Press Release, Irish District Energy Association, 10/10/2023
The Irish District Energy Association today welcomed the creation of a new Infrastructure, Climate and Nature Fund as part of Budget 2024.
While detail is yet to emerge on exactly how the fund will operate and the types of projects it will support, the cumulative scale of the €14bn fund and its focus is ‘cause for optimism’, according to the sectoral interest group. Speaking on behalf of IrDEA, CEO Yvonne Murphy stated,
We have been advocating for a significant boost in the level and kind of funding available from the State to support capital projects of the scale needed to tackle decarbonisation in the heating sector. Naturally, we await further detail on how this fund will operate, but our initial impression of this announcement is a very positive one.
The organisation highlighted that the time for minor interventions has passed for Ireland as the country is currently on track to achieve less than 10% of the Climate Action Plan target of 2700 GWh for 2030. Murphy warned,
We cannot afford to wait, which is why it was so important that Budget 2024 was seen to deliver the resources needed to kick-start district energy in Ireland. There are additional areas of spending that we still wish to see addressed and it seems this fund is unlikely to deliver all the funding we believe the sector needs. But today's budget acknowledged the need to invest in the capital projects to achieve our decarbonisation commitments. That must be welcomed.
The district energy sector is poised to invest up to €2bn between now and 2030 to serve heat demand equivalent to 200,000 homes. We currently boast less than 20 GWh of district energy in Ireland.
Ms Murphy concluded by stating,
Strong market signals are needed on the part of government to demonstrate that the State is behind the sector and is committed to district energy into the long term. This will help to build confidence within the sector, which will help to trigger investment. This fund has the potential to help with that if it is correctly focused and can be accessed to support district energy projects. We await further detail with great hope that this is the case.
View or download IrDEA's Pre-Budget Submission
(VIEW OR DOWNLOAD FULL PRE-BUDGET SUBMISSION)
IrDEA’s total ask for Budget 2024 was €389.5m per year, which would be used to provide for district energy under three headings,
- Resource public sector bodies tasked with facilitating delivery of district energy (€6.35m)
This is chiefly to increase staffing in Local Authorities, SEAI, CRU, and the Department of Environment, Climate and Communications to ensure capacity exists to drive district energy forward.
- Match private sector capital infrastructure investment (€333m)
District energy infrastructure is a long-term investment, with piping lasting over 50 years before replacement. Allowing for private sector innovation and agility is important to get projects off the ground, but State support for infrastructure is also important given the public good it serves by keeping end use energy prices affordable and creating certainty in the market.
- Protect early adopter consumers with a new Heat Cost Protection Scheme (€50m).
- Modern district energy schemes rely on largescale heat pumps to raise the temperature of waste heat to the threshold needed to supply heat to consumers. This requires electricity.
- As electricity prices are set by the most expensive oil or gas unit available in the wholesale market, it is difficult for electricity-based heat to compete with gas, which is generally more affordable.
- Good news is, district energy is more efficient, so less power is used, which keeps prices down.
- To keep electricity prices less than double those of gas, IrDEA suggests that government put in place a sinking fund of €50m per year to be put aside in the event of an electricity price spike.
- This money would only be deployed in a rare and extreme situation, so it would simply need to be available in the event of such a circumstance.
- This money would be used to create a price control buffer for customers to shield them from the worst excess of an electricity price spike should it arise. It is not a blank cheque and would be limited to this amount.
Why we need to decarbonise heat.
Heat accounted for 41.8% of final energy demand in 2021, this compares to transport at 36.1% and electricity 22.1% (SEAI, 2022). In 2022, only 5.2% of heat produced in Ireland came from renewable sources, this is the lowest renewable heat share in Europe (Eurostat, 2023a, 2023b). Although Ireland has made great strides in developing renewable electricity, we have outright failed to make progress on renewable heat.
The plan to decarbonise heat.
The Climate Action Plan 2023 sets out that government intends to move us to a heat system run on a combination of heat pumps and district energy(Government of Ireland, 2022). In simple terms, this would mean using heat pumps in areas of low building and heat demand density, and district energy in areas of medium to high heat demand density, such as villages, towns, and cities. This would help to maximise efficiency and affordability in the heat sector, as where the heat demand exists, district energy is a more affordable option than heat pumps, but heat pumps are agile enough to cater to the needs of customers in, for example, one off houses.
District energy in brief.
District energy is well proven as an affordable, local source of decarbonised heat. One of its key benefits is that it can run off any energy source that can heat water; this means it can run off a range of renewable and waste heat sources, and often systems incorporate several heat sources to ensure adaptability and optimised cost effectiveness.
Insulated tanks or pits filled with water that range in size from domestic hot water tanks to large pits occupying surface areas equivalent to or bigger than football fields are used as energy storage in district energy systems. The water in the storage system is heated when energy is abundant or cheap, allowing for greater savings and efficiency to be delivered to consumers. At the longest duration, solar arrays are used in some sites to capture heat in summer for use in the winter as a source of heat for buildings.
Eurostat. (2023a). Heating and cooling from renewables gradually increasing. https://ec.europa.eu/eurostat/web/products-eurostat-news/w/DDN-20230203-1#:~:text=As%20a%20result%2C%20the%20share,value%20in%202004%20(11.7%25).
Eurostat. (2023b). Renewable energy statistics. https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Renewable_energy_statistics
Government of Ireland. (2022). Climate Action Plan 2023. https://www.gov.ie/en/publication/7bd8c-climate-action-plan-2023/
SEAI. (2022). National Heat Study: District Heating and Cooling. https://www.seai.ie/publications/District-Heating-and-Cooling.pdf