooling for Urban Europe
(IEE/11/977) / Duration: 01/06/2012 - 30/11/2014 7
Zagreb – possible step-by-step approach
Assumed scenario:A. Identify key customers.
B. Operate independently or create micro grid.
C. Utilize redundancy if possible.
D. Arrange with temporary production or “to be” peak production locally.
E. Create large scale system when critical mass has been achieved.
RESCUE - REnewable Smart Cooling for Urban Europe
(IEE/11/977) / Duration: 01/06/2012 - 30/11/2014 8
Concluding remarks
1. Focus not only on what to create but also how and with whom.
2. Permits, access to land and customer contracting often on critical
timeline.
3. Small scale step-by-step approach might be the way to a large scale
system.
4. Consider several business and financing models early on.
5. The technical solution is often a mix of several technologies and sources
RESCUE - REnewable Smart Cooling for Urban Europe
(IEE/11/977) / Duration: 01/06/2012 - 30/11/2014 9
Joakim Nilsson
+46 70 617 77 52
www.devcco.se
Thank you!
