Local government roles in supporting district heating The case of Veurne

Transcription

1 Project No: IEE/13/650 Local government roles in supporting district heating The case of Veurne WP 3 Task 3.3 Annex to Deliverable 3.b. 01/09/2016

2 District heating systems - Theoretical best practices Authors: Pieter Valkering, Erik Laes, Erwin Cornelis, VITO / EnergyVille Contact: erwin.cornelis@vito.be Deliverable No. 3b Veurne - Annex: public document. The STRATEGO project (Multi-level actions for enhanced Heating & Cooling plans) is supported by the Intelligent Energy Europe Programme. The sole responsibility for the content of this document lies with the authors. It does not necessarily reflect the opinion of the funding authorities. The funding authorities are not responsible for any use that may be made of the information contained therein. STRATEGO website: Page 2

3 Contents 1. Introduction Introduction to the STRATEGO project The case of Veurne Purpose and structure of this report Local government roles in supporting district heating and cooling Local government as planner and regulator Energy strategy and targets Energy mapping Integrated energy planning Connection policies Local government as facilitator: enabling actions to leverage finance Financing and fiscal incentives City assets Demonstration projects Local government as provider and consumer As a provider As a consumer Local government as a coordinator and advocate Market facilitation and capacity-building Awareness-raising and outreach Advocating for district energy at other levels of government Key steps in developing a district energy system Why? When? Pathways to energy mapping Depart from national and local regulatory frameworks City-twinning The governance context of Veurne General characteristics EU and Flanders policies Local regulatory frameworks Supporting district heating in Veurne: a checklist of options 22 Page 3

4 4.1. Planner and regulator Facilitator: enabling actions to leverage finance Provider and consumer Coordinator and advocate Recommendations 27 Bibliography 28 Page 4

5 1. Introduction 1.1 Introduction to the STRATEGO project The STRATEGO project is a European co-funded project developed in the framework of the Intelligent Energy Europe Program. The purpose of the project Multi level actions for enhanced Heating and Cooling plans STRATEGO is to: provide tangible support in developing National Heating and Cooling Plans, assist local authorities in evaluating their Heating and Cooling potential, find their priority area for intervention, and identify concrete projects that should be implemented. This support to national and local authorities in the implementation of more efficient heating and cooling solutions is organised in different work packages (WPs), see Figure 1. Figure 1: Infographic on the STRATEGO project structure The geographical focus of STRATEGO is Austria, Belgium, Croatia, Czech Republic, Germany, Italy, Romania and the United Kingdom, with support from experienced partners from Denmark and Page 5

6 Sweden. The transferability and implementation of the project results outside the targeted countries is ensured by involving partners from Spain and Poland. WP3 National plan local action: supporting local authorities see the red line in Figure 1 which is the focus of this report, provides support to local authorities. Support is given to in total 29 target cities (or regions) in the focus countries of STRATEGO, see Figure 2. Figure 2: Map of the STRATEGO target cities This support to the local authorities of these target cities is organised in five tasks, see Figure 3. In the first task, demand of heating and cooling is mapped, as well as potential supply points and renewable energy sources. The starting point is the Pan-European Thermal Atlas (PETA) 1, from which data are extracted. This is complemented with locally available data; a manual is written in the framework of the STRATEGO project to give guidance to this exercise (Cornelis & Meinke-Hubeny, 2015). 1. Based on the map of local heating and cooling demand and supply, areas of priority for intervention are defined. These are areas where the local conditions are favourable for developing projects first. In total 44 projects will be defined in the STRATEGO project. 2. Business models are then developed for each of the identified projects. An interim report gauging the current status on business models in the target countries, including a SWOT analysis of these was drafted in the framework of the STRATEGO project (Lauersen, 2015). 3. The results of the previous steps are then discussed with local stakeholders. 1 Link to PETA: Page 6

7 4. The results of the previous steps, including the conclusions of the stakeholder meeting, are summarised and are presented to the representatives of the target cities, so they can integrate this information in their local heating and cooling action plan. WP3 builds upon WP2 which supports the development of advanced heating and cooling plans on national level. WP3 provides input to WP4, which supports key actors in policy and industry by exchanging best-practice knowledge between various regions across Europe. Mapping local heating and cooling demand and supply Identification of areas of priority for intervention Business models for local partners Involvement of local stakeholders (stakeholder workshop) Input to local heating and cooling action plans Figure 3: Infographic on the tasks in WP3 supporting local authorities 1.2 The case of Veurne This report is written in the framework of the support given to the Veurne, one of the target cities in Belgium. Veurne is situated in West Flanders, see Figure 4. It has about inhabitants on 96,34 km² (population density of approx. 115 inhabitants / km²). Most of the inhabitant live in the town centre, which is surrounded by meadows and small villages; the area covered by infrastructure is 10,24 km². The heat consumption of Veurne (see Table 1) amounts to 338 GWh (final energy 2013 data), which leads to an average heat density for the town of 33,0 GWh/a.km² or 9,17 TJ/a.km² (only taking the covered surface into account). About 60% of the heat is consumed by industrial companies (SMEs mainly); about 35% is consumed by the residential, commercial and public sector. The remaining 5% is consumed by agriculture. About 9% of the heat is from renewable sources, which is mainly solid biomass sources that are combusted as a fuel. Table 1: Final yearly energy demand of Veurne by carrier and sector (excluding transport) Final (GWh) Fuel (GWh) Elec. (GWh) Electricity 107 Residential CHP heat 2 Commercial Fossil fuels 304 Industry non-ets Renewables 31 Agriculture 22 5 TOTAL 444 TOTAL Page 7

8 The Flemish Heat Map indicates that the heat density of Veurne is high enough to consider a district heat network, see Figure 4. Figure 4: Location of Veurne on the Flemish Heat Map (top) and the Pan-European Thermal Atlas (bottom) The picture of the town below (Figure 5) provides more details on the heat fabric of the town: Page 8 Big yellow triangle: indicates a new urban development (450 living units) on a site of an abandoned sugar refinery Big yellow rectangle: indicates a new industrial development Red stars: indicate 2 CHP installations: o A 732 kw e installation at a food company in the east of the town o A 291 kw e installation at the hospital in the west of the town Red circles: indicates potential supply points of waste heat (solid line: higher possibility dashed line: lower possibility) Blue circles: indicates food companies with a heat demand Blue triangles: indicates public buildings:

9 o o a hospital and a school nearby the industrial area in the south a train station and a military airport in the north of the town Big blue rectangle: indicates an industrial area in the north Yellow triangle: indicate new public buildings o A new swimming pool, about 300 m north of the train station and east of the industrial area and the military airport Figure 5: Current and planned heat sources and demands in Veurne. For clarifications see above. There are two heat clusters connected to the two industrial areas in Veurne. The south-east cluster: there are concrete project ideas to exchange heat from a food company (red circle) to two other companies nearby (blue circles). That heat could also potentially supply the new urban and industrial developments nearby (big yellow triangle and rectangle resp.) The north-west cluster: the new swimming pool (small yellow triangle) offers an opportunity to consider developing a DH network connecting it with the industrial companies nearby (big blue rectangle). This is currently not under consideration. The focus in this report is on the south-eastern cluster, in view of the specific project ideas that are raised by local stakeholders. The current project plans concern heat exchange between industrial companies, but the local authorities would like to investigate the feasibility of connecting the new urban and industrial development to this potential district heating (DH) network as well. Especially the role of the local authority will be investigated in this case, as they are not directly involved in the current project ideas. Page 9

10 1.3 Purpose and structure of this report The main question the City of Veurne currently has is which role it can take as local authority to support and stimulate the development of a DH network. The purpose of this report is hence to give guidance on which roles are theoretically possible, and which ones may be particularly suitable for the City of Veurne. Based on the recent study of UNEP (2015), we will describe to this end four potential roles local governments could take: as a planner and regulator, a facilitator of finance, a provider and consumer, and as a coordinator and advocate (Chapter 2). Bearing in mind the specific context of Veurne (Chapter 3), we analyse for each role which policy actions Veurne may undertake to support the development of the DH network in the city (Chapter 4), which are further put in a time perspective in the conclusions and recommendations of Chapter 5. Page 10

11 2. Local government roles in supporting district heating and cooling The first steps in implementing a heat market often rely on the local government. The degree of involvement of the local government on the development of district heating networks may vary depending on the particular needs, situation and objectives. The United Nations Environment Programme published a report where the different roles for the local government where classified as (UNEP, 2015): Planner and regulator Facilitator: enabling actions to leverage finance Provider and consumer Coordinator and advocate In the following, each role is further described Local government as planner and regulator Local governments can catalyse district energy development first and foremost in their role as planner and regulator (UNEP, 2015). Within this category, the local government may take up four main tasks: Energy strategy and targets An energy strategy is a long-term guiding vision that outlines the potential role and benefits of district energy in the context of broader policy objectives, such as the reduction of CO 2 and other GHG emissions, energy intensity, fossil fuel consumption, energy efficiency and renewable energy. An energy strategy may include explicit district energy-related targets on, for example, the future share of district heating/cooling power, the share of district energy in specific buildings (e.g. public buildings) or the share or absolute numbers of buildings connected. Developing an energy strategy and setting targets may have various benefits. It: Provides validation and direction to a local governments work in district energy, justifying time and resources spent delivering district energy projects Reduces opposition to district energy project by enhancing public understanding of the relevance of district energy Helps to mobilizing support from other levels of government Reassures investors about the continuation of revenues To be able to develop an energy strategy, first an integrated study of municipal energy use and needs including a local heat and cooling assessment is needed (see Section 2.1.2). Consequently, district energy targets and pathways can be identified. Most cities that are active in district energy started with broader targets, such as targets for CO 2 and greenhouse gas emissions, energy intensity, fossil fuel consumption, energy efficiency and renewable energy (cf. Figure 6). Over time and with learning, these broad targets can then lead to targets that are specific to district energy on, for example (UNEP, 2015, p. 51): Page 11

12 expansion of the district-energy system, interconnection of segregated district-energy networks, share of GHG reduction target to be met by district energy networks, share of the city s energy to be provided by district heating and/or cooling, share of renewable or waste heat to be employed, percentage increase of energy performance of buildings due to district heating, waste heat recovery, replacement of existing building heating or cooling systems. Figure 6: Shares of the 45 champion cities that have targets for district energy and broader energy targets. Reprinted from (UNEP, 2015) Energy mapping Energy mapping refers to geographically mapping a city s local heat or cooling demand and supply and related variables, such as building density, current networks, location specific energy barriers and opportunities, and socio-economic indicators. Energy mapping serves to: support strategy and target development (Section 2.1.1) and integrated energy planning (Section 2.1.3) identify potential hot spots for district heating and cooling particularly suitable to develop viable district-energy projects facilitate stakeholder engagement, both as a tool to develop public-private partnerships and as a visualisation tool to help raise public awareness Comprehensive, city-wide energy mapping requires a significant effort and financial investment, which may act as a barrier. If needed, this barriers may be overcome by: Creating a constantly evolving energy-map that starts small and is consequently developed. Zooming in on high-potential areas, rather than directly adopting a city-wide scale Page 12

13 Integrated energy planning An integrated energy plan is a roadmap of project developments and policy interventions aimed at realizing the articulated goals of its energy strategy. Importantly, it relates the theme of energy to the city s broader land-use and infrastructure planning. Integrated energy planning is needed to: Exploit synergies between energy, land use and infrastructure. Provide guidelines for urban development plans, possibly containing requirements for energy assessment of new developments. Designate areas with favourable conditions for district heating and/or cooling to apply tailored policies, financial incentives or license regulations. Integrated energy plans can include a variety of policy interventions, such as encouraging mixed-user zoning and using energy criteria in planning documents (see (UNEP, 2015, p. 57) for further examples). Do note that successful integrated planning requires collaboration among diverse local government organizations. Therefore, setting up interdepartmental structures like an interdepartmental committee, multi-stakeholder partnership, or designated agency is recommended Connection policies Connection policies refers to the variety of mandatory and incentive-based policies that can be put in place to support the connection of consumers to the district-heating network where it is economically and technically feasible. Due to the large capital investment in the district infrastructure, connection policies may be needed to create a minimum level of load certainty 2. This in turn should ensure a viable long-term business model for companies and investors 3. Local governments connection policies can include (UNEP, 2015, pp ) various mandatory connection policies (city-wide, zonal, unless policies ) and other stimulus: density bonuses, credit towards green building requirements, removing barriers to connect, banning undesirable alternatives, etc Local government as facilitator: enabling actions to leverage finance High upfront investment may hamper the implementation of district heating and cooling systems. According to (UNEP, 2015), the public sector is the most important actor to catalyse investment, with the private sector as a very important additional one. The local government may leverage financing in three ways: Financing and fiscal incentives Financing and fiscal incentives comprise all types of financial support local governments may provide to improve the economic viability of district-energy projects. Typical options are (UNEP, 2015, pp ): 2 A complementary way to achieve load certainty is connecting government assets (see Section 2.3) 3 In theory, existing buildings are the best starting point, since the structures and energy loads are known. However, it can be difficult for local governments to influence existing buildings connections, and also the connection may be relatively difficult technically. Therefore, new construction developments are a better starting point. They can act as a catalyst to establish a new network, which can then be extended to existing buildings. Page 13

14 Debt provision and bond financing Loan guarantees and underwriting Grants and city-level subsidies Supporting access to international or national grants, funds or loans A revolving fund 4 Development-based land-value capture strategies City assets Using city assets to support financing mainly refers to the allotment of public land, buildings or other properties for district energy generation or connections. Assets can be used in kind or for rent. If applicable, also a portion of a publicly owned district heating systems may be privatized to generate the capital needed for modernization Demonstration projects In some case, demonstration projects are needed to enable the financing of the further roll-out of district-heating and cooling. The local government may support such demonstration projects. They may enable further investment by: Proving and raising awareness about the potential benefits and payback periods of district energy systems, thus illustrate the feasibility and commercial viability of modern district energy Build local and institutional capacity and confidence by generating public and local government support and accelerating private sector engagement. Pilot new enabling policies for uptake by the city council or national government 2.3. Local government as provider and consumer Local government as a provider refers to cities that own or have a stake in local utilities, thus creating leverage to shape the low-carbon pathways of the (e.g. energy, waste) services they provide. The local government is equally a consumer of heating and cooling itself, in public buildings, social housing, hospitals, leisure centres, etc. Thus it is ideally placed to demand the energy services that it deems optimal in return for load and connection certainty As a provider As a provider, three main options may be considered: Targets for renewable heat: In case the local government has stakes in a municipal utility, it can prescribe the use of recovered or renewable heat in its district energy networks Develop interconnections: District-energy networks usually develop in a nodal way, starting from isolated blocks. Local governments can direct the integration of these networks by 4 Investment fund to provide subsidies, grants and zero- or low-cost financing, particularly at early stages, for developments that are in the public interest. The funds are designed to be self-sustaining and to grow through returns on investment, interest rates on debt and other revenues. 5 Capturing the increased land-value resulting from urban development to finance district-heating and other infrastructure. Particularly relevant for developing countries. Page 14

15 creating transmission systems, for example though partnerships of municipal distribution companies. Waste tariff regulation: As a utility shareholder, local authorities may play a role in waste heat tariff setting to stimulate the connection of recoverable or renewable heat or cold. Different models can be used (UNEP, 2015, p. 75), reflecting the connection and running costs for the waste heat provider, costs to the utility for required redundancies (as waste heat can usually not be guaranteed), and any incentives needed to encourage the waste heat provider to connect to the network. Finally, integration with other utilities (water, waste, transport) may offer synergies towards creating a viable common business case As a consumer According to (UNEP, 2015) perhaps the most important factor in developing financially viable district energy projects is the ability to find an initial customer base with a large and steady demand load. Many public buildings such as schools, hospitals, leisure centres and municipal housing buildings are used long hours a day and/or have fairly large and steady loads. The city, as a consumer of energy, can thus provide such an initial customer base by stimulating the connection of its buildings to the energy network and by setting district energy targets for its buildings and operations Local government as a coordinator and advocate This role includes three main activities: supporting projects through capacity building, awareness raising and outreach, and advocating for district energy at other levels of government: Market facilitation and capacity-building Besides a regulatory role, a local government can also adopt a facilitator role as a driver of district energy development. This may include: Coordinating within the city council and across stakeholders Scanning the horizon for project and financing opportunities Providing various types of support, for example information, training, project structuring, and stakeholder convening. Lobbying to create co-ownership of the city s district energy vision and commitment for its implementation Organising the process of data collection to underpin policy, outreach and awareness raising (see also Energy mapping, Section 2.1.2). To take up this role, cities need a dedicated city unit or coordination mechanism operating across domains which can be organised via dedicated municipal staff, a dedicated government agency or a public utility Awareness-raising and outreach Awareness raising and outreach refers to those activities aimed at a broader understanding and awareness of district energy across society: customers, professionals, governments etc. This can be done for example by making use of public media, education campaigns, awards, community events, website, publications, energy mapping, information centres and help desks. Awareness Page 15

16 raising and outreach is particularly important in areas where the district heating market is undeveloped and knowledge about district heating is limited. It can result in greater acceptance by potential heat customers as well as broad political consensus for project implementation Advocating for district energy at other levels of government This category includes all lobbying activities whether at higher levels of government, other municipalities, utilities or regulatory agencies to influence the development of policies in favour of district heating. The city s role in lobbying for, demonstrating and providing input on district energy related policies is very important. Examples of policies to be influenced include building energy performance regulations, interconnection measures, regulations for CHP etc., see (UNEP, 2015, p. 82) Key steps in developing a district energy system The local government roles described above sketch out the different possibilities that may be considered. Different policy activities of the different roles may be applied in different phases of development process of district energy. So where to start? And which activities to apply when? To provide structure, (UNEP, 2015) identified ten key steps in developing a district energy system, shown in Figure 7. The figure gives a prototypical process design which may be adapted depending on the specific local context. Figure 7: Key steps in developing a district heating/cooling system (UNEP, 2015). In addition, specific recommendations include: Why? Before deciding on district energy ambitions, it is important to assess whether district energy is an appropriate solution given the specific local circumstances. This depends for example on: Page 16

17 Overall heat demand and availability heat sources Distribution of heat demand and heat demand density, which should be significantly high in a at least a number of areas Current technologies for producing heating and cooling that determine the specific benefits of replacement, whether being a weaker dependence on volatile gas prices (for gas-based systems), avoiding power infrastructure investment, or reducing electricity costs (for electricity based systems) When? Also the timing of district energy development is relevant to take into account. Appropriate timing considers, for example: The actual relevance of drivers such as energy efficiency improvements, energy independence and other potential benefits. Whether a clear champion has recently emerged Recent external events that may have catalysed the urgency to act Pathways to energy mapping An energy strategy and district energy targets (Section 2.1.1) based on a first heating and cooling assessment is critical to mobilize diverse stakeholders. Local authorities may build on this assessment by developing an energy map. However, as already mentioned in Section 2.1.2, comprehensive energy mapping requires a significant financial investment. Moreover, it requires a certain institutional capacity in terms of the willingness and skills among key stakeholders to share data on a common platform. When either the funds or the institutional capacity is missing, possible pathways to energy mapping include (UNEP, 2015, p. 123): Develop energy mapping for a specific area or zone, preferably through a public-private partnership Develop a demonstration project, either to build institutional capacity or to showcase potential benefits. To this end, funding at national or international level may be considered. Use the developed institutional capacity or showcased benefits to further the energy mapping exercise Depart from national and local regulatory frameworks A good starting point is to assess which policies exist at the national or higher (e.g. EU) level. National policies with greatest impact are a) incentives for CHP and renewables, b) national regulation on tariffs, c) incorporation of district energy in building efficiency standards and d) polluter taxes. The availability of such policies determine to some extent which stimuli on the local level are further needed. Also the local regulatory framework is important, for example on how cities can intervene in planning and permitting of district energy infrastructure. This partly determines the extent to which collaboration with national or regional utilities needs to be sought. Another example is its possibilities for issuing connection policies that are cost effective for the consumer. Page 17

18 City-twinning A general recommendation is to adopt a so-called city-twinning programme. This involves identifying a city with similar metrics that already successfully piloted or rolled out district energy. Lessons on energy strategy development in that city (such as methodologies, generalizations etc.) can be shared, and development best practices can be identified. Page 18

19 3. The governance context of Veurne The roles and recommendations described in Chapter 2 originate from an analysis of 45 champion cities that typically differ in size and context from the specific situation in Veurne. Therefore, this section maps the specific governance context in Veurne to be able to apply the generic insights to the Veurne case General characteristics Regarding the current status on district heating on generally distinguishes consolidated cities (with a modern, largely renewable-based district energy system in place), refurbishment cities (with an outdated, fossil fuel based district energy system), and emerging cities (with no district heating deployed at a large scale). Veurne clearly falls into the latter category, where district energy is a new technology. Regarding its size, Veurne is significantly smaller most of the 45 champion cities, which often are main capitals like London, Toronto, Dubai and Tokyo. Yet a number of medium to small sized cities are included as well: Bergen, NO (~ inhabitants), Sonderborg, DK (~ inhabitants), Brest, FR (~ inhabitants), and Güssing, AT (~4000 inhabitants). Veurne currently does not have an overarching energy strategy in place. Its main policy plan for the coming years ( meerjarenbeleidsplan 6 ) does not contain references to energy or district heating. One energy related policy that is in place is a subsidy for heat pumps 7. Moreover, the city s website contains information on EPB 8 and EPC 9 and offers a link to the aerial heat photos of Veurne s roofs 10. Veurne also hosts ACASUS 11, the provincial help desk for Sustainable Living and Building, which may offer an entry point for linking district energy to end users and SMEs EU and Flanders policies As a city with district energy ambitions, the following policies are important to be aware about: EU level The Energy Performance of Building Directive (EPBD) 12 and the Renewable Energy Directive (RED) 13 are two main EU policies directed towards sustainable energy use in buildings. The first mandates setting requirements for the energy efficiency of buildings, including the reduction in buildings' thermal energy demand. The second includes the heat sector in the 2020 renewable energy target, and promotes renewable energy use in buildings, and the use of district heating and cooling as an instrument towards that target. The EU 2030 and 2050 energy strategies 14 further outline targets for energy efficiency and renewable energy on the longer term. Such directives and strategies can be referred to while setting energy targets at the local level Page 19

20 The most relevant directive in relation to district heating is the Energy Efficiency Directive 15, which establishes a set of binding measures to help the EU reach its 20% energy efficiency target by Under article 14, this directive requires Member States to carry out a comprehensive assessment and cost-benefit analyses of potentials for high-efficiency cogeneration and efficient district heating and cooling 16. Another relevant program is the Covenant of Mayors 17. Under this programme, local and regional authorities voluntarily commit themselves to implementing EU climate and energy objectives on their territory. This involves setting up a local Sustainable Energy Action Plan (SEAP) with concrete actions to achieve a significant CO 2 emission reduction over the longer term. The implementation of this plan is then followed-up by the EU. Last but not least, in February 2016 the European Commission has launched a first proposal for a EU heating and cooling strategy. This heating and cooling strategy includes plans to make energy efficient renovations to buildings easier, to develop energy efficiency guidelines for public schools and hospitals and improve the reliability of energy performance certificates for buildings. The strategy also aims to better integrate the electricity system with district heating and cooling systems. Another arm of the strategy is to avoid energy waste in industry by linking industry with district heating systems. Flanders level For the Flanders, the most relevant information can be found under the district heating topic at the VEA website 18. This portal shows: The incentives in place for green energy and CHP through certificates (for renewable electricity and CHP), or through a subsidy call (for renewable heat, residual heat and biomethane). Links to the heat map of Flanders, the underlying report (including future scenarios for heat demand and supply, assessment of technical potentials and cost-benefit analyses), and an overview of current heat networks in Flanders. Information about the share of renewable heat needed to fulfil EPB obligations through district heating Link to the heat network Flanders 19, which aims to stimulate the development of district heating by offering a coordinating platform for all involved partners, as well as up to date information about rules and regulations, market developments and support schemes. Link to the policy platform on district heating 20, that provides an interface between stakeholders and the Flemish government on the topic of stimulating district heating. Support to the development of district heating in Flanders was expressed by the Flemish Parliament in a resolution of 18 December A recent development worth mentioning are the recent Page 20

21 decrees on district heating and gas networks 21 proposed by the Flemish government (yet to be confirmed by parliament). The district heating decree proposes more clear and transparent rules for the heating market, to make investment more attractive in light of the goal to fulfil one third of the renewable energy target with renewable heat. To this end, various rules are worked out on for example the rights and obligation of market players, technical conditions for the exploitation of a DHC grid (including priorities for CHP or renewable heat), requirements for individual metering devices and invoices etc. The gas decree, moreover, proposes to abolish the strict requirements for gas connections (95% in 2015, 99% in 2020). Other ways of heat delivery are allowed when sustainable and cost-efficient alternatives (like solar panels, heat pump or district heating) are available Local regulatory frameworks The most important local policy instruments w.r.t. the implementation of district heating include: The meerjarenbeleidsplan describes the planned policies on a municipal level for the period until the next municipal elections. This meerjarenbeleidsplan can include policies relevant to the development of district heating, thus providing a stable planning horizon for possible investors; The Covenant of Mayors: as explained in Section 3.2, by signing the Covenant of Mayors a municipality commits itself to implementing EU climate and energy policies on its territory. According to the VVSG 22, there are various reasons why local authorities should engage themselves. For example, it improves the city s image as a future oriented and pioneering city, and creates a clear energy policy vision that engages municipal workers and other stakeholders in the city. Following the accession to the Covenant of Mayors, multiple cities have published ambitious long-term climate action plans. Examples in Flanders include Gent klimaatstad 23 and klimaatplan Antwerpen 24. Local utilities: in Flanders, the main distribution system operators Eandis and Infrax have recently joined forces in a new company ( Warmtebedrijf Vlaanderen ) specifically dedicated to the development of district heating in Flanders. This company is 100% owned by the Flemish municipalities. Through this ownership structure, Flemish municipalities can lobby the company for developing district heating on their territory although it must be said that individual (and smaller) municipalities (such as Veurne) will usually find it more difficult to get their district heating projects on the company agenda. Coalition building seems to be a necessary strategy, as the new Warmtebedrijf Vlaanderen will of course direct its investments to the most profitable business cases. Connection policies: as mentioned before, municipalities have the option to make the connection to a heating network mandatory for new neighborhood developments. This could be an option for the new development on the site of the former sugar factory in Veurne (provided that a district heating project proves to be financially feasible) Page 21

22 4. Supporting district heating in Veurne: a checklist of options This section gives an overview of concrete options available for the City of Veurne to support district heating, following the roles and policy activities described in Section 2. The feasibility of the policy action for the City of Veurne is assessed as well Planner and regulator Policy activity Concrete options for the City of Veurne Feasibility assessment of the option for the City of Veurne Energy strategy and targets An energy chapter is added to the meerjarenbeleidsplanning. The current plan covers the period until the end of 2018 (when the next municipal elections will be organized), but preparatory steps for the elaboration of the next plan can already be taken (e.g. coalition building, listing opportunities and barriers for ambitious climate policies in Veurne, investigating possible options for the reduction of greenhouse gas emissions, etc.). Veurne can become a member of the Covenant of Mayors. Link to EU policies and Belgian / Flanders targets can be made. Energy mapping Veurne can finance the development of a detailed heat map for its territory. As an alternative (depending on financial resources), the heat map can be restricted to particular zones. The new development in the South-West area of the city seems to be likely candidate. Page 22

23 Integrated planning Plans for city development should take into account the overall goals regarding energy and climate policy. When making up new spatial plans ( ruimtelijke uitvoeringsplannen ), the municipality of Veurne should take into account the possible development of heating networks (where feasible). A link with the EPB legislation should be made. Connection policies New Flemish legislation for the development of district heating is currently being developed ( decreet warmtenetten not yet entered into force) Depending on the particular legal context, municipalities have different options for mandatory obligations: For instance, the city of Antwerp has made it mandatory for big apartment buildings to provide space for a common heating installation and the distribution of heat (hot water) to the separate living units. In cases where district heating proves to be financially feasible, connection to the heating network can be made mandatory. The obligation to connect new buildings to gas network will be abolished Facilitator: enabling actions to leverage finance Page 23

24 Policy activity Financing and fiscal incentives City assets Demonstration projects Concrete options for the City of Veurne Veurne can probably not act as an important financer of district heating projects. Role will probably be limited to facilitating access to external funds. Veurne can investigate the option to connect its public buildings to district heating networks. Veurne can take the first step towards the implementation of demonstration projects by ordering feasibility studies. Such feasibility studies can then be used as a lever to investments by the new Warmtebedrijf Vlaanderen Provider and consumer Policy activity Provider Consumer Concrete options for the City of Veurne No role. In order to lead by example, Veurne could examine options for connecting public buildings to heating networks in the context of the comprehensive energy and climate plan (to be developed), or in concrete demonstration projects. Page 24

25 4.4 Coordinator and advocate Policy activity Market facilitation and capacity-building Concrete options for the City of Veurne Capacity building by twinning strategy can be considered. For instance, in the context of the STRATEGO project an exchange of experiences with the city of Antwerp could be arranged. Awareness-raising and outreach Options for Veurne include: Coordinating within the city council and across stakeholders Scanning the horizon for project and financing opportunities Providing various types of support, for example information, training, project structuring, and stakeholder convening. Lobbying to create co-ownership of the city s district energy vision (to be developed) and commitment for its implementation Organising the process of data collection to underpin policy, outreach and awareness raising (for instance, in the context of an energy mapping initiative). To take up this role, Veurne needs a dedicated city unit or Page 25

26 coordination mechanism operating across domains which can be organised via dedicated municipal staff. Advocating for district energy at other levels of government Coalition building with other interested municipalities, e.g. in the context of the West-Vlaamse Intercommunale (WVI of which Veurne is a member), or in the context of decision making at the provincial level (the province of West-Flanders has announced its ambition to become climate neutral by ) Page 26

27 5. Recommendations Given that: Currently, district energy initiatives have a rather ad-hoc character. The City of Veurne is relatively small with limited financial means It is best to act as a facilitator rather than initiator of district energy development. It s main role is to initiate a more systematic approach to district energy development, similar to the process guide of Figure 7. Broadly, 2 stages can be distinguished. 1 st stage would be devoted to setting the stage with a focus on the roles of regulator and planner and coordinator and advocate: Assessment: overview of potentials Mapping: also to build institutional capacity Energy strategy and targets (possibly with awareness raising) Capacity building (including need assessment) Scanning financial opportunities Closely follow Flanders policy development Coalition building, e.g. in the context of the provincial climate action plan or the WVI 2 nd stage would be about demonstration and implementation with a focus on the roles of facilitating finance and provider / consumer: Wait for appropriate timing! Perform techno-economic feasibility studies (city of Veurne in the lead) Demonstration project (network operators in the lead) Facilitating finance Become consumer Lobbying at the Flemish government (if needed) Get the public involved: broader awareness raising, marketing, connection policies Page 27

28 Bibliography Cornelis, E., & Meinke-Hubeny, F. (2015). Local action: Methodologies and data sources for mapping local heating and cooling demand and supply. Interim report of the STRATEGO project. Mol, Belgium: VITO. Lauersen, B. (2015). Business Models - Interim Report in the framework of the STRATEGO project. Kolding, Denmark: Danish District Heating Association - DDHA. UNEP. (2015). District Energy in Cities - Unlocking the potential of energy efficiency and renewable energy. Page 28