Best practise support schemes

Document 3.3

 

Best practise support schemes

 

 

According to the Ecoheat4EU project contract, this D3.3 report shall contain:

 

c) Based on the understanding achieved in Tasks 3.1a and 3.2b, examples of best practice support schemes for district heating and district cooling are selected per country category and per sector dimension (e.g. generation, distribution, demand). This task relates to information gathered in WP 2 (a) and (d). 12 examples of best practice support schemes are selected and described (D3.3)

 

 

 

In order to fully interpret the national inputs from the Ecoheat4EU enquiries, the following sections have been chosen in this report:

 

Introduction. 2

Support schemes by sector dimension. 3

Selection procedure. 4

12 examples of best practise support schemes. 8

Conclusions. 9

 

 

 

Introduction

This report contains an analysis of the Ecoheat4EU enquiries concerning best practise support measures related to district heating and cooling in 14 European countries. The basic enquiries were performed between October 2009 and March 2010. Each national answer can be found at the Ecoheat4EU website. Short summaries of the national inputs are available within Ecoheat4EU document D3.1. The national inputs have later been refined based on project meeting discussions. This report contains all changes and additions until November 30, 2010.

 

With respect to market situation, the 14 countries were divided into 4 country groups according to:

 

Country group

Countries

Consolidation

Denmark, Finland, and Sweden

Refurbishment

Croatia, The Czech Republic, Lithuania, and Romania

Expansion

France, Germany, Italy, and Norway

New development

Ireland, Spain, and United Kingdom

 

In Consolidation countries, district heating systems have reached a very mature, almost saturated market share of 50-60%. The market share denotes the share of buildings heated by district heat. Some countries include only residential buildings in the market share, while other countries also include the service sector buildings.

 

In Refurbishment countries, district heat has also high market shares (10-50%), but the systems need some refurbishment in order to increase customer confidence, energy efficiency, and profitability. The common denominator for the district heating systems in these 4 countries is that they were introduced and developed within planned economies.

 

In Expansion countries, district heating systems appear in some cities, but the total market share is rather low (3-15%). By expanding existing systems and establishing systems in other cities, the market shares can grow significantly.

 

In New development countries, very few ordinary district heating systems exist, giving typical market shares below 1%. However, genuine interest for district heating and cooling is growing in these countries.

 

Within each country group, different demands appear for national legislation and support measures concerning district heating and cooling. The intention is to reflect these non-uniform demands in this summary report.

 

Support schemes by sector dimension

Advantage and disadvantages by sector dimension (Planning, Generation, Distribution, Demand, and Organisation) with various support measures was one part of the country enquiries. The country answers are summarised in Table 1 for support subgroups and in Table 2 for support main groups. The advantages are more pronounced than the disadvantages. But the answers have not been so selective with respect to sector dimensions. In many country answers, all 5 sector dimensions have been chosen as having a positive influence from the measure reported. Hence, we can not correlate various support measures to the five different sector dimensions with respect to the selection of best practise support measures.

 

Table 1. Support measures within subgroups by positive or negative influence on five different sector dimensions.

 

Table 2. Support measures within main groups by positive or negative influence on five different sector dimensions.

 

Selection procedure

As described in document D3.2, it was impossible to recommend or select effective or best practise support measures from the analysis performed in document D3.2. This situation appears since the development of district heating during several decades has been the result from various national attitudes towards financing of local infrastructure, various market conditions (as the high oil prices during the 1970’s and early 1980’s), and various historical support measures (Rüdig 1986). No correlation between the current district heat market shares and the current support measures could be found.

 

For the selection of best practise support measures, a voting procedure was performed in May 2010 among the various country partners. From the full list of support measures identified from the summary of the country reports, each country had to rank the 10 support measures, which were preferred in each country. The voting procedure was organised with ranking from 1 to 10 with 1 being the measure rated the best. During the voting analysis, the ranking values were changed to reversed order, with 10 being the measure rated the best, in order to get an additive scoring system. The final result from the voting procedure is presented in Table 3. All identified support measures received votes, except for two measures: The emission trading system and operation support for renewables (as green certificates). The overall impression is that the voting outcome gave high prioritisation for planning measures together with investment grants as financial support.

 

The highest voting score was given to Planning – Heat planning and/or zoning. This support measures was in the top 10 list in all countries, except for Sweden. This top choice emphasise the prioritisation of reducing uncertainties and the corresponding financial risk for extending distribution networks. The financial risk is lowered both from the harmonised connection and the reduced connecting pipe construction costs, when buildings are connected at their initial construction.

 

The highest score within the country partners for the heat planning measure reveals a potential conflict between freedom of choice for heat consumers and the community goals for reaching higher energy efficiency by exploiting urban synergies by district heating systems.

 

The second best practise measure elected was Support – Investment grant, DH distribution. This verifies also that the district heating community would like to see support measures reducing the financial risk for extending distribution networks.

 

Table 3. Voting scores by country and support measure.

 

Table 4. Voting scores by country group and support measure.

 

The third most popular measure became Planning – National energy policy. This choice underlines the necessity of identifying district heating and cooling as very important strategic tool in order to get higher energy efficiency within the energy system. It is difficult to introduce and maintain support measures for district heating and cooling, if district heating and cooling is not an acknowledged vital part of the national energy policy.

 

The fourth highest voting score was given to Support – Operation support for CHP. This choice prioritises the aim of supporting the essential part creating the higher energy efficiency be recycling the inevitable heat losses from thermal generation of electricity. But this support measure lacks a direct link with gathering heat demands in order to make CHP possible.

 

The fifth ranked support measure became Support – Investment grant, DH connection. This is the third verification in the voting outcome that it is important to reduce the financial risk when expanding distribution networks. But this support measure emphasises to facilitate the connection of the customer building to the distribution network. Hence, this financial support is more directed to the final customer than to the heat provider and the heat distributor.

 

The voting scores by country group and support measure are reported in Table 4, while the corresponding top 5 ranking for each country group is presented in Table 5. The uniform pattern was that all country groups prioritised heat planning measures. National energy policies were prioritised in three country groups, but not among Expansion countries.

 

The top ranking was not completely uniform between the country groups, since some specific preferences can be identified among the country groups. The Consolidation countries (Denmark, Finland, and Sweden) had a unique preference for a general carbon tax, reflecting that they are seeking for a more long term general market solution than specific financial support. The Refurbishment countries (Croatia, Czech Republic, Lithuania, and Romania) were unique by preferring price regulation, reflecting the focus on heat price levels and the ability to pay situation in these countries. The Expansion countries (France, Germany, Italy, and Norway) and the New development countries (Ireland, Spain, and United Kingdom) have a common view about preferring investments grants for distribution and connection, since they see expansion of district heating and cooling as a high priority.

 

Reference:

Rüdig W, Energy conservation and electricity utilities: A comparative analysis of organizational obstacles to CHP/DH. Energy Policy 14(1986):2, 104-116.

 

 

Table 5. Top 5 support measures for all together and each country group: Consolidation: Denmark, Finland, and Sweden; Refurbishment: Croatia, Czech Republic, Lithuania, and Romania;  Expansion: France, Germany, Italy, and Norway; New Development: Ireland, Spain, and United Kingdom.

 

 

 

 

12 examples of best practise support schemes

The final ranking list of the 12 prioritised best practise support measures are presented in Table 6. This is the total list for all 14 countries. You should be aware of the different preferences in the four country groups analysed and reported in the preceding section.

 

Table 6. Final ranking list of the 12 best practise support measures elected by the 14 country partners in this project.

Rank

Top 12 support measures

Short description of the support measure

Sector dimension

1

Planning –

Heat planning and/or zoning

Strategic energy planning, probably at municipality level. May include encouraging or even enforcing particular energy solutions (zoning).

Currently applied in Germany, Denmark, Spain, France, Italy, Lithuania, Norway, and United Kingdom.

 

Distribution

2

Support –

Investment grant, DH distribution

Financial support for district heating pipes through provision of grant, probably from government, but other sources also possible.

Currently applied in Germany, Spain, France, Italy, Lithuania, Norway, Romania, and the United Kingdom.

 

Distribution

3

Planning –

National energy policy

The framework, within which relevant legislation, possibly including measures on this list, may be framed.

Currently applied in the Czech Republic, Germany, Denmark, Croatia, Lithuania, and Norway.

 

Planning

4

Support –

Operation support, CHP including feed-in tariff

Supporting CHP through regulatory means, one prominent example being by means of a Feed In Tariff or a CHP bonus.

Currently applied in the Czech Republic, France, Italy, Lithuania, and Romania.

 

Generation

5

Support –

Investment grant, DH connection

Financial support for connecting customers to existing mains network through provision of grant, probably from government, but other sources also possible.

Currently applied in Germany, France, Denmark, Finland, and Sweden.

 

Demand

6

Burden –

Carbon tax

Implementing a tax penalty on fossil fuels proportional to its fossil carbon emissions. Applicable to all energy systems (energy efficient approaches like district heating would prosper).

Currently applied in Denmark, Norway, and Sweden.

 

Generation

7

Support –

Favourable loans

Providing low interest loans to finance the capital cost of establishing, extending or refurbishing district heating.

Currently applied in Germany and Croatia.

 

All

 

Rank

Top 12 support measures

Short description of the support measure

Sector dimension

8

Support –

Investment grant, CHP

Financial support for CHP through provision of grant, probably from government, but other sources also possible.

Currently applied in Germany and Ireland.

 

Generation

9

Support –

Tax deduction, DH

Implementing a tax benefit for district heating schemes.

Currently applied in Finland, France, Italy, Lithuania, and Norway.

 

Distribution

10

Planning –

Building regulations

Using existing regulatory framework to encourage deployment, and in to ensure unnecessary barriers are removed.

Currently applied in Ireland, France, Norway, and United Kingdom.

 

Demand

11

Support –

Investment grant, renewables

Financial support for renewables through provision of grant, probably from government, but other sources also possible.

Currently applied in Germany, France, Croatia, Ireland, Norway, and Sweden.

 

Generation

12

Planning –

Waste planning & landfill bans

Promoting in a strategic way disposal of waste, so that the energy can be recovered and put to use in district heating schemes.

Currently applied in Denmark and Norway.

 

Generation

Remark: Country applications in italics have added by the country partners in the final project stage and do not appear earlier in the 3.1 and 3.2 reports. These additions are examples of the project learning process.

 

Conclusions

The three main conclusions from this summary report concerning best practise support schemes are: