Key Contacts: Angelyn Rowan – Partner | Finola Igoe – Senior Associate

The Irish District Energy Association (IrDEA) released a Low-Carbon Heating Options Appraisal and a Roadmap for Delivery of District Energy in Ireland (the “Roadmap”) in May 2024. The reports cover an analysis of current heating options in Ireland and of district heating in other European nations, as well as highlighting a plan to achieve Ireland’s 2030 district energy targets. Whilst the Roadmap acknowledges that considerable progress has been made in recent years in Ireland, including clear target setting, the establishment of the District Heating Centre of Excellence within SEAI, the Irish Government commitment to publish a dedicated Heat Act and National Heat Policy Statement, it seeks to set out the sectoral view of the immediate steps to kick-start the expansion of heat networks across Ireland.

Currently, Ireland has lagged behind the rest of Europe in adopting district heating, with Ireland’s current district heating network contributing less than 1% of total building heat demand. IrDEA estimates that to achieve Ireland’s 2030 goals, €1 billion in funding will be needed immediately, with an additional €2.7-4 billion invested over the next six years. In its appraisal, district heating was found to be the most cost-effective technology for 64% of the Irish population and 67% of all building heat demand, with the potential savings of at least 3.8 million tonnes of Co2. The Roadmap suggests a focus on high density areas, which offer the greatest potential savings, with a mixed ownership model that would allow flexibility, offer diverse investment opportunities and enable the market to be developed at pace.

The Roadmap analyses the experience and expertise of certain other European countries in the adoption of district heating, namely in the more mature markets of Denmark, Sweden and Finland and the emerging markets of England, Scotland and the Netherlands, with a view to identifying potential policy interventions in the Irish market. The recommendations from the report focus on four key themes as follows:

  • Finance and ownership – early lifecycle grant aid is essential to allow district heating to compete in the market, especially due to the fact that its benefits accrue over a much longer investment period compared to other energy generation projects. It suggests that grant funding should also be made available to consumers seeking to connect to district heating networks in order to assist in the commercialisation of district heating schemes. A mixed ownership model would stimulate market growth and provide clarity to potential investors on the future direction of market development.
  • Planning and consenting – the report finds that a lack of clarity over the planning and consenting processes discourages investment in the space, as well as a lack of trust amongst consumers emerging from a lack of appropriate consumer protection measures in the regulatory development process, therefore, it suggests that this is a key area of focus where clarity can be brought to the sector to encourage investment.
  • Consumer protections – lessons learned from other jurisdictions suggest that consumer protections should be put in place, including protections similar to other existing energy consumers, oversight of the Commission for the Regulation of Utilities, a dispute resolution mechanism and metering and regular billing.
  • Dedicated legislation – the report suggests that dedicated legislation is required to ensure greater clarity and certainty to investors, operators, developers and consumers in the sector and help guide market development.

See the below links to the reports which are a useful resource for anyone interested in the development of district heating in Ireland.

The Irish Government formed the District Heating Steering Group under the Climate Action Plan 2021 with the purpose of coordinating the rollout of policies and measures to support district heating in Ireland. Its 2023 report to the Government contains a number of key recommendations, including legislative underpinning, a single state entity with responsibility for overseeing the development and expansion of networks, a new National District Heating Centre of Excellence under the remit of the Sustainable Energy Authority Ireland, the provision of financial supports to the market whilst recognising that the financing of district heating systems should be predominantly market based.

The barriers to the development of district heating in Ireland are understood to be non-technical. The technology exists – now is the time for steps to be undertaken to tackle the barriers for market entrants and create more certainty to encourage and incentivise investment.

Should you require any further information on this topic, please contact Angelyn Rowan, Finola Igoe or your usual Philip Lee contact.

Key Contacts