Boosting Innovation from Research to Market

1. Boosting Innovation from Research to Market District Cooling in Europe Potential and Benefits Tomas Bruce President Euroheat & Power Chairman Capital Cooing Europe AB Euroheat & Power

2. Boosting Innovation from Research to Market District Cooling Turning a potential threat into a great opportunity for the energy companies, their customers and the community Euroheat & Power

3. Boosting Innovation from Research to Market Status and Trends Air-conditioning and process cooling • 80% in USA and Japan, commercial and institutional buildings • <50% in EU, but is expanding rapidly • About 40-50% of the cooling energy relates to process cooling in commercial and institutional buildings, computer cooling etc • AC within the residential sector has a strong position in urban areas and is expanding rapidly • Investments in the AC business within the EU will increase to meet the phase-out of HCFC and are predicted to be 5 billion € in 2004 or 60-100 billion € up until 2010 Euroheat & Power

4. Boosting Innovation from Research to Market District Cooling in Sweden 1992-2002 Euroheat & Power

5. Boosting Innovation from Research to Market District Cooling in Europe Euroheat & Power

6. Boosting Innovation from Research to Market The EU perspective challenges and triggers Electricity • Capacity shortage - production and distribution Environment • The Kyoto agreement: 8% reductionin2012 • HCFC phase-out, EU in the same situation as Sweden 1996 • Increased environmental awareness, consumer and energy companies Authorities • Security of supply • De-regulation of the electricity market • Reduction of CO2 emissions • Legislation, regulations • Taxes and environmental fees Euroheat & Power

7. Boosting Innovation from Research to Market The DC potential in Europe- based upon Swedish development and statistics Sweden – population 9 million • Statistics for 2002: 28 cities with 10.000 to 750.000 inhabitants 600 GWh or 500 MW ~40% of the energy is year round base load • Prediction for 2010: 2 TWh20-25% of the non-residential market EU – population 380 million • Status ~ 2 TWh • Potential 2010-2015: Up-scaled and adjusted to the warmer climate 100 TWh20-25% of the non-residential market The residential sector could add another 100 TWh Euroheat & Power

8. Boosting Innovation from Research to Market Potential savings using District Cooling Total energy efficiency ratio EER for cooling • Conventional local solutions EER 1,5 - 3 Conventional chillers EER 3 - 7 Aquifers for AC • Centralised District Cooling solutions EER 6 - 8 Industrial chillers/heat pumps with efficient condenser cooling EER 8 - 25 Combined DH/DC Absorption chillers or waste heat Free cooling Euroheat & Power

9. Boosting Innovation from Research to Market Potential savings using District Cooling, contd DC electricity savings potential, non-residential • 40 TWh/25.000 MW • 1-2% of EU electricity demand Electricity capacity peaks in summer • Saved investments in production • Saved investments in distribution European Commission: • +44% electricity demand up to 2020 • 750 power plants/300.000 MW Euroheat & Power

10. Boosting Innovation from Research to Market Critical success factors • Between 2003 and 2008 there is a great opportunity to establish and position DC on the EU market • To be able to handle the high investments the DC business has to be established with: • step by step solutions • short lead times • the right price strategy Euroheat & Power

11. Boosting Innovation from Research to Market Critical success factors, contd • The business must be set by a party that: • is trustworthy on the local market • has a long term perspective as energy supplier • can build energy infrastructure with low risk • is a suitable, and natural actor in the building of a sustainable society Euroheat & Power

12. Boosting Innovation from Research to Market New business opportunities for energy companies & local authorities • New products and services to offer the end-user market • Reduced investment costs in the distribution infrastructure of electricity • Increased revenues • Strong environmental profile • Increased customer loyalty • A bridge for an expansion of the District Heating business “A new profitable business for the energy companies that establish long term relationship with the customers” Euroheat & Power

13. Boosting Innovation from Research to Market New profits for property-owners and end-users • Capital and resources are released • Risks linked to owning, operating and maintaining cooling plants are eliminated • The price picture is stabilised and maintenance costs are reduced • Reliability increases through secure cooling supplies and simple, safe technical solutions • Floor-space is made available • Environmental profile is sharpened “A new flexible, reliable and cost effective solution for the customers with high environmental profile” Euroheat & Power

14. Boosting Innovation from Research to Market Profits for the community • Adjustment to the Kyoto protocol and stricter, new environmental norms • Reduced emissions of CO2 and environmentally hazardous HCFC “freons” • Enhanced aesthetics and an improved local environment • Avoid shortages of electricity capacity • Increased energy utilisation and reduced electricity consumption “Savings of1-2% of the electricity consumption and up to 25% of the EU commitment according to the Kyoto agreement, or 20-40 million tons of CO2” “By establishing a 100 TWh D.C. Business, EU will avoid 25 billion € of investments for peak electricity capacity” Euroheat & Power