Procurement of a function rather than a product facilitates more innovative solutions than with traditional tenders. Previously, Hedensted Municipality cooled its servers using regular ventilation, but after purchasing Cronborgs RECOOL technology, the Municipality can reuse the heat generated by the servers. DKK 73,000 year in cooling and heating expenses, and the environment is annually relieved of 28 tonnes of CO2.
Cronborg has developed a new product based on existing technologies. Their heat pump system, RECOOL, can collect excess heat from e.g. a server and reuse it for space heating and domestic hot water through the existing heating system of a building. The system is both environmentally friendly and economically viable.
'The customer’s heating costs are reduced when the excess heat is recycled and less CO2 is emitted from the use of other sources of heat and refrigeration. Moreover, the heat pump solution is based on natural refrigerants that do not pollute the environment,' says Hanne Kronborg, co-founder and director of Cronborg.
She explains that RECOOL takes the heat into the heating system, regardless of the temperature in the system, and how the heat is generated. Thus, RECOOL offers great flexibility in both installation and use.
Green Public Procurement is very important for Cronborg
When Cronborg promotes their solution to public procurers, the economic and environmental aspects are of great importance. 'Green procurement is of great importance to us. It creates demand for our products. We match the municipal energy policies, and we solve a task in a resource-efficient manner. The public institutions are willing to invest in solutions that save CO2 and turn expenses into an income', says Hanne Kronborg.
So far, 10 municipalities have invested in solutions from Cronborg, of which seven are 'Climate Municipalities'.
Hedensted Municipality wished to benefit their economy and the climate
Hedensted Municipality was aware that it was a waste of resources to send excess heat from the City Hall servers through the ventilation system. This made it an easier task for Cronborg to assure the municipality of the profitable and environmental advantages of buying and installing a RECOOL solution.
'An interesting project was presented to us. There was a prospect of a financial saving and an opportunity to improve the municipality’s climate account. It was important that we could save CO2,' says engineer Niels Abildsten from Department of Construction in Hedensted Municipality.
The specific system in Hedensted has an annual operational cost of DKK 32,000 in electricity consumption. In turn, the municipality saves approximately DKK 105.000 on the heating bill, creating an annual operating profit of around DKK 73,000. With a purchasing and assembly price of DKK 400,000, the system has a payback period of approximately 5.5 years.
Roughly 700 kWh is generated from the servers every day. This corresponds to the daily electricity consumption of 24 households, and it provides the City Hall with 50 percent of its heating need during the winter months. When the outdoor temperature increases, the system provides up to 75 percent of the City Hall’s heating.
Overall, Hedensted Municipality saves approximately 10,000 liters of oil a year. This corresponds to an annual saving of 28 tonnes of CO2. The income from heat recycling is greater than the cost of the total electricity consumption of the system.
Procurement based on function rather than product specifications facilitates for more innovative solutions
Cronborg is offering a new, innovative solution to an existing problem; a solution that can save money for the customers and reduce both CO2 emissions and resource consumption. Nonetheless, the company cannot comply with the usual tender criteria.
'Typically, the procurement officers describe the traditional cooling systems in the tender documents, and then RECOOL is not eligible', explains Hanne Cronborg, adding: 'As long as traditional procedures prevail where the system specifications must match the tender descriptions of free cooling, we cannot be considered. Cronborg would have better chances of expanding their market if municipalities and the State based procurement specifications on the function, performance and result rather than specific product details. It would provide the suppliers the possibility of contributing with new and innovative solutions based on knowledge of the market.'
Another barrier for sale to the public is that RECOOL is not included in the ESCO solutions; i.e. solutions where the owner of the building collaborates with a private energy provider, who plans and implements energy optimizing renovations in the buildings. The investments are financed through the energy savings achieved. The ESCO consultants are not familiar with RECOOL and therefore this solution is not included in their recommendations.
'The municipalities would experience greater savings if the RECOOL solution was offered through the ESCO tenders,' says Hanne Kronborg. 'We have been contacting the ESCO providers to let them know that some municipalities would like to have the RECOOL solution included in the ESCO collaboration catalogue. The municipalities can demand that a RECOOL-based solution is included in the catalogue, but for this to happen they need to know about the solution. It takes a lot of resources for us to inform every single procurer,' says Hanne Kronborg.
Cronborg has improved the working environment through less noise
Through the purchase of RECOOL, Hedensted Municipality did not only reduce the climate impact, also the working environment improved. The former cooling system was placed outside the office windows and was a disturbance to the employees. RECOOL has 0 decibel in noise, which has improved the wellbeing of the employees, who are relieved of the constant humming of the air conditioner.
Both Cronborg and subcontractors are expanding
Cronborg is doubling their turnover every year. But Cronborg is not the only one who experiences success; also its subcontractors are expanding. In 2013-2014 alone Cronborg and its subcontractors expect to create a total of 41 new jobs. Green procurement of heating systems from both public and private clients is included in this calculation.
'The sale to Hedensted Municipality helps ensure the positive development,' says Hanne Kronborg, and adds 'we find it easier to get through to new customers when we say that we have sold a system to Hedensted. It makes a difference.'
This case study originally appeared in a publication by the Danish Ministry of the Environment: 'Business cases for green procurement'