Submission to the DCCAE's Consultation “Ireland's Draft

Submission to the DCCAE’s Consultation “Ireland’s Draft National Energy and Climate Plan (NECP) 2021-2030”

Submission prepared by the Irish District Energy Association

February 2019

www.districtenergy.ie

Submission to ‘Draft NECP’ Consultation from DCCAE: February 2019

Contents Contents ...... 2 1 Introduction ...... 3 2 IrDEA welcomes the support for District Heating in the responses to the Initial NECP Consultation .. 3 3 The Potential for District Heating is much higher than proposed in the NECP ...... 4 4 District Heating is a key enabler of Renewable Heat ...... 5 4.1 Excess Heat Should be Considered along with Renewable Heat as it also offsets carbon emitting fuels such as oil and gas ...... 8 5 The Flexibility of District Heating Should be valued under Energy Security ...... 9 6 Increasing Renewable Heat will require stronger signals and/or support ...... 12 7 Bioenergy should be prioritised where it adds most value ...... 12 8 District Heating can be a cost-effective form of Energy Efficiency ...... 12 9 Policies and measures should include a mix of approaches ...... 13 10 The impact assessment of planned policies and measures should use a holistic energy system approach ...... 14 11 District heating could be a key research area in the NECP ...... 14

Submission to ‘Draft NECP’ Consultation from DCCAE: February 2019

1 Introduction

The Irish District Energy Association (IrDEA) promotes the development of District Heating & Cooling in Ireland. Countries with similar climates, populations, and energy systems to Ireland have proven that district energy can deliver sustainable and cost-effective heating to urban areas with millions of people. However, there is currently a major shortage of knowledge, capacity, standards, and regulations in Ireland to facilitate the implementation of large-scale district energy networks. IrDEA’s objective is to overcome these barriers, by informing key stakeholders in Ireland about all aspects of district energy.

This document outlines the main observations and recommendations by IrDEA in the NECP which are: a) IrDEA welcomes the support for District Heating in the responses to the Initial NECP Consultation b) The Potential for District Heating is much higher than proposed in the NECP c) District Heating is a key enabler of Renewable Heat, although Excess Heat Should be Considered along with Renewable Heat as it also offsets carbon emitting fuels such as oil and gas d) The Flexibility of District Heating Should be valued under Energy Security e) Additional support will be require stronger signals for Renewable Heat f) Bioenergy should be prioritised where it adds most value g) District Heating can be a cost-effective form of Energy Efficiency h) The NECP should also set national targets and objectives for 2050 i) Policies and measures should include a mix of approaches j) The impact assessment of planned policies and measures should use a holistic energy system approach k) District heating could be a key research area in the NECP

Each of these is elaborated upon in the remainder of this document.

2 IrDEA welcomes the support for District Heating in the responses to the Initial NECP Consultation

IrDEA welcomes the fact that as part of the responses to the initial consultation on the NECP, “Issues consistently raised were the… development of district heating”. In the summary of these responses provided, IrDEA would like to highlight that district heating was recommended in relation to:

• Energy efficiency: “District heating as part of a national heat plan is also proposed”; • Renewable Energy: “supports to all technology types including support for microgeneration and community owned projects, including district heating using waste heat” and “District heating and community participation should be encouraged along with the elimination of subsidies for peat burning”; • and Energy Poverty: “Any strategy should ensure fair access to all for new technologies, with policies to incorporate new energy production (including heat pumps/district heating”;

Submission to ‘Draft NECP’ Consultation from DCCAE: February 2019

Being mentioned across these variety of aspects demonstrates the multiple benefits that district heating has to offer, so IrDEA welcomes the strong support for district heating by respondents. 3 The Potential for District Heating is much higher than proposed in the NECP

IrDEA believes that the ambition of 0.12 TWh should be substantially increased under the “National Targets in the NECP” and the potential should be updated in Section ii of “4.3 Dimension Energy efficiency” entitled “Current potential for the application of high-efficiency cogeneration and efficient district heating and cooling

This section states that “In virtually all areas, alternative low carbon technology options at a building scale, such as heat pumps, can provide a more cost effective heat source than heat networks”. IrDEA is currently developing Ireland’s first All-Island heat atlas and the potential for district heating in Ireland is expected to show that ~30% of buildings in Ireland are located in areas suitable for district heating. This heat atlas is being developed by Europe’s leading researchers in the field of heat demand and heat source mapping, which uses peer-reviewed methodologies that have been developed and refined for over 5 years through the Heat Roadmap Europe project, and corroborated using actual measured heat demands in cities & towns across the EU. IrDEA requests that this statement is removed from the NECP until suitable evidence is provided to verify this claim. The results of the Irish Heat Atlas will be available before summer 2019.

Heat mapping by Codema -Dublin’s Energy Agency, found that “Using the same thresholds for DH viability typically used by Danish energy planners in their own municipality areas, over 75% of the small areas in Dublin City would be classified as suitable for DH”1: this equates to approximately 4 TWh which shows there is scope to grow well beyond the 0.12 TWh target in the NECP. IrDEA recommends that a higher target is set for 2030 considering this potential. Also, to ensure district heating sector is stimulated, IrDEA recommends a policy is introduced in the NECP that requires local authorities in Ireland to map, identify and designate areas for district heating in the future.

This type of planning policy is already outlined in the Eastern and Midland Regional Assembly’s Draft Regional Spatial & Economic Strategy; e.g. policy RPO 7.34 “EMRA shall, in conjunction with Local Authorities in the Region, identify Strategic Energy Zones as areas suitable for larger energy generating projects, the role of community and micro energy production in urban and rural settings and the potential for renewable energy within industrial areas” and RPO 7.37 “Local Authorities shall consider the use of heat mapping to support developments which deliver energy efficiency and the recovery of energy that

1 http://www.codema.ie/images/uploads/docs/Dublin_City_Spatial_Energy_Demand_Analysis_June_2015.pdf

Submission to ‘Draft NECP’ Consultation from DCCAE: February 2019

would otherwise be wasted. A feasibility assessment for district heating in Local Authority areas shall be carried out and statutory planning documents shall identify local waste heat sources.”

Figure 1: Total Heat Demand Density of All Sectors in Dublin City (TJ/km2)2

When evaluating cost effectiveness of heat sources it is important to take account of all costs of delivery. Heat pumps for instance will electrify heat but moving the thermal demand to the electrical grid from gas or oil supply has a cost to the wider electrical network such as new substations, HV networks, generation capacity etc. The additional cost of these electrical grid upgrades is significant and should be included in any economic comparison of HPs implementation on a large scale compared to district heating.

4 District Heating is a key enabler of Renewable Heat Renewable heat will need to grow rapidly over the coming decade, due to a historically poor performance and also as it is part of the non-ETS sector, which has a binding CO2 reduction target of 30%. IrDEA welcomes the ambitious growth in renewable heat, but considering the scale of the this ambition, it is important that additional policies are put in place to support more renewable heat and IrDEA proposes that district heating is one option which can deliver more consider the potential outlined in section 3.

The countries with the highest renewable heat targets in Europe have developed district heating so this is a proven way to provide renewable heat (Figure 2). Also, other countries have demonstrated how

2 http://www.codema.ie/images/uploads/docs/Dublin_City_Spatial_Energy_Demand_Analysis_June_2015.pdf

Submission to ‘Draft NECP’ Consultation from DCCAE: February 2019

district heating offer large-scale thermal storage to help balance the intermittency of renewable electricity.

Recommendation: the share of renewable heat from district heating should be increased and reflected in section vi of 3.1.2 Renewable Energy “Assessment of the necessity to build new infrastructure for district heating and cooling produced from renewable sources”.

Figure 2: Renewable heat share in Europe.

Submission to ‘Draft NECP’ Consultation from DCCAE: February 2019

Figure 3: Share of renewable energy in heating & cooling compared to the share of district heating in different EU Member States34.

3 U. Persson and S. Werner, “STRATEGO WP2 Background Report 4: Quantifying the Heating and Cooling Demand in Europe,” 2015. 4 D. Connolly, H. Lund, and B. V. Mathiesen, “Smart Energy Europe: The technical and economic impact of one potential 100% renewable energy scenario for the European Union,” Renew. Sustain. Energy Rev., vol. 60, pp. 1634– 1653, 2016.

Submission to ‘Draft NECP’ Consultation from DCCAE: February 2019

4.1 Excess Heat Should be Considered along with Renewable Heat as it also offsets carbon emitting fuels such as oil and gas District heating infrastructure is an essential component for renewable heat, so it is essential that this technology is developed in Ireland in the coming decades. Excess heat can be used in the early stages and can be replaced with renewable heating over time, which has been demonstrated in many EU countries already.

A recent peer-reviewed scientific paper estimated that there is 102 PJ/year of excess heat in Ireland, which is a by-product of Ireland's Heating Sector Power Plants Industry Waste Incineration power plants, waste incineration, and industrial processes. In 120 comparison, the total heat demand in all Irish buildings was 100 calculated in the same paper as 117 PJ/year (see Figure 4)5. Therefore, 87% of the heat demand in buildings in Ireland is 80 ‘freely’ available as a by-product from existing plants. By 60 replacing fossil fuels with this excess heat, fossil fuels are PJ/Year 40 replaced with carbon-neutral heating, which is as important as 20 renewable heating. Therefore, excess heat should also be 0 included on the list of technologies considered under the RHI. Heat Demand in All Excess Heat If not, the scheme will likely support new renewable Buildings Available generation where there is already an enormous over Figure 4: Excess Heat Compared to the Heat production of sustainable heat. For example, there is enough Demand in Buildings in Ireland for the year 2010. excess heat in Dublin and Cork to supply all of the heat demands in the cities. Therefore, if this RHI scheme supports a new renewable heat facility in these areas, then it is effectively supporting a new renewable heat supply in a location that does not need it.

This excess heat study is also limited to sources of high temperature waste heat, when there are also multiple sources of lower exergy heat available in close proximity to heat demands, such as waste water treatment plants, data centres and service sector buildings, that can be utilised, particularly when looking at heat supply of buildings with improved energy efficiency. For example, the first DH scheme in Dublin will be heated from waste heat from a Data Centre in Tallaght, which is supplying 4MW of waste heat just from its latest extension. The data centre sector in Ireland is growing substantially, and as an example a midsize data centre with 1 MW IT load releases 3,700 MWh thermal energy per year into the atmosphere (equivalent to around 0.46 MWhth of waste energy/MWh of electricity consumed by the data centre)6. Codema research has shown that, there is 343MW of waste heat available just from planned and existing data centres in Dublin alone, and these centres run 24/7.

5 U. Persson, B. Möller, and S. Werner, “Heat Roadmap Europe: Identifying strategic heat synergy regions,” Energy Policy, vol. 74, no. C, pp. 663–681, Nov. 2014. 6 Source: ReUseHeat project at https://www.reuseheat.eu/data-centres/

Submission to ‘Draft NECP’ Consultation from DCCAE: February 2019

From Codema’s research into the waste heat potential in the Dublin region, there is 2,358 MW of zero- carbon waste heat already available that is currently not being used, over half of this is available from existing power stations and industrial processes. The equivalent annual market value of this heat is €1.2 billion. The potential value to the heat suppliers for their waste product is €410m. This is money that will be paid to local business for indigenous energy that will off-set the equivalent gas import dependency and increase security of supply.

Recommendation: The NECP should consider ‘excess heat’ along with renewable heat as a way to reduce carbon emissions in Ireland. The excess heat is already being produced, but the district heating network is required so this excess heat can reach the consumer and thereby replace fossil fuel boilers such as gas and oil.

5 The Flexibility of District Heating Should be valued under Energy Security District heating is an enabling technology, since it connects central heat suppliers to individual heat consumers: similar to the electricity grid connecting power plants to individual homes. Since water is the delivery medium, district heating can use a wide variety of heat supplies including excess heat (which can come from power plants, waste incineration, and industry) and large-scale renewables such as solar thermal (see Figure 6), deep geothermal, heat pumps, and electric boilers. This makes district heating very flexible i.e. it can use a variety of different heat supplies to meet the same heat demand.

This flexibility also facilitates supply switching as other more economic or low carbon heat supplies become available in future years. This will be essential as Ireland transitions towards more renewable energy. For example, Figure 5 shows how Denmark has varied the fuel supply to its district heating over the last 40 years. If individual solutions are implemented instead, then the flexibility of the heating sector will be reduced significantly. It is much easier and cheaper to change a central heat supply than changing the individual heat supply in every home. For example, biomass has increased a lot in recent years in Denmark’s heat supply since the district heating plants are simply switching from coal to biomass (see Figure 5), while new forms of renewable energy are also being introduced such as large-scale solar thermal (see Figure 6). If individual solutions are implemented, then this change will take much longer and be more expensive, since each individual would need to make the change rather than just one central plant.

Submission to ‘Draft NECP’ Consultation from DCCAE: February 2019

100% 90% Geothermal 80% Electricity 70% Solar 60% Bioenergy 50% 40% Waste: Biodegradable 30% Waste: Non-Biodegradable 20% Coal

10% Gas Danish District Heating Fuel Mix (%) Mix Fuel Heating District Danish

0% Oil

1995 1980 1983 1986 1989 1992 1998 2001 2004 2007 2010 2013 1 977 1 1 972 1 Figure 5: Fuel mix for Danish District Heating from 1972-20157.

Figure 6: Solar thermal district heating plant in Silkeborg, Denmark8.

7 “Årlig Energistatistik 2015 (Annual energy statistics 2015),” 2016. 8http://solar-district-heating.eu/NewsEvents/News/tabid/68/ArticleId/498/Silkeborg-Recordbreaking-solar-d istrict-heating-plant-in-operation.aspx

Submission to ‘Draft NECP’ Consultation from DCCAE: February 2019

District heating networks will not only facilitate more renewable heat, but they can also accommodate more renewable electricity. Thermal storage on a district heating system is approximately 100 times cheaper than electricity storage on the electric grid9, which is why Denmark has over 50 GWh of thermal storage and Ireland has less than 2 GWh of electricity storage. When there is excess wind power in Denmark, then large-scale electric boilers and heat pumps are activated to produce heat on the district heating systems. If there is no demand for the heat at that specific time, then the heat is stored in the thermal storage facilities until a heat demand occurs. Wind power that would otherwise be curtailed is used to generate heat which can be stored for days if necessary in a thermal storage tank. In this way DH could increase the utilisation of electricity which is wind power generated within Ireland, further improving energy security.

Furthermore, as district energy facilitates the use of waste heat which is already generated in Ireland it improves our security of supply through use of indigenous heat generation and subsequently reduces the primary energy import required to provide heat via alternative methods of gas or electricity.

It is noted that the Energy Security section primarily focuses on fossil fuel and electrical supply and how this is to be secured into the future. In the near future there will be limited fossil fuel which is indigenous to Ireland. From a security of energy supply perspective that limits indigenous energy supply to intermittent wind and solar generation. Without significant advances in battery technology, this will leave Ireland reliant on international fossil fuel suppliers indefinitely. With a stated national vision to decarbonise the energy system and have a low carbon economy by 2050 with improved security of supply, IrDEA recommends that a roadmap is developed to further exploit indigenous energy sources such as geothermal and biomass to provide the required thermal demand, store excess renewable generation and reduce the energy import requirements continually.

A future low carbon economy will need to use all indigenous sustainable sources of energy in Ireland and todays plan should be outlining how this will be facilitated by at least using the technologies which are proven today and used in other jurisdictions to achieve such low carbon economies.

Recommendation: the NECP should include district heating as a solution to improve energy security in Ireland. Also, the NECP should propose that heating schemes in Ireland’s apartments (Dublin, Cork, Galway, Limerick, and Waterford) should only be allowed if they deliver the heat to a building from a central heating system i.e. from a boiler/heat pump in the basement or via a district heating network. This will avoid a ‘lock-in’ to individual solutions which are developed inside each dwelling.

9 H. Lund, P. A. Østergaard, D. Connolly, I. Ridjan, B. V. Mathiesen, F. Hvelplund, J. Z. Thellufsen, and P. Sorknæs, “Energy Storage and Smart Energy Systems,” Int. J. Sustain. Energy Plan. Manag., vol. 11, pp. 3–14, 2016.

Submission to ‘Draft NECP’ Consultation from DCCAE: February 2019

6 Increasing Renewable Heat will require stronger signals and/or support At present, the only ‘renewable heat specific’ policy in the NECP is the SSRH (note: the current grant scheme for residential heat pumps from SEAI is not currently mentioned in the NECP which is a second policy dedicated to renewable heat). Although there are a number of indirect policy measures that will impact renewable heating, IrDEA recommends that more dedicated renewable heating policies are considered to ensure that the growth rates envisioned can be realised. Also, the NECP suggests that fossil fuel prices will be a key driver of renewable heat:

“The effect of fossil fuel prices on uptake of renewable heat technologies is significant as can be seen by comparing the results from NECP4 with NECP2” and “uptake of biomass boilers and heat pumps continues to grow in these sectors in the latter half of the 2020s (after SSRH supports come to an end) as fossil fuel prices are assumed to reach sufficiently high levels to drive this fuel switching”

Relying on fossil fuel prices to drive so much growth in renewable heat would seem like a very high risk strategy and therefore, IrDEA recommends that if the NECP is to realise its ambition for renewable heat, then a minimum fossil fuel price should be considered over the next decade (via fuel levies or carbon taxes). This will ensure the renewable heat industry can grow in a stable and sustainable way over the next decade.

7 Bioenergy should be prioritised where it adds most value The NECP should also ensure that the use of bioenergy in the heating sector is sustainable and also that the heating sector is the best use of this valuable resource. With the objective of decarbonisation, IrDEA sees high-efficiency combined heat and power (CHP) and heavy-duty transport as the most valuable use of bioenergy. In transport there are very few low-carbon alternatives available compared to other sectors. With CHP the most efficient use is made of this low carbon fuel, contributing further to the decarbonisation objective.

IrDEA welcomes the NECP’s aim to develop 1.6 TWh of biomethane injection to the gas grid, but as mentioned above IrDEA would recommend that this is prioritised in order to further the decarbonisation objective, rather than directly for heating which can utilise heat pumps and district heating instead.

8 District Heating can be a cost-effective form of Energy Efficiency Beyond 2021, the Government has identified a technical potential to save up to a further 16 000 GWh in the period towards 2030. Costs should be compared on a like for like basis to evaluate most economically efficient method.

There was €107 million investment in 2018 that saved 4.83 GWh (and 120 000 tons of CO2), which equates to a unit cost of €22M/GWh. If 16,000 GWh additional savings is required at the same unit cost of

Submission to ‘Draft NECP’ Consultation from DCCAE: February 2019

€22M/GWh, then it will require €350 Billion or €35B per year over the next ten years. This could be even higher as the NECP states that it will require deeper and more expensive measures, especially in the building sector and to decarbonise heat. In contrast, if Ireland develops district heating networks in urban areas, then it can utilise all of the excess heat available (which is currently wasted) to replace the use of existing fossil fuel boilers, primarily oil and gas. There is ~4 TWh of heat in Dublin alone and based on the typical cost of district heating in Denmark, it costs less than €1 M/GWh. Therefore, it could be much cheaper to improve the efficiency of the energy system by using the existing waste heat to supply the thermal demands of our buildings, than to spend money reducing the thermal demand of our buildings.

The NECP should ensure that these various options are compared and the development of policy should consider requiring the most economic method of heat supply to be provided and that all such projects are evaluated in such a manner as per Paragraph 3, Article 14 of EE Directive and Article 6 of Buildings Directive.

9 Policies and measures should include a mix of approaches IrDEA recommends that the NECP defines a stable energy policy as regards the targets and measures by aiming for a reasonable balance between enforcement/regulation, tax incentives and subsidies using the market forces. Some examples include:

• Increase taxes on fossil fuels as the best instrument to a market force driven sector • Let tax on electricity be a percentage of the market price rather than a constant price in order to encourage smart demand response and better reflect the fuel production (no tax on surplus wind and additional tax on critical electricity consumption) • Let part of the revenues be reserved for subsidies to avoid, fuel poverty • Let part of the revenue be reserved for co-financing the energy and transport infrastructure (district heating and electrified public transport and bike lanes) • A balanced enforcement to buildings to renovate, insulate and connect to district heating in cities • Electricity market price to all consumers and implement “smart grid distribution tariffs”, which offers incentives to demand response, e.g. low distribution tariff to mainly large consumers, which can disrupt consumption as long as needed for capacity in the network.

EU directives require a special focus on the objectives of good indoor climate and providing energy services in the most cost-effective way rather than on specific targets for each sector. For example, EU directives which call for a holistic approach integrating sectors include:

• Article 14 in the EE directive: https://eur-lex.europa.eu/legal- content/EN/TXT/?qid=1399375464230&uri=CELEX:32012L0027 • Article 13-3 in the RE directive: https://eur-lex.europa.eu/legal- content/EN/ALL/?uri=CELEX:32009L0028

Submission to ‘Draft NECP’ Consultation from DCCAE: February 2019

• Article 6 in the building directive: https://eur-lex.europa.eu/legal- content/EN/ALL/;ELX_SESSIONID=FZMjThLLzfxmmMCQGp2Y1s2d3TjwtD8QS3pqdkhXZbwqGwlg Y9KN%212064651424?uri=CELEX:32010L0031 10 The impact assessment of planned policies and measures should use a holistic energy system approach The NECP should consider the existing and new interactions between the electricity, heat and transport sectors which will enable each sector to contribute to meeting the objectives of the others. To do so, the NECP should consider interactions such as the following:

• The power sector could supply power to the district heating, not least via power plants next to cities so it is possible to use the waste heat but consider how to integrate the fluctuating wind and solar PV; • The gas sector supplies gas to the power and the district heating plants, as well as directly to buildings for heating and cooking; • The district heating sector which can transfer renewable energy and CHP to the buildings, not last integrating fluctuating wind energy and any other surplus heat source, e.g. from data centers; • The district cooling sector for supply of cooling for buildings who need air condition and process cooling in symbiosis with the district heating sector; • The waste sector, to ensure that energy is recycled as an alternative to dumps; • The agriculture and forest industry, which could deliver waste products or domestic biomass to gas and district heating; • That investments in renovation is equally divided on insulation, HVAC installations and the supply from district heating or individual heat pumps, based on same discount rate which is used in the planning of district heating grids 11 District heating could be a key research area in the NECP As district heating is a relatively new technology in Ireland, it could be defined as a key area of focus in the Energy Research Strategy.