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Gas crisis causes rethink of energy sources for district heating

In recent years, energy companies operating large combined heat and power plants were looking to switch from coal to gas as a stepping stone towards decarbonisation

By: EBR - Posted: Thursday, November 3, 2022

Across Europe, about 10% of heat is supplied by district heating systems, which pump heat through underground water pipes across neighbourhoods or cities.
Across Europe, about 10% of heat is supplied by district heating systems, which pump heat through underground water pipes across neighbourhoods or cities.

by Dave Keating

In recent years, energy companies operating large combined heat and power plants were looking to switch from coal to gas as a stepping stone towards decarbonisation. Now, soaring gas prices have put question marks over how to lower emissions from these energy and heat-producing installations.

Across Europe, about 10% of heat is supplied by district heating systems, which pump heat through underground water pipes across neighbourhoods or cities.

The heat has usually been generated as a byproduct of power generation and is generally considered more climate-friendly than individual gas boilers in each home.

But the extent to which that’s true depends greatly on what fuel is being used in the power generation.

Many of Europe’s large legacy district heating systems have historically been fed by combined heat and power (CHP) coal plants, particularly in Eastern Europe, where sprawling pipe networks were built by Communist governments decades ago. Today, 26% of Europe’s district heating is still supplied by plants burning coal.

Before Russia’s invasion of Ukraine, some eastern EU countries had made plans to switch their district heating systems to fossil gas. This was seen as a cost-effective way of meeting the EU’s 2030 emissions reduction targets since gas produces about half the amount of carbon emissions when burned.

But with the sharp increase in gas prices caused by the Ukraine war, these plans are being re-evaluated.

A recent study done for the European Commission identified a number of ways that these systems could achieve intensive decarbonisation by integrating renewable and carbon neutral energy sources and technologies, and participating in energy system integration.

Legacy systems running on coal

The problem is that Europe’s large legacy systems are difficult beasts to change.

“We have a challenge with decarbonising the larger systems, which historically have been based on fossil fuels – it requires a major effort to phase them out,” said Stefan Moser, who heads up the buildings and products unit at the European Commission’s energy department.

Speaking at a recent EURACTIV event, Moser noted that several pieces of EU legislation, such as the Energy Performance of Buildings Directive, the Renewable Energy Directive and the Energy Efficiency Directive, are trying to “promote neighbourhood solutions” to heating and “make sure we have a more systemic approach”.

The decarbonisation of heating is a major challenge for Europe: heating buildings is responsible for 40% of EU emissions and 36% of final energy use, according to EU statistics.

And this is a challenge for district heating too, according to the Czech Republic, which currently holds the EU’s six-month rotating Council presidency.

Tomas Smejkal from the Czech industry ministry’s energy strategy unit said there is a rethinking happening of how district heating systems are organised that could be more comprehensive than the simpler coal-to-gas switch being thought about before.

“Some of the district heating CHPs were oversized – they were built to supply more heat than is generally needed. So some kind of downsizing is good,” he said at the EURACTIV event. “We are motivating CHP to switch to other fuel through the modernisation EU fund and the distribution of the recovery and resilience fund.”

“Bigger CHP units are decentralising,” he said, noting that large systems with one major central unit are now “switching to smaller units.” These smaller units can more easily operate with heat pumps or geothermal rather than fossil fuels.

To summarise this new approach, Smejkal came up with a formula: “Change the source, downsize, and change the fuel.”

Massive investments needed in renewables

The need to diversify energy sources for district heating was amplified by Uta Wei?, programme lead for buildings and heat grids with the German think-tank Agora Energiewende.

With the cost of renewable electricity and heat pumps coming down, it is now becoming more attractive to skip the planned intermediate step of switching coal CHP plants to gas and go directly to a renewable refit, she explained.

And there is a wide variety of renewable energy options available to power these systems, she said at the event.

“This is really a technology that will help us tap into renewable energies like geothermal, environmental heat like wastewater plants, rivers, solar. All these renewable forms of feed that you can’t really tap into on an individual basis. So it’s really the solution to develop carbon-neutral heating,” she said.

What is missing from the debate, Wei? added, is that there are massive investments needed to make this happen.

“In our view, district heating is hugely important for reaching climate neutrality,” she stressed. “In Germany, we have today about 11% of residential heat from district heating and according to our scenarios, we would need to reach a quarter of all residential heat in Germany in 2045 if we’re planning to have climate neutrality.”

However, this does not mean that decarbonisation through gas will not happen at all, as some still see gas as the fastest and most cost-effective way to reach the EU’s decarbonisation targets.

In Poland, for instance, plans to switch from coal to gas in district heating are still on track, despite the surge in gas prices.

“Renewables in district heating systems cannot deliver the heat supply for the biggest agglomerations based on a heating system with hundreds of megawatts of capacity,” said Wanda Buk, vice president for regulatory affairs at PGE, Poland’s largest electricity company.

“That’s why the largest investment in Poland is planned for the replacement of our generation with the high-efficiency electricity-gas cogeneration,” she said at the EURACTIV event.

PGE has plans to reduce CO2 emissions from their district heating systems by 50% by 2030 and will do this by installing 1.9 GWt in new heat capacities and completing the coal phase-out by 2030.

Much of this reduction will be achieved by switching from coal to natural gas, Buk said, adding that the new gas infrastructure will be “100% hydrogen-ready” when cleaner gases become available.

But all of this requires a significant amount of investment, explained Pauline Lucas from Euroheat and Power, an industry association representing the district heating sector.

According to Lucas, the EU legislative frameworks now in place can encourage this investment, but more will be needed.

“In the Renewable Energy Directive and the Energy Efficiency Directive, we’ve seen a push for heating and cooling planning at the municipal and national level so that’s very positive. For district heating, we see revised targets and a gradual approach to decarbonisation of the sector.”

*first published in: Euractiv.com

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