Risk mitigation for industrial excess heat recovery projects

Panel: 5. Business models, finance and investment

Authors:
Elsa Chony – Industry Department, ADEME, France
Cyrielle Borde, ADEME - Industry Department, France

Abstract

Excess Heat Recovery represents a huge potential of reducing energy consumption as well as boosting competitiveness of the EU Industry. Despite a significant support from EU Policy maker in this field, number of barriers still exist. At least two main reasons characterize the specificity of these projects:

– The multiplicity of stakeholders (industry that produces the excess heat, industry that consumes the energy, financing organization, local authority)

– Energy production is a complementary activity from the industry viewpoint.

These two reasons lead to a risk-staking that is difficult to allocate to the different stakeholders. Some important risks are:

• Technical (Design failure, uncertainty about long-term availability of the excess heat, etc.)

• Organizational (Lack of agreement between stakeholders, lack of skills, etc.)

• Financial/Economical (Failure to achieve profitability : fluctuation in energy market prices ; fluctuation in excess heat supply or consumption ; failure to find appropriate business models, etc.)

• Legal (Lack of policy instrument ; Implementation constraints; etc)

• Operational (Failure to achieve targeted performance, etc.)

In order to tackle those barriers, especially from the financing institution viewpoint, ADEME conducted a study in order to obtain a comprehensive overview of standard risks that are encountered throughout the lifecycle of a heat recovery project. The objective was to define a list of standard risks, possible causes, existing mitigation measures and to propose new mitigation measures.

10 real and very different projects – success and failures – has been studied from this perspective. A tool is now operational and applied at project level as well as territorial level. The final aim is to improve projects bankability for investors by mitigating risks. The sudy/tool and its very first utilization at project level (by investor) as well as territorial level (Marseille/Fos Port) will be discussed.

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