District cooling is really hot

There is a great deal of interest within many energy companies to pursue a new investment or expand their existing investment in district cooling. In addition to having a positive impact on the environment, it also frees up electrical capacity that can be used for other purposes, such as electric car charging.

“There is a lot of pressure on the cooling market. This is due to several factors, but particularly that the energy companies’ customers are placing higher demands on a comfortable indoor climate all year round. This can be compared with cars, where air conditioning used to be an option, but today cars without AC are barely sold, so there has been a general increase in standards,” says Thomas Nordin at FVB.

A contributing factor to the increased interest in district cooling is that customers are demanding better operational reliability, but another factor is that the EU F-gas Regulation means that refrigerants with a high environmental impact are being phased out.

“Property owners with large refrigeration machines are required to have a continuous leak detection process and certified resources are needed for inspection. Some refrigerants are also flammable, which requires preventive safety measures,” says Aksel Holmberg at FVB. He continues:

“We can clearly see that many district cooling customers value not having to take responsibility for the refrigerants and instead transferring this to an energy company.”

It is mainly buildings in healthcare, offices, stores, and commercial properties that require comfort cooling. Right now, it is still rare to have district cooling for residential homes, but a recent cooling report from Värmemarknad Sverige indicates that in the future it will likely be more common to have comfort cooling in homes, although it is difficult to determine how great the demand for cooling in homes will be and when there will be a breakthrough. 

FVB imported district cooling from the U.S. to Sweden in 1992 and is currently one of the country’s biggest consulting companies in district cooling. Over the past year, several energy companies, including Varberg Energi and Sundsvall Energi, have decided to expand their initial district cooling system and have hired FVB to get the job done.

For energy companies that want to understand the conditions for district cooling, it is important to investigate the local opportunities for cooling production at an early stage.

“The primary goal should be to utilize natural sources as much as possible, so free cooling from waterways is an interesting solution. Preferably as pure free cooling but also so that the process is cooled with water instead of air to achieve a high degree of efficiency,” says Thomas Nordin.

There are many good examples of this, including Övik Energi taking cold water from the Port of Örnsköldsvik for a district cooling system entirely based on free cooling.

“Secondly, we are looking at whether there is residual heat from a factory or a waste incineration plant, for example. This heat is not in demand in the summertime and can instead be used in absorption cooling machines that are powered by heat,” says Thomas Nordin. 

The energy company will combine free cooling from the sea with residual heat.

“We have very good conditions for cooling production and with high demand in the market, it is now possible for us to invest in district cooling,” says Henrik Näsström, Head of Marketing at Varberg Energi.

“We will take free cooling from a deep port in Varberg, which means we will not have to run pipes as far out to achieve low temperatures. During the warm months of the year, we will produce cooling from absorption cooling machines with residual heat from the pulp mill Södra Cell Värö,” says Henrik Näsström.

Varberg Energi will also build a 2,500 cubic meter accumulator tank to level out production over the day.

A SEK 152 million investment
It was in May that the Board of Varberg Energi made the decision to invest SEK 152 million in district cooling. FVB conducted the in-depth feasibility study that formed the basis for the decision. FVB is now responsible for the process and automation of the planned investment.

“With such a large investment, we feel good about hiring FVB. FVB also has specialist knowledge in district cooling, which not many companies have,” says Henrik Näsström.

In Varberg, the planning of the district cooling network and the selection of the property for cooling production is now underway. In parallel, a marine biological survey will be conducted in the port where free cooling will be taken from.

“We expect to connect the first customer in 2026 and the largest customer will be the hospital,” says Henrik Näsström. 

Hospitals are becoming an increasingly common district cooling customer throughout Sweden. Hospitals are responsible for maintaining redundancy and therefore must have a reserve system for electricity, heating, and cooling. Many hospitals previously had their own cooling systems but are now often choosing district cooling as a regular supply, along with their own compression cooling machines as a backup to ensure access to process and comfort cooling. It is also possible to connect the systems in order to optimize them. 

FVB works not only with the technical issues but also the market issues.

“We support many energy companies throughout the sales process with agreements and pricing models, among other things. It is important to set a price that is sustainable over time and matches the company’s costs and the customer’s options,” says Thomas Nordin. He continues:

“We have also developed a dynamic tool where you can enter the customer’s conditions and see how much more profitable it will be to have district cooling compared to having a compressor cooling machine of their own.

There are many plans for expansion in the country right now, but there is an overriding risk that they will take longer and become more expensive than originally planned. This is because the pandemic and the war in Ukraine have led to long delivery times and cost increases for various components.

“It can take up to a year to get electronic parts delivered, among other things. The price of materials has also gone up, especially for steel pipes and fuel. This of course affects the calculation. As an energy company, you must be aware of this and take it into account right now,” says Thomas Nordin.

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