ORGANISATION FOR THE PROMOTION OF ENERGY TECHNOLOGIES

Combined Heat & Power/ District Heating Results of activities 2003-2005

Contents

Context

Context 3 Eight reasons to promote Combined Heat & Power/District Heating(CHP/DH) 4 OPET CHP 5 Legislative context 6 CHP/DH in Central/Eastern European Countries (CEEC) 7-11 1 2 3 4 5 6 7 Organisational framework Price regulation and taxation Support and promotion mechanisms Legislative and regulatory measures Energy planning Benchmarking Financial options for CHP/DH investments The Organisation for the Promotion of Energy Technologies (OPET) Network, established by the European Commission, seeks to enhance sustainable energy production, distribution and consumption (excluding nuclear energy) by promoting the use and exchange of information on new technology in the marketplace. The resulting efficient knowledge transfer benefits all European citizens, supporting and implementing European policy priorities at EU, Member State and regional levels, accelerating innovation of renewable energy sources (RES) and the rational use of energy (RUE). The OPET Network was restructured in 2002 around a series of Thematic Consortia to provide an integrated and comprehensive view of on-going research and to further innovative technologies deployment. The CO-OPET partners in cooperation with each Thematic Consortium have issued a Consortium brochure, which provides a summary of the promotion and dissemination actions undertaken betwen 2003 and 2005 in emerging sustainable energy technologies, aimed at the valorisation and integration of R&D results, pointing the way towards more intelligent energy use in Europe.

Ever-increasing energy consumption is one of the greatest challenges facing Europe and the world today. Most consumption is derived from fossil fuels - much of it imported from outside Europe, depleting natural resources and contributing to global climate change, through increased greenhouse gas emissions. When the EU signed the Kyoto Protocol, it promised to reduce these emissions by 2012, by 8% in comparison to 1990 levels. To meet this commitment, significant changes of behaviour are required now, both in terms of energy supply and demand management.

The OPET Thematic Consortia:

Micro and small-scale CHP (M/SSCHP) 12-15 1 2 3 4 CHP Directive Technology Financial incentives Market potential

Biomass CHP 16-17 1 2 Present use Actions to overcome market barriers

China: CHP and trigeneration 18-19 Further information: http://www.opet-chp.net

Legal notice: This publication was produced and published by PRACSIS (Brussels, Belgium) with the technical assistance of Motiva Oy, with the financial support of the 5th RTD Framework Programme, managed by the Directorate-General for Energy and Transport and represents those organisations' views on the subject matter. Neither the European Commission nor the publisher guarantee the accuracy of the data included in this publication, nor do they accept responsibility for any use made thereof. Some product and company names mentioned in the publication are trademarks or tradenames of their respective companies and are protected by international law. European Community, 2005 Reproduction is authorised provided the source is acknowledged. Printed in Belgium on Biotop Photo Credits: Motiva OY (Cover, 5, 9, 16, 18, 19) Photodisc-Shutterstock

Buildings Electricity generation from renewable energy sources (RES-e) Combined heat and power / District Heating (CHP/DH) Clean fossil fuels (CFF) Energy issues in transport New energy technologies in the Mediterranean region (MEDNET) Modern and clean energy and transport technologies in Latin America and the Caribbean (OLA) Early market introduction of new energy technologies (EMINENT) and CO-OPET, support to the OPET Network

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Eight reasons to promote Combined Heat & Power/District Heating (CHP/DH)

OPET CHP

Conformity with European energy policy

CHP is one of the primary means for the EU to achieve its energy policy objective of improving energy efficiency and its environmental policy objective of reducing greenhouse gas emissions. The Commission estimates that doubling the amount of CHP electricity will allow the EU to meet half of its CO2 reduction commitment. (The Kyoto Protocol requires an EU greenhouse gas emission reduction by 8% by 2008-2012 from1990 levels, equivalent to 300 million tonnes CO2 per annum). Increasing DH use is essential for moving from the present 9% to 18% of EU electricity generated by CHP. Plants are often local, small in size and processes can utilise a wide variety of fuels.

Fuel flexibility
A wide variety of fuels can be used, including those with a low calorific value and high moisture content, such as industrial wastes and biofuels. The most commonly used fuels are coal, natural gas, industrial waste, wood and peat. Oil is used sparingly, usually only as a supplement. Traditionally, biomass fuels have been used in CHP generation, mainly in connection with forest industry processes. For many reasons, CHP applications are an ideal use for biofuels. Biofuels transport is costly given their low calorific value, so use tends to be local which matches CHP's local nature. The fuel mix used in CHP plants will change considerably. Natural gas and biofuels can largely be used as substitutes for coal and oil.

The OPET CHP Consortium aimed at promoting technical improvements and market development tools and thereby supports further use of efficient CHP/DH technologies within the EU policy framework.

The project Consortium consisted of thirty-two partners from twenty-two EU and Central and Eastern European countries and China. The coordinating partner was the Danish Technological Institute. The 14-month project included a large range of activities at national and international level as well as specific national partner actions.

The activities were organised in Work Packages addressing specific objectives: EU CHP Directive information provision and knowledge transfer Support to CHP development in Central and Eastern European countries Support for market uptake of small scale CHP Promotion of further use of biomass for CHP Promotion and support of Chinese market penetration by EU clean, efficient and renewable energy technologies Improvement of industrial energy efficiency The project results are presented on the project website www.opet-chp.net

Reliability
CHP is a proven and reliable technology, dispersed EU wide, and a cost-effective energy source, supplying around 10% of electricity generated and heat demand. Systems can operate for at least 20-40 years.

High availability
CHP plants have high availability levels enabling uninterrupted energy production. Local CHP generation can reduce the risk of power and/or heating outages. CHP plants are better maintained and operated than in-building systems. They can be switched to a reserve fuel source as needed.

High thermal efficiency

Plants achieve a total efficiency between 80 and 90%, 30-40% higher than separate production of heat and electricity. Primary energy consumption in CHP is lowered by approximately one third. In conventional condensing power plants the efficiency remains at around 40%. Fuel cells offer the opportunity for higher levels of power-to-heat ratios.

Supply security and market benefits

By substantial fuel savings and the wide range of different fuels utilised, CHP significantly contributes to reducing the dependency on foreign energy supplies (50% now and 70% in 2030 based on current trends). Heating consumes more energy than any other use.

Lower environmental impact

The high efficiency of the CHP plant leads to lower fuel consumption, which consequently reduces the burden of energy production on the environment, not only from carbon dioxide but also from sulphur and nitrogen oxide emissions.

Economic benefits
CHP facilitates through generation plant diversification, competition in generation and liberalisation of energy markets in general.

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Legislative context

CHP/DH in Central/Eastern European Countries (CEEC)

CHP Directive
EU Member States have two years to implement the EU Directive on the promotion of cogeneration based on a useful heat demand in the internal energy market (2004/8/EC ) into national legislation following its publication in February 2004. The Directive seeks enhanced energy efficiency and improved supply security by creating a promotion and development framework of high efficiency cogeneration of heat and power based on useful heat demand and primary energy savings in the internal energy market. Specific national circumstances, especially climatic and economic are taken into account. The Directive in the short-term supports existing CHP installations and creates a level playing field in the market. The Directive specifies: Harmonisation of CHP definitions Establishment of EU wide efficiency values Micro and small scale CHP (M/SSCHP) A Guaranty of Origin of CHP Electricity scheme framework An obligation for Member States to ensure objective, transparent and non-discriminatory procedures for grid access, tariff criteria and administration. The medium and long term intention is to ensure that high efficiency CHP is considered whenever new capacity is planned. A number of criteria are set for an obligatory analysis of the national potential for high efficiency CHP (including M/SSCHP). Support schemes based on useful heat demand and primary energy savings may be continued or established in the Member States to support the realisation of the potential. Annex 2 implementation guidelines for the calculation of CHP electricity, including harmonised reference values for separate production have been issued. Each Member State must report to the EU regularly about the progress in achieving CHP potential and CHP promotional actions.

District heating has a long tradition in Central and Eastern European Countries and has a large share in the heating market. In the residential heat market (population related) it represents about 38%, significantly higher than in the EU-15 countries (7%). The DH market share varies from 16% in Hungary up to 70% in Latvia. In cities, DH has the highest market share - in some cases exceeding 75%.

Recommended tools and measures for CHP/DH sector improvement in Central and Eastern Europe
The work focused on supporting development towards improvement of the economic and environmental performance of the district heating and cogeneration sectors in the CEEC partner countries covering Bulgaria, Czech Republic, Estonia, Latvia, Lithuania, Poland, Romania and Slovakia . The objectives were to develop and further promote appropriate tools and measures to overcome barriers for improvements in these sectors and to provide key market actors with increased understanding of the problems related with upgrading and modernisation of the existing systems and the possible solutions to these problems. The activities included studying the policy framework conditions and the current sector situation. Furthermore, a series of pilot projects were initiated and case studies were investigated to show the application of the tools and measures in practice. National surveys on the current CHP/DH situation from a policy, sector and company perspective in CEEC provide a comprehensive overview of the existing framework and conditions and highlight the important barriers to development and improvements. Necessary steps for further development of the CHP/DH sector were identified and investigated.

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Other relevant legislation
Cogeneration Directive - COM 415 (2002) Emissions Trading Directive - COM 581 (2001) New Electricity and Gas Directive - COM 304 (2002) Energy Performance of Buildings Directive - 91 (2002) Taxation of Energy Products Directive - COM 30 (1997)

Price regulation and taxation

Independent regulatory bodies have been established in all CEEC. The regulatory body that approves DH tariffs acts at national level, for example, in Bulgaria, Romania and Lithuania. However, in some countries, (Latvia, Estonia, Poland) municipal regulatory bodies exist alongside state bodies. Tariff setting has moved towards full cost reflection, away from a cost basis derived from operational costs alone. In Poland, the price covers the development, modernisation and, to some extent, environmental protection costs. Price setting and subsidy still face some challenges.

Organisational framework
In most CEEC, local government plays a key role in the DH and CHP sectors through ownership. In Bulgaria, most DH companies are state owned. Leasing, privatisation and public and private partnerships are becoming more common in most CEEC to attract financial resources for system reform and refurbishment. In most countries, sectoral associations are quite active at national and European level. In some countries, homeowner interests are also nationally represented. In Estonia, the homeowner associations have an important role whereas in Bulgaria the representation is through the consumers' association.

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CHP/DH in Central/Eastern European Countries (CEEC)

Support and promotion mechanisms

R&D activities have been limited. The activities have been focused on strategy development, introduction of CHP plants, DH system rehabilitation and in EU project participation. Research financial resources are limited and the resources from donor countries are used for DH system development and refurbishment. The DH rehabilitation and modernisation financing mechanisms range from direct government support to third-party financing and capacity leasing. Private sector investments have an increasing importance, being often associated with the privatisation process. In some cases, international financing bodies have played a catalytic role.

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Generally, the CEEC have developed a relatively extensive energy legislation framework with a sectoral approach. Most countries passed an overall Energy Act providing for sectoral legislation. However, Estonia replaced the overall Energy Act by sector specific Acts, and Poland has just one overall Energy Act. The CEEC, except Bulgaria, have started electricity market liberalisation in line with EU Directives. The liberalisation degree varies, averaging about 30%. In the gas market, the process lags behind due to sector specificities and monopoly structures. Most countries strongly support CHP generation development. To this end, feed-in tariffs are used in Bulgaria, Estonia, Latvia and Hungary.

Benchmarking
Benchmarking permits the comparison of any DH company's technical and economic parameters with other companies. Benchmarking implementation requires cooperation between the companies, and coordination by a DH association or third-party organisation. This can be in different countries.

Financial options for CHP/DH investments

A cross-national review of financing opportunities has been made to facilitate future energy efficiency and CHP project implementation in the CEEC. Financing issues are of common concern but the specific problems vary depending on the size of the company and the national location. Energy efficiency projects in DH companies can be divided by type (retrofitting of production site, introduction of CHP unit, upgrade and refurbishment of DH networks (pipelines and substations)), and by size. Most commonly retrofitting of existing large DH networks with big capacity needs substantial investment. Usually a joint financing model is used. Financing of energy efficiency and CHP projects in DH companies is dependent on legislative and regulatory frameworks developed in different CEEC. In particular, price and tariff incentives and preferences for CHP can influence the profitability of CHP introduction projects, since in most cases the issue of rate of return is critical for obtaining finance from commercial banks and private investors (the two major sources of funds). Different support schemes are usually used as complementary sources of funding. In many cases, the national support schemes have benefited from international finance. For example, the Energy Efficiency Funds in Bulgaria and Romania have been established with World Bank and European Bank for Reconstruction and Development (EBRD) financing.

Legislative and regulatory measures

Legislative initiatives of the European Union present certain requirements for the development of the energy sector in the CEEC. The Directive on Emission Trading encourages the use of more energy efficient technologies, including combined heat and power. The Directive on the Promotion of Cogeneration creates the framework for the support and promotion of CHP based on useful heat demand and primary energy savings. Other Directives influencing energy sector development are the Directive on Energy Performance of Buildings and the Energy Service Directive. The legislative framework focuses on: Energy market organisation and rule formulation defining energy sector business activities Energy sector restructuring Reorganisation and privatisation Increased energy efficiency through technological innovation

Energy planning
Energy planning is a focal instrument to enable the development and operation of the energy sector with minimum expenses, and at the same time high reliability of energy supply and a minimum impact on the environment. Efficient planning allows both optimisation of expenses at the national level and introduction of competition between different energy utilities at the planning level.

Promotional activities
One of the barriers to CHP/DH market development is lack of knowledge and awareness. Potential users and investors are not aware of CHP advantages. Other barriers to overcome are underestimation of the need for qualified assistance and proper project development and costs.

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CHP/DH in Central/Eastern European Countries (CEEC)

Project example
Energy planning in Poland at municipal level The Energy planning at municipal level - support to decision-makers project's main aim was to support community energy planning implementation according to the Polish Energy Act. The specific project goals were to explain political, social and technical issues at the local level and to prepare a set of materials helping the authorities make decisions concerning these processes. The Government of Denmark financed the project under an agreement between the Danish Ministry of Environment and Energy and the Polish Bureau for Housing and Urban Development. The main contractor was the Danish company, COWI (Consulting Engineers and Planners AS), subcontractors being PEPRC (Power and Environment Protection Research Centre of the Warsaw University of Technology) and COWI Polska. At the same time, KAPE (Polish National Energy Conservation Agency) set up an Energy Planning Secretariat (EPS) whose main aim is to develop conditions for the implementation of a national energy planning training scheme and dissemination of methodology and experience gained during the main project. The project was coordinated by a Steering Committee with representation from the Danish Energy Agency, the Polish Bureau for Housing and Urban Development and the Polish Ministry of Economy, Energy Department. The project contained stakeholder analysis, toolbox elaboration and energy planning in selected municipalities. Main issues for all three components were training, knowledge transfer relating to planning as well as managerial know-how and experience dissemination. Three municipalities were selected as model municipalities: Bytow in northern Poland Legionowo, a suburb close to Warsaw Myszkow in southern Poland. Energy planning was demonstrated as a means to balance both short-term and long-term development goals of reliability of supply, environmental sustainability and economic efficiency. This can be achieved by efficiency, diversification and flexibility at less cost. The following conclusions were drawn: At the local level, there are problems related to the experience in preparing development plans regarding gas and heat supply Absence of time limits and sanctions results in low budgetary priority for executing planning and implementing improvement measures Data collection was very time consuming. The following was recommended for the three model municipalities: the planning processes initiated during the project should be continued DH master plans should be prepared in each municipality An energy audit of the Myszkow paper mill should be carried out

Follow-up project
Legionowo CHP plant: the project comprised master plan preparation for the Legionowo DH system including a more detailed analysis of the possibilities of a major natural gas fired CHP plant. An important element of the feasibility study is a Polish electricity market analysis. The possibilities of joint implementation financing were investigated. A status report for the DH system was prepared including hydraulic analyses of the network. An analysis of the CHP option was elaborated. Myszkow energy audit project: the project comprised a detailed energy audit of the paper mill to investigate the optimisation of paper production and a more energy efficient electricity and heat production. The need for re-engineering the major heat consuming processes at the factory was identified in order to improve the future CHP schemes. Analyses will be made on the consequences of increasing the heat supply from the mill to the greatest extent (meeting up to 90-95% of the district heating demand in Myszkow).

The initial project and the two follow-up projects in Legionowo and Myszkow have resulted in creating a group of Polish municipalities experienced in implementing the planning procedure and a replicable toolbox useful for energy planning by other municipalities. More information: www.kape.gov.pl/EN/Programmes/Programme s_Bilateral/SPE/index.phtml

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M i c ro a n d s m a l l - s c a l e C H P ( M / S S C H P )
Promising small scale power generation concepts are under development to ensure efficiency and environmental performance. Stirling engines, fuel cells and microturbines provide CHP packages for individual homes. In order to promote M/SSCHP, fourteen partners of the OPET CHP/DH cluster focused on compilation and exchange of information on the status quo and framework conditions for the use of M/SSCHP, and information dissemination to support M/SSCHP project development.

Market potential
M/SSCHP offers solutions for a wide range of applications. Nevertheless, in most of the countries only very few units have been installed due to a variety of legislative, economic and technical barriers. Most countries support cogeneration by obligating the grid operator to purchase cogenerated electricity and some type of remuneration model. Investment cost support schemes exist in most countries. However, there are hardly any targets and only a few support mechanisms specifically for M/SSCHP. Sometimes regulations support centralised CHP solutions excluding M/SSCHP. Only some countries promote fuels for cogeneration, which increases M/SSCHP profitability remarkably. Given higher investment costs per kW installed capacity, in many countries M/SSCHP is thus not considered profitable under this legislative framework. The energy sector structure is far from beneficial for M/SSCHP in most countries with vertically integrated energy companies, declining heat demand and low prices for electricity produced in amortised big power plants. M/SSCHP needs further promotion at the legislative level with special regulations and schemes for small appliances. Measures like CO2 tax and green and cogeneration certificates could also increase M/SSCHP profitability. M/SSCHP should be considered as a cost-effective solution for replacing obsolete and often oversized large-scale heat and power plants. Last but not least, existing promotion measures and technical know-how need to be communicated to potential users.

Legislative support
Almost all European countries have enacted specific legislation for energy efficiency, cogeneration or decentralised energy. Some legislation includes quantitative targets for cogeneration. Nevertheless, there are no specific targets for micro and small-scale CHP in national energy policies. Most policies and legislation do not even mention small-scale CHP and its promotion. An exception is Germany, where the extension of small-scale CHP installations and the introduction of fuel cells are listed among the objectives of the Conservation, Modernisation and Development of Combined Heat and Power Act. Basically the same support mechanisms as for medium and large scale cogeneration apply in all countries. Legislative support measures comprise the obligation of the grid operator to purchase cogenerated electricity, bonus payments for cogenerated electricity as well as subsidies/ preferable tax treatment for CHP fuels.

Financial incentives
In addition to the legislative support, in many countries investment for M/SSCHP is supported under international, national or regional financial support schemes. Objectives of these schemes are usually promotion of climate and environmental protection or SME development. Support is offered in the form of soft loans. Often, investment costs for M/SSCHP units are subsidised by grants, for instance under the Greek operational Programme for Competitiveness. In some countries, there are support schemes addressing M/SSCHP in particular, such as the Austrian Kommunalkredit under the Environmental Support Scheme. Austria subsidises 30 % of the costs for M/SSCHP equipment turbines, engines, fuel cells and exhaust gas purification systems. Very few countries have introduced mechanisms for the internalisation of external costs. In Flanders (Belgium), M/SSCHP owners profit by the trade in green and cogeneration certificates. Similar systems will be introduced in Bulgaria in 2007 with the new Energy Regulation which is currently under preparation. In Slovenia, where in 1997 a CO2 tax on fossil fuels was introduced, M/SSCHP owners benefit from the higher efficiency and thus reduced tax burden in comparison to separate production.

Total installed M/SSCHP capacity in selected countries

Promising M/SSCHP applications

Technology
Apart from a promotional energy policy, technology availability is an important condition for M/SSCHP promotion. The biggest market is Germany with almost fifty companies offering M/SSCHP services such as operation, maintenance, financing, installation, planning, consultancy and turn-key installations. Gas engines are most common. Innovative technology such as Stirling engines, fuel cells or micro-turbines are available only in a few countries such as Germany, Belgium and Austria. Estonia has a fuel cell research centre. Although the M/SSCHP technology is available, there are only a few cogeneration units with a capacity of 1 MW and less in most of the European countries. The spectrum ranges from countries like Bulgaria, Greece and Estonia, where SSCHP as a decentralised solution for heat and electricity production is just starting to be implemented to Austria, Belgium, Germany and Spain where M/SSCHP technology is widely applied.

* approximation / estimation

* especially in combination with cooling applications

Source: CHP/DH Cluster: Work Package 2, Micro and small Scale CHP, Cross-National Report by berliner Energiagentur (www.opet-chp.net)

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M i c ro a n d s m a l l - s c a l e C H P ( M / S S C H P )

Best practice applications

The OPET CHP partners have reviewed existing M/SSCHP units in their countries and compiled best practice descriptions of typical M/SSCHP applications: hotels, hospitals, commercial and office buildings, residential buildings, industry, landfill sites, agriculture, greenhouses and district heating. Case studies are available at www.opet-chp.net . The Hotel Almesberger (A) and Hotel Bankya Palace (BG) cases show that hotels are a profitable application of M/SSCHP units. Apart from heat demand for hot water and space heating, particular needs such as spa treatments, swimming pools, laundry, sauna landscapes and hot water for catering services lead to an increased heat demand even in summer. Similarly, good examples of profitable M/SSCHP applications are sanatoriums such as the hospital rehabilitation centre in Palanga (LT) and the San Eloy Hospital (E) and sport centres such as Zumaia (E) with a high demand for heating and hot water throughout the year. The examples of small co/trigeneration in shopping centres in Berlin (D) and Celje (SLO) demonstrate M/SSCHP in commercial and office building centres. Both are also examples of third-party financing models: it is not the centre owner, but an energy service company which has planned and financed and now operates the small cogeneration units at their own risk. The residential sector M/SSCHP use is not yet developed in most countries. One of the few examples is the micro-CHP in social housing blocks with nineteen dwellings in Herenthout (B). To reduce energy consumption for space heating and hot water, thermal collectors, condensing boilers and the M/SSCHP plants were set up in an energy efficiency project framework. The cogenerated electricity is fed in to the power grid of two housing blocks. Due to constant heat demand for space heating and production processes, industry offers another interesting application. An example is a furniture factory in Azpeitia (E), where heat is used for drying wood and cogenerated electricity covers part of the factory's consumption. Other examples of industrial M/SSCHP use are the small scale CHP use in a Bulgarian textile factory as well as in Slovenian poultry processing and sport equipment plants. With the advantage of turning waste into usable energy and decreasing greenhouse gas emission, landfill sites are an M/SSCHP application with added ecological value. The examples of the SSCHP installations in the Pskla (EE), Tagarades (GR) and Liosa (GR) landfill sites show, how nearby municipalities can be supplied with heat whereas the cogenerated electricity is fed into the grid. The latter can be particularly profitable if electricity produced by landfill gas-fired cogeneration plants is remunerated according to special green electricity tariffs as it is in Estonia, where there is no feed-in tariff for cogeneration in general but only for electricity produced on the basis of renewable energy sources. Apart from all these decentralised applications, M/SSCHP is also used for district heating. During the transition in the early nineteen-nineties, the Municipality of Adazi (LV) experienced an industrial and agricultural decline. Given the outdated technology and over capacity, the Municipality decided to outsource heat production. Essent Balitic started to run a SSCHP heat supply system and the cogenerated electricity is delivered to the grid. The better performance of the technology, the reduced consumer cost for hot water and electricity and the municipal budget benefit due to third-party installation financing are only a few of the advantages. Innovative technologies such as micro turbines, Stirling engines and fuel cells are not yet used in most countries. In Germany, there are innovative technologies in the test stage. For example, a Stirling engine is being tested by the district heat and electricity provider of the City of Kiel, in order to prove that long maintenance intervals and less emission make this technology an attractive alternative. Another example of innovative technology use is two fuel cells developed for multi-family houses in the German cities of Brake and Oldenburg which cover the major part of the electricity, hot water and space heating requirements of the two building complexes.

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Biomass CHP

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Biomass technologies are considered as one of the options with the highest potential to contribute to reaching the RES targets by 2010 for a number of fundamental agricultural, industrial and economic reasons. OPET CHP/DH Cluster focused on the whole supply chain, and the related technologies, connected with the use of biomass resources for CHP and DH purposes. The key aim was to bring the needed expertise together in order to exploit possibilities for market penetration.

Actions to overcome market barriers

The partners compiled an up-to-date summary of the major barriers and existing policy and financial measures used in partner countries relevant to the development of biomass CHP/DH technologies' further market penetration. The work then concentrated on exchanging experiences and latest innovative technologies in biomass district heat and CHP including the whole production-utilisation chain. New member countries have DH and CHP but mainly using fossil fuels. Some partners have only limited biomass DH and CHP experience. The goal was to bring different stakeholders together to exchange information and experience with study tours, seminars, training, case project descriptions, articles, advice and reports. Study tours and training actions have been successful. The whole biomass utilisation chain has been the subject of study tours in Finland, Austria and Sweden. Finland concentrated on large scale and woody biomass, whereas Sweden and Austria concentrated on small-scale biomass and biogas technologies. Study tours included visits to biomass supply sites and plants and were supported by training actions and descriptions of twenty-nine best practice case projects. International and national seminars were organised in Austria, Finland, Hungary, Lithuania, Poland, Scotland, Slovakia, Sweden and the Netherlands. Around 250 participants attended the study tours, whilst the seminars gathered more than 1800 participants interested in both biomass DH and CHP. People who attended the study tours and seminars came from approximately twenty-eight countries in Europe, Africa, Asia and South America. Investors in innovative biomass technologies gave details of their experience at these events on: biomass bundling technology biogas micro turbines biomass co-firing in large-scale CHP plants Website and journal publications also resulted, raising awareness of bioenergy as a commercial and environmental opportunity.

Biomass and waste input compared to total fuel input for thermal power generation in partner countries (European Communities, 2003)

Biomass CHP/DH SWOT analysis

Strengths
CHP and DH have a long history and so they are well known and developed CHP technologies enable the fuel switch from coal, oil or natural gas to biomass in existing CHP/DH systems Legal framework that promotes CHP and biomass usage High potential of Biomass CHP in terms of contribution to RES targets and the strong position of fossil fuels Low availability of finance Lack of standards for definitions and activities Centralised energy generation systems High costs Uncertain prospects on the CHP market development Immature biomass market Lack of efficient distribution channels Dependency on policies

Present use
Biomass CHP/DH technologies implementation varies significantly among countries involved (Austria, Denmark, Finland, Lithuania, the Netherlands, Poland, Scotland, Slovakia, Slovenia and Sweden). The CHP share in DH production is rather high in most countries, but natural gas is predominantly used as a fuel. Countries producing a rather high share of their DH by biomass are Finland Austria, Lithuania and Sweden whilst, for example, The Netherlands' DH uses 99% fossil fuels and Slovakia and Slovenia do not use biomass.

Weaknesses
Low acceptance and awareness of DH due to history

Opportunities
RES promoting national and EU legislation: RES are and will be continuously promoted Increasing price of natural gas, oil and electricity Broad category of biomass CHP technologies varying from micro-scale to large-scale production A rather strong position of industrial CHP, opportunities for fuel switch, i.e. to biomass CHP Privilege of natural gas, coal and oil

Threats
The present process of liberalisation of the energy sector may lead to a (temporary) hesitance towards new investment projects Falling prices of electricity Changes in taxation or policies for subsidies Spreading the gas networks into areas that have biomass potential Failure of deployment of new technologies

Source: www.opet-chp.net/chpbiomassswot.asp

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China: CHP and trigeneration

In China, CHP has been developed over five decades. Great success has been achieved with coal-fired CHP technologies, equipment manufacture and design of CHP systems among others. CHP technology enjoys an important role in enhancing energy efficiency, alleviating pollution emissions and improving Chinese urban infrastructure and living conditions.
With rapid economic development and increasing living standards particularly in the property sector, the demand for electricity (for heating and air conditioning) has been increasing. China is one of the largest coal consumers in the world. Coal is a large part of the energy mix. There are more than 500.000 small coal-fired boilers with less than 50% energy efficiency, leading to heavy air pollution. In the context of sustainable energy development and environmental protection, the strategic impact of energy efficiency is emphasised as is changing the energy mix through gradual replacement of coal by natural gas and other clean energies. Advantages of CHP/trigeneration fuelled with natural gas are high energy efficiency, pollutant emissions reduction, a diversified energy supply, the shaving of peak power grid load and balancing of seasonal gas pipeline load . Up to 2001, there was 32 GW of CHP installed capacity (6 MW/per unit and beyond), which accounted for 13.37% of installed thermal power. 60% of central heating in urban areas is produced by CHP. From 1991 to 2001, heating area has grown five-fold up to 1.2 billion m2, and 12,874,369 TJ (trillion Joule) of heat per year. In recent years, annual average increment of areas heated within buildings has been more than 200 million m2. Compared with separate production of electricity and heat, CHP has contributed to energy savings of 25 million tce (tonne of coal equivalent), and reduction of 65 million tonnes of CO2 in China. CHP has been mainly used in industrial sectors and for central heating in northern cities. Many self-provided cogeneration plants exist in energy intensive companies, such as petroleum, chemical, metallurgical and light industrial sectors. CHP is used for residential central heating in northern cities, and for commercial buildings and industrial use in southern municipalities and provinces, such as Shanghai, Jiangsu, Zhejiang and Anhui along the Yangtze River. In industrial parks, cogeneration plants are important for energy providers in southern China, particularly in the Yangtze River and the Pearl River Deltas among other examples. The promotion of trigeneration fuelled with natural gas is at an early stage in China. However, there are a few pilot projects of gas-fuelled trigeneration carried out in the regions of Shanghai and Beijing, where natural gas supply is available. Furthermore, in the Pearl River Delta, there are some oil-fuelled internal combustion engine generators, some equipped with waste heat utilising devices. Legislation and regulations have been developed to promote CHP development. There are difficulties with grid connection due to lack of specific legislative and regulatory provisions for operation and poor economic performance as a result of higher gas prices and environmental cost externalisation, among other factors.

Future prospects

Although the power industry sector is now undergoing reform to liberalise the power market, its monopoly status remains, to a certain extent, unchanged. Another monopoly, that of natural gas, has been formed in recent years. Hence, barriers on CHP/trigeneration exist: lower public awareness, incentive policies and instruments, advanced technology and equipment manufacture, relations with networks (power grid and gas pipeline) and energy pricing among other factors. At present, Chinese market actors including government decision makers, industrialists, designers and potential users are still not aware of CHP/trigeneration advantages. CHP/trigeneration is not easily accepted by the market, particularly power companies and natural gas companies. Key potential future markets for natural gasfuelled CHP/trigeneration are in Beijing and Tianjin, in the Pearl River and Yangtze River Deltas, including Shanghai, Jiangsu and Zhejiang Provinces among others, where many cities forbid direct coal burning. These regions are hot in summer and cold in winter, the period of space heating and cooling being six to ten months.

Other achievements related to OPET projects in China :

Increased awareness of Chinese energy actors on OPET and EU energy policies, technologies and best practices. Established and strengthened networking among OPET China partners, dealing with energy and industry, EU partners as well as Chinese energy organisations and governmental departments, which are significant for completion of existing projects and development of future collaboration. Increased capabilities of China partners to act as bridges for Chinese actors to EU, through exchange and collaboration with EU partners, in terms of study, events for dissemination etc. Extended channels for obtaining and updating EU information and cooperation potential dedicated to the OPET network.

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The OPET Thematic Brochures: Results of activities 2003-2005

The collection comprises 8 brochures and covers the following technological topics: Energy Technologies in the Building Sector Energy Technologies for the Generation of Electricity from Renewable Energy Sources Combined Heat and Power Generation (CHP) and DHC (District Heating and Cooling) Technologies Clean Fossil Technologies Within the Energy Market New energy technologies and efficiency measures in transport Mediterranean Cooperation for New Energy Technologies Modern and Clean Energy and Transport technologies in Latin America and the Caribbean Accelerating Market Introduction of Promising Early Stage Technologies for Transport and Energy

For more information, please contact sonja.ewerstein@stem.se