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This document outlines essential strategies for enhancing energy efficiency in district heating systems across the EU. It emphasizes the importance of standards, certification, and benchmarking while highlighting funding opportunities such as grants and subsidies. Key areas include cogeneration promotion, regulatory frameworks, energy audits, and investments in R&D for optimal performance. The role of various stakeholders, including government and the private sector, is analyzed, along with best practices and successful examples from selected EU countries.
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Energy Efficiency in District Heating and Joint Implementation Mark van Wees CAP SD Energy and Climate Consultants Moscow, 21-23 August 2006
District Heating Market Share Source: IEA
Energy Efficiency in District Heating Source: IEA
1. Promotion of energy efficiency in district heating systems in the EU • Standards and certification • Regulation of boiler efficiency • Energy audits and certification • Benchmarking • Energy efficiency benchmarking in tariff system • Voluntary programmes • Tax incentives • Investments in energy efficiency • R&D • Best practice programmes • Benchmarking, technical expertise, auditing • Financing (by governments) • Project preparation grants and investment subsidies • Guarantees • Carbon financing
Share of cogeneration Source: IEA
2. Promotion cogeneration in the EU • Fair market conditions (cost sharing between electricity and heat) • Bonus payments and feed-in tariffs • Subsidies/grants for new capacity • Tax incentives • Investments in energy efficiency • R&D • Best practice programmes • Benchmarking, technical expertise, auditing • Financing • Project preparation grants and investment subsidies • Guarantees • Carbon financing (Joint Implementation)
3. Promotion of energy efficiency in end-use of heat (buildings) in EU • Metering and control • Building energy codes • Energy audits and certifications • Information campaigns • Tax incentives • Investments in energy efficiency • R&D and best practice programmes • Benchmarking, technical expertise, auditing • Financing • Project preparation grants and investment subsidies
Joint Implementation Baseline emissions Ton CO2e/yr ERUs Project emissions 2012 2008 time
Examples JI Projects in District Heating (approved and contracted) • Bulgaria (cogeneration) • CHP Portfolio: gasturbine + gasengines ( replacing heat only boilers) • Extension DH network • Romania (boiler efficiency) • Increase boiler efficiency at coal fired CHP plant • Romania (reduction heat losses) • Replacement secondary distribution network • Replacement heat exchangers in substations • Poland (renewable energy) • Feed-in geothermal energy in district heating replacing coal-fired
Energy efficiency with the context of district heating reform Source: IEA
Carbon Market 2004-2005 Source: PointCarbon “Carbon 2006”
Austria Netherlands EBRD ECF Belgium Standard Bank Worldbank KfW TGF Sweden Finland Denmark IFC JCF-JBIC NEDO
Categories of Buyers • Government: buy for Kyoto compliance / risk averse / inflexible in transaction / passive approach to project identification / tenders • Private sector: buy for compliance EU ETS / some flexibility in transaction / medium risk / direct project-by-project approach in purchasing • Banks/funds/traders: buy for trading / can serve different buyers / balancing risk versus profit / flexible transactions and price structures / active approach to project identification
Two typical buyers in Russia • Passive buyer: • Now waits for certainty on JI infrastructure (LoA) • Limited presence in Russia • New proposals in Russia on the shelf or treated with care • Examples: Belgium, Netherlands • Active buyer: • Invests in new project identification and development • Willing to pursue (conditional) transactions • Strong presence in Russia (agents, existing network) • Examples: EBRD, Denmark, traders
Differences between buyers? • Interest in Russian market • Volume to be purchased • Preferred/eligible projects • Risk profile • Price and other transaction terms • Flexibility in contract terms • Support in project development • financial, technical, moral • Combination with project finance
International Financing Schemes offering project+carbon financing • World Bank (IFC) • European Bank for Reconstruction and Development (EBRD) • European Investment Bank (EIB) • Nordic Environment Finance Corporation (NEFCO) + Private sector schemes
How to select a buyer? • Status of your project (initial idea or fully developed)? • Your capacity in project development? Required technical and financial support? • Small-scale project? Others? • Combination with project financing necessary? • Risk profile project and host company? • Financial objectives (revenues, price, upfront payments, etc.)?
Marketing your project • Market research and orientation • Shortlist of buyers • Non-exclusive initial discussions with buyers • Exclusivity and compensation preparation costs • Preparation documentation (PDD) • Negotiations on transaction • Emission Reduction Purchase Agreement
Finding the right buyer • New buyers still arrive • Others may change their strategy in Russia • Some may even leave again • New mechanisms in the future Study the market and shop around!
Conclusions • Increasing energy efficiency in district heating is important for economic, social and environmental reasons • Potential JI is substantial and demand is still growing • Decision of the Russian government on JI badly needed • Active involvement of the district heating sector in the national and international debate on JI is very important (e.g. National Program) !