District Energy Road Map for Germany - Concept for the future

District Energy Road Map for Germany Concept for the future IDEA/CDEA Annual Conference, Toronto (CAN), Monday, June 27, 2011 Werner Lutsch Managing Director/CEO

AGFW | The German Energy Efficiency Association

HEATING | COOLING | CHP HEATING | COOLING | CHP Source: AGFW

110624_Roadmap_Germany_for_Energy_Efficiency_luw

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District Energy Road Map for Germany - Concept for the future » AGFW - Who we are

LAW & EUROPE URBAN DEVELOPMENT & KNOWLEDGE MANAGEMENT

TECHNOLOGY & STANDARDISATION

RESEARCH & DEVELOPMENT ENERGY POLITICS & HEAT MGMT

ORGANISATION & LABOUR SAFETY

» AGFW is the efficient, independent and impartial association promoting district energy/heating, cooling and CHP at national and international levels » AGFW reunites round about 450 (regional und municipal) district energy suppliers and industrial operators of this industry in Germany and Europe

» AGFW represents over 95% of the heat load connected to German district heating systems – the largest scale in Western Europe » AGFW means 40 years experience in this field

of

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District Energy Road Map for Germany - Concept for the future

12,5

4,3

The district heating connected load in Germany is approximately 57,000 MWth.

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The district heating customers are: 46% private homes, 36% public buildings, commercial and trade sector and 18% industry.

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The total length of the district heating grid in Germany is approximately 100,000 km.

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Over 84% of District Heating is generated in high efficient cogeneration (CHP) plants

10,8

» 8,0

2,1 2,3

3,8

Schleswig Holstein

6,8

8,2

8,3

4,7

5,9

21,4 21,2

6,8

5,6

24,4

7,0

» Facts and figures – district heating and CHP in Germany

1,3 1,0 2,1

Mecklenbur gVorpommer n Hamburg

5,3 4,0

Berlin

SachsenAnhalt 2,9 3,0 3,3

4,4

Nordrhein-Westfalen

5,8 5,6

6,1 6,4

7,7

Niedersachsen

Brandenburg 3,6

3,1 3,2 4,0

Bremen

Sachsen

9,2 6,6

Saarland

8,0

9,1

RheinlandPfalz

11,2 10,5

1,1 0,9 1,0

1,9 1,8 1,7

Thüringen Hessen

Bayern

BadenWürttemberg

Connected load Network supply Grid length

HEATING | COOLING | CHP AGFW | The German Energy Efficiency Association

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District Energy Road Map for Germany - Concept for the future » District heating market share / EU and Germany

district heating; 14% oil; 32%

90%

electricity; 4% coal; 2%

80% 70%

others; 1% gas; 48%

60% 50% 40% 30% 20% 10% 0% IS

PL

S

DK LT

UA

LV CZ EST PL FIN AT RO BG HU DE SK SLO HR CH GB

N

F

NL

IT

HEATING | COOLING | CHP AGFW | The German Energy Efficiency Association

Source: Source:AGFW AGFW/ Euroheat & Power/ BGW

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District Energy Road Map for Germany - Concept for the future » German Energy Policy - Political Targets of the government

The framework for the energy concept (2010)

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Reducing CO2-emissions by 40 % until 2020 and by at least 80 % until 2050

Increasing the share of renewable energy in electricity production to at least 35 % until 2020 Increasing the share of renewable energy in the gross final consumption of energy to 18 % until 2020

Increase in the relative share of CHP electricity from today 11% to 25% in 2020

NEW

» »

Permanently shut eight nuclear power plants immediately after the Fukushima crisis in Japan, and closing the remaining nine in stages up to 2022. Still focus primarily on Renewable Energy (wind on- and offshore, solar and bioenergy) and consider as a second key factor Energy Efficiency (buildings, use of District Energy) – but also a return of conventional power and imports HEATING | COOLING | CHP

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District Energy Road Map for Germany - Concept for the future » Potential – district energy expansion targets

Increasing CHP-electricity up to 25 % leads to a corresponding expansion of the district heating market share to 18 – 22 %.

today

86 % gas, oil, others

year 2020

DH 14 %

DH 18% - 22 %

78 - 82 % gas, oil, others

84 TWh

54 TWh

CHP-electricity (public supply)

CHP-electricity (public supply)

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District Energy Road Map for Germany - Concept for the future » German legislation to implement the policy

German CHP law (2009) – main points Doubling CHP electricity share in the market to 25 % until 2020.

» » » »

Continuing CHP-allocation on current level, based on a premium for electricity from CHP Support for the construction of new and refurbishment of old CHP-Plants Support for high efficient CHP Support for district heating grids based on high efficient CHP and/or RES

Renewable Energy Heat law (2010) – main points Increasing the use of renewable energy in the heating sector from 6 % to 14 % in 2020

» » »

CHP-based district heating supply as substitute for renewable energy Obligation for the use of biogas in CHP-plants Compulsory heat planning regulated at federal level HEATING | COOLING | CHP

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District Energy Road Map for Germany - Concept for the future » What the sector is offering to implement these political goals

In order to reach the political targets, we are willing to ...

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» » »

significantly extent the district heating networks until 2020, realize the extension and densification potential along the district heating networks until 2050,

increase the share of CHP and district heating significantly over the already ambitious political goals (> 25%), increase the share of RES in district heating systems significantly, consisting of a mix of biogas, solid and liquid biomass, solar and geothermal energy as well as industrial waste heat Communicate the environmental performance and benefits of district energy

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District Energy Road Map for Germany - Concept for the future

» Six main bullet-points to communicate (1)

Heat insulation on buildings will not confront District Energy with a fundamental problem » »

»

Buildings using district heating services/CHP in Germany already have a low heat consumption With heat insulation in existing buildings advancing, freed-up district heating capacity can be put to use for further development of heating systems

All other forms of heating will be affected by heat insulation to a greater degree because they have inferior parameters to start with, are directly affected by heat insulation activities, and fail to generate true efficiency in the energy system as a whole.

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District Energy Road Map for Germany - Concept for the future

» Six main bullet-points to communicate (2)

District Energy is increasingly becoming renewable and low-carbon » » »

District heating is ideally suited for the use of nearly all renewable energies (biomass/biogas, geothermal energy, solar thermal energy etc.) Efficiency increase implies a higher share of CCGT plants in connection with district heating Hard-coal-fired CHP plants featuring CCS are a valid option for the future according to the German governmental Energy Scenarios

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District Energy Road Map for Germany - Concept for the future

» Six main bullet-points to communicate (3)

District Energy is ideally suited for urban spaces with potential for densification »

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District heating offers efficiency and renewable energy use for urban spaces with potential for densification of the system but with limited potential for roofmounted solar thermal energy or geothermal heat pumps (little floor space available). Pellets and/or solid biomass used in central CHP plants, with heat distributed by district heating systems, help avoid particle emissions and other air pollutants.

District heating leaves the cityscape untouched, is “invisible“, safe, odourless (in comparison with private use of e.g. biomass) and helps reduce traffic volume.

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District Energy Road Map for Germany - Concept for the future

» Six main bullet-points to communicate (4)

With the reduction path targeted at up to – 85 % GHG-emissions on the horizon 2050, oil- and natural gasfired heating will have to disappear from the heat supply system » »

The accelerated expansion of biomass-fired CHP plants and renewable heat will lead to a continuous reduction of carbon emissions of district heating mix as early as in the next few years. In future, too, the lion’s share of district heat will be produced by highly efficient CHP plants working at distinctly reduced carbon emission levels.

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District Energy Road Map for Germany - Concept for the future » The phase-out curve of technologies Reduction of GHG emissions according to the “Energy Scenarios for an Energy Concept of the German Government“ , Project 12/10 GHG

GHG carbon equivalents

100%

75% - 40% Fuel oil/calorific value (today)

50%

Gas/calorific value (today)

25% - 80% - 85%

1990

2020 end of Oil

2030

end of Gas

2040

District heating/mix (today)

2050 HEATING | COOLING | CHP

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District Energy Road Map for Germany - Concept for the future

» Six main bullet-points to communicate (5)

CHP/DH funding comes at a comparably low price » » »

Comparably low price, high ecological impact and highest funding efficiency; Recommendable from the perspective of the national economy, i.e. the burden it imposes on households and the industry amounts to 0,5 % of the electricity price (approx. 1/15 of the electricity tax); Strengthens the national economy through increased value creation and local investment, and does not burden state coffers.

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District Energy Road Map for Germany - Concept for the future

» Six main bullet-points to communicate (6)

District Energy and renewable energies play together well. To optimize them further, preconditions must be put in place for heat accumulation. » »

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CHP units with heat accumulators are ideally suited for balancing the system (runup, run-down and scheduling dynamics). Photovoltaic and CHP are anti-cyclical by nature; for example, overlapping periods of time (heat in winter, PV in summer) are minimized.

Biomass/biogas has already been used as a fuel for CHP plants and is well suited for balancing. To balance several hours of storm fronts, heat accumulators with electrical boilers at short notice appear feasible as future elements of the district heating system. [The example of Denmark has demonstrated that a high share of CHP (50 %) can ideally complement a high share of wind power (19%)]. HEATING | COOLING | CHP

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District Energy Road Map for Germany - Concept for the future » What the sector needs to implement these political goals

In order to reach the targets, we need ...

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a stable political and legal framework, political commitment to CHP and DHC in the context of climate change and energy efficiency targets, reconcilability of RES and CHP and district heating as equal ways of reaching political targets,

A level playing field in the heating market, especially concerning the Emission Trading Scheme 2013, which is limited to installations > 20 MW

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District Energy Road Map for Germany - Concept for the future

HEATING | COOLING | CHP AGFW | The German Energy Efficiency Association

Many thanks for your attention!page 17

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