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February 13, 2015

District energy potential for a low carbon economy

The EU offers support for changing to sustainable heating and cooling systems

As sustainable energy moves up the political agenda, low carbon solutions for heating and cooling (almost 50 percent of the total energy consumed in Europe) are increasingly important.

Analyzing European energy security in response to potential disruption in gas supplies, last autumn 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.

The benefits of district heating are already well-known in the Czech Republic where 41 percent of all households are supplied with district heating. On average the district heating share in urban areas reached 56.8 percent and in rural areas 9.7 percent.

Ownership of the district heating sector is largely concentrated in the 10 biggest companies, which supply heat to over 1.125 million households. International companies (Dalkia, MVV) are active on the market but a large part of the sector is owned by municipalities and (in many cases) leased to private companies.

Talkin’ ‘bout cogeneration

In a nutshell, co-generation (also known as combined heat and power or CHP) technologies allow for the simultaneous generation of heat and electricity, increasing the overall energy efficiency of the conversion process by partially recovering heat produced during electricity generation.

The heat can be used for a variety of purposes including industrial processes as well as to supply the needs of buildings. To distribute the recovered heat from the co-generation site, a district heating network (high-efficiency, insulated piping system circulating water) brings the heat to residential and commercial buildings for applications such as space heating and water heating. Co-generation and district heating go hand-in-hand – in 2011, some 79 percent of all district heating in OECD countries was produced by co‐generation plants.

district heating in Czech Republic

Currently, around 70 percent of the heat distributed in district heating networks in Czech Republic is produced by CHP. Solid fossil fuels (brown and black coal) are the main fuels used for electricity production from cogeneration with more than 75 percent share of all fuel used by CHP plants.

Natural gas has a 7.5 percent share, and renewable energy sources (mainly biogas and wood) are at almost 8 percent share.

EU subsidies along with national support schemes for renewables have been important drivers here – however, these grants are being phased out, and are set to end completely in 2017.

Energy expert David Borovský who is participating in the SDHplus project explains more:

“There are two main groups of systems operators here in the Czech Republic. The first and most important part of the market is represented by operators of systems with large scale CHP coal based plants. This group is working with legislative requirements (to reduce CO2 emissions) upcoming in 2016,” he said.

‘The second group consists of stakeholders who operate small or mid-scale systems with natural gas boilers or natural gas CHP. This group is deeply focused on utilization of CHP units in system because natural gas CHP is significantly supported by national subsidy schemes and legislation, including the National Energy Plan.’

‘Clean air and energy independence’

Deep de-carbonisation of the sector however requires a long term switch to renewables.

Of these renewable energy source options, at present there is most interest in biomass and biogas, according to Borovský.

Veolia Energie Mariánské Lázně, under a lease agreement with the municipality, operates the district heating network serving 40 percent in the town of Mariánské Lázně. Originally powered by heavy fuel oil and then replaced by natural gas, the system is now powered by biomass (wood chips). Commissioned in December 2013, this has resulted in CO2 savings of 17,000 tons. Customers also benefited from two price reductions in 2014.

“Energy management is a strategic axis of our local development,” says Litoměřice Mayor Ladislav Chlupáč. The city council has focused on sustainable energy since 2012 resulting in financial savings of about 7.5 million Kč (€270,000).

Following analysis of local resources, the city council decided to build a geothermal CHP plant which will produce 18.4 GWh of energy per year and will feed a district heating network. Litoměřice’s vision of its future: “clean air and energy independence.”

The Regional Energy Agency of the Moravian-Silesian region is taking part in the Intelligent Energy-Europe funded project STRATEGO, helping cities and regions to map local heating and cooling demand and supply and identify priorities for intervention.

Future plans for the Moravian-Silesian region include the ambition to power heat networks using recovered heat from sewage. According to project engineer Pavel Koláček, “This is a pioneering project for our region.”

Funding opportunities

Along with growing the share of CHP and renewables, many Czech heat networks require improvement. At national level, investment aid from the European Regional Development Fund amounting to 4 billion Kč is already earmarked for the rehabilitation of existing networks. However these funds are not yet disbursed, as current administrative rules are not geared towards the distinctive pattern of ownership and operation of heat networks (split between municipalities and private companies).

At EU level, it is encouraged to find synergies between funding instruments – meaning that EU programmes can be combined to finance different phases of the same project. Project promoters are encouraged to look at synergies between European Structural and Investment funds, Horizon 2020 and programmes such as INTERREG. Recently the popular Covenant of Mayors initiative produced a quick reference guide for sustainable energy project financing available from EU funds.

Under the European Union’s Research & Innovation Programme Horizon 2020, 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 technologiesLCE-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

“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,” said Antonio Aguilo Rullan, project advisor on energy efficiency programmes at European Commission agency EASME who are administering the energy efficiency (EE) topics in Horizon2020.

    • 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, Belgium.

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