European regulatory frameworks for heat networks. Dave Hawkey and Jan Webb University of Edinburgh

Transcription

1 European regulatory frameworks for heat networks Dave Hawkey and Jan Webb University of Edinburgh

2 Regula?on? To regulate (OED) To control, govern, or direct, esp. by means of regula?ons or restric?ons. To control, modify, or adjust with reference to some principle, standard, or norm; to alter in response to a situa?on, set of circumstances, etc. Heat networks are the product of coordinated ac?vity across mul?ple actors What are the rules within which actors nego?ate, collaborate, coordinate, etc.?

3 Overview Regulatory systems suppor?ng heat networks Denmark Municipal planning model Norway Spa?al licencing model Netherlands Consumer protec?on model Themes Protec?on of long term development models Coordina?ng heat sources and heat networks Appraisal of heat network opportuni?es and viability Role of local government Balancing constraints with opening opportuni?es

4 Denmark: Planning Model Context 1970s oil crisis exposed dependence on energy imports Heat produc?on Electricity Supply Act 1976 required new electricity genera?on to be CHP Infrastructure planning Heat Supply Act 1979 required local authori?es to plan heat supply DH zones with power to mandate connec?on of buildings and ban electric hea?ng Socio- economic accoun?ng (CBA) with 6% discount rate

5 Danish district hea?ng businesses Required to be non- profit Surpluses reinvested or used to lower tariffs Prices required to be fair and cost- reflec?ve Price tables are published hap://energi?lsynet.dk/varme/prissta?s?k/ Consumer representa?on in business governance Consumer coopera?ves, board representa?on, municipal involvement Users have right of first refusal to take over company that ceases trading or is put up for sale

6 Norway: Spa?al Licencing Model Context Electricity dominant in hea?ng (old buildings have oil- fired boilers) Electricity price vola?lity, network capacity constraints EfW required to be minimally 50% efficient 1990 Energy Act (liberalisa?on) introduced DH licencing Only one licence holder within defined licence area Prices capped at electricity costs Opera?ng requirements (interconnec?on, con?nuity) At licence end public sector can take over systems for free

7 Norwegian DH Licensing Purpose to ensure that district hea0ng plants being built are socially ra0onal and that they have environmentally acceptable solu0ons (NVE 2009) Required for systems over 10MW Detailed applica?on Maps, subscriber commitments, rela?onship with wider energy developments, coordina?on on street breaking, specific effects (environmental, resources, community) Licence holders may be granted power to mandate connec?on of new developments in concession area Licence area based on 5-10 year build- out Socio- economic cost/benefit analysis must be posi?ve

8 Norwegian heat from waste: Bergen 250 Municipal waste company obtained licence for incinerator JV with local DNO Three year ini?al construc?on phase Ten years to posi?ve cashflow Municipality laaerly involved in system planning

9 Netherlands: Licensing for User Protec?on Context Hea?ng predominantly gas History of CHP but liale DH (5%) Energy liberalisa?on began Dutch parliament concerned DH customers could be exploited Heat Act (provisions in force 2014) Price: standing charge, energy charge and connec?on charge required to be below equivalent for gas Emphasises protec?on of small (<100kW) customers Regulator monitors returns licence holders make

10 Netherlands DH licensing Government has power to revoke licences and appoint supplier of last resort Applica?on must demonstrate Organisa?onal, financial and technical capacity Ability to fulfil obliga?ons Service standards Supply agreement, metering, billing, range of payment methods Pricing Annual audited accounts for heat

11 Roaerdam 1990s collabora?ve industrial ini?a?ves to use heat from harbour industries Pre- emp?ng regulatory interven?on Project to supply heat to non- industrial users EfW: municipal contract required heat off- take Municipal authority tendered DH supply concessions 50,000 homes (equivalent) by 2023 New buildings in concession area required to connect on basis of CO 2 Exis?ng buildings incen?vised by Dutch EPC

12 Theme 1: Protected development Mi?gate risk of stranded assets for long- term, large scale sunk investment and network extension Norway protec?on from compe?ng licence holders over 5-10 year build phase Ndls local building regula?ons in Roaerdam concession zones Supported by spa?al energy data

13 Theme 2: Coordina?on of heat source and infrastructure Regula?on of heat producer makes heat networks a solu?on Denmark required CHP before Heat Law Roaerdam harbour industries pre- emp?ng regula?on Norwegian energy efficiency regula?ons for waste Scopsh EfW regula?ons? Coupled with mechanisms for crea?on of heat consumer base Contrast UK proposed CBA methodology

14 Theme 3: Socio- economic appraisal Denmark: 6% Norway: 6.5% using low discount rates Netherlands: 5.1% 7.6% (consultant es?mate of fair return based on returns on other infrastructure classes) UK proposed CBA methodology: 16.5% (12% real post- tax) Consultancy report to Dutch govt EA CBA method

15 Theme 4: Local government Danish legisla?on municipali?es central Energy planning directed at social, economic and environmental objec?ves Dutch and Norwegian regula?on post- liberalisa?on Regula?on allows more diversity in lead actor Local government s?ll important Overview of how local area will develop Suppor?ve planning/building regula?ons Investment in local DH enterprises &/or building conversion to DH Local authority commitment more important than technical opportunity [Major UK heat network developer at DE Vanguards Workshop 2013]

16 Theme 5: Balance of opportuni?es and restric?ons Regula?on affords actors considerable powers Connec?on of heat loads Shielding from compe??on Trade- off between no?ons of socio- economic benefit, fair returns and fair prices Condi?ons for more direct interven?ons to be perceived as fair/legi?mate? Norwegian capital grants (20%) Danish systems of tax and subsidies Without [licensing] it would be difficult to jus?fy public support (DH Expert Commission)