Sunday, January 13, 2008

Selling Heat

Last week I was challenged by our CTO here at Pano Logic if I had ever heard of selling heat. I assumed immediately he didn't mean selling electricity or gas, but I have never heard of just selling "heat." So I turned to Google, as I was sure this must be a common practice somewhere. Strangely, it wasn't.
I figured someone out there must have sunk a geothermal well and sold off excess capacity (cooling or heating) to their neighbors, but I didn't come across any examples. I soon realized that such an agreement could be very difficult given the lack of a market for "heat energy." How would you put value on it?
Finally, I found this. A shopping mall built in 2001 in an old Telegraph building in Norway.
The designers of the new mall worked out a plan to connect their heat pump system to the data center of a near by Telco facility. During the Winter, the data center heats the mall, and during the cooling season, the mall uses the heat generated by the server room to preheat a local hotel's sanitary (showers, sinks) water system.
What is interesting about this system, is not just the logical efficiency, but that the entity in the best position to profit is the mall that installed the heat pump and exchanger system that allows the system to operate. There are not a great deal of details on the business model or financial relationship between the 3 entities in the story above, but it does get me thinking.
To make these these types of "symbiotic" trade relationships to work at any type of scale, there must be some price put on heat energy, rather than the energy it costs to heat and cool water from systems described above. Rather than the simple logic that the Data Center Operator can save money by shipping off heat rather than cooling it on their own, if the Data Center was instead "selling heat" they could recognise revenue on this very real and valuable bi-product of their primary business. Of course, the value of that heat fluctuates throughout the year. The system would have to get bigger to find more uses as the ambient temperature rises during the summer, and arguably, the value would go negative. But what if another facility decides to drill a series of Geothermal wells around their property. Instead of sizing their wells for the cooling of their property, they drill as much capacity as the space permits, selling that "heat" capacity in a local market of interconnected heat pumps and exchangers?
At the end of the day, it would be easy to imagine urban "heat markets" where interconnected heat exchangers and a control system drives a commodity market for "heat energy." Efficiencies and investments would be driven by the local market, rewarding individual property/business owners for decreasing their consumption of fossil fuel energy while creating a framework for cost/benefit analysis that can guide designers to make balanced systems that go beyond their own facilities.
So what's the opportunity? As in the control center of the mall, it is the control system that could make the market "work." How could a business "build" such a market and extract profits? Worth some thought, but enough for tonight.


Bennett said...

Great article! You should also take a look at this recent article about a project to heat Stockholm Central Station using body heat.

Mindaugas said...

While most of the continental Europe is rather corrupt, there is not too much hope that political will is there to brake centralized heat supply monopolies and separate heat production and distribution (like it is attempted in electricity markets). Further distribution should be split into backbone city heat pipelines and distribution branches to multi apartment buildings. Then each apartment building may generate heat using integrated solar thermal facades or roofs plus heat pumps. A "smart grid" markets technology applied to heat would make wonders to heat prices. I am writing occasionally on this at
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