Recovery and resilience facility – State aid, Guiding template: District heating/cooling generation and distribution infrastructure

The European Commission has recently published a working document on State aid for district heating infrastructure, where it provides instructions for assessing the State aid for heat generation facilities and distribution networks. Any such support is subject to the scrutiny of the competent State aid authority prior to granting the aid, which in the case of the Energy Community Contracting Parties is their respective national State aid authority. The guidance provides instructions in which cases State aid may be excluded and in which there is no need to notify for State aid clearance, but other requirements may apply.

Check out the full guidance of the European Commission, as well as examples of different forms of State aid granted to the district heating/heating sector by the EU Member States.

Internal market for renewable heat

Heat comprises half of the EU’s energy consumption, and 80% of it comes from fossil fuels. Several organisations published a joint statement calling for a more ambitious renewable energy target of 45% by 2030 rather than the current 40%. Among the enlisted measures that can have a high impact on the target for renewable energy, there is a call for ensuring a level playing field for all renewable technologies and establishing an internal market for renewable heat and renewable hydrogen. Read the full statement.

Source: SolarPower Europe

How would heating and cooling sector contribute to EU 2030 decarbonisation goal – NECPs measures

To provide a starting point for exchanging best practices, the Secretariat launched a discussion paper outlining the objectives and measures defined in NECPS of selected EU Member States. This report assesses the NECPs of seven EU Member States with different outlooks of heating and cooling sectors: Denmark, Ireland, Latvia, Lithuania, the Netherlands, Poland and Sweden. It provides insights into the stages of the development of the heating and cooling and the district heating sectors, as well as targets and measures for the development of the sectors in the period from 2020 to 2030. The focus is placed on measures for deployment of renewable energy in the respective sectors, providing information on possible regulatory and financial solutions for the integration of renewable energy in the heating and cooling sector.

Discussion paper

Renewable Energy Policies in a Time of Transition – Heating and Cooling

The International Renewable Energy Agency (IRENA), the International Energy Agency (IEA) and the Renewable Energy Policy Network for the 21st Century (REN21) joined forces to issue a report focusing on the status and development of renewable heating and cooling policies globally. Policies concerning specific technologies that can be used in the heating and cooling sector are assessed separately: renewable-based electrification, renewable gases, biomass, solar thermal heat, geothermal heat and district heating and cooling. The report emphasises the need for having long-term integrated planning, an efficient institutional setup and creating a level playing field. Read more about the recommendations for the way forward.

Source: IRENA

Power-to-Heat: a flexibility solution

The balancing of electricity production with consumption in real time is problematic and the increasing share of renewables amplifies this challenge. The Energy Community has just launched a tender for a study on the flexibility needs of power systems in the region, seeking to obtain solutions that will facilitate the integration of renewable energy sources.

Power-to-heat technologies can offer solutions for providing flexibility to the electricity sector. The Renewable Energy Directive of 2018 requires from electricity distribution system operators to assess at least every four years, in cooperation with the operators of district heating or cooling systems in their respective area, the potential for district heating or cooling systems to provide balancing and other system services. This includes demand response and storing of excess electricity from renewable sources. The role of the heat sector in providing flexibility to the electricity sector is recognised in the EU Strategy on Energy System Integration.

IRENA’s report on renewable power-to-heat solutions provides an overview of the integration of greater shares of variable renewable energy by using heat pumps and electric boilers as a source of demand-side flexibility in power systems, or by storing surplus renewable heat in thermal storage.

Heating in the Western Balkans – Overview and recommendations for clean solutions
Bankwatch has just issued a new publication in which it outlines the current situation in the heating sector in the Western Balkan and provides recommendations on how improvements in this sector could be achieved. The publication emphasises the role of the ‘energy efficiency first’ principle, the benefits of district heating in densely populated places and a need to ban coal from heating in individual households and replacing it with clean fuels in district heating systems. There is also an example of renewable-based
alternative solutions to the heating provided from the coal-based CHP plant Novaky in Slovakia, scheduled to shut down by the end of 2023. Read more in the publication. Source:

Joint Research Centre Technical Report – Assessment of heating and cooling related chapters of national energy and climate plans (NECPs) in EU Member States

JRC just published its assessment of the chapters of EU Member States’ National Energy and Climate Plans (NECPs) dealing with the heating and cooling sector. The analysis showed that most Member States are less ambitious in decarbonising their H & C sector in comparison with the power sector. JRC issued the following recommendations for drafting the heating and cooling sector goals and measures in the NECPs:

1) increasing the level of ambition, given the important role of this sector in fulfilling the EU’s climate and energy goals;

2) providing more information on the constraints that caused not meeting the requirement of reaching the renewable energy targets in the heating and cooling sector, with a detailed plan with measures to close the gap;

3) identifying and providing trajectories for the main renewable energy technologies contributing to reaching the sectorial target

4) clarifying the contribution of CHP to targets, for example that co-generated heat from natural gas CHP plants should not be considered waste heat and, therefore, cannot be counted towards the target specified in Article 23 of Directive (EU) 2018/2001 on the promotion of the use of energy from renewable sources.

Read more in the Report.

Source: Joint Research Centre

District heating in the Western Balkans – we need clean, modern heating that works for everyone, for the long term

Achieving decarbonisation goals is not possible without reforming and modernising the district heating sector. Despite being an important source of space heating, district heating efficiency in the Energy Community is still at a low level. In its blog and video, Bankwatch Network addressed the issues that district heating systems in the Energy Community are facing and emphasised the need to start planning the transformation of district heating as soon as possible.


White paper on transforming district heating in Ukraine: assessment and recommendations

Ukraine is currently conducting deep reforms of district heating (DH) to address the sector’s challenges. Non-reflection of operating and investment costs in the DH tariffs have made it difficult if not impossible for companies to invest in modernization of the networks. Being closely interlinked with the natural gas sector, DH sector regulations should align with the upcoming natural gas market liberalization.

USAID with its Energy Security Project provides significant support to the reform process. This document describes key challenges faced by Ukraine’s DH sector and provides recommendations on developing and implementing a comprehensive 10-year strategy that can lead to loyal and satisfied customers, a sustainable and self-sufficient DH sector and an efficient and environmentally friendly heat supply market.

Source:  USAID

Options for large-scale installation of individual heat substations based on international best practices

A means to improve energy efficiency in the district heating sector is installing individual heat substations (IHSs) in buildings connected to the district heating network. IHSs allow for building-level temperature regulation and can significantly reduce heat consumption and overheating. IHSs are nearly universal in Western European countries with developed district heating systems. These investments have improved service quality and energy efficiency and are generally found to be cost-effective. The report provides the financial and legal solutions for large-scale deployment of IHSs in Ukraine, building on analysis of international best practices in three Member States – Poland, Czechia and Latvia, as well as United Kingdom. Learn more in the Report.

Source:  USAID

European Commission issues Recommendation on content of comprehensive assessment of DHC potential

The Contracting Parties of the Energy Community have an obligation, based on Article 14 of the Energy Efficiency Directive (EED), to conduct a comprehensive assessment of the potential for high-efficiency cogeneration and district heating and cooling, which must include all the elements referred to in Annex VIII of the EED. The obligations to deliver the first comprehensive assessment and notify the Energy Community Secretariat were due by 30 November 2018.

Annex VIII of the EED was amended by the Commission Delegated Regulation (EU) 2019/826 of 4 March 2019, which simplifies the requirements for the assessments and aligns them with the legislative acts of the Clean Energy Package. e. The European Commission, after analysing the first set of comprehensive assessments of Member States, delivered this recommendation to further instruct the Member States on the updated requirements of the content of the comprehensive assessments. These instructions can guide Contracting Parties in designing their comprehensive assessments.


JRC’s Study on Integrating renewable energy and waste heat in district heating

Based on a holistic case studies analysis of 8 efficient district heating and cooling (DHC) systems in different EU Member States (Denmark, France, Germany, Italy, Lithuania and Spain), the study investigates the design and operation of DHC systems mainly supplied by renewable energy sources and (excess) waste heat and cold sources. The study aims at identifying the key success factors enabling the integration of those sources, and drivers and conditions for their replicability in other cities and communities. Finally, it suggests some potential policy guidelines to support the integration of local and low-carbon energy sources through DHC. Read more in the JRC’s study.

Source: Joint Research Centre

A carbon pricing design for the Energy Community

The Energy Community has commissioned Kantor and E3 M to prepare a study proposing a carbon pricing mechanism for the time horizon until 2040, suitable for the decarbonisation of the power and district heating sectors in the Contracting Parties. The PRIMES-IEM model was used to quantify five stylized scenarios for the introduction of carbon pricing in the power and district heating sectors in each CP: 1) Baseline Scenario, 2) Full Carbon Pricing and Market Fragmentation Scenario, 3) Gradual Carbon Pricing and Market Fragmentation Scenario, 4) Full Carbon Pricing and Market Integration Scenario and 5) Gradual Carbon Pricing and Market Integration Scenario.

Fossil fuels being by far the dominant energy source in district heating in the Energy Community, the study investigates the impact of each scenario on heat prices. The study puts forward a proposal for a Cap and Trade policy option in the power and district heating sectors, rather than a carbon tax, and also recommends the Gradual Carbon Pricing and Market Integration Scenario as the optimal approach for the Energy Community. Read more about the scenarios, policy options and recommendations in the Report.

JRC‘s Technical Report on Decarbonising the EU heating sector

The heating and cooling sector has been recognised as key for achieving decarbonisation and energy efficiency targets. The Joint Research Centre has presented two clean transition pathways for the heating sector in EU Member States, namely electrification of heat and efficient heat and power production and district heating networks. The study finds that electrification of heat, by replacing all current fossil-fuelled heat generation technologies by heat pumps, would reduce by 16% the combined emissions of the heat and power sector. The implementation of the second pathway concludes that if all current or future steam based power plants were operating on CHP mode together with district heating networks (including thermal storage), the overall efficiency of the energy system would increase significantly. Read more about decarbonising the EU heating sector in the JRC’s technical report.

Source: Joint Research Centre

District heating and cooling in France

To make district heating systems more sustainable, France has developed various planning and policy tools, including the set-up of a Heat Fund, an obligation of creating local heating and cooling plans, mandatory connection to district heating network in certain cases, etc. Read more about French policies.


Ex mine as a source for district heating and cooling in Germany

Operational and closed coal and other mines represent valuable geothermal energy potential for district heating and cooling. Find out the main facts about a new district heating and cooling network in Germany, 80% supplied by geothermal energy from pit water by use of heat pumps.


Heat cost allocation rules in Slovenia

Heat cost allocation rules in multi-apartment buildings are an important aspect in setting a fair and transparent framework for sharing costs between co-owners. In order to improve them, Slovenia has changed its heat cost allocation rules in 2010, 2015 and 2016. According to the author of the Fact Sheet, the new rules are fairer, clearer and more predictable. Read more about the Slovenian heat cost allocation rules.


IRENA’s Innovation outlook: Thermal energy storage

The report expects the global thermal energy storage (TES) market to triple in size by 2030. TES use in district heating and cooling effectively decouples demand from supply, allowing energy to be stored on a seasonal basis. The resulting flexibility allows far greater reliance on variable renewable sources, such assolar and wind power. District heating already incorporates sensible heat technologies such as tank TES (or TTES) and underground TES (or UTES). Water tank TES (or WTTES), already widely used in buildings, is also coming into increasing use for solar thermal plants in the mining, food and textile industries. The report includes 12 case studies illustrating several TES technologies and their impact on the energy sector. Check the TES technologies status and innovation outlook in district heating and cooling sector:  the Report

Source: IRENA

The Renovation Wave Strategy

The European Commission published on 14 October its Renovation Wave Strategy to improve the energy performance of buildings in the European Union. The Strategy aims to at least double renovation rates in the next ten years and make sure renovations lead to higher energy and resource efficiency. The Strategy recognises district heating systems as being crucial elements of positive energy districts. Moreover, the Commission announced the revision of the Renewable Energy Directive by June 2021; this will provide a toolbox of measures to promote advanced heating and cooling, including highly efficient low-temperature renewable and waste heat and cold technologies, and the development of local and regional heating and cooling plans.

Check out the Factsheet of the Strategy!

Source: European Union

EU Strategy for Energy System Integration

In June 2020, the European Commission adopted the EU Strategy for Energy System Integration. The Strategy emphasises the role of the district heating systems in sector coupling. The heating sector can be coupled with the power sector through the roll-out of heat pumps as a way for building electrification. Moreover, to ensure that local energy sources are sufficiently and effectively used, waste heat from industrial sites should be reused, on-site or trough district heating and cooling networks.

Source:  European Union

Renewable energy prospects for Central and South-Eastern Europe Energy Connectivity 2020 IRENA

The International Renewable Energy Agency (IRENA) has just published a Renewable Energy Roadmap (REmap) analysis for the Central and South-Eastern Europe Energy Connectivity (CESEC) area. The results also include possibilities for integration of renewable sources in district heating in Energy Community Contracting Parties (Bosnia and Herzegovina, Kosovo*, Moldova, North Macedonia, Serbia and Ukraine). According to study, renewable resources that can be integrated in CESEC region are solid biomass and geothermal. Read more about it REmap CESEC 2020 .

Source: International Renewable Energy Agency

The World Bank Agenda for District Heating Reforms in Ukraine

Due to the electricity and gas sectors’ transition towards market-based arrangements, the Ukrainian district heating (DH) sector is faced with major technical, commercial, financial, operational, and institutional challenges. The World Bank published in May 2019 a report analysing the status of DH sector reforms and the remaining challenges. The report also identified proposals on how these challenges could be overcome. Find out more about the proposals for DH reforms in Ukraine:  the Report

Source: The World Bank

Making district heating happen: Empowering users through fair metering –  Policy paper on infrastructure

In December 2018, the European Bank for Reconstruction and Development commissioned the policy paper on the promotion of consumption based billing (CBB) and demand side management (DSM) in the district heating sector, built on the experiences of different stakeholders from several countries, including Energy Community Contracting Parties: Bosnia and Herzegovina, North Macedonia, Moldova, Ukraine and Serbia. It identifies legal and regulatory measures to enable and incentivise stakeholders to implement CBB and DSM reform. Read more about the Paper.

Source: European Bank for Reconstruction and Development

Biomass-based heating in the Western Balkans – A roadmap for sustainable development

The sector study on biomass-based heating in the Western Balkans was published in October 2017, produced by the World Bank with the support of the Energy Community Secretariat. The  study is financially supported by the European Western Balkans Joint Fund under the Western Balkans Investment Framework. The aim of the study is to identify viable investment options and determine policy measures to increase the use of biomass for heating in a sustainable manner. Read more about the Study.

Source: World Bank

Renewable energy in district heating and cooling –  A sector roadmap for REmap

The International Renewable Energy Agency (IRENA) delivered in March 2017 the study on the renewable district heating and cooling potential up to 2030 on the global level, examining nine countries worldwide – China, Denmark, Germany, Poland, Switzerland, Japan, the United States (US), Kuwait and the United Arab Emirates (UAE). Read more about the REmap .

Source: International Renewable Energy Agency

Efficient district heating and cooling systems in the EU

In 2016, the European Union conducted the study on efficient district heating and cooling systems, providing case studies in several Member States and detecting the success factors leading to a high quality, efficient and sustainable DHC service: adequate national policy and regulatory environment, direct/indirect financial support, focused local policy and coherence with urban planning, alignment of interests and cooperation between local and national authorities, etc. Read more about the Study .

Source: European Commission

Heat roadmap Europe 2050 – Study for the EU27

Addressing the lack of inclusion of district heating potential in contributing to the decarbonisation goal in the Energy Roadmap 2050 of the European Union, the Aalborg University has published in cooperation with Euroheat & Power two studies   the first one in May 2012 and the second one in May 2013. The reports address individual Member States and the potential and impact of implementing various energy efficiency measures in the heating and cooling sectors. Read more about the studies Heat Roadmap Europe 1: First Pre-Study for the EU27 and Heat Roadmap Europe 2 Second Pre-Study for the EU27

Source: Aalborg University’s research portal

Source: USAID

The Final Report of USAID’s Municipal Energy Reform Project – Ukraine (MERP)

One of the activities of the USAID’s Municipal Energy Reform Project – Ukraine (MERP) was assistance to the Government of Ukraine to review its current legal and regulatory framework and develop several new regulatory acts aiming to promote sustainable long-term development of efficient and competitive district heating sector in Ukraine. Read more about the delivered deliverables, accomplishments and recommendations in the Final Report of March 2019.