DIGITALISATION OF THE DANISH DISTRICT HEATING SECTOR
CASE CATALOGUE 2023
“THANKS TO BIOMASSAUCTIONS, WE CAN EXPOSE OUR PROCUREMENT TO MARKET MECHANISMS WHILE ALSO ENSURING EQUAL TREATMENT AND TRANSPARENCY FOR ALL OUR STAKE HOLDERS. THIS HELPS US ENSURE THAT ALL QUALIFIED SUP PLIERS CAN SUBMIT A BID ON EQUAL TERMS. THIS ALSO HELPS US ATTAIN THE CORRECT MARKET PRICE IN TERMS OF SUPPLY AND DEMAND.”
ERIK WOLF, CEO, SØNDERBORG VARME
Solution Changing procurement practices for biomass takes some getting used to. Sønderborg Varme had to make some stra- tegic decisions on how best to utilise the platform, including the amount of biomass they would put up for tender, auction deadlines, and delivery times of the contracts. The company is still finalising some of these decisions. On the other hand, actual implementation of the platform was quite simple according to Erik Wolff. Another important element for him is that the company can define the basis for the contract that suppliers bid on: “It means that suppliers are familiar with our quality require- ments and the conditions of entering into a contract with us. This is a huge advantage, not least for the suppliers,” he says and adds: “Using BiomassAuctions for procurement is effective, simple and transparent for us as the buyer and for interested suppliers. There are also significant time savings for all par- ties compared with conventional contract negotiations. And we reach a broader group of potential suppliers.” Results There are several advantages of digitalisation in negoti- ations. First of all, It is no longer necessary to attend long negotiation sessions where the parties argue about price.
These sessions can be a negative experience for both buy- ers and sellers, especially if there are different perceptions of price. All that can be avoided by trading digitally. “It helps standardise the process of entering into a contract. What’s more, digitalisation of trading generates value for Sønderborg Varme and the consumer, as it ensures the cor- rect market price and the district heating company avoids paying too much or too little for biomass,” says Erik Wolff. “Furthermore, we have the documentation to prove it. We’re open and transparent about hitting the mark pricewise at the time of purchase. Consumers can see that everything is being done openly and professionally. That’s how it should be.” The communication strategy stays the same after a contract has been entered, he explains: “We send a letter welcoming suppliers to the heating sea- son. Afterwards, we give them a call to agree on the time and manner of delivery, and check how it fits with their schedule.” Sønderborg Varme has used BiomassAuctions to procure sustainable wood chips for several seasons. The company has gone from purchasing 5,000 tonnes in the first year to an expected 20,000-30,000 tonnes per year going forward.
Sønderborg Varme Digitalised Biomass Procurement CASE 17
Challenge It can be hard to determine prices when establishing a contract on the supply of biomass for district heating. It is also hard to be sure all potential suppliers can bid for the contract. These issues have been under careful consideration for Sønderborg Varme, a district heating company from the southern part of Jutland, which primarily uses biomass and waste to produce district heating. The district heating company has therefore decided to test the market by pro-
curing some of its biomass via the online trading platform: BiomassAuctions. Erik Wolff, CEO of Sønderborg Varme, ex- plains that the fundamental idea behind the auction platform is really good: “We chose to use the platform because we thought it’d be a good way of making the market more transparent. Imagine if everyone used a platform like BiomassAuctions, we’d actually achieve a free market. And that’s what we’re looking for in reality.”
INFORMATION
Meters Address Email Phone
Company Solution Providers Employees Heat
1.500 Nørrekobbel 54, 6400 Sønderborg, Denmark post@sfjv.dk +45 73 43 50 00
Sønderborg Varme BiomassAuctions 52 306 GWh
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