A Package Arrived for Us!

As promised in last month’s newsletter, the European Commission has at last published its Winter Package, a huge bundle of policy proposals designed to set the EU on a path to its climate and energy objectives for 2030 and 2050. With well over 1000 pages of dense, legalistic text to sift through, the EHP team certainly won’t be short of reading material over the holidays! Below are some first impressions:

What we like!

While there are literally thousands of details to consider, some key points of interest are already quite apparent. First and foremost, the package provides definitive proof that the heating sector in general and DHC in particular are no longer stuck on the margins of the EU policy debate. Heating and cooling networks are in the spotlight. There is more and more recognition of DHC’s potential to contribute to key European goals such as cutting GHG emissions, enhancing supply security and facilitating the increased update of renewables into the energy system. Similarly, the proposal to establish a home for DHC in the future Renewable Energy Directive is a clear and highly visible political signal that our technology is now understood as a driver of the energy transition rather than an alternative. We recognise in the proposals significant efforts on the part of the Commission to address EHP’s most pressing policy concerns, notably the explicit promotion of waste heat and cold and the fair treatment of ‘nearby’ energy supply (i.e. via DHC networks) relative to its on-site (building level) equivalent. Collectively, all of these positive signs tell us that the advocacy work we’ve taken as an industry in recent years has been worth the effort. They tell us that our voice can be heard and that the views of our industry count for something.

What we like a little less…

While the increased awareness of DHC is of course welcome, some of the proposals on the table will likely need to be refined if they are to deliver their stated objectives. An important example is the provision calling for opening of thermal networks to 3rd parties wishing to sell heat directly to customers. Although this is an interesting concept in principle, the likely effect of its application in practice would be to simply increase prices and decrease system reliability, neither of which is particularly compatible with the EU’s ambitions in this field. Other areas of potential concern include the proposal to revise downward the factor used to determine the relative efficiency of electricity generation, continued uncertainty regarding the distinction between the notions of ‘customer’ and ‘final user’ with respect to metering and billing obligations for DHC providers and insufficient clarity as to the placing of waste heat and cold on an equal footing with their renewable counterparts. And we’re only just getting started!

What happens next?

The publication of these proposals marks the beginning of a new phase for EHP and for the European district energy sector. Taken together, the numerous provisions on heating and cooling networks can be understood as an offer from the European Commission to our industry. They are effectively proposing to encourage our growth and development in exchange for assurances about our ability to deliver the best version of DHC; one that is green, affordable and consumer-friendly. To use a term from the Brexit debate, to refuse this offer would be an astonishing act of self-harm. Equally though, it is our right and obligation to negotiate the terms. With this in mind, EHP, together with our members, will work closely alongside the European Council and Parliament throughout the process of transforming these draft proposals into finished pieces of legislation. It will be a busy, challenging and exciting time. We cannot wait to get going!