“The heat is on” – District heating in Ireland

Key Contact: Hugh Cummins – Partner

Ireland’s heating sector currently faces major decarbonisation challenges given its reliance on fossil fuels. Swift and decisive action is required if the sector is to meet its share of reductions to achieve the target of halving CO2 emissions by 2030 and reaching net zero by 2050.

In addressing climate change and reducing CO2 emissions, one must look at both our energy supply capabilities as well as our energy demands. Ireland is uniquely positioned to exploit offshore wind to produce renewable energy as part of the wider global energy transition. That said, we are well behind on this journey and the necessary major upscaling of our renewable generation capacity is still some years away. In parallel we must focus closely on our energy needs and must continue to identify ways to reduce demand and improve efficiencies. This will allow us to deliver significant short to medium term benefits on the demand side. However, addressing demand side issues requires a multitude of measures which require careful planning and integration.

The roll out and delivery of district heating infrastructure is recognised as one of the solutions for Ireland achieving its 2030 targets on the way to the decarbonisation of residential, public and commercial heating. Indeed, the SEAI’s National Heat Study has identified that district heating could, in time, provide as much as 50% of building heat demand in Ireland.

With the recent publication of the Government’s updated Climate Action Plan 2023 (“CAP23”) and proposals for further revision to energy targets soon to be introduced at EU level, there will undoubtedly be a renewed emphasis on district heating as a key measure to achieve Ireland’s climate aims.

What is district heating?

District heating is a proven technology that uses a network of highly insulated pipes to create a local-level heating grid that delivers low-carbon heat from a central energy source. This heat can then be distributed to provide space heating and hot water to buildings connected to the network.

The source of heat can vary depending on factors such as proximity to a waste heat source (e.g. industry or data centres) or suitability for geothermal supply. Large scale combined heat and power generators can also be used, either to provide a primary source of heat or to supplement another source such as geothermal or waste heat. Ultimately, district heating can accommodate any type or mix of heat source(s) and is technologically flexible in this respect. The electrical by-product of this process can then be supplied to the grid or used locally.

Notwithstanding that waste heat produced by industry or data centres may be a by-product of burning fossil fuels, the Renewable Energy Directive[1] does allow it to be considered as a heat source for the purposes of “efficient district heating”. This is more fully discussed below.

District heating is widely used across Europe, currently delivering 9% of Europe’s total heating demands. Denmark is a leader in this field with 60% of all houses heated through networks operated by 430 district heating companies. In Denmark’s sustainable cities such as Copenhagen, district heating supplies 90% of all heat.

Ireland has the potential to utilise district heating in the same manner across all areas of the country. However, densely populated urban areas like Dublin are more viable in that there is potentially enough waste heat and renewable energy sources to heat over 1 million homes.

Why is it needed?

As well as obvious benefits, such as decreasing CO2 emissions and Ireland’s heavy reliance on fossil fuel imports, there are many positive outcomes which support the case for district heating in Ireland.

For example, district heating can deliver a significant reduction in wasted energy. In the production of electricity, it is estimated that around 60% of energy is lost, mostly in the form of heat, during the transformation stage. Recoverable or ‘waste’ heat is an unavoidable by-product of thermal power production and currently most of this waste heat is released into the atmosphere. This heat is zero carbon, indigenous and practically free. It is estimated that, at present, there is enough waste heat from power production in Europe to meet all of the continent’s heat demands.

In Ireland, data centres are huge consumers of energy and produce large amounts of waste energy in the form of heat. Capturing this heat and using it to supply district heating networks would offset the need separately to burn fossil fuels for space and water heating.

There are many benefits to district heating, including:

  • Lower emissions and greater use of renewable energy;
  • Reliability as a system of producing heat;
  • Improved air quality;
  • Improved Building Energy Ratings;
  • Flexibility in providing heat from multiple renewable sources including geothermal and solar thermal energy; and
  • Cost efficiency – typically cheaper than alternative heating methods so it is often used to alleviate fuel poverty.

Of course, there are challenges to implementing district heating successfully in Ireland.  These include logistical issues associated with the installation works for the required pipework and carrying out of the appropriate level of retrofitting prior to implementing next generation district heating.  There is also a need for buy-in from the public. These barriers and challenges will be discussed further in a follow-up article.

Legal and policy drivers of district heating

Recent legislative changes at national and EU level as well as developments in Government policy are driving the impetus for the implementation of district heating.  Some of these include:

  • Renewable Energy Directive

The Renewable Energy Directive (“REDI”) established the EU’s renewable energy targets[2]. These targets were updated by the recast Renewable Energy Directive (“REDII”) which was introduced in December 2018, as part of the “Clean energy for all Europeans package”[3] and established a common framework for the promotion of energy from renewable sources in the EU.

Member States must permit minimum levels of renewable energy in building regulations to be fulfilled through “efficient district heating and cooling” using a significant share of renewable energy and waste heat and cooling[4]. The European Union (District Heating) Regulations 2022 were introduced by the Government in October 2022 for the purpose of giving effect to Article 15(4) of REDII. These Regulations define “efficient district heating and cooling” as a system using at least: –

(a) 50% renewable energy,

(b) 50% waste heat,

(c) 75% cogenerated heat, or

(d) 50% of a combination of such energy and heat.”

REDII set a binding target of 32% overall renewable energy in the EU’s gross final energy consumption by 2030. District heating therefore has a potentially significant role to play in achieving these renewable energy targets.

The REPowerEU plan presented in May 2022 proposes a revision of REDII to further increase the above renewable energy target to 45% by 2030. This is now being considered by the Council and the European Parliament, along with the rest of the legislation aiming to deliver on the European Green Deal. The adoption of the third Renewable Energy Directive (“REDIII”) is expected by first quarter of 2023 which will go further than its predecessors in the targets it will set.

Sweden is currently leading the EU when it comes to renewable energy used for district heating at 66.4%. Ireland is way behind with only 6.3% renewables being used to supply district heating with the EU average being 21%.

  • Energy Efficiency Directive

The Energy Efficiency Directive (“EEDI”) sought to improve energy efficiency in the EU by 20% by 2020 compared to 1990 levels[5]. The EEDI included a requirement for all EU countries to set national energy efficiency targets to achieve this aim.

The second Energy Efficiency Directive (“EEDII”), along with the revised REDII formed part of the aforementioned “Clean Energy for All Europeans package”. The main amendments introduced by EEDII include the requirement for the EU to meet a 32.5% energy efficiency target by 2030 and anticipating further improvements after that. EEDII seeks to remove barriers in the energy market that obstruct efficiency in the supply and use of energy. It is also a requirement of EEDII that Member Statues set their own national contributions for 2030.

Further revision of the energy efficiency targets is envisaged under the REPowerEU plan, through a recast Energy Efficiency Directive with a target for reducing primary (39%) and final (36%) energy consumption by 2030.

Again, for reasons already outlined, district heating can play a key role in achieving these targets.

  • Climate Action and Low Carbon Development (Amendment) Act 2021 (the “2021 Act”)

The 2021 Act introduced a legal requirement for Ireland to pursue and achieve, by no later than 2050, the transition to a climate resilient, biodiversity rich, environmentally sustainable and climate neutral economy. Again, district heating can and must play a part in delivering on these aims.

  • Climate Action Plans

CAP23 builds upon the Climate Action Plans of 2019 and 2021 and is the first plan prepared since the enactment of the 2021 Act. CAP23 recognises that the built environment accounted for 12.3% of Ireland’s greenhouse gas emissions in 2021. Indeed, CAP23 expressly cites district heating as being key to achieving decarbonisation of residential, commercial and public heating. Along with measures proposed to support the growth and development of district heating, one of the key targets for the built environment proposed in CAP23 is the generation of up to 0.8 TWh of district heating by 2025 and up to 2.5 TWh by 2030.

  • District Heating Steering Group (the “Steering Group”)

The Steering Group was formed in 2022 by the Department of the Environment, Climate and Communications under the Climate Action Plan 2021 to push the expansion of district heating in Ireland and co-ordinate the rollout of support policies and measures.

The Steering Group is comprised of key stakeholders and reports to the Government on the development of an appropriate legislative basis, to include advice on transposition on EU Directives. The Steering Group will make evidence-based recommendations of policies and regulation options that will attract private sector investment.

CAP23 notes that one of the key actions for 2023 is to implement the recommendations of the Steering Group, in accordance with an implementation timetable.

Next steps

There have been many positive steps taken recently towards achieving Ireland’s 2030 targets and ultimately the decarbonisation of the heating sector by 2050. District heating is recognised as one of the key measures that can be implemented to achieve that end. However, significant ramp-up in the deployment of district heating will be required to 2030 and beyond.  This requires proper project identification, planning, funding and implementation.

To establish the structures required in the heating sector to accelerate the move to renewable sources, such as district heating, primary legislation will be required. There are also other challenges which must be overcome by the sector such as the need to scale up and upskill our workforce to have the necessary skills to deliver district heating.

Ireland has an opportunity to be at the forefront of change in the energy sector by accelerating and driving delivery of decarbonisation through district heating. However, there is no time to wait – as the title of this article suggests – “the heat is on”.

[1] (EU) 2018/2001

[2] 2009/28/EC

[3] 2018/2002/EU

[4] Article 15 REDII

[5] 2012/27/EU

 

This article was contributed by Hugh Cummins and Thompson Barry Doherty.

 

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