HOT|COOL NO. 2/2017 - "The Winter Package"

HOT|COOL NO. 2/2017 - "The Winter Package"

N0. 2 / 2017

INTERNATIONAL MAGAZINE ON DISTRICT HEATING AND COOLING

THE WINTER PACKAGE

DBDH - direct access to district heating and cooling technology

www.dbdh.dk

CONTENTS

4 5 6 7 8 10

THE COLUMN

THE BEAST IS IN MOTION

THE WINTER PACKAGE – A UNIQUE OPPORTUNITY FOR THE ENERGY SECTOR

WINTER PACKAGE OPENS THE DOOR TO DISTRICT HEATING IN EUROPE

CLEAN ENERGY FOR ALL

HEAT ROADMAP EUROPE: PUSHING THE WINTER PACKAGE TOWARDS AN INTEGRATED APPROACH

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2 SIMPLE ECONOMIC REFORMS COULD CREATE MASSIVE ENERGY CONSERVATION IN SMART ENERGY SYSTEMS

19 22 26 27 28 30

THE RIGHT PRE-INSULATED PIPE SYSTEM FOR LARGE-SCALE SOLAR DISTRICT HEATING NETWORKS

KEY SUCCESS FACTORS FOR DISTRICT HEATING AND COOLING FOR SIX CASES ACROSS EUROPE - LESSONS LEARNT FROM THE ONGOING PROGRESSHEAT PROJECT

NEW MEMBERS

NEW CHAIRMAN OF DBDH

MEMBER COMPANY PROFILE: GENTOFTE DISTRICT HEATING COMPANY

LIST OF MEMBERS

HOT|COOL is published four times a year by:

DBDH Stæhr Johansens Vej 38 DK-2000 Frederiksberg Phone +45 8893 9150

Total circulation: 5,000 copies in 50 countries

THE WINTER PACKAGE

[email protected] www.dbdh.dk

ISSN 0904 9681 Layout: DBDH/galla-form.dk

Editor-in-Chief: Lars Gullev, VEKS

Pre-press and printing: Kailow Graphic A/S

Coordinating Editor: Kathrine Windahl, DBDH

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By Lars Gullev, Managing Director VEKS and Editor of Hot Cool THE COLUMN

EU'S WINTER PACKAGE SHOWS THE WAY TO MORE RENEWABLE ENERGY

In Denmark, renewable energy accounts for more than half of the district heating production, and the increased adaptation of solar heat and biomass means that the share is increasing. One can hope that this success will be reflected in the EU Commission's initiatives, where a number of other countries are already today looking towards Denmark for inspiration on the best way to convert their renewables energy sector. In this version of Hot Cool, we learn how Udo Wichert (AGFW, Germany), Morten Helveg (Member of the European Parliament), Kim Mortensen (Danish District Heating Association), Birger Lauersen (Euroheat & Power) Susana Paardekooper, Brian Vad Mathiesen, and Lars Grundahl, (Aalborg University) each looks at the consequences of the Winter Package for the further development of district heating and cooling. All in all, the Winter Package is a huge opportunity to increase the share of district heating throughout EU. No other technology can integrate renewable energy as cost-effectively as district heating.

On 30 November 2016, the EU Commission presented its "Winter Package", which contains a number of initiatives that affect the entire European energy sector. The Winter Package is part of the implementation of the Energy Union, and it is expected that the Winter Package will mean a revision of the RE directive and that there will be specific recommendations on how the EU Commission will meet the Union's target of 27% renewable energy in 2030.

Among the main elements of the Winter Package, the following can be mentioned:

• EU's goal of using energy more efficiently is raised from 27% to 30% by 2030 in terms of consumption in 2007. • In order to reach the 27% renewable energy target by 2030, countries must draw up action plans. New requirements are also proposed for the share of renewable energy in district heating and transport. • TheWinter Package is estimated to be able to create 900,000 jobs by 2030 and trigger growth and investment of more than 190 billion Euro. EU's total GDP is expected to grow up to 1%. • Buildings account for 40% of EU's total energy consumption. A revised building directive will be an important part of cutting consumption and the CO2 emissions of houses. • A revised Renewable Energy Directive must reduce EU's dependence on imported fuels. This will also help make EU a global leader in climate-friendly energy.

We would like to wish all readers of Hot Cool a well-deserved summer holiday – enjoy reading!

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By Morten Helveg, Member of the European Parliament in the ALDE group and Vice Chair of the Industry, Research and Energy (ITRE) committee

REFLECTIONS ON THE WORK ON THE EU’S CLEAN ENERGY PACKAGE

Ever since the launch of the European Commission's “Clean Energy for all Package”, the nature of the “1000+ pages beast” has been widely discussed. And naturally so, because the package goes farther than any energy legislation before and it touches upon all energy related sectors: research and innovation, building, industry, transport, skills, finance. The list goes on and on.

I speak from a Danish point of view, where green, innovative energy policy has been a priority since the beginning of 1970s. The decisions taken by brave and visionary politicians across the political spectrum back then are directly linked to today’s innovative industry, which has worked diligently towards the priorities of delivering a cost effective transition to an economy largely based on renewables, coupled with a highly energy efficient building stock. One example is the way energy intensive industries in Denmark ensure that their industrial production processes harness waste heat and turn it into cheap heating. In the Danish energy sector, synergies between different elements of the economy are always taken into consideration. In doing so, many Danish businesses are market leaders and innovators in a variety of areas - from offshore wind, to heat pumps and super-efficient district heating systems. The Danish approach, being cost-effective and inherently green at the same time, has benefited our society tremendously and I believe that the Energy Union can offer the same benefits to the whole of Europe. The Clean Energy package is the perfect driver. Beast or not, it really does not matter. The Clean Energy package is first and foremost a unique opportunity in terms of promoting renewables, improving energy efficiency and reducing greenhouse gas emissions. As long as it will deliver this, you can call it whatever you want.

In my view, as an MEP dedicated to energy policy, it is indeed a beast in terms of coordination and of looking at the proposals in their entirety. My colleagues and I try to keep head and tails right and navigate to find the right course in the many and divergent ideas on how to progress the proposals towards the best results for the EU. No one said it would be easy, it never is when you’re standing on the brink of entering a whole new era. That is why we have focus on getting the guiding principles right and then, after that, the actions and initiatives that will help us achieve the goals. The Paris Agreement and the 2030 EU Climate and Energy framework serve as core to the Energy Union strategy. However, in my view, the level of ambition in the Clean Energy package needs to be altered and advanced, if we want to live up our commitments. In other words, the package is a big step in the right direction, but the proposals could have gone even further. I have said it before; They should have gone much further. You have to practise what you preach, and therefore I see it as my job to make the case for a more optimistic, more radical and fundamentally more ambitious transition. This is history in the making. If we get it right, it will be the foundation for a brand new and much needed single energy market in Europe. All the arguments are there to support the transition to a better European Energy system that delivers clean energy for all European citizens. If we fail, it will lead to a halt of innovation, the loss of thousands of new jobs, a continuous EU- import of Russian gas and of oil from the Middle East. And we will continue to exacerbate climate change. The pressure is on and it should be.

Morten Helveg Phone: +32(0)2 28 45683 [email protected] For further information please contact:

www.dbdh.dk

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By Udo Wichert, Managing Director of STEAG Fernwärme GmbH/Essen and President of AGFW/Frankfurt am Main, Germany

Combined heat and power (CHP) and district heating are technologies which have been acknowledged for years for their high efficiency and delivering renewables to urban areas. They are the real key to the real “decarbonisation” of European economy. The district heating sector in Europe is willing to increase the share of renewables in the generation – and we are aware of the importance of this step. However, this must go hand in hand with removal of obstacles and inequalities amongst technologies. The specific features of the heating and cooling sector must be observed, since heating and cooling differ considerably from electricity supply. In conclusion, we can say that EU’s recognition of the heating sector and strong support to DHC is a unique opportunity that needs to be welcomed. We all see that the support is not unconditional – the European Commission is asking for assurances about which version of DHC people will end up getting. Therefore, we must be open-minded, accept the offer in principle and start working with the EU institutions and national governments to get the details right in practice. So I think the next two years will be very busy and exciting in Brussels as well as in our home countries for the DHC sector!

In October last year, the European Commission’s Vice President for the Energy Union, Mr. Maroš Šefcovic said: “If we want a cost-effective transition to a low-carbon economy, we have to create an internal energy market where European rules apply”. Regarding to this, we had an intensive look into the papers published on November 30th last year, called “CLEAN ENERGY FOR ALL EUROPEANS”. We are talking about more than 4,500 pages, setting the scene for the EU policy on energy for the period 2020 – 2030. But what about heating? Even though heating accounts for half of European final energy consumption, the sector has long been overlooked by EU policy makers, who focused only on electricity, gas, oil and transport sectors. In 2015-2016, we finally witnessed a steadily increasing interest in DHC (district heating and cooling) and the heating sector itself, pushed by new discussions on energy security and the recognition of great ”decarbonisation” potential. So DHC is being recognized by local authorities and cities taking the lead in climate change efforts. In 2016, the first EU heating and cooling strategy proposed by the Commission, recognizing the important role of DHC has been issued. This year we hope to see the first proposals of EU legislation that will shape our sector. But back to the great ideas of the “Clean Energy Paper”: There are several legislative proposals important for the district heating sector, such as the revision of the Energy Efficiency Directive, the revision of the Energy Performance of Buildings Directive and last but not least the recast of the Renewable Energy Directive. Here we see some major effects that we need to discuss.

For further information please contact:

AGFW | The Energy Efficiency Association for Heating, Cooling and CHP Stresemannallee 30 D-60596 Frankfurt/Main Germany

Phone: +49 69 6304-278 [email protected]

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By Kim Mortensen, Managing Director, The Danish District Heating Association (Dansk Fjernvarme)

The Danish companies, which today create jobs to about 20,000 employees and have a total annual export worth 1 billion Euro, have a golden opportunity to demonstrate their potential internationally even further. In the Danish utility sector, together with district heating companies, the export companies have a solid showcase that can strengthen their exports. In close collaboration, we have demonstrated how the development of new technologies, such as solar heating, can go hand in hand with green conversion, high security of supply and competitive prices.

With the EU Commission's Winter Package, the direction has been set for next year's work in the EU Energy Union. The future is based on increased investments in security of supply, green conversion, energy efficiency, and research and development.

In total it is estimated that from 2021, the package will create private and public investment for approximately 117 billion Euro, while the package is expected to create 900,000 jobs. What the Commission calls for is technological solutions that, on one hand, can ensure a high level of security of supply while also securing that the energy and supply prices will not skyrocket. The Commission also calls for green solutions that can meet our overall 2030 environment and climate goals. From the point of view of district heating and cooling, there is reason to welcome the Commission's initiative. The Winter Package points to a systematic spread of district heating in the other EU countries, and with the strong district heating competencies we have in Denmark, this must cause optimism. In Denmark, district heating has steadily increased the share of renewable energy, and today, renewable energy accounts for more than half of the district heating production, as opposed to just over 30 percent 10 years ago. During the same period, we have kept the prices for district heating customers steady, and the last three years even reduced the price by 10 percent, which means that the average price is at its lowest level. The EU Commission's Winter Package does not indicate the direction for the development of the individual sectors, but sets, with a joint RE target and a number of concrete initiatives, the framework for the individual Member States to be able to be in control and lead the energy sector towards the 2030 targets.

What remains is that a joint EU finds support for the individual initiatives in the package and later that each member state finds out how to translate the initiatives into concrete goals. For some member states, it will probably be difficult due to national reasons, but for the most part, especially the Danish neighboring countries, the direction of the package and the individual initiatives will hopefully be seen as new opportunities for continuing the green change. Here the European Commission's winter package is a good helping hand, which we welcome and look forward to implementing.

For further information please contact:

Dansk Fjernvarme Att.: Kim Mortensen Fjernvarmens Hus Merkurvej 7 DK-6000 Kolding

Phone: +45 7630 8000 [email protected]

Photos: Nils Rosenvold

www.dbdh.dk

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By Birger Lauersen, Manager International Affairs, The Danish District Heating Association (Dansk Fjernvarme) and Vice-President, Euroheat & Power

This prominent role is also the positive outcome of efforts of the European DHC sector with the Heat Roadmap Europe analyses, which demonstrate the role the technologies will play in developing a sustainable energy supply for cities. The prominent role in the proposed RED can also be seen as an upgrade in status of DHC from mainly being seen as energy efficiency measure, to DHC also being recognized as a conduit for renewable energy (RE). Also challenges Generally there is an increased awareness of the importance of heating and cooling (not least due to aforementioned Heat Roadmap Europe and previous work), and it is positively reflected in the package, but it also means that the sectors are facing increasing demand for scrutiny. The fact that the development trend for RE in the heating/cooling sector at European level does not keep pace with the development of renewables in the electricity sector, has attracted attention and pressure to increase its rise.

In November 2016 the European Commission published its most recent energy initiative under the heading "Clean Energy for All Europeans". Of primary significance for the district heating and cooling sector are proposals for a major revision of the Renewable Energy Directive (RED), minor revisions of the Energy Efficiency Directive (EED) and Energy Performance of Buildings Directive (EPBD), and as well as proposals on the design of the electricity market, security of electricity supply and governance rules for the Energy Union. Good news The EU Commission has taken the habit of presenting its legislative initiatives in "packages" and presented a Winter Package in November with a series of proposals that affect the European energy supply. The package is welcomed by the Danish District Heating Association and the European district heating and cooling (DHC) sector in general - primarily because district heating and cooling play a major role in the package - especially in the proposal for revision of the RED.

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It seems there was skepticism inside the Commission towards creating this parity, and this may also be expected among green movements and certain business organizations. Member States could be expected to be positive towards parity, as it would make the achievement of the RED goal easier and cheaper, and will enable the "cheap" surplus heat to finance the construction of district heating and cooling infrastructure in the cities. The RED also contains a proposal on sustainable biomass. This proposal is being assessed by the DHC sector in all countries. The assessment in Denmark is that it is reasonably close to the voluntary framework used in the Danish sector agreement for sustainable biomass. EED and EPBD The Commission proposes much more modest changes in the directives on energy efficiency and buildings, where the aim seems to be to extend (in time) current provisions, clarify certain issues, add focus to fuel poverty and moving Member States’ reporting obligations to the package proposals on governance. The package is now being reviewed by the EU Council of Ministers and the European Parliament. The Maltese Presidency has launched the work of the Council of Ministers with the Energy Efficiency and Building Directives already in early January, and expect to push for adoption before summer of a Council position. Discussions on the RED have been opened, but all stakeholders now primarily focus on assessing the impact of the many proposals. The remaining proposal in the package, not least the proposal on design of the electricity market, is expected to be taken up by the Estonian presidency in the second half of this year. Much more information on “Clean Energy for all Europeans” can be found here: https://ec.europa.eu/energy/en/news/ commission-proposes-new-rules-consumer-centred-clean- energy-transition

It is therefore proposed that EU Member States “endeavor”, as the Commission formulates it, to increase RE in heating and cooling with one percentage point annually by 2020, but with full flexibility, as there is no specific requirement for countries in how to achieve it. It is furthermore proposed in the RED for Member States to provide DHC consumers with the right to challenge district heating and cooling systems that are not efficient, and – with some limitations - seek other options by disconnecting. The definition of an efficient district heating or cooling system is, according to the Energy Efficiency Directive, that it "uses at least 50% renewable energy, 50% waste heat, 75% cogeneration, or 50% of a combination of such energy and heat". It is also proposed that such non-efficient DHC systems (again with certain limitations) must provide heat producers with RE heat or surplus heat with direct access to - through the grid – final customers.

This proposal is not warmly received throughout the European district heating sector, and it certainly is a challenge to confront. Keeping customers on board and honoring existing planning, where implemented, is important to an integrated approach to an efficient heating and cooling supply which avoids sub-optimized solutions on a project-by-project basis. Current legislation (EED) also aims at promoting efficient district heating and cooling when, based on a cost-benefit analysis, a cost-benefit surplus over efficient individual heating and cooling supply options is shown. A main deficiency in the RED proposal is that full equality between RE and surplus (waste) heat is not created. The Commission has chosen not to create parity, so that use of surplus heat - which does not express use of fuels – could count as RE, but paradoxically promotes net heat production for heat pumps as such. This even though a share of electricity used in heat pumps will originate at thermal power plants emitting surplus heat. This beggars the question: how far from a thermal power plant must a heat pump be placed before the heat it upgrades, with electricity from the power plant, becomes renewable? Is inside the fence acceptable, just outside or far away? And then why isn’t surplus heat directly extracted from the power plant considered RE?

For further information please contact:

Dansk Fjernvarme Att.: Birger Lauersen Fjernvarmens Hus Merkurvej 7 DK-6000 Kolding

Phone: +45 7630 8000 [email protected]

Photos: Nils Rosenvold

www.dbdh.dk

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By Susana Paardekooper, MSc., Brian Vad Mathiesen, Professor MSO, and Lars Grundahl, MSc., Aalborg University Aalborg University

low hanging fruits available; and it is their implementation that remains challenging. Through research at Aalborg University, Denmark, and in particular the Heat Roadmap Europe projects, we have identified three areas where there are still significant opportunities to improve the heating and cooling sector, which must be taken better advantage of than currently set out. Renovation strategies mean a better energy transition Heat savings, and particularly heat savings in the existing building stock, are essential to decarbonise the heating and cooling system and can still be very economical if they are implemented when people are doing regular renovations to their house. This is especially the case for individual homes, built before 1980. While the Winter Package addresses the building stock extensively in the proposals for the EPBD (Energy Performance of Buildings Directive), the focus remains exclusively on the individual building rather than integrating renovation strategies with NEEAPs (National Energy Efficiency Action Plans), SEAPs (Sustainable Energy Action Plan), and the wider energy system. This automatically limits buildings’ potential to contribute to the decarbonisation of the energy system. An investigation in the Danish building stock and energy system has shown that if the building stock is to be part of a wider energy transition towards decarbonisation and renewability, thermal performance is not enough (Figure 1). Buildings must also enable technologies that maximise synergies within energy systems such as low temperature district heating, consider user behaviour and find a balance between investing in savings and renewable supply technologies. Approaching renovation strategies with a more integrated perspective will not only allow for more and deeper renovations, but also enable a better energy transition in other sectors of the energy system.

It has been a while since the first Heat Roadmap Europe research report was launched in 2012, in which we first emphasised the importance of an integrated smart energy system for Europe’s heating and cooling sector. Europe has faced a number of challenges, including a Brexit and a refugee crisis. However, there is also a strategic crisis with regards to the integration of the energy sectors in the European Union. The EU’s “Clean Energy for All Europeans” set of proposals, more commonly known as the Winter Package, was published in November 2016. The emphasis on 1) energy efficiency and 2) an expansion of renewable energy for heating and cooling can enable a real development of renewable energy in heating. The Winter Package also recognises the need for an integrated approach towards the sectors – something which underpins the ability of the energy systems to achieve decarbonisation in an affordable way through synergies and smart energy systems. This is indeed good news, as in Heat Roadmap Europe we have repeatedly found that Europe is able to provide heat in a more efficient, sustainable and affordable way by combining energy savings, efficient individual heating and district heating in an integrated approach. As part of the Energy Union, it marks the largest launch of changes in EU legislation on the energy markets to date. While critics say that it is simply old wine on new bottles, the package provides a much-needed change concerning the heating and cooling sector, which has been neglected so much in the past. When the EU Energy Roadmap was published in 2011, heating and cooling did not get much attention. This prompted the start of our Heat Roadmap Europe series (www.heatroadmap.eu), which is now in its 4th edition. Since then, the Commission hosted its first heating and cooling conference in 2015, and published its first heating and cooling strategy last year. In the past 7 years, we have seen the EU and energy community recognise the importance of heating and cooling more and more, and the Winter Package is an extension of this. The Winter Package has been brought out with the framing that ‘we have already harnessed the low-hanging fruits’, and the next steps towards more renewable and efficient heating and cooling will be more challenging. While this may be true on the policy side, our research also shows that there are many more technical

Figure 1: Three perspectives that are key to the role of buildings in future cost- effective sustainable energy systems. Taken from Future Green Buildings: A Key to Cost-Effective Sustainable Energy Systems. Department of Development and Planning, published in 2015 by Aalborg University

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Figure 2: District heating and cooling potential in the EU28, based on heat demand density. This figure shows the cumulative heat demand densities based on Peta3. While it does not have an energy system perspective (so cannot show what the efficient level of district heating could be in the context of the energy system) it shows that there are many areas in Europe where district heating is already (highly) feasible, and should be implemented.

Implementing district heating The further implementation of district heating is still an area where large gains can be made. In many areas, district heating potential remains largely unfulfilled. The work in Heat Roadmap Europe 3 (WP2 of the Stratego project) included the thermal mapping of the EU28 and the development of integrated heating and cooling strategies for five member states. Figure 2 shows the cumulative heat demand densities in the EU28. In some of the countries with the highest potential for both conventional and 4th generation district heating, such as the Netherlands, Spain, and Germany, district heating is currently minimal or practically non-existent, even though the potential is larger than in some more traditional district heating countries. The implementation of district heating systems in these areas is hard because of current planning and institutional frameworks, but there is technical and socio-economic potential to providemore renewable and affordable heating and cooling. Heat synergy regions Most impressively, the latest results from the Heat Roadmap Europe project, which is now expanding to 14 countries, show that there is still a huge amount of energy being wasted. One of the latest results currently available online in the Pan-European Thermal Atlas is the location of excess heat activities. The excess heat available from individual plants is calculated as the theoretically available excess heat based on >Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12 Page 13 Page 14 Page 15 Page 16 Page 17 Page 18 Page 19 Page 20 Page 21 Page 22 Page 23 Page 24 Page 25 Page 26 Page 27 Page 28 Page 29 Page 30 Page 31 Page 32

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