An essential strategy
As sustainable energy moves up the political agenda, low carbon solutions for heating and cooling are coming to the fore. Every year, almost 50% of the total energy consumed in Europe is used for the generation of heat for domestic or industrial purposes. There is an emerging consensus on what could be a big part of the solution here, with the International Energy Agency recently citing co-generation and district heating as ‘an essential part of strategies for greenhouse gas emissions mitigation and energy security.’ Analysis of the European energy system’s resilience in the face of disruptions in Russian gas imports presented in the European Commission’s Stress Test Communication pointed to fuel switching through district heating and cogeneration as a key measure for ensuring long-term energy security – and reducing dependency on Russian gas supplies.
Co‐generation and efficient district heating and cooling (DHC) can support an integrated energy system by providing a flexible link between electricity and thermal energy while delivering enhanced energy efficiency. These technologies are mature, yet progress in deployment has been frustratingly slow. Global electricity generation from co‐generation was reduced from 14% in 1990 to around 10% in 2000, and it has remained relatively stagnant since then.
In Europe, market development has been typically patchwork. Most of the space and water heating (88%) in the EU is performed by individual boilers for self-consumption while the overall share of district heating is 12%. This average masks radically different markets: the Nordic countries, where district heating is well-established (for example, 98 % of Copenhagen’s heating needs are met through heat networks); Germany and Austria, where the market is expanding fast; UK, Netherlands and Belgium where market penetration is much lower but showing growth, Mediterranean countries with less than 2 % market share; and the Eastern European countries where large scale heat networks are already in place – although in need of modernization. Here there are legacy issues to overcome, as poor service during the Soviet era has left reputational damage in its wake.
Policy and planning
This year, there’s a policy push from Brussels via the Energy Efficiency Directive (Article 14). By the end of 2015, all member states are required for the first time to submit to the European Commission a comprehensive assessment of the potential for the application of high efficiency CHP and efficient district heating and cooling.
Funded by the Intelligent Energy Europe programme, the Stratego project is supporting the development of national heating and cooling roadmaps (required by the Energy Efficiency Directive) by compiling a pan-European heat map – the European Thermal Atlas. The heat atlas will comprise an EU28 map of 1km2 grid resolution, which for each cell (1km2) will contain the modeled heat and cooling demand, the local density of both demands, the basic geometry of DHC supply, the available waste heat resources and the potential for renewable energy sources (solar thermal, geothermal, relative accessibility of biomass).
According to Nicolas Février, who is coordinating the project,
‘City planners have a pivotal role in developing eco-districts where the upgrading of building stock goes hand in hand with the establishment, expansion or modernisation of district heating and cooling networks. This Atlas will allow you to rapidly check the thermal resources available in your region as well as the thermal demand.’
Some cities and regions are already moving ahead of the mandatory national heating and cooling plans. By 2025 London aims to supply 25% of the city’s energy through decentralised energy sources, like local heat networks. The Decentralised Energy for London programme aims at facilitating investment of £95 million of projects and has produced the London Heat Map, an interactive tool that allows users to identify opportunities for decentralised energy projects. (Also worth a peek is the Scotland Heat Map.)
Along with planning and legislation, a key challenge is in getting whole neighbourhoods to surrender individual boilers and sign up for a distributed heating system.
‘This is not primarily a technological challenge. The real challenge is to organize collectively and getting people to understand the benefits of a collective system,’
says Morten Hofmeister from Danish company PlanEnergi, who are involved in SmartReflex, an Intelligent Energy Europe-funded project working in six regions across Spain, Germany, Ireland and Italy to promote district heating through supporting legislation and planning.
Open for business
Moving into implementation, another group of projects are using European funding to leverage further public and private investment into large scale district heating.
In the Netherlands, Etriplus is the energy development company of a consortium of DCGV, Alliander, Greenchoice, Arcadis and Ekwadraat. The company aims at providing low cost and secure energy supply for the agro-industrial area of Greenport Venlo. Key stakeholders are area developers Californië, Freshpark and Siberië; the greenhouse owners, the agro-logistic companies, Etriplus, the local municipalities and the province of Limburg. Three projects are planned: heating network based on a geothermal source, a gas and heating network based on CHP and HTU (High temperature storage), and cooling network and solar power. Aiming for a total investment of EUR 54 million to realize these plans, EUR 1 793 582 has already been provided by the Intelligent Energy Europe MLEI- PDA facility (now can be found under Horizon 2020 here).
Peter Elbers of DCGV explains the necessary bridging role of public funding:
‘The possible financial gap cannot be filled by market parties because of the risks. Public parties like DCGV, the province of Limburg, the national government or the European Union play a vital role.
‘The other lesson we have learned that the development of these projects often lead to a chicken-egg discussions between the investors and the energy consumers. The investors need a signed contract that gives assurance that the energy will be consumed at an agreed rate and for an agreed period of time, in order to receive financial close. The energy consumers on the other hand want assurance in advance about the specifications, volumes and price continuity prior to signing a contract. A close cooperation and communication between investors and consumers is essential to solve this issue.’
In Hungary, another beneficiary of MLEI funding (EUR 285 000) City of Kecskemét is hoping to transform its natural-gas fired district heating network into a geothermal system – and aiming to attract investment of over EUR 30 million for the project. In this area, the geothermal gradient (the temperature increase per meter of depth) is twice the global average, meaning that a 1000 meter borehole reaches earth with a temperature of over 50°C. A number of Hungarian cities operate district heating networks that can be powered by local clean geothermal energy. ‘It is a big market, and there are big opportunities’, says Pál Boza who is coordinating the project.
The CELSIUS project, funded under the EU Smart Cities & Communities/Seventh Framework research programme (to the tune of EUR 14 million, with an additional EUR 12 million from the project partners) is working in London, Rotterdam, Genoa, Gothenburg and Cologne on twelve new demonstrator projects. Market conditions among project partners vary hugely from the mature market in Gothenburg of more than 90 % penetration, to around 2 % market share in Genoa.
Just last month in Gothenburg, the project achieved a world-first when a district heating connection to the ferry Stena Danica was inaugurated. Previously the Stena Danica was supplied with hot water from oil burning when she was moored. Now oil burning is replaced with hot water from the Gothenburg district heating system.
On prospects for the European market, Jonas Cognell, program manager at the Celsius project, says:
‘We can see that there is some fresh movement, and new markets opening up. I think 2015 is the beginning of a breakthrough – but to see investments and decisions take place, we’re probably talking about a 3-5 year timeframe.’
Finance for projects
The Intelligent Energy Europe funding programme has now been subsumed into Horizon 2020, where opportunities for financing sustainable heating and cooling projects include:
- EE13: Technology for district heating and cooling
- EE14: Removing market barriers to the uptake of efficient heating and cooling solutions.
- Market uptake of existing and emerging renewable heating and cooling technologies, LCE-4
- Enhancing the capacity of public authorities to plan and implement sustainable energy policies including activities on heating and cooling planning EE7
- Project development assistance for innovative bankable sustainable energy investment schemes and projects including district energy infrastructure investments are supported in H2020, EE-20
- Support for the demonstration of renewable heating and cooling technologies is provided in LCE-3
- Smart Cities and Communities , SCC-1
- R&D for the utilisation of heat recovery in large industrial systems EE18
Find out more about the activities being supported under the Intelligent Energy Europe programme 2010-2013 in the area of heating and cooling here.
And finally, a high level conference focusing on the role of heating and cooling in the European energy transition will take place on 26-27 February 2015 in Brussels. The hot ticket here is the workshop on financing, which will include the launch of the next Energy Efficiency Financial Institutions Group report.
According to Antonio Aguilo Rullan, project advisor on energy efficiency programmes at European Commission agency EASME,
‘There will be significant focus on this topic in 2015. People are starting to realise the need for sustainable heating and cooling solutions in the energy transition.’