The normative framework of single Member States has been insufficient to push the development of cogeneration sector and to offer the correct respondance to european efficiency directives. This trend emerged in the last Cogen Europe national snapshot survey. Interview with the Managing Director Hans Korteweg.
Can you give me more details about the research, for example which are the most significant results emerging from the survey?
This report is based on contributions by CHP experts from the EU28 and Turkey, representing 21 countries with an aggregated CHP installed capacity of 119 GWe – equivalent to 94% of the region’s total installed capacity. For the first time this year, the survey has received a contribution from Japan, which was summarised separately. The data was collected by COGEN Europe between June and November 2017 through an online survey. Most respondents represent national CHP trade associations. The aggregated results in the report are weighted by the share of each participating country in total installed CHP capacity in the EU28 and Turkey. The survey questionnaire included multiple choice and essay questions focusing on the latest CHP market and policy developments, and CHP market outlook expectations.
The Survey reveals several key results:
- Despite the identified cost-effective potential for growth in the cogeneration sector, the sector overall has experiences slower growth than expected.
- There are some pockets of growth in specific CHP segments (i.e. renewable CHP, small commercial CHP) or in certain countries (e.g. Belgium, Sweden, Czech Republic and Turkey). However, given that these segments and countries represent a small proportion of CHP in Europe, it has not yet translated in overall growth in CHP.
- Policy stability represents a key driver for CHP in Europe. While some countries have provided favourable policy frameworks (e.g. Germany, Czech Republic, Slovenia), in most countries investors are put off by regulatory uncertainty and not sufficient political support for CHP.
- In this respect the implementation of EU legislation on CHP has been weak and patchy at national level. More can be done to unlock the existing potential for CHP growth
- Despite these hurdles, CHP outlook for the next five years appears positive. Experts representing 60% of the CHP installed capacity in Europe expect growth to pick up pace for CHP.
Are there differences compared to the snapshot of past years? Which ones?
The Survey has been carried out every year for the past 6 years. Compared to previous years, the prospects for CHP appear to have improved. The industry sees a lot of new opportunities for CHP providing flexibility services and being rewarded for both environmental and reliability benefits, especially in industry.
Which are the segments most promising to speed the growth of the cogeneration?
There is potential for CHP to grow in all relevant sectors, from district heating, industrial and commercial CHP to micro-CHP. Given the ambitious energy and climate objectives that the EU has committed to, the role of CHP is changing to contribute towards those objectives.
As the share of renewable energy fuels is increasing in both electricity and heat production, the energy system costs are increasing. CHP will continue to provide energy efficiency, while also playing a more important role as an energy systems integrator, providing flexibility across electricity, heat and gas networks.
On-site cogeneration in increasingly popular, given the higher awareness of energy consumers on the benefits of producing your own reliable heat and electricity. Italy for instance is championing integrated systems involving cogeneration using biogas in small businesses (one of which was recently awarded by COGEN Europe – see description below).
The Award for Market Development for organisations went to the Italian Cooperativa Agricola Speranza, for representing the future of CHP as a flexible and dispatchable energy solution. In the words of Piero Gattoni, President of CIB – Consorzio Italiano Biogas: “Consorzio Italiano Biogas is very proud of the Award assigned to its member Cooperativa Speranza, a farm with biogas plant which built a district heating to heat up the nearby Institute for the Research and Treatment of Cancer. This represents a clear example of high commitment towards the local community with a perfect integration within the territory, moving a step forward in the key role of agriculture in the next future.
Another opportunity for CHP emerging business models that valorise the flexibility of the systems. There are several new CHP projects in Germany under development (e.g. Kiel Stadtwerke), where highly flexible CHPs are supplying heat to the city and flexible electricity reacting rapidly to electricity price signals, while storing the heat for later use.
How the EU Energy Efficiency Directive can help the develpment of the cogeneration? Why do you affirm that Clean Energy Package coul fails to deliver the “energy efficiency first” principle at national level?
The Energy Efficiency Directive sets out a good framework for cogeneration. It defines high efficiency cogeneration that can and should be promoted, based on the identified potential by each Member State. While a good framework at the EU level, the implementation by national governments has been unambitious an lagging behind. In Italy for instance the potential for CHP growth has been underestimated in the government assessment, compared to other similar studies. Even when the additional potential was realistically assessed, Member State governments fell short of developing policy that effectively supported the sector. We have identified several policy barriers, which shift attention away from CHP: 1) There is quite a lot of focus on electricity and heat in silo and not so much attention given to local integrated energy planning, which optimises and maximises efficiency and low carbon energy generation across all energy systems 2) The significant push for renewable electricity, without much focus on increasing the share of renewable heat and renewable gas, lowering electricity prices on wholesale markets, while subsidies and higher grid costs increased retail electricity prices for consumers. 3) Meanwhile, the higher share of renewable electricity production, did not necessarily translate in proportional decarbonisation. This is because without prioritising efficient cogeneration, the remaining energy consumed will continue to be supplied by inefficient and very polluting generation.
The Clean Energy Package represents an opportunity for the entire energy sector to put “energy efficiency first”, one of the key pillars of this legislative package. Yet there is a danger of cherry picking in how “energy efficiency first” is understood. Instead of applying this principle across the entire energy value chain, the focus has been primarily on end use efficiency, namely insulating buildings and promoting more efficient home appliances. In the implementation of Clean Energy Package provisions, governments must also make sure that the energy supplied to homes or businesses is also efficiently produced. In addition, rather than substituting energy efficiency with renewable energy, we must ensure that all renewable energy sources are produced and consumed efficiently. When applying energy efficiency to the entire energy system, the value of cogeneration becomes obvious, as it helps deliver the highest ambition in terms of energy efficiency and decarbonisation at the lowest cost for both the consumer and the energy system.
Key provisions in the Energy Efficiency Directive were reviewed as part of the Clean Energy Package, including the EU energy efficiency target and the energy savings obligation (i.e. implemented through the White Certificates scheme in Italy). Yet the review of the CHP provisions, not part of the Clean Energy Package because of the later implementation timeline, is still upcoming. With the potential review of CHP provisions in the Energy Efficiency Directive, there is an opportunity to show Member States that cogeneration can help them deliver the increasingly ambitious energy efficiency objectives. While today cogeneration contributes towards 14% of the 2020 energy efficiency target, by 2030, with a doubling of CHP generation, it can contribute up to 20% of the 2030 EU target. Even though CHP projects are more complex to implement compared to low hanging fruit (e.g. higher efficiency lighting), the impact is much larger and longer term.