HEAT 35 project partners prepared an internal market analysis and identified the main challenges of the district heating sector in Central Europe, with a focus on pilot DH systems and territories. Except for Austria, DH systems in Central Europe are still predominantly fueled by fossils, ranging from 50% to 95% share in fuel-mix. Key stakeholders are aware of decarbonization requirements (as set by the Revised Energy Efficiency Directive). However, many tough challenges remain ahead of DH systems. The analysis of the situation at pilot systems identified some of them:
- Many uncertainties concerning long-term decision on fuel-mix due to volatile markets and unpredictable legal environment (taxation systems, categorization of biomass, etc.)
- High prices of planning and investing in DH systems require a stable environment and adapted financial mechanisms
- Not much experience with new technologies of 4thand 5th generation DH systems (integration of different heat sources and fuels, different temperatures, active consumer, etc.) used on a large-scale (not pilot-sized)
- Little knowledge about potential financial and business models to support investments into a new generation of DH systems: loans, green bonds, climate funds, public-private partnerships, etc.
- Improving energy efficiency of grids and demand side
- High prices of heat from DH systems are expected due to big “decarbonization” investments required and high fuel prices
- Not enough data and experience with the integration of different fuels/heat sources into existing grids, like waste-heat and geothermal, as well as the integration of existing and new grids.
Following improvements to the system framework conditions were identified during the process:
- Suitable framework conditions needed to enable large-scale investment in heat generation
- Availability and affordability of renewable energy sources
- Predictability of environment – legal, availability of RES, taxation, long-term financial sources
- End-user price regulation should allow the accumulation of finances for maintenance and investments
- Availability of data – regional maps of potential energy sources (RES, waste-heat)
- Evidence of full-scale 4th/5thgeneration DH systems operating using a mix of high/low temperature, different fuels and heat sources with active demand-side
- Governance of the DH transformation process in a way that reduces administrative burdens and obstacles
The analysis provides input for the development of the HEAT 35 Learning Lab and policy recommendations that will be developed at a later stage.
Matjaž Gerl, E-zavod