Innovation and technology made district heating a success story in Estonia

We may think of central heating as a heritage from the Soviet times when we see an unearthed heating pipe somewhere. However, Estonia’s largest heating company, Utilitas, has turned district heating into one of the most efficient and environmentally friendly heating methods. Thanks to industrial technology and digital solutions, district heating has become an Estonian success story in Europe.

Utilitas heats nearly 5,000 buildings in eight cities across Estonia, from Tallinn to Valga and Kärdla. The company provides heat for nearly 174,000 homes. Besides the constant renewal of the heating pipelines, the company has radically changed district heating in two ways. First, domestic wood chips are used as the main fuel instead of fuel oil and gas. Gas boilers are only used when demand peaks, for example, during a period of extreme cold.

As a result, Utilitas has become the largest producer of renewable energy in Estonia. “We produce 1.4 TWh of green energy per year, and our customers consider it more and more important,” confirms Priit Koit, CEO of Utilitas Group.

As another major change, Utilitas operates three electricity and heat cogeneration plants in Tallinn. First, electricity is produced, and the residual heat generated during this process is directed to heat buildings. This way, all the energy obtained from the burning of fuel is used, meaning that the efficiency of energy production reaches 100%! Utilitas’ solution has already played an important role in reducing Estonia’s carbon footprint and is becoming increasingly important in meeting future climate goals.

District heating and cooling play an extremely important role in the European Union’s environmental policy and renewable energy goals, and Estonia’s district heating success story is an example for some Central European countries.

Software solutions keep the system efficient

Cogeneration and modern industrial technology made it possible to make a great leap forward in the efficiency of energy production and distribution. Different software solutions and their interfacing enable the operation of modern energy production and distribution networks even more efficiently.

Digital capabilities ensure real-time data from various points in the district heating chain, starting from production, and ending with the client’s heating substation. It enables modeling and forecasting and provides recommendations and financial calculations based on large datasets.

The central software is Dynamics NAV, which the company has been using since 2002 (previously called Navision). Riina Vikat, the CFO of the company, confirms that the software fully meets their needs in daily financial accounting: “Accounting is accurate, and the client can very easily organize the reporting according to their needs, creating a clear and simple picture from the data in the system. As a group, we also really like the fact that it is easy to consolidate the results of different companies and make forecasts. Our accounting is completely paperless, which was especially beneficial during the months of COVID-19. It was very easy for our team to stay home and do the financial accounting remotely.

Kaarel Rahu, Head of ICT, considers Dynamics NAV’s flexibility as a development platform to be one of the biggest advantages, in addition to its standard functionalities. It has made it possible to take data analysis, important for Utilitas, to a new level. “I also want to mention our partner BCS Itera, who has created miracles on top of the software,“ he adds.

BCS Itera:
The client mainly uses the financial module in addition to the sales CRM and the warehouse software. The entire solution is integrated with several others used, like GIS, SCADA, etc. Business analysis, built on the data warehouse Bi4Dynamics and PowerBI platform, also plays an important role. The solution is integrated with many industry-specific solutions, and processes and customer service are managed based on business analysis. BCS Itera has implemented the Microsoft Dynamics 365 Business Central solution in Utilitas.

The group’s CEO, Priit Koit, emphasizes that one of the main goals of the company is to ensure a convenient service for the customer. District heating and, a new service, district cooling must be convenient to use and competitive compared to other types of heating or cooling. “The data set collected by the software allows the entire system to be optimized in such a way that its efficiency is as high as possible and the customer’s benefit is maximized,” he explains. “Customers value renewable energy and environmentally friendly services more and more. We consider it our duty to provide them with all the information they need to optimally consume heat without wasting energy. And this is exactly what the software solutions enable us to do.”

Since customers regulate their heat consumption themselves, no one else can prescribe what temperature should be kept inside the building. However, thanks to real-time data, the heating company can give recommendations on how to consume energy in a stable way and avoid large fluctuations. If the customer skillfully configures their system, it becomes more efficient, costs are reduced, and they only gain from it. Since the price of heat is regulated by the state, Utilitas does not directly benefit from the increase in efficiency – the company’s profit does not increase, because the higher efficiency is taken into account when confirming the price of heat. Indirectly, of course, the company wins: the lower the heat price is, the more satisfied the customer is.

Highly accurate forecasts and a smart network

Many years ago already, Utilitas created a remote heat meter system that captures and transmits the readings of customers’ heat meters. Since no solution efficient enough already existed, everything had to be invented from scratch. The result – every hour, data runs in not only from energy production but also from customers. It enables much better planning of production resources.

A huge amount of data is created. Approximately 100 million rows per year. Kaarel Rahu, Head of ICT, has been working in recent years to ensure that this data is correct, even perfect, as the analytics made in the Power BI environment are based on it.

Thanks to this, it is possible to carry out an accurate fine-tuning of the district heating system. By analyzing weather forecasts, production sources, and customer heat consumption data, they can plan heat production much more precisely than before.

For example, if Utilitas receives an accurate weather forecast that Christmas Eve will be cold, minus 25 degrees, and the wind will be 25 meters per second, but the next day will be just minus 15 degrees and completely calm, then the system models with an accuracy of a few percents, which operating modes to use in boiler houses and cogeneration plants hour by hour.

Priit Koit specifies: “In heat production, we see exactly the same trend as in electricity production where, thanks to digital solutions, intraday management becomes more and more important. We are moving in the same direction, analyzing the hours the stations work most and how to keep the load of the base stations as high as possible. This is a daily job that cannot be done without a database. If there is no information, you cannot analyze and set goals.”

“When it comes to the use of artificial intelligence, which Dynamics NAV enables, the most primary application is pattern recognition, which identifies the customer’s consumption pattern over time,” says Kaarel Rahu.  “And even this solution is mysteriously accurate! But in order to further increase the level of accuracy, additional features must be introduced: working days and holidays, the time of day; for example, the heat consumption in an office is completely different at night and during the day.”

The collected data is securely logged into each customer’s profile, thanks to which it is possible to analyze the efficiency of their heat consumption and make forecasts. In the future, each customer will be able to see how high their heating bills might be in a cold winter or a warm winter. All the data form a forecast of heat consumption in the entire network.

“The most important thing for us is that we constantly see the consumption chart,” says Priit Koit. “Then we have retrospective information on how the automation of the customer’s heating substation has worked in different weather conditions and how it relates to the energy supplied to our network. This way we can find out whether it is possible to increase the efficiency of the system through optimization.”

When each customer’s heating system is more efficient, so is the system as a whole. Customers benefit the most from the fact that the automation of boiler houses and heating substations of apartment and office buildings work in a coordinated manner, avoiding sudden jumps in heat production. And this is the reason why district heating companies have a goal in mind: they will either become more and more technology-savvy companies by developing relevant digital solutions, or they will disappear from the competition in the long run. It is nice to know that the Estonian company Utilitas is at the forefront of innovation in this field globally.

GOOD TO KNOW

• Utilitas is an Estonian energy group whose main activities are the production of heat and electricity and the provision of district heating services.
• Utilitas supplies nearly 5,000 buildings with district heating in Tallinn, Maardu, Keila, Rapla, Haapsalu, Kärdla, Jõgeva, and Valga.
• The company operates 27 boiler houses and three cogeneration plants.
• Total number of employees is 249.
• In 2019, 40 million euros were invested in the technological modernization of energy production and distribution.
• In 2019, the company’s turnover was 134.6 million and the net profit was 21.9 million euros.

The article was published in the autumn issue of the magazine Äri-IT 2020 https://www.itera.ee/wp/wp-content/uploads/2020/09/Ari-IT-2020_2.pdf.