Needs-Challenges-Barriers-Opportunities

Needs/challenges, barriers, opportunities

Country

Romania
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Name and reference of measure

Type of measure

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Existing or planned?






Urgent Needs/Challenges

There are many recognized urgent needs in the Romanian DH sector.

The main challenge is the delay in receiving payments of delivered heat and the lack of funds for rehabilitation and adaptation of heat sources. Oversized capacities are generating losses due to bad economics. Also, the regulated tariffs are not providing enough profit margin in order to facilitate investments in new technology and modernizaton of systems. From the point of equal treatment DH is carrying heavier tax burden compared to some other heating systems.

Generally speaking the most of the viable areas are connected to DH already. In future finding the relevant heat load will be even more challenging due to low energy buildings and tightening building codes. DH is professionally managed and controlled and it is also a carefree, safe and secure, easy and comfortable heating option for ageing population.

DH sector is often seen as lazy in putting effort into innovations, research and development. One possible reason for the lack of development is strong public ownership of the DH utilities.

The challenges are also on the long term development of municipal planning and in building up economically viable heat loads for already mature market and for conditions of less heat demand.

DH companies feel that the benefits of the DHC/CHP production are still not clearly understood by the stakeholders at large and the general public. Some feel that the benefits of DHC are solely connected with the use of biomass and other renewable sources. Others feel that the heat sources should be dealt as a separate issue from efficiency of the system.

The general feeling is that DH does not need specific legislation or other obligatory support measures. The legislative needs are actually in keeping all options open and the usage well founded. If any obligatory measure was to be introduced that should be aimed at mixing the individual gas boiler heating with DH dwellings. In practice that means that DH buildings should be kept clear from individual heating solutions using gas, for which emissions are not accounted as pollutants in residential areas.

DH is and should be cost effective system in order to survive the market competition without additional subsidizing.

Main Driving Forces

Some Romanians are considering DH as a public service, old fashioned, communist era antique but some do value DH as efficient and the environment, climate and customer friendly over all beneficial heating system for urban communities. DH is also considered cost effective, mainly in areas where heat production is done in coal fired power plants. The development of DH has gone hand in hand with the development of CHP and together they form an important player in the Romanian energy system in whole. The CHP power plants actually solves the un-balancing of the energetic system during the dry periods when hydro power plants are not able to produce in consumption peak periods.

DH and CHP are widely seen as the one of the best ways to increase the use of renewable and waste fuels. Finland is currently already the leading user of biomass in European Union. Romania is using primarily hydro as renewables. In 2020 the EU renewables target is set on 38 per cent. A large part of the renewables can be used in power plants supplying DH.

The domestic production of coal – lignite covered an important share of the DH and CHP electricity fuels which is very beneficial from the security of supply angle.

The environmental benefits include also the good air quality in city centres, which is sometimes forgotten as DH has been so widely in use for long time.

In order to utilize maximum local biomass and waste resources needs strong commitment to develop the cost efficiency of small scale DH and CHP technology (from few hundred kW up to 10-15 MWe).

other solutions such as heat pumps.

Main Barriers

General consensus is that there are no institutional barriers to hold back the development of DH.

Barriers are the low income of population, age of DH systems, tax regime not tailored to the specificities of DH sector, lack of possibility to deduct VAT associated to heat losses, un-differentiated gas price for big and small consumers, lack of funding under the existing legislation provisions, delay in directing the subsidies from the local councils to DH companies, the lack of provisions that prevents the usage of different heating solutions in condominiums and apartment buildings, the non-favorable regime on the power market for CHP producers, the old horizontal heat distribution system inside buildings which is un-appropriate for meters installation.

Main Opportunities

DH will remain strong in the Romania heating market in the foreseeable future. It is efficient, secure and indiscriminative heating system.

In future energy efficiency of buildings will be measured by primary energy use and there is also a possibility to include a CO2 emissions component to the calculations. DHC should be in strong position in comparison with many of the other heating systems especially in connection to CHP.

DHC and CHP also offer good possibilities to increase the efficient use of biomass.

The main risks in DH investment are considered to be in incoherent political decision making. Different level regulation from EU directives to national legislation and local planning decisions give mixed signals of

the need for investment. Utilities also underline that DH sector requires long term commitment in order to be functional. The system is easily spoiled if the profit margins are set on too high level.

Such future risks as the diminishing heat demand are somewhat controllable because of the pace of change. Adaptation to warmer climate needs gradual changes. The building stock is changing as well but the annual change is only about one percent annually.

Some municipalities have been forced to make fast decisions on how to replace DH production when a big industrial facility shuts down a production unit with integrated heat production. In small municipalities such big structural changes may cause also migration away from the area and the cost of infrastructure, heat and water for example, falls on fewer inhabitants while also making economic losses.

No major changes are expected for DH sector by 2020. Strong market position will remain at the same level provided that the support scheme will continue to function . Major share of the renewable increase will come from biomass and waste and that will support the use of DH as well. Gas, coal and petroleum products will still be an important part of the DHC fuel mix due to security of supply, logistics and technical reasons. The increase of biomass depends also a lot from the supply of fuels.