Towards2030-dialogue - Renewable Based District Heating in Europe

According to the NREAPs of the EU member states, renewable based heat generation will play significant role in achieving the 2020 RES targets, and they will continue to play a crucial role in the period up to 2030 as well. Renewable district heating is a major contributor in this process, but further uptake of this technology needs careful design of support and regulatory schemes.

In this study an in-depth assessment is conducted out on selected European countries with the aim to identify those policy instruments that could effectively support the development of RES district heating (DH) deploy- ment.

This is a complex task, as RES DH is ‘embedded’ in the national or regional DH systems. This ‘embeddedness’ means that the penetration and development of RES DH systems are very much dependent on the general market structure of the heat market and the regulatory framework of the DH systems, in general. Thus, even similar policy instruments aiming to increase RES based DH generation might have very uneven effects depend- ing on the heat market structure. This problem is further exacerbated by the fact that district heating market structures are typically heterogeneous, not only varying amongst member states but also within a country due to the divergent regional/municipal characteristics of the DH systems.

In addition, the electricity market structures also have impacts on the RES DH development, through the link- ages with the CHP generation. CHP is one of the most efficient ways to produce useful energy, but as its pro- duction level is determined in two markets (electricity and heat), and thus, its regulation and promotion as a source of heating entails additional challenges.

Increasing the share of RES-based district heating is a multifaceted task for policymakers, as it can be achieved through various paths with the use of various technologies. In addition, the heat demand characteristics can differ to a great extent (volume and concentration of the heat demand), as well as, the cost structures of the various fuels used in satisfying the heat demand.

The present EU and national energy policies have multiple targets towards district heating. The EU level policy aims to increase DH potential with more efficient CHP production and utilization of industrial waste heat or renewables (article 24 of Directive 2012/27 on energy efficiency, EED), if they are efficient and in a cost/benefit framework they will have a positive balance. The EED directive requires MSs to carry out a cost/benefit as- sessment (CBA) by the end of 2015 to assess the potential of efficient DH and take the necessary measures to support their deployment. It also requires that during the process of permitting new electricity generation installations, or the ones carrying out major refurbishment, have to go through a CBA assessing the potential to convert it to a cogeneration plant. There is no specific provision in the Energy Efficiency Directive which would directly increase the share of RES in DH systems and the use of this option is driven by the provisions of the national energy policies and legislations.