Sustainable heat production a top priority

Promoting the sustainable and efficient use of energy has always figured among the top priorities for NIB. Investments in the district heating sector with NIB financing, exceeding EUR 1 billion, have been implemented in the Nordic and Baltic region as well as other countries in recent years.

As an international financial institution with an explicit competitiveness and environmental mandate, NIB sees district heating as an area in which the Bank can make a substantial additionality. NIB’s member countries have developed world-leading science-based techniques and knowledge in district heating and district cooling. NIB’s role is to add value to Nordic expertise by providing long-term loans for complex investment projects.

NIB has financed a number of projects that directly or indirectly promote the efficient use of energy, particularly combined heat and power plants based on biomass or waste using technologies that allow increasing the energy output beyond 90% of fuel capacity.

Long-term loans have been granted to sophisticated combined heat and power plants that use a variety of fuel types. The latter enables the operator to offset fluctuations of the electricity price as more and more renewable sources become available for power generation.

“These are normally large-scale and costly efforts to serve the needs of local communities looking for opportunities to provide themselves with sustainable heating solutions, save energy, and use energy efficiently,” says Johan Ljungberg, Head of Mandate at the Nordic Investment Bank.

“NIB sees substantial merits in financing CHP plants using biofuel or waste or district heating systems re-using heat from an industrial plant. Promoting innovation and efficiency is ingrained in the Bank’s mandate.”

In the past ten years, the total amount of long-term loans NIB has granted for district heating projects has exceeded EUR 1 billion.

In recent years, Bio-fuelled combined heat and power plants with loans of 15 to 20-year maturity have been financed by the Bank and implemented by local energy utilities in Tranås, Vimmerby and Växjö in Sweden.

Finnish Porvoon Energia Oy has launched a wood chips-fired combined heat and power plant in south-eastern Finland. Taking the new plant into use has increased the share of renewables in the company’s heat production from 70% to 90% and helped reduce CO2 emissions. NIB has financed the project through a loan to SEB Leasing Oy earmarked for the acquisition of construction equipment.

NIB has also financed a green-field district heating plant run by Norwegian Akershus Energi in the Oslo area. The plant combines the incineration of wood chips, heat pumps and waste deposit gas with solar panels, taking into account the most varied access to wind, water and solar power, which further increase the sustainability of heat production.

A 19-year-maturity loan has been provided to Finnish Keravan Lämpövoima Oy for financing the construction of a new combined heat and power plant fuelled with wood chips, forest residue and peat in southern Finland. This investment is aimed at reducing the import of gas for the needs of the local district heating network.

Waste-to-energy CHP plants have been implemented in Norway by Eidsiva Energi AS and in Finland by Lahti Energia Oy. The state-of-the-art plants enabled local district heating networks to move away from fossil fuels and decrease its dependence on natural gas.

Another waste-to-energy combined heat and power plant has been implemented by Finnish Fortum Oyj in the Lithuanian city of Klaipeda. The power plant uses municipal and industrial waste as well as biomass as fuels to provide district heating to the residents and businesses in Klaipeda and electricity to the Lithuanian power grid. It is the first of its kind in the Baltic countries.

The Bank has also financed the expansion of district heating networks. A 13-kilometre pipeline between district heating networks has been built by Norwegian Hafslund in Oslo. The municipal heating utility Københavns Energi has built a four-kilometre tunnel hot steam and water to the district heating network in the centre of the Danish capital.

Loan facilities placed with intermediary banks in different growth regions of the world have helped to finance projects of Nordic and Baltic companies in different economic sectors, including renewable energy production and the upgrade of district heating.

“NIB assists companies from the Nordic and Baltic countries in promoting the export of their know-how and clean-tech solutions to fast-growth markets in Asia, Latin America and other regions,” says Søren Kjær Mortensen, Head of Lending Origination at NIB.

“The Bank expressed a keen interest in financing district heating projects in China and Russia. Our experts have been monitoring projects in this sector in past years.”

In Russia, NIB in cooperation with Swedish international aid agency Sida and two Russian commercial banks, Gazprombank and VTB, has launched a special programme, Russia Energy Efficiency Programme, to raise awareness about energy efficiency and help develop bankable projects in upgrading district heating.

“In order to alleviate climate change, it is critical to turn energy production away from oil, coal and gas towards renewable sources of energy such as solar, wind, water and biomass. By financing clean-tech district heating plants and networks based on renewable energy sources, NIB is helping to speed up this shift,” concludes Mr Mortensen.