The energy efficiency sector looks to supporters of the Energy Union to change a historic ‘do-little’ approach to one of consistent, sustained action in support of Europe’s strategic energy goals, writes Dr Fiona Riddoch

The 2014-2019 European Commission (EC) got off to a robust start by unveiling the new EU Energy Union framework in February 2015. The Energy Union is an early initiative of the new EC president, Jean-Claude Juncker, who has promised an agenda for jobs, growth, fairness and democratic change.

The Energy Union concept was first floated as a response to the external challenges of security of supply posed by the EU’s significant dependency, acute in some member states, on Russian gas supplies. In its final form, the title of the new Energy Union reveals a broader scope than energy as a commodity for purchase. The Energy Union clusters existing energy initiatives into one framework. As published, the European Energy Union is called: ‘A framework strategy for a resilient Energy Union with a forward-looking climate change policy’. The new politics of this Commission reflected in the Energy Union is summarised as ‘security, solidarity and trust’, suggesting more consideration of member-state concerns and recognition that deep co-operation is required. While recent Commissions have been able to concentrate heavily on the energy and climate agenda, the Energy Union widens the energy objectives, re-focusing on all three strategic objectives of EU energy policy: competitiveness, sustainability and security of supply, perhaps suggesting that there is a balance to be struck between these and maybe even compromises to be made.

Strategic energy goals

The document has surprised some by putting energy efficiency so prominently at the heart of the matter. In the past, energy efficiency has been much talked of and only periodically pursued. The energy efficiency sector looks to supporters of the Energy Union to change this historic approach to one of consistent, sustained action in support of all three strategic energy goals.

The language of the Energy Union is explanatory and exploratory, indicating the framework within which action should be taken by the Commission over the coming four years. There are five so-called ‘dimensions’ to the strategy, a list of actions for the EC to execute and a timetable (Roadmap) with some very pressing action deadlines for DG ENER, with significant new legislation in 2016 and several important communications in 2015.

Clearly the inclusion of energy efficiency demonstrates the Commission’s ongoing commitment to it, and with that the substantial legislation around cogeneration. There are several action items which may well have an impact on the cogeneration sector and which the sector needs to follow closely. The most pressing are arguably:

• An EU Strategy for Heating and Cooling by end 2015;

• Proposal for a new electricity market design in mid-2015/2016 (including the issue of self-generation);

• Review of the Energy Efficiency Directive as of 2016;

• Proposal for a new renewable energy sources package to be published in 2016-2017 (which will include a new policy for sustainable biomass and a Communication on waste-to-energy).

All of these represent opportunities for the cogeneration industry to expand as the EU seeks to fulfil its strategic aims. There is no doubt that cogeneration can help Europe meet its goals. The member states have proposed that the deployment of CHP in Europe could be doubled and recent work conducted in the framework of the EU-funded CODE 2 project shows that cogeneration is poised to deliver substantial, real CO2 and primary energy savings by 2030 provided that the Energy Efficiency Directive (EED) is conscientiously implemented in member states. The CODE 2 project created a cogeneration roadmap for each member state and then estimated the CO2 and primary energy savings to be delivered by building new and refurbishing existing CHP plants.

The project estimates that, in 2030, CHP could generate 20% of the EU’s electricity using a range of increasingly renewable fuels. The CHP Roadmap projections estimate that new and upgraded CHP capacity beyond 2012 would further reduce total inland energy consumption by 870 TWh and additionally reduce CO2 emissions by 350 Mt in 2030. Fifteen percent of the EU’s heat today comes from CHP (850 TWh). The CODE 2 project estimates that this heat volume will increase to 1264 TWh in 2030.

The EU Strategy for Heating and Cooling, as introduced in the Energy Union, has a natural point of departure in the ‘comprehensive assessment of the heating and cooling potential’ which is requested by Europe’s latest piece of energy efficiency legislation, the EED. Indeed, while a heat strategy is potentially a good thing for cogeneration, it has the potential to be one more energy ‘silo’ for policymakers, perpetuating the single-topic thinking which stops Europe’s energy policy from taking a much-needed look at the energy system as a whole: across all fuels, form primary energy to end use. A heat strategy could take the comprehensive assessment required by the EED, an assessment which must include both heat and electricity, and develop it, further refining the analysis, introducing a bottom-up approach and considering the real time interactions between energy sources in the delivery of energy flows to customers. The risk for CHP is that the heat strategy, instead of improving the situation for CHP, adds a range of policy measures focused purely on heat to the existing range of policy measures focusing purely on electricity – a recipe for trouble for the CHP sector.

Roadbumps for heating and cooling

The EU has tended to focus its energy thinking around electricity and fuel supply. Little strategy has been developed to address improving the ways Europeans generate and use heat. Developments thus far have focused on improved use of heat, particularly in buildings, and efforts to reduce fabric heat losses from buildings. On the supply side there has been very little.

The absence of EU-level attention here is partly explained by the ‘local’ nature of heat, whereas the EU’s sphere of influence is greatest in matters affecting Europe as a whole – and, as regards energy supply, at the cross-border level. This could arguably put heat outside the remit of the EU. However, its omission from energy and climate strategy has led to an EU-level approach which fails to seize the opportunities of system-level benefits in optimising network assets and using local resources, and efficiency benefits from considering the delivery of the total energy package to customers. Using the experience of cogeneration, it is clear that neglecting an integrated approach means that fuel efficiency opportunities are missed, not just regarding the joint provision of heat and power, but also for making full use of heat at different temperatures, such as waste heat from a range of different industrial processes, for space or water pre-heating.

The new Heating and Cooling Strategy is an opportunity for Europe to introduce a new perspective to its energy supply network. Tackling the issue of heat requires addressing the local dimension, which inevitably leads to a more integrated view of the opportunities of supplying energy from a more appropriate mix of local sources.

The title of the new strategy – ‘Heating and Cooling’ – may prove to be misleading. A ‘Strategy for Heat’ would be a better title. Heat is used for different purposes in the economy and at different temperatures, including cooling. The easiest heat demand to satisfy is the need for space heating/cooling where the temperature required is relatively low (under 100oC) and where there are several good technology solutions. However, a significant proportion of Europe’s heat demand is in industry and industrial and commercial processes. Here the heat is of a very different temperature and commonly delivered as steam, with specific use and timing characteristics. The Heat Strategy will be deficient if it fails to tackle industrial and process heat, and to recognise the specific nature of this heat and its economic function. It seems inevitable that the preparation of such a heat strategy will reveal the many different options in terms of fuel and sources for supplying space heating needs, while underlying the significant challenge of meeting the more difficult demands of industrial heat. This complexity poses a challenge for policymakers. Heat is the ideal candidate for taking the first steps in developing a more system-level approach to energy strategy.

Cogenerators straddling the heat and electricity markets are in a unique position to appreciate the need for energy system awareness in new policy developments. Particularly in this EU heating and cooling strategy where, yet again, working on just one aspect of the energy system risks underplaying the possibilities of CHP and the integrated energy supply approach.

COGEN Europe advocates that the new Heat Strategy must step away from the old ‘silo’ thinking of fuel, electricity, gas and oil into a more energy system-level approach using the transposition of the EED into national law as a first step.

Heat supply success

The EU’s energy strategy has three main goals: environmental sustainability, security of supply and competitiveness. A very real challenge for the new Strategy will be to find a route to addressing the delicate balance between all three of these energy objectives.

Energy efficiency is generally recognised as supportive of all three of these goals. By improving energy efficiency all along the supply chain, primary energy inputs to meet the same demand are reduced. As a result of these reductions, greenhouse gas emissions drop – and, in a well-integrated energy system, higher efficiency of energy use results in lower energy inputs to the system, making it more competitive.

Beyond a Heat Strategy

The Energy Union does not stop with the Heat Strategy. For the cogen sector, the proposal for a new electricity market design, which will be the subject of a Commission communication in mid-2015, is important. As the only supplier of both heat and power, CHP must be able to operate fully on the electricity network while meeting the needs of its heat customers. The Heat Strategy can start to introduce a framework for heat supply that incorporates thinking around dual supply, which should be taken forward through all EC thinking on the Energy Union.

Dr Fiona Riddoch is Managing Director of COGEN Europe